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The business value of Information Systems. Case study: Amazon.com

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THE BUSINESS VALUE OF INFORMATION SYSTEMS CASE STUDY: AMAZON Isabel Maria Arroyo Moreno Student ID Number: 114695 Business Information Technology Module BSc Business Management with HR Greenwich School of Management, University of Plymouth (London) Submission date: 8th December 2011 Word count: 2.776 Table of Contents Executive Summary 4 The Business Value of Information Systems 5 Introduction 5 Business Value of Information 5 Business Information Management through Information Systems 6 The Value of Information Systems 6 Customer Relationship Management (CRM) Systems 6 Enterprise Resource Planning (ERP) Systems 7 Supply Chain Management (SCM) Systems 8 Information Systems and the Changing Business Environment 8 Amazon.com Information Systems 10 Introduction 10 Amazon.com's Information Systems Value 10 Amazon's Customer Relations Management (CRM) system 11 CRM System Business Value 11 Amazon's Enterprise Resource Management (ERP) System Value 13 Amazon.com's Supply Chain Management (SCM) system 13 Amazon.com's SCM system Value 13 Amazon IS and the external changing environment .........................................................................15 Conclusion.............................................................................................................................................16 Executive Summary Business information management requires the use of information systems, which make possible the conversion of data into useful information to be used by decision makers in organisations (Chaffey, 2004) The acquisition and further deployment of such systems requires organisations to make expensive investments prior to know whether they are going to produce the desired business improvements. Therefore, delivering value for money from information systems investments has become a very serious issue for many organisations. There are several examples in both the private and public sector of expensive failures, but there are fewer published cases of success (Ward, 2006) The purpose of the present paper is to explain how added business value emerges from the use of information systems. The paper begins with a review of the related literature and then, it takes a practical approach through a case study analysis which intends to set out the value of information systems to a successful organisation such as Amazon. Therefore, the case study will illustrate how different information systems have enabled Amazon to achieve a solid competitive advantage by improving ...read more.


Amazon uses information systems to improve profitability faster and its current financial situation, strategic position, market share, and intangible benefits give evidence of that the company's IT and IS strategies worked as expected. According to Hottovy's report (2011) Amazon doubled in size from 2008 to 2011 with $34 billion in net sales and its current revenue growth is close to 40%. The company has a valuation of $325 per share and generates return on invested capital exceeding the 50% - note that Amazon invests mainly in IT and IS technologies -. Moreover, it has an active customer base of 137 million users that accounts for an annual growth rate of 20%. All in all, Amazon has one of the most capital efficient-models in e-commerce and its low cost operations, network effect and focus in customer service provide the company sustainable competitive advantage (Hottovy, 2011). Amazon uses ERP, SCM and CRM information systems. Oracle (ERP) built a multi-terabyte database for the company, while SCM software was acquired to control costs and to improve shipping and logistics efficiency. In addition, Amazon's CRM system intends to work up e-marketing efforts through the analysis of customer's preferences and the provision of products for specific segments (Foley, 2000). Amazon's Customer Relations Management (CRM) system Amazon's CRM system uses the following applications to gather customer information: * A database of customers with personal, profile and transactional data which include their purchase history and activities * An order processing system that includes the record of credit card information and is linked to a delivery system * A web-page system that takes customer information such as customer feedback, personal interests, wish list and product review records, and customises formats. * Automated communication systems: e-mail and message systems and order information systems that ensure personalised and relevant communication with customers (Hof, 2003; Jenkinson, 2005; Hottovy, 2011) CRM System Business Value Amazon's CRM system creates business value through integrating customer sales, services and communications effectively (Jenkinson, 2005; Manjoon, 2011) ...read more.


