FMCG Ltd has recently introduced its own sales staff to supply the retailers of its products. This has been critical in ensuring the products are effectively placed and promoted. This has enabled the company to increase its sales dramatically. The use of the company’s own sales force allows important sales information to be gathered and fed into the company’s information system. This information assists the company, the wholesalers and the retailers. The company closely supervises and assists the wholesalers, retailers and the company that is responsible for collecting the mineral water at its source.
The Chair said that the Enterprise System is the ‘heart’ of the company. The company uses the system to increase the company’s efficiency and profitability. Fahy discusses the benefits of strategic enterprise systems (Fahy, 2001). He emphasises the importance of the management issues as well as the technical challenges associated with introducing such a system. The Chair said that he agreed with this comment. The Chair also said that the benefits of such a system as outlined by Laudon (Laudon, 2002) were experienced by FMCG Ltd .
These benefits included:
- greatly improving decision making
- increasing the market orientation of the company
- increasing the overall company performance
- achieving growth in the business without the need to introduce additional layers of management to manage the increase in operations
- increasing the flexibility of the organisation in terms of determining supply, production, the need for and timing of promotional activity, and minimising staff numbers
- making management processes more efficient
However, some of the benefits of such an information system on a company that are identified by Laudon were not relevant to FMCG Ltd. They are as follows:
- separating work from location – FMCG Ltd’s sales force still make hand written records that are later entered into its computer system. A laptop or hand held device would be equivalent to a year’s salary of a sales person and makes the potential risk of the loss of equipment out-weigh the potential benefits. Benson suggests that an effective information system can involved both digital and manual elements (Benson, 2002).
- reorganising workflows - FMCG Ltd’s workflows have remained fairly unchanged since the introduction of the Enterprise System. However, the speed and efficiency of the workflows has increased.
Question 1 (b)
Analyse the role played by the six major types of IS in the organisation and their relationship to each other (listed below).
There is a free flow across the company’s different function areas, including accounting, human resources, sales and marketing and also between the different IS discussed below. The Chair commented that the boundaries between the 6 levels of IS identified by Laudon were ‘blurred’ in FMCG Ltd due to its flat management structure and entrepreneurial culture. He said that he thought this blurring of boundaries was typical of many companies that have relatively flat structures. Tatnall supports this suggestion (Tatnall, 2002).
Executive support system (ESS)
FMCG Ltd has an ESS with the characteristics of the ESS described by Laudon (Laudon, 2002), The ESS of FMCG Ltd:
- supports non-routine decisions
- is designed to incorporate external information, such as tax laws and competitors
- draws on summary of MIS and DSS
- uses graphic software packages
However, the Chair felt that it was important that information be fed back into the system at all levels, as shown in the chart below.
Decision support system (DSS)
FMCG Ltd has a DSS with the characteristics of the DSS described by Laudon (Laudon, 2002), The DSS of FMCG Ltd:
- supports decisions that are unique and rapidly changing, and not easily specified in advance
- uses both internal and external sources of information
- has more analytical power than other systems
- is interactive and enables you to change assumptions
The Chair stressed the importance of mining the data at this level. He said that routine executive reports can be misleading when looked at in isolation. The DSS allows issues to be explored in detail. The benefits of having an Enterprise System greatly assisted this process.
Management Information System (MIS)
FMCG Ltd has an MIS with the characteristics of the MIS described by Laudon (Laudon, 2002), The MIS of FMCG Ltd:
- serves in planning, controlling and decision making by providing routine summary and exception reports based only on internal information
- focuses on weekly, monthly, yearly and not daily figures
- does not have the capacity to be flexible and has little analytical capability
This system is particularly important to the managers responsible for supervising the wholesalers and the sales staff.
Knowledge Work System (KWS)
KWS do not play a significant role in FMCG Ltd. This is may be due to the company being driven more by achieving efficiencies within the distribution channel rather than creating new information and knowledge.
Office Systems
FMCG Ltd’s office systems are based largely on Microsoft software products.
