Ways in which Information Systems have Changed Organizations (Term Paper Sample)

Ways in which Information Systems have Changed Organizations
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Information systems and the organizational changes
Today, information systems form the foundation of conducting businesses. The mere survival and existence of industries without the incorporation of information technology is inconceivable as IT and the general information systems play a major role in increasing production. Information technology has become part of the commodity in the industry. But when used in conjunction with other complementary organizational and management changes, information technology forms the foundation for new ways of conducting businesses, and product differentiation that place an organization at a strategic advantage to its competitors. This paper discusses the organizational changes, both short term and long term, occasioned by the use of information systems. The ways in which organizations have changed in relation to information systems include the achievement of operational excellence, development of new products, services, and business models, improvement of customer and supplier intimacy, improved decision making, achievement of competitive advantage, and survival. These changes will be elaborated based on technological determinism where technology acts as a push and influence for technological solutions and social determinism where a need drives technology to yield a solution (Haider, 2013).
Competitive advantage and strategic information systems
The company’s business strategy to compete, its objectives, and the plans and policies that are essential in the achievement of these goals is defined by its competitive strategy. A company’s competitive strategy provides a means that ensures that it has a competitive advantage in terms of costs, quality and the speed of production in the industry. Additionally, the company’s competitive advantage defines its ability to control the market and generate higher profits. By using information systems as a tool, the traditional sources of a company’s competitive advantage have been increased to levels that companies themselves did not anticipate. The competitive advantage has been achieved through strategic information systems (SISs). SISs enable a company to implement its strategic goals and thus increase its performance and productivity (Rainer et al., 2014). The need to remain a competitive force in the market and continue making above average profits necessitated the development of strategic information systems and, as a result, social determinism is responsible for the development SISs.
Decision support systems (DSS)
Decision making is one of the key factors in business management. As a factor, it necessitated for a tool that combines various aspects of an organization’s operations and yield better decisions. This led to the development of DSS. Since the development of the first DSS, organizations have been able to acquire or develop their own decision support systems based on the unique problems that the organization may have to deal with (Chatterjee, 2010). According to Power (2002) decision support systems have shown the potential of helping organizations create a cost advantage by improving personal efficiency and reducing time and the need of staff, speeding up problem solving, and increasing the control of the organization. For instance, a university can reduce costs by employing a new DSS that consolidates the number of processes and reduce the number of staff hours needed for complete fee payment by students. The ability of a DSS to provide access to data and analysis tools makes it an important tool for business management.
Product differentiation and creation of business models
Information technology has facilitated networking of computers and resulted in the creation of more powerful communication networks. IT has been able to eliminate many technical and geographic barriers that obstruct information flow and has accelerated the information revolution. This has inspired new uses of information resources and business models. IT provides a global connectivity and a flexible platform for information sharing and thus creating the new use of information systems. Additionally, the employment of information systems has revolutionized the means of decision support and thus creating opportunities for new business models (Dolgui et al., 2006). Additionally, information systems have resulted in product differentiation which distinguishes products, and creates new products and services. For instance, Google, eBay, and Apple (Laudon, 2001). This provides a competitive advantage that the customer enjoys. In relation to the two concepts, product differentiation and new business models arose after the organizations realized the power of information systems and thus this change is occasioned by technological determinism.
Achievement of reverse logistics
The application of novel information systems provides a sophisticated framework that has the ability to manage any global returns strategy for the ongoing products in the market. The framework permits managers to manage a complicated mix of products. This is because it offers sophisticated summary reports that manage service levels, product quality and cost (Dolgui et al., 2006). To achieve this, the sophistication is tailored for each user to provide a menu driven interface that gives them the correct features and simplicity. Generally, the return system involves three aspects; the data administration module, the client module and technical, and the technological module. The data administration module is responsible for keeping all the data regarding the product that are sold and the service obligation to the customer while the technical module concerns itself with the returns of the administration module in case of technical disparity. This change in the organization’s way of collecting data about products and performing the necessary logistics was necessitated by the large amount of information gathered from a large variety of goods and services and hence reverse logistics is a product of social determinism.
Supply chain management (SCM)
In addition to the reverse logistics, the optimization of supply chains has been a major concern for many organizations (Dolgui et al., 2006). Information systems have been able to facilitate effective management of the combined effect of all the parties involved in the production of goods and services. This is due to the ability to communicate and exchange data between companies in the supply chain and thus enhancing the smooth flow of information between them (Gupta, 2011). For example, the Wal-Mart retail linking system that connects suppliers to Wal-Mart. The use of information system has enabled Wal-Mart to increase inventory turns, maintain stock, and have a long lasting replenishment cycle. The use of information system consolidates the three levels of supply chain management that includes the strategic level, the tactical level, and the operational level and, as a result, several benefits of SCM have been achieved. These benefits include, the reduction of production and distribution costs due to more information and less inventory, the management of the supply chain by fewer employees, better customer satisfaction due to less stock-outs, and the enhancement of strategic relationship with suppliers (Gupta, 2011). Furthermore, SCM IS provides a competitive advantage in SCM, fast order processing, elimination of wastage, enhanced inter-enterprise and intra-enterprise coordination, and an increase in overall efficiency. SCM IS illustrates the technological determinism in that the use of IT in the supply chain improves the social interaction between retailer’s, suppliers, and customers.
Enhanced collaboration and formation of business partnerships
A proper supply chain management through the use of information systems has also resulted in the easy formation of new business partnerships through the collaborative planning, forecasting, and replenishment systems (CPFR) and the downstream collaboration of customer service, marketing, and relationship management (Gupta, 2011). Additionally, the formation of partnerships has been occasioned the relative ease of sharing data and making deals in real time by the use of information systems and thus, the formation of partnerships conforms to the concept of technological determinism. Through these partnerships, companies have been able to mitigate the bullwhip effect and other supply chain management problems. This has been accomplished by means of sharing and exchanging information along the chain by means of Electronic Data Interchange (EDI). Additionally, other parts of inter-organizational information systems such as the internet based extranet and groupware technologies provide an effective platform for information sharing that eases the partnership and SCM problems. EDI links a company to external partners such as warehouses, freight forwarders, suppliers, customer centers and others that may benefit the business (Bhasker, 2013). For instance, the provision of daily sales information to P&G by Wal-Mart to monitor inventory levels and thus enabling P& G to plan production.
Material planning
Faced with the problem of material quality and delays in production, manufacturers had to devise an ingenious way of tackling the issue. They developed a system known as Just in Time (JIT) system. Through the proper information exchange, the JIT system minimizes the quantity of inventory of materials and proves to be a crucial aid in material planning. In an environment where information is uncertain, reliable delivery schedule requires that large quantities of inventory be held. Holding inventory has the cost implications since it blocks the financial and the building capital of an orga...