Oracle [Online] Available from: http://www.oracle.com/us/solutions/thoughtleadership/journal-mgmt-excellence-june-2010-116920.pdf [Accessed on 12/11/2011] * Publications 8. Bacheldor, B. (2004)" From Scratch: Amazon Keeps Supply Chain Close to Home" Informationweek [Online] Available from: http://www.executivemanagementskills.com/pdf/amazon.pdf [Accessed on 11/11/2011] 9. Businessweek (2003) "Reprogramming Amazon" Bloomberg Businessweek December 23th [Online] Available at: http://www.businessweek.com/magazine/content/03_51/b3863115_mz063.htm [Accessed on 18/11/2011] 10. Dans, E. (2003) IT Does Matter. European Business Forum [Online] Available at: http://profesores.ie.edu/enrique_dans/download/IT%20Does%20Matter%20-%20EBF.pdf [ Accessed on 18/11/2011] 11. Foley, J. (2000) "Amazon's IT Agenda" Informationweek.com News, November 6th [Online] Available at: http://www.informationweek.com/811/amazon.htm [Accessed on 18/11/2011] 12. Gabe, M. (2010) "Lessons in Distribution" Mortgage Banking [Online] Available at: http://www.allbusiness.com/banking-finance/banking-lending-credit-services-mortgage/14266140-1.html [Accessed on 18/11/2011] 13. Gilmour, K. (2003) "Amazon Warehouse" Internet Magazine, Sept. 2003 [Online] Available from: http://www.kimgilmour.com/articles/archive/amazon_warehouse.html [Accessed on 14/11/2011] 14. Hof, R.(2003) "Amazon.com: The Wild World of e-commerce" Business Week Archives [Online] Available at: http://www.businessweek.com/1998/50/b3608001.htm [Accessed on 18/11/2011] 15. Jenkinson, A. (2005) "Amazon: Bounding Customers with Integrated Service" Centre for Integrated Marketing, University of Luton [Online] Available at: http://www.centreforintegratedmarketing.com/gfx/documents/amazon_bonding_customers_with_integrated_service.pdf [Accessed on 18/11/2011] 16. Knowledge Wharton (2009) "Fit for the Holidays: Amazon is Shaping Up and Shipping Out". Knowledge@Wharton [Online] Available from: http://knowledge.wharton.upenn.edu/articlepdf/2382.pdf?CFID=172480957&CFTOKEN=80041908&jsessionid=a8305ac77adc802c10107e653f5a2f715b56 [Accessed on 14/11/2011] 17. Manjoo, F. (2011) "The Great Tech War of 2012" Fastcompany October 19th [Online] Available at: http://www.fastcompany.com/magazine/160/tech-wars-2012-amazon-apple-google-facebook [Accessed on 18/11/2011] 18. Ray, R. (2010) "True CRM: It is Beyond Technology" Smallbiztechnology, June 29th [Online] Available at: http://smallbiztechnology.com/archive/2010/06/true-crm-its-beyond-technology.html/ [ Accessed 18/11/2011] 19. Ramesh, A. et al (1997) "Establishing a management information system" FAO Corporate document Repository. [Online] Available at: http://www.fao.org/docrep/W5830E/w5830e0k.htm [Accessed on 10/11/2011] 20. Steinberg, M. (2006) "Enterprise Applications: A Conceptual Look at ERP, CRM and SCM" Hill Associates Inc. [Online] Available at: http://www.hill.com/resources/whitepapers/enterprise_apps.pdf [Accessed on 18/11/2011] 21. Ward, J. (2006) "Delivering Value from Information Systems and Technology Investments: Learning from success". [Online] Available at: http://www.som.cranfield.ac.uk/som/dinamic-content/research/documents/deliveringvaluereport.pdf [Accessed on 12/11/2011] 22. Wailgum, T. et al (2008) "ERP Definition and Solutions" Cio.com [Online] Available from: http://www.cio.com/article/40323/ERP_Definition_and_Solutions [Accessed on 16/11/2011] * Web-sites 23. B.E.L. Systems Ltd (2011) "ERP/MRPII Solution: Foundation for Business Enterprise Resource Planning" ESP Foundation for e-Business [Online] Available from: http://www.belhk.com/ [Accessed on 17/11/2011] 24. UK Academy for Information Systems (2011) "Definition of Information systems" www.ukais.org [Online] Available from: www.ukais.org [Accessed on 17/11/2011] ...read more.

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