Transaction Processing System (TPS)
The basic business information system for recording daily routine transactions relating to sales at FMCG Ltd is based on hand written records that are entered into its centralised computing system. This detailed information, which is collected by the sales force, is of central importance to decision-making within the company. The Chair said that the process of keeping records by hand writing was very effective. Although there is likely to be an introduction of hand held devices for the sales staff to use in the future, he believed that the benefits would not be significant. Most other transactions within the company, such as payroll, are entered directly into the computer system.
Interrelationship between the systems
The Chair disagreed with the interrelationships between the systems described on page 46 of Laudon (as shown below). The importance of feedback processes between ESS and DSS is also discussed by Tatnall (Tatnall, 2002). The Chair said that a senior executive visited people in the field to ensure that the information that senior managers received from the company’s IS actually matched what was happening at the lower levels of the company. He commented that if an IS is not effective, there is a major danger of what he described as ‘garbage in, garbage out’. He also said that he felt the feedback from the ESS should be fed back into the information system, which is not shown in the Laudon chart.
The Chair emphasised the importance to the company of people involved in the different IS meeting regularly to ensure the quality of the information passing through the different IS is accurate and to explore information that can be difficult to communicate solely by electronic means. He commented that total reliance on electronic communication was ineffective.
The effectiveness of FMCG Ltd’s IS has enabled the company to successfully introduce Customer Relationship Management practices. The effectiveness of the company’s Enterprise System has enabled the company to develop a close relationship with its wholesalers and retailers which have a detailed understanding of the mineral water needs of customers. This is then effectively supported by the efficient supply chain. Non-profitable retail outlets were also identified, so that greater support and resources could be allocated to strategically significant clients.
Question 1 (c)
Describe one of the IS used by your organisation in terms of its inputs, processes, and outputs and in terms of its organisation, management, and technology features, and the importance of the system to the company.
The following chart outlines the main inputs, processes and outputs of FMCG Ltd DSS.
FMCG Ltd’s DSS primary data originates primarily from:
- the hand written records of the sales staff and staff involved with the supervision of the warehouses
- the hand written records of staff supervising the water source production area and bottling unit
- internal accounts
Managers request ad hoc reports from technical staff on issues identified by them, as a result of information they receive in their routine reports or otherwise. This system allows managers to drill down into the data to identify issues in order to optimise the efficiency of the supply chain. The key role of the DSS being to drill down into data is supported by Benson (Benson, 2002). The flexibility of the system is critical and is largely achieved by having a well maintained database of information that can be accessed and manipulated to seek and present information concerning a very wide range of potential issues or areas that need exploration.
Another feature of the reports generated by the DSS is that managers are normally able to link the results of the reports to the structure of the organisation. This means that when issues are identified, those responsible for managing the issues can easily be identified, and the issues can be promptly and effectively addressed.
The Chair emphasised the importance of keeping the DSS fundamentally simple.
Tatnall recommends that when considering the input, process and output of IS you need to consider them from the perspective of hardware, software, procedures and data (Tatnall, 2003) . The following table summarises FMCG Ltd’s DSS in relation to sales information from this perspective.
Question 2 (a)
Evaluate the web site of the organisation in terms of its functions, user friendliness, how well it supports the organisation’s business strategy. Suggest improvements.
Note: As the actual name of the company that is assessed in questions 1 and 3 or this report is not to be used, Ron Williams, in his email of 11 December, confirmed that I could assess the website of my employer (The Canberra Institute of Technology) for question 2.
Background information
Website address - www.cit.act.edu.au
Canberra Institute of Technology (CIT) is the major provider of vocational education and training in the ACT. The structure of the CIT is based on 5 faculties, with each faculty being divided into a number of departments. Its structure would fit into Mintzberg's Professional bureaucracy organisational type (Mintzberg, 1979). CIT delivers a very wide range of courses to a range of target markets.
Evaluation of website
To assist in the evaluation of CIT’s website, a number of criteria are used to assess the site’s functions, user friendliness and how well it supports the organisation’s business strategy. These criteria have been adapted from a number of sources, including Awad, E.M. (2002), Chaffey (2000) Eisenberg, B. (2001), Hurol, I. (2002), Sanchez, M. (2004) and Turban, E. (2003).
Summary of table
Overall the site is rated poorly, being rated approximately 2 on a scale of 0 – 5.
