The top five benefits of a fully integrated information system are: 1. A third fundamental role for information systems is management support in making decisions. PO Box 644750, Pullman, WA 99164-4750. As part of the strategic planning process, Business processes can be simplified and unnecessary activities can be streamlined through the use of information systems adapted to common business tasks, such as manufacturing, supply chain, and employee processes. This literature review is basically based on a strategic role perspective of the IS/IT integrating with other management strategies of an organization. With the advent of end to end digital technologies, (terminals, processors, transport, etc. This can be as simple as global procurement of materials, components or products or as complex as fully integrated global operations. In the old days, it required specialized technologies for voice, data and video communication, for example. With constant reorganization, as well as increased mergers and acquisitions, top management recognizes the need for flexibility through compatible information technologies. Intense competition is forcing the organizations to become more efficient and effective. “Besides the components of hardware, software, and data, which have long been considered the core technology of information systems, it has been suggested that one other component should be added: communication,” writes researcher Dave Bourgeois. Second, information technologies have become distributed over time with respect to processing, memory, switching and intelligence. A strategic information system helps an organization gain a competitive advantage through its contribution to the strategic goals of an organization and/or its ability to signiﬁcantly increase performance and productivity. Similarly, travel agents have reduced the cost of operating the business through computerized travel reservations. For example, both Citicorp and American Express outdistance their competitors in the use of information technologies. They have formed a separate subsidiary called Sears Communications Network (SCN) that reports directly to the chairman, Edward Brennan. In the recent past, any business success has been pegged on the information technology quality that the business has employed and the capabilit… In some instances, another external linkage critical to the organization is the customer. For example, manufacturing is driven less by parts and materials and more by customer demand. Second, global business operations have necessitated use of online computerized networks to minimize time and distance barriers. However, the principal focus must be on the enormous potential offered by technology-based information flows and the associated challenges of infrastructure management, information architecture, and integrated services.There is nonetheless a powerful argument against IT determinism: that we should exploit information technology … Information technologies began as single location centralized hardware products used primarily for cost control purposes. We are witnessing similar cost reductions in fiber optics, switching systems, and digital services. This directly impacts information technologies. It also plays a role in the operation of any organization. They are not equally good at customized software or database management skills nor are they capable of offering a vendor independent environment. It is especially true today as the triad markets (North America, Europe and Japan) have become highly interdependent through global competition, global mergers and acquisitions and global business operations. For example, we are witnessing market share battles in the steel, metal, chemical, processed foods, mainframe computing, automobile and appliance industries. “ (1) supporting and influencing the strategic direction of the firm through identification of value-adding computerized information systems, (2) integrating and coordinating various organizational technologies through development of holistic information architectures, and (3) developing general strategies for successful systems implementation” (Segars et al., 1998:306). In general, the emphasis is on single location displacement technologies such as computers, word processors and computerized process technologies. Why is Information Technology Becoming a Strategic Resource? It can also change the goals, processes, products, or environmental relationships to help an … The worldwide network of American Express for credit card verification, as well as the database management expertise including artificial intelligence, are an industry showcase. As part of the strategic planning process, While the first three forces create the need, information technology revolution is the enabling force for increasing the strategic importance of information technologies. A strategic information system has been defined as, “The information system to support or change enterprise’s strategy.” Simply says, a Strategic Information System is a type of Information System that is aligned with business strategy and … Importance of information systems IT systems can produce: ft is recognized that with adequate information technologies, it is possible to prevent, abate, contain or at least quickly respond to corporate crises such as earthquakes, major fire, random shootings, or stealing proprietary information. In short, boxes are more important than networks when an organization uses information technologies for internal cost control purpose. It is no wonder that information products and services including FAX, data networks, personal computer terminals, and private lines have been growing rapidly around the world. They may deliver a product or service that is at a lower cost, that is differentiated, that focuses on a particular market segment , or is innovative. Most hardware manufacturers have discovered that they have a weakness. Management information systems use all of these capabilities in a way tailored to managerial and executive decision-making. These mergers and acquisitions require reorganization and rationalization of respective information