The modern world is a global village where information exchange and information processing are of paramount importance. Companies are linked to their customers and suppliers by numerous information networks, the ever-expanding internet being a major player in the industry. Thus, information processing is a way to view organizations and their designs. Both information systems and individuals possess a capacity to process information, but this capacity, however, is not unlimited and the scarcity of information-handling ability is an essential feature for the organization’s demand for information processing and its capacity for processing information (Burton et al, 2001).
As modern business organizations become more and more dependent on their information systems to deal with the complexity and changeability of the context in which they operate and consequently their internal organization structures; up-to-date, complete and accurate information has become a necessity to survive in an increasingly competitive world.
An organization processes information in order to coordinate and control its activities. By processing information, it observes what is happening, analyzes and makes choices about what to do, and communicates the above to its members. The rationale underlying concept which makes organization necessary and information processing is the mechanism by which organizations can obtain coordination of their activities.
Drawing from information processing theory, Information Technology IT and centralization of organizational decision authority may also be complementary, depending on a firm’s corporate learning type. Therefore, IT enhances horizontal information processing, which is the primary mechanism to coordinate a firm’s subtasks in decentralized organization designs, but IT may also enhance vertical information processing, which is the primary coordination mechanism in centralized organization designs (Mahr, 2010).
Background: case study of Fastrek Plc.
Fastrek Plc., headquartered in London, is a delivery service company with an increasing clientele database. This delivery firm separates itself from the competition by providing a differentiated customer experience and its commitment to its tag line “service is key”.
At Fastrek Plc., the CEO coordinates activities by reading the mail in the morning when orders arrive. He processes the orders and issues directions for the day. He is the central figure coordinating activities in an environment in which orders and specifications have to be in writing. He balances the risk and centralizes the information and decision making in order for his firm to be effective and efficient. However, the introduction of the internet changed how this firm operated. Orders came in at any given time, therefore, information demand increased. The demand for quick responses grew because customers wanted offers immediately by email or call. Because modern technology allows customers to send requests to more than one firm, competition enhanced. The delivery firm’s old centralized decision procedure no longer worked; decision had to be developed. Changing the information flow changed the organization structure.
Tools available for information processing
In a commercial context, the business case for investment in the (re)development of the computer systems will usually depend upon the potential for increased efficiency in the organization, and often the improved performance, increased revenues or reduced costs will be found in department other than the one responsible for the information system developments.
Information processing requires tools to solve current issues in an organization. Therefore, organizations expect efficient information systems to address performance, reliability, standardized access capabilities that return information in well-defined formats, adaptability, validation and documentation (Heynderickx et al, 2010).
As a result the use of such tools proves reliable. These include; text processors that allows the user to write pretty well formatted documents, client-server technology that enables the user to perform tasks in a co-operative way with the server, databases, artificial intelligence that plays a major part in improving the interface between humans and computers image and speech understanding, expert systems, data warehousing and the use of internet and email that allows paperless exchange of critical business information between parties in a business (Sonfroniou, 2008).
Technology is the information, equipment, techniques, and processes required to transform inputs into outputs. The skill level and capacity of employees help define the techniques and processes and must be compatible with the technology applied. From an information processing point of view, the categories may be transaction processing that involves storage, modification and retrieval of an organizations transactions, information presentation and reporting thus delivering powerful information for making the most informed decisions and measuring the organizations performance, strategic advantage that also offers the business organization planning tools and other resources to help develop and implement significant decisions and problem solving skills that is a fundamental part for any business success (Heynderickx et al, 2010).
Therefore, ordered mass, unit and process form a key area. Mass production may require the lowest information processing capacity, if proper formalization and coordination mechanisms are used. Less formalization can be used in unit production, and more complex information processing is needed to obtain coordination (Burto, 2000). If the organization is small, similar to Fastrek plc., coordination can be obtained by centralization. However, due to demand and expansion of the firm, decentralizing some decision-making process in the organization becomes important. Real-time processing, a situation whereby a client sends in transactions and awaits a response from a distant computer before continuing, may also be achieved if the tools required to solve a specific issue in an organization are applicable. Response time on the data communications facility is crucial when a customer is utilizing a voice call to obtain a quick response. Fastrek plc had to change how the firm worked in order to meet the real-time response from its clients.
Based on the amount of information, that may be ordered unit, mass and process. The number of vertical levels may be related to the managers per total employee’s ratio. However, span of control and skill level of employees are linked to complexity of information. Argumentatively, the more complex the information, the higher the demand for information processing capacity, and thus the higher the number of vertical levels. If employees have a high skill level, he or she can process complex information. Therefore a high skill level will, ceteris paribus, decrease the vertical information systems and the number of vertical levels.
Conclusively, modern information technology can decrease the vertical information systems, e-mail, and so on increase information capacity and eliminate the need for a large middle management. That is, modern information systems can process information previously handled by middle management.