The design of the site suggests that the organisation has not considered carefully enough the purpose of the site in terms of its target audience or key role. A result of not having a clear role for the site is that the site appears poorly organised and inconsistent. There is a wide range of information about CIT available on the site, ranging from student information, operational material (such as the strategic plan) and job opportunities. However, the impact or effectiveness of this information is limited because there is not a coordinated approach to the way in which this information is presented.
CIT has an extranet, with limited functions and other limited on-line functions, such as student enrolment. The site does offer some scope for feedback, although the value of the short questionnaire is questionable.
In terms of user friendliness, the site rates approximately 2 out of 5 overall. Information tends to be difficult to find, due largely to the site being poorly organised. The individual web pages are poorly presented and there is little consistency between pages. The pages tend to be too long and key information is not prominent on the pages.
The site also rates poorly in terms of how well it supports the organisation’s business strategy, except for the consistent use of CIT’s corporate graphics for most of CIT’s promotional activities. However, the positioning strategy of CIT is not reinforced by the site, and the specific target audience of the site is not clear.
Explanation for characteristics
The site rates poorly for the following reasons:
- Despite the vocational education market in Canberra becoming increasingly competitive in the past 5-6 years, CIT is still struggling to become a market orientated organisation. This is reflected in it not having a clear positioning strategy that is effectively communicated to a specific target group.
- The fact that CIT has a very broad target market spanning a large number of discipline areas and demographics increases the challenge of effectively positioning the organisation.
- The fact that the CIT is spread over 6 campus and has 5 Faculties, each Faculty being divided into a number of Departments makes it very difficult to achieve consistency between Faculties, and between the web pages of the departments. This difficulty is heightened by the fact that it is the responsibility of most departments to prepare their own web page.
Recommended improvements
The following are recommendations to improve the site:
- Most importantly, CIT needs to define the specific role of the site in terms of its overall strategy and the way it is integrated into CIT’s communications strategy. Unless this is achieved, it will be difficult to make fundamental improvements to the site.
- It is essential for the information contained in the site to be rationalised in terms of its relevance to the different target audiences. Once this is achieved it should be easier to arrange the site to enable each target group to have easier access to the area that is relevant to them. An example of a site that has managed to target a wide range of target groups effectively is the Disney website. Disney has designed a number of different areas on its site, each being relevant to a particular target group.
- It would be a difficult to centralise the preparation of department web pages for internal political reasons. However, strict guidelines in terms of length of page, format and presentation of material would be useful.
- In the longer term, additional issues can be addressed, such as increasing the interactive functions of the site. However, there is little value in incorporating additional features until the key issues identified have been addressed.
Conclusion
The CIT website is an example of a poorly designed website in terms of functions, user friendliness and its fit with the organisation’s overall strategy. The organisation needs first to make strategic decisions about the site’s role and target audience. CIT then needs to take the necessary steps to improve the site’s functionality and user friendliness.
Question 3 (a)
Consider the potential impact of new hardware technology on the organisation.
FMCG Ltd operates in a mature and stable market, of which it has a large market share. As mentioned earlier, the firm’s strategy is based largely on gaining greater efficiency through the supply channel, rather than on the long-term, rapid growth of sales for the business. Because the company’s IS is based largely on a relatively simple database the system is effectively operated using its existing hardware resources. The hardware system is centralised, based on a mid range computer. The Chair commented that the capacity planning and the scalability of the firm’s hardware are minor issues for the company as the scale of the business is unlikely to expand, and he could not foresee any dramatic changes in the demands of the hardware technology as dramatic changes to the company’s IS or relevant technologies are unlikely.
The total cost of ownership (TCO) is relatively small for the company. The reason for this is that highly sophisticated hardware is not required by the company, and systems maintenance and technical support and training is done largely in-house, with only ad hoc specialised tasks being undertaken by consultants.
The only potential for significant change in the company’s hardware requirements is in the use of small hand held devices and portable information appliances to be used by staff in the field. The Chair did not expect this to have any major ramifications for the company, except that no longer requiring hand written records to be entered into the system may bring minor improvements in terms of speed of access to the information and greater accuracy in the information entered because of the number of input errors would be reduced.
Kypridemos discusses some additional problems a company can face when introducing computer based systems to execute existing functions (Kypridemos, 2001). She includes possible negative consequences in terms of the cost of new equipment and the human and other costs related to health and safety issues of IT, an increase in fraud, increased staff training costs, and privacy issues.
