As the importance of information systems for firms has developed over time, so has the role of chief information officer (CIO) within a firm. The position involves determining the contribution of the information systems function in a business and how this relates to the overall strategic direction of the firm. As a result, the CIO may even be present on the executive board. Traditionally, a high proportion of CIOs came from technical background, for example, engineering or computer science. However, as systems have evolved, more and more are entering the role from a managerial or strategic background.
Furthermore, information systems can be classified from various perspectives, for example, from a hierarchical perspective or a functional perspective. With regards to the latter viewpoint, a firm may possess accounting, human resources and sales systems.
A socio-technical approach
There are various methods of approaching the study of information systems, most common being technical and behavioural approaches. Even though mainframes may be incorporated into a system, the necessary organisational and social structure needs to be in place. Within the technical aspect, one could approach the field in an operational, managerial or computer science manner. This approach utilises logic, mathematical models and physical technology. However, management, to name just one example, cannot be solely investigated with a technical approach. As a result, sociologists, psychologists and economists may approach the subject in a behavioural manner. For instance, economists might analyse the impact of technology on transaction costs.
“No single approach effectively captures the reality of information systems. The successes and failures of information are rarely all technical or all behavioural.”
(Laudon, K., Laudon, J. 2006, p.27)
As a result, to effectively capture the reality of information systems, one needs to combine the technical and behavioural aspects, and have a socio-technical approach. The fundamental principle of socio-technical theory was established in the 1950s, in a case study by Eric Trist and Ken Bamforth. Their study concluded that if management tried to maximise their economic gains by solely improving the organisation’s technological system and forgetting the social system, the economic benefits would be less. Consequently, socio-technical academics and practitioners have developed principles that should be followed to achieve effective collaboration between the social and technical aspects of the socio-technical system.
The impact of information systems
As globalisation continues, the impact of information systems on individuals, organisations and society as a whole strengthens.
While information systems have developed, so has the method of registering pupils’ attendance at schools. LiveRegister is a system that has developed biometric fingerprint recognition technology to enable students to register with their finger from various access points across the school. It reduces the registration time and enables more time to be allocated to other more important concerns or teaching. In addition:
“efficient and secure, Live Register™ provides added flexibility as well as improved information for staff, helping them to deal more effectively with any attendance issues.”
(www.biometrictracking.com)
As a result, the advantage for students and staff is less time for administrative work and additional time for more important matters. In addition, it is more convenient for the students, especially if the school has a large campus and enables the school to process data quickly and efficiently, possibly helping combat truancy.
However, there have been disadvantages regarding a similar system, as MPs and parents have had concerns regarding privacy. This was first made public when it was found out that primary schools in the UK had stored children’s thumb prints without parental consent. In addition, further fears could arise if the security on the data is not sufficient and the data finds itself in the wrong hands.
It is not only society that is aware of such problems regarding information systems. Organisations can experience information overload. This is where workers can be overloaded with information as it is so easy to share. As a result, they are unable to differentiate between trivial and essential information. This could waste workers’ time and have an effect on productivity.
Another frequent issue in the workplace is employees using their system to socialise and partake in non-work related activities, such as online messaging and the new phenomenon, Facebook. As a result, productivity may suffer further. To combat this problem, a simple solution would be to follow King's Mill Hospital’s example and ban Facebook.(BBC News 2007)
An additional problem facing firms, as briefly mentioned before, is regarding privacy. Personal data may be accessible without tight security. Furthermore, there may be employees within a firm that are opposed to change and may hold resistance against the managers. To combat this, careful preparation and possible consultation may be required to ensure a smooth conversion.
Nevertheless, firms have experienced the advantages of developing their own information systems with improved decision making and increased competitive advantage as examples. Dell have increased the competitive margin among its rivals as they have developed a mass customisation model which, along with its web based order form, allows customers to receive a customized computer or laptop within a few days. Also, Verizon Corporation has developed an online dashboard to allow managers to access real time information regarding complaints by customers and network performance. As a result, the management team can make decisions regarding repairs as quickly and efficiently as possible.