technologies. Some experts believe that just as labor was probably the most critical resource in the agricultural age, and capital was the most critical resource in the industrial age, information will be the most critical resource in the post-industrial age. Information technologies (computers, networks and terminals) are increasingly regarded as strategic resources of an organization. In summary, four areas of global business operations—global procurement, global marketing, global resources and global economy—are creating a need for information technologies to minimize or eliminate time and distance barriers (see Figure 4.). They were the first in the chemicals industry to get a Cray supercomputer, which helps DuPont researchers develop new classes of products, particularly in pharmaceuticals. chairman and founder Sam Walton appeared on television at Wal-Mart Stores, leading the company’s more than 185,000 employees in a simultaneous Wal-Mart cheer. We have accordingly seen an explosion in local area networks, metro area networks and global networks to fully exploit the capabilities of affordable information technologies. The college spans four campuses throughout Washington and has a presence on four continents, leading to extensive networks of businesses and alumni. Upon successful completion of this chapter, you will be able to: 1. describe each of the different roles that people play in the design, development, and use of information systems; 2. understand the different career paths available to those who work with information systems; 3. explain the importance of where the information-systems function is placed in an organization; and 4. describe the different types of users of information systems. They have become the tools to meet corporate objectives of efficiency and effectiveness. In most advanced countries, industries are at the maturity stage of the life cycle. Strategic information systems (SIS) are information systems that are developed in response to corporate business initiative. Information systems when used for providing information to managers for their decision-making needs become a management information system. As the industry becomes more global in its procurement, manufacturing and marketing operations, it requires greater use of information technology to reduce time and space barriers. To integrate communication, Bourgeois suggests adding people and process to the traditional hardware, software, and data components of information systems. Today, the strategic information system are widely used in business. It is also not surprising to see many consulting companies, such as Arthur Andersen, Boston Consulting Group, A.D. Little and others are invited to develop computerized planning tools and processes. A good example of the benefits of business information systems is the success of Walmart. When an organization shifts from product divisions to market divisions, the value chain and flow of operations change significantly. There are different types of information systems and each has a different role. Information technologies have evolved over time in their applications. It built mini warehouses at its Memphis hub for several key accounts and began to manage the pails inventories for such companies as General Electric, Caterpillar and Boeing. No wonder today FAX is growing very rapidly and is no longer a product or service strictly for big business. Arid finally, they are likely to be used more and more for managing alliances among multiple organizations. The changing role of information technology in an organization can be summarized as in Figure 1. Tech writer Julie Davoren details them on Chron.com as follows: As information systems become more entrenched in the world of business, companies’ managerial staffs and executives are expected to familiarize themselves thoroughly with business information systems and what they have to offer. Figure 2 depicts the four drivers of the changing role of information technology, in this section of the report, we will discuss why and how each force is enhancing the strategic importance of information technology. Finally, in some instances, information technology organization is asked to both review and participate in the long-term strategic plans of operating divisions or subsidiaries. AU that the parts managers had to do was to use a terminal to send requests to Federal Express for shipment of Paris to different customers. In this study, we follow a perspective paradigm based on the strategic management literature to define IS strategy as an … In the oil and chemicals business, DuPont is pouring millions of dollars into expert systems that mimic the problem-solving abilities of sages who have devoted their careers to learning the intricacies of industrial chemical processing. Similarly, who would have imagined that the facsimile machines will be as affordable as featured calculators and telephone terminals? And this is not limited to terminals. It represents a radical departure from other information systems concepts — a completely new way of thinking about the role of information systems in the strategic planning process. 426-434. However, they are likely to migrate more toward multi-location distributed network oriented services as organizations utilize them for managing more complex relationships across different organizations. I have identified at least four ways a company can gain competitive advantage with the use of information technologies. This allows investors to make decisions on a minute-by-minute basis instead of the daily trading cycles common prior to the use of information technologies. A third major force, and probably a more immediate reason for the increasing the importance of information technologies, is organizational change, especially the reorganization of corporations. While the focus is on the centralized, single location displacement of professional staff, it is important to note that it is not hardware architecture but software capabilities that are key to this application of information technologies. This reduces bottlenecks, dependence on experts, and large capital expenditures to