Question 3 (b)
Identify important issues in the organisation relating to the management of organisational software assets.
The Chair commented that the software that the company uses is relatively simple. It is based on an existing package that could be modified and adapted. Some important modifications of the software were made by a consultant when the software was initially installed. Minor adaptations have been required from time to time. Most changes were be done in-house. There has been no need for an application service provider due to the simple nature of the system used.
As mentioned, the central role of this software is to allow managers to mine information to ensure the supply chain is operating efficiently.
The company’s software rates highly in terms of all of Laudon’s criteria for selecting software, being appropriateness, efficiency, compatibility and support (Laudon, 2002).
Question 3 (c)
How can telecommunications technology provide the organisation with competitive advantage?
Due to the fairly poor technological infrastructure in Vietnam, the use of telecommunication technologies for the company, such as broad band, network convergence and videoconferencing, is relatively limited. This is certain to improve in the future. The future use of electronic data exchange, when available, would contribute to the company’s competitive advantage.
The firm uses a Star network and a private branch exchange.
It is likely that technology infrastructure in Vietnam will be improved. This would bring a number of advantages to the company in terms of increasing its use of telecommunications technology, including:
- increasing the reliability and speed of the transfer of information throughout the firm
- increasing the potential use of intranets to give increased ease of access to information by employees
- allowing the establishment of extranets to further strengthen the close existing relationships that exist throughout the supply chain
The Chair felt that these factors would strength the company’s competitive position. However, he did not consider that they would provide new competitive advantages or opportunities in themselves.
I asked him whether he felt that there was a danger for a company to fail to identify new opportunities because of an attitude among managers that technology was there to assist in the existing functions and processes of the organisation.
He replied that there was always the danger of managers looking at opportunities too narrowly. But he also said that there was a danger of companies becoming too preoccupied with introducing new technologies that may not necessarily increase the competitiveness or profitability of the organisation. Abdus Sattar Chaudry of Nayang Technical University in Singapore is quoted by Coakes in the context of ensuring that the benefits of IS is measured. Chaudry comments that despite the difficulty of measuring the impact of knowledge management ‘companies should not give up on measurement in this area’. He went on to say that the key issue is for managers to understand the real drivers of the company and to ensure they are aware of changes to these drivers and relating IS opportunities in relation to these key drivers.
References
Awad, E.M. (2002) Electronic Commerce: From Vision to Fulfilment, Prentice Hall, USA
Benson, S. and Standing, C. (2002) Information systems: a business approach, John Wiley and sons, Australia
Carr, N. (2001) Digital enterprise: How to reshape your business for a connected world, Harvard Business School Publishing, USA
Chaffey, D., Mayer, R., Johnston, K and Ellis-Chadwick (2000) Internet Marketing Prentice Hall, England
Coakes, E. ( (2003) Knowledge management: current issues and challenges, IRM Press, USA
Eisenberg, B. (2001) Do You Walk Your Talk?[Online], Available: , [Accessed 20 December 2003].
Fahy, M. (2001) Strategic enterprise management systems: tools for the 21st century, Richmond Ventures Pty Ltd, Australia
Hurol, I. (2002) Measuring the success of your website : a customer-centric approach to website management, Pearson Education, Australia
Kypridemos, L. and Veliotis, S. (2001) Business information processing, Eastern House, Australia
Laudon, L. and Laudon, J. (2002) Management Information Systems, managing the Digital Firm, 7th Ed., Prentice Hall, USA
Mintzberg, H. (1979) The Structuring of Organisations, Prentice Hall, USA
Sanchez, M. (2004) 50 Sure-fire Web Design Tips [Online], Available: , [Accessed 20 December 2003].
Tatnall, A., Favey, B., Burgess, S., Davidson, A. and Wenn, A. (2002) Management information systems: concepts, issues, tools and applications, Data Publishing, Australia
Tatnall, A., Paul, S., Burgess, S. and Dave, B. (2003) Business information systems, Data Publishing, Australia
Turban, E. (2003) Electronic Commerce – A Managerial Perspective, Pearson’s Education Enc, USA
