REPÚBLICA AFAP RESTO DEL SISTEMA TOTAL SISTEMA

Development of Information Systems

Information systems (or IS) have become an important concept in management because of the need for improved communications within organisations.

IS and their supporting technology were originally used to improve the supply of information to managers, for example, by means of visual display units (VDUs), so that it was more quickly available. Its main purpose was seen as improving systems which were carried out manually by clerical staff. The main advantages of these new systems were seen as:  reducing clerical costs by improving efficiency, and

 improving the effectiveness of managers by providing them with better quality and more up-to-date information.

However, the sources of information remained the same as before, and so its quality was not improved. But most organisations now realise that investing in IS can lead to greater

exploitation of information resources and that this is an important part of their business strategy.

The attitude of management to IS investment is influenced by their understanding of the potential benefits it can bring, and also by the reality of the benefits obtained previously. During the recession of the late 1980s in the UK the commonly held view was that any investment in IS had to be financially justified. As a consequence of this many systems were developed piecemeal and this meant they tended to suffer from being "integrated" more by accident than design.

At BAC systems, for example, I recall many different personal computers (PCs) were purchased independently by different sections, depending to a large extent on personal preferences. A situation was reached where many of these systems were incompatible, and then a central control was set up to ensure that in future this would not be the case.

In order to use IS successfully today the main opportunities for improving business

effectiveness lie in the efficient integration of systems, both internally and externally. To this end IS strategy is concerned with how the organisation will satisfy its needs for new

computer systems to support its business.

One technique used in systems development is "affinity analysis" or "grouping", in which processes are grouped together according to the data they affect, and this is used to identify the best sequence for developing systems.

Systems development also has to take account of market and product strategies. There is no point in developing sophisticated systems to support markets or products from which the organisation intends to withdraw.

Cost/benefit analysis and investment appraisal techniques will be used to assess the case for systems development. The business may also impose an absolute limit on investment in IS to ensure expenditure does not get out of line with income growth (see Figure 8.7).

Figure 8.7

Information technology planning is used to schedule and allocate resources to projects in order to meet technology or information systems objectives.

Using Information Systems for Competitive Advantage

As more advanced technology becomes available for IS, organisations can now use it as a means of gaining competitive advantage. Some examples will illustrate how this can be done.

(a) Lower Costs/Lower Prices

Information has always been used to help control costs.. Now developments in IT, giving better and cheaper access to detailed and timely information, has enabled much more effective cost-cutting. Sometimes this is through improved systems of control but increasingly information technology is actually lowering the costs of many business operations and processes. For example, developments in information technology have enabled companies to operate in areas of the world with lower labour costs, whilst at the same time still having effective control. Many companies now deal with customer enquiries through call centres in the developing parts of the world, and this has substantially lowered their costs for these operations. Lower costs where not passed on to customers necessarily mean higher profits for the organisation, and are

particularly important therefore for the company pursuing a cost leadership strategy. Alternatively lower costs can be passed on in the form of lower prices, thereby enabling a company to have a price advantage over competitors, at least in the short run.

(b) Knowledge of Customers and Their Needs

Information systems are increasingly allowing companies to develop much better information regarding their customers and their needs. Databases, for example, allow companies to identify specific customer requirements, purchasing patterns, income levels, etc which facilitate product and service offerings which are more nearly tailored to the needs of individual customers. In some cases companies have moved towards what could be termed almost customised marketing, which in the past has not been possible or has been considered too expensive.

Business Environment Financial Planning Business Strategy Information Systems Strategy Information Technology Planning Technology Strategy Business Architecture

(c) Knowledge of Competitors

Databases facilitate improved information systems concerning competitors; their strategies, strengths and weaknesses, and likely future actions. The organisation which has good information systems on its competitors is in a much stronger position to develop and sustain successful competitive strategies.

(d) Easier and Faster Purchasing Processes.

Information technology has facilitated easier purchasing for customers, as well as for companies purchasing from their suppliers. The development of the Internet, and all the information technologies which accompany it (such as websites, electronic data interchange and the intranet), all make it easier for customers to order products and services and have them delivered. As we all know, an increasing number of customers throughout the world are purchasing through their home computers.

(e) Improved Product Quality and After-Sales Service

Information technology (again particularly the use of databases) facilitates quality control both for products and for services. Information systems can be used to analyse complaints and explore issues in product or service reliability. Improved after-sales service can be provided by better information systems. An example would be automatic service reminders generated by the information system and sent out to customers of a car dealership.

These, then, are just some of the ways in which information systems and IT are now serving to potentially improve an organisation's strategic capability and help it compete. Effective organisations now plan their information systems around this notion of using the system as a basis for competitive advantage. There is no doubt that the use of information systems for this purpose will continue to grow as companies seek to exploit information as a way of improving their competitive position.

Study Unit 9