Wal-Mart: a case study
Wal-Mart is the largest and most profitable retailer in the world, having grown from a single store in Arkansas, USA to become a multi-national firm and the world’s largest private employer.
The reason for this success is partly down to its information system. They have developed a system called Retail Link that enables data to be shared between themselves and their major suppliers, such as Proctor & Gamble. As a result, every time an item is scanned at the cash register, Wal-Mart's system stores this data. Consequently, if low stock exists, the suppliers are made aware of an order and are able to dispatch their products quick enough for the specific store to restock as soon as possible. As a consequence, if one visits a Wal-Mart store, they are unlikely to find an item out of stock.
“Traditionally, because knowledge is power, retailers and suppliers do not share information. But Retail Link has shown the value to both parties of making information available.”
(Scavo 2006)
As a result of Retail Link, Wal-Mart is not the only firm benefiting, but also its suppliers. In connection with Retail Link, Wal-Mart has developed into their system an RFID (Radio frequency identification) scheme.
“Gillette, for example was able to tell from RFID data which stores did not get product out to the selling floor in time for a new product launch date and was able to discount such stores from their sales analysis. A smaller supplier that provides Christmas seasonal merchandise was able to track pallets through Wal-Mart's distribution chain. They saw that a group of pallets went into a DC but were not moving out to stores. They alerted the DC to the problem, which was able to expedite delivery to stores in time for the holiday season, saving the supplier from having to suffer lost sales and mark-downs.”
(Scavo 2006)
As a result of developing Retail Link, Wal-Mart is able to reduce labour costs and simplify its business processes. Also, a problem that affects retailers and suppliers internationally at a rate of 8 percent of items is reducing out-of-stocks.(Collins 2005) However, with the development of RFID, this is no longer the case for Wal-Mart.
Additionally, on a more global scale, Wal-Mart operates a single system with a single set of code worldwide. When they initially set out operations in a new country, they translate store operations to their own code. Wal-Mart's CIO, Linda Dillman has explained, "The cost advantages are huge: Our IT budget is well less than one-half a percent of sales. We can do this because we do not have to invest in multiple systems."(Scavo 2006)
Furthermore, Wal-Mart’s information systems are centralised and all of its operations are managed through the headquarters in Arkansas. For example, a credit card sale which has been transacted in China is processed in Arkansas within half a second. An advantage of this centralised structure is that Wal-Mart's developers are in one place, allowing them to collaborate more easily. Also, the developers are situated at the core of the business, along with the managers, which enables them to keep up to date with the business.
Conclusion
To conclude, information systems are a multi-dimensional structure within a firm with information technology being a sub-sector, along with, for example, the firm’s management and culture. Using such systems, managers are able to improve decision making and controls, analyse problems and produce new products or services. Furthermore, the greatest advantage of an effective information system is that it increases competitor advantage, as explained with the example of Wal-Mart’s Retail Link and RFID. Nevertheless, with such advantages there are disadvantages which management need to consider. These include privacy concerns regarding data access, resistance to adapting to new systems by employees and, of those that do adapt, information overload.
References
Attendance - What is Live Register™?. [Online]. (URL http://www.biometrictracking.com/Attendance-WhatIs.php?section=). (Accessed 4 January 2008)
BBC News. (2007). Facebook ban for hospital staff. [Online]. (URL http://news.bbc.co.uk/1/hi/england/nottinghamshire/7105733.stm) (Accessed 4 January 2008)
Benson, S., Standing, C. (2005). Information Systems a business approach. 2nd ed. Queensland: John Wiley & Sons Australia
Collins, J. (2005, April 18). School Studies RFID's Effect on Wal-Mart. [Online]. (URL http://www.rfidjournal.com/article/articleview/1514/1/9/). (Accessed 4 January 2008)
Laudon, K., Laudon, J. (2006). Managing Information Systems Managing the Digital Firm. 10th ed. New Jersey: Pearson Prentice Hall
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