properly use information technologies. Management Information Systems (MIS) focus on the use of Information and Communication Technologies (ICT) in managing organizations. Globalization of Business Operations. Intense Competition. Once all the elements are integrated, every information system plays several roles for businesses with varying degrees of importance depending on a company’s needs. Major industrial crises, including the Three-Mile Island nuclear plant accident, Bhopal tragedy in India, and Tylenol product tampering in the United States, have all resulted in top management’s personal involvement in crisis management. In this setting, it is usually the data processing industry which tends to provide expertise and products as compared to the telecommunications industry. (c). For example, telephone companies have computerized billing, account management, and operator services with the use of information technologies that result in significant cost savings. It is, therefore, not surprising that more generic operating systems, such as UNIX and higher level user languages such as the C language, have become extremely popular in recent years. The goal of such information systems is to provide relevant information to management so that it helps in its functioning. It results in account control. Business intelligence (BI) systems, for instance, can turn data into valuable insights. In other words, it is no longer necessary to have these capabilities exclusively in a centralized location, such as in the mainframe CPU or in the central office switch. Recently, they are also used for corporate strategic planning. I have identified four distinct forces which seem to be driving the strategic importance of information technology. This use of information technologies for internal planning purposes is relatively new. This was one of the reasons for American Hospital Supply to offer computerized order entry system to hospitals, clinics, and physicians for medical supplies. A strategic plan provides management the roadmap to align the organization’s functional activities to achieve set goals. For example, at General Motors, it is reported that Roger Smith’s personal interest in greater use of computers and communications as a strategic resource led to the acquisition of EDS and Hughes. Our extensive review of the literature suggests that the concept of IS strategy is a term that is used readily; however, it is also a term that is not fully understood. Third, crisis management and security of physical and human resources has become a major issue in recent years. It represents a radical departure from other information systems concepts — a completely new way of thinking about the role of information systems in the strategic planning process. Second, we have witnessed a significant number of domestic mergers and acquisitions in many industries especially in the last decade. The focus is at’ internal efficiency in operations, and the primary targets are the major operations cost centers such as the factory or the office. This is also true for the organization in charge of information technologies: both data processing and telecommunications functions are increasingly integrated and consolidated. However, in today’s hyper-connected world, it is an extremely rare computer that does not connect to another device or network,” Bourgeois continues. First, information technology is clearly shifting away from the support and administrative function to the more mainstream and strategic function. Therefore, organizations have to plan for the long term when acquiring information systems and services that will support business initiatives. Second, it has relieved the necessity for cost-benefit style justification of many investments in IT where such justification may have been inappropriate ~ . Tech writer Ian Linton breaks information system capabilities down into categories in an AZ Central article: Managers can also take advantage of information systems that are specifically designed for business functions that affect their department or position. Information will be stored in a database consisting o… There is less error per unit of activity. The strategic role of information systems is to enhance the image of information Services in an organization. This is summarized below in Figure 5. In Proceedings of the Twenty-first International Conference on Information Systems, P. Weill, W. Orlikowski, S. Ang, H. Krcmar, and J. I. DeGross (eds. Organizational Changes. For example, personal computers today offer memory and processing capabilities at a fraction of the cost of mainframe computing only a decade ago. Four organization issues (mergers and acquisitions, downsizing and consolidation, market driven reorganization and crisis management) are responsible for the increasing importance of information technologies. Normally information system analyst will conducting SISP activities to analyze which is the best or suitable information system for the organization since it must take into consideration about the alignment of information system (IS) planning and organizational strategic goals and objectives. (See Figure 3.). This requires a highly centralized, integrated, and dedicated on-line information system which is secure, accurate and reliable. This value-added service, also utilized by APL in the container cargo business, provides a competitive advantage through differentiation. • Information systems that promote business innovation, improve operational efficiency. Information systems are not just technological, however. Federal Express went one step further. Alliance management across multiple organizations requires network solutions. It increases operational efficiency. 3. Five Roles of an Information System: a Social Constructionist Approach to Analyzing the Use of ERP Systems. A third way to use information technologies is for internal planning purposes. Although this is very convenient and efficient for the customer, it also creates exit barriers. Both of these objectives are increasingly achieved by deploying information technologies. 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