Information processing methods within Fastrek Plc
Centralization is where majority of decision are made by senior management or by a centralized function. For example, in Fastrek plc old centralized decision method, the CEO received orders in the morning, processed them and later gave instructions for the day. As a result, few decisions are delegated to lower level managers who simple carry out the order of senior management or centralized function (Best et al, 2005).
However, the demand for quick responses at Fastrek delivery firm grew because customers wanted offers immediately by email. Other factors such as under-motivation for lower level managers, slower and inefficient decision making procedures, and lack of clear understanding on departmental decisions demanded for a distributed or decentralized method that incorporated real-time response.
In a decentralized organization, authority is delegated down the structure to divisional or lower level managers who make their own decisions. With this method in place, information processing at Fastrek plc ensures the limitations discussed above are avoided. As the firm expands its activities and operations, plans for restricting their information processing methods have to be looked into. A mixture of both centralized and decentralized approach for different decisions might be a solution in applying an efficient information processing procedure. For example, functions such as accounting and purchasing may be centralized to save costs, whilst tasks such as recruitment may be centralized as units away from head office may have staffing needs specific only to them.
Other methods that can also be applied are; batch method which involves executing or processing a large number of accumulated orders or transactions at one time. However, batch processing does not allow real-time processing since transactions are collected and updated as a batch when it’s convenient or economical to process them. The stages followed are collecting and storage, and processing the data at a convenient time. For example, Fastrek plc can apply this method when processing orders that would not require an immediate feedback.
Transaction processing method is a system that supports a business in the delivery of its business transactions. Therefore, transaction processing involves the continuous updating of the customer and inventory files as orders are entered. A business transaction is an event that generates or modifies data, for example, a phone call to the bank for an account balance or perhaps collecting of accounting information. Each type of business transaction may have multiple states before it is completed where at each stage it may generate financial information that may be useful to the responsible staff and intended users. Information systems may apply both batch and transaction processing (Reich, 2011).
Evaluating information systems within Fastrek Plc
In the past, the majority of data processing has been carried out by companies using batch style computer systems. With the cost of hardware rapidly reducing and with the hardware power and facilities increasing inversely, on-line systems are now becoming easier to justify and develop (Sonfroniou, 2008). An information system is a discipline that involves the study of sharing and processing of information and ideas through computers and telecommunication technologies.
Measurement and evaluation of information technology is irrelevant to winning in the market since all the technology is available to the competition (Grembergen, 2002). Moreover, there is growing evidence that an information system fails to deliver its expected benefits. This situation has motivated the development of different evaluation models for information systems, mainly focused on investment justification. In fact, most companies turn to new technologies, in particular, information systems that will provide them with a competitive edge.
The selection of a set of measures and metrics for different organizations depends on the circumstances and the context faced in their business environment. This approach is related to the development of contingency models for evaluation of information systems. According to Willcocks et al (1992), the use of contingency models would assist in understanding the role and impacts of information technology or information systems. Information technology/ systems can affect business operations in diverse ways and the ultimate impact on business performance depends on various intertwined factors that can render IT/IS evaluation a difficult task.
Consistent evaluation of IT should be based on an overall management framework, a set of key measures, performance targets associated with selected measures and underlying information and reporting system. Given the range of frameworks, performance measures, reporting mechanisms available to include in an IT evaluation program, there is a clear need for a systematic approach to the design process. To derive an appropriate set of attributes for an It evaluation program, four activities must be carried out, these are; understanding stakeholders’ needs and expectations, determine IT application and supply, derive performance measures and targets, and test adequacy.
When the design and verification of an evaluation program has been carried out, which means that real activities are measured using a set of selected performance measures, associated targets, evaluation techniques, and tools; the next step is to weave the evaluation program into the organization and existing management practices. Having discussed the what of evaluation program design, it is the how of putting the program into practice that is now of interest. The implementation of information systems evaluation program focuses on the development of three conditions essential for effective implementation; operational alignment, stakeholder ownership and stakeholder mastery.
Although the design and implementation of an IT evaluation program might not be easy, the operation of it requires the sustained commitment of an organization and its stakeholders to exploit such a program to its full potential. By taking advantage of the positive effects of evaluation on the behavior of people, though, the combined energy of all stakeholders of the evaluation program can be channeled in the same positive direction. The ability to measure and evaluate performance on a continuing basis assumes the existence of fundamental and reliable information systems, procedures and databases that link disparate pieces of existing operational measures so they can be used for analysis purposes.
To demonstrate the purpose for which the program is originally envisioned, evaluation results must be seen to be used to fuel sustainable improvement actions. Developed improvement actions justify the need for the evaluation program itself and demonstrate the seriousness of management that drives the program. Evaluation results and improvement actions therefore must be communicated and, above all, managed.
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