Given a description of business pressures in the digital firm requiring information systems solutions, describe the evolution, the current state, and the trends in information technology and solutions that address those pressures from a functional perspective.
About fifteen years ago, there was a distinct line that separated organizations from its partners, suppliers, and customers (Laudon & Laudon, 2006). There were also distinct lines that separated an organization’s various divisions such as finance, production, manufacturing, and the human resources department. As such, organizations weren’t expected to make any information available to parties outside of the organization. However, in today’s business world, organizations must make such information available not only within the various divisions of the organization but also to other parties outside of the organization in order to stay competitive.
The Internet has played a big role in this initiative of information sharing as it’s the technology that enables information to be distributed and people to be brought together. As an example, the Internet is capable of connecting the employees, suppliers, and customers of an organization. In addition, the Internet provides the benefits of being cost-efficient and easy to use.
The Internet also led to the globalization of organizations where their market has expanded to include the whole world and not just their locality. For example, because of the Internet, a user in Japan can purchase a cell phone from a company in the US and have that cell phone delivered to his or her home. In the same manner, globalization has made it possible for organizations to operate from different parts of the world in order to maximize their profits and minimize their costs. For example, an organization may have its headquarters in the US, its development team in India, and several sales offices across Europe and Asia. Having the development team located in India will result in lower human resource costs and having sales offices where the key customers are located will enable the organization to respond to the customers’ needs more quickly and more easily.
With information being the most globalized of services and goods (Watson, n.d.), organizations have become very dependent on information systems, which support the decision-making and operations of an organization’s multi-country strategy. These systems are highly centralized and cost-efficient. They enable employees to access the right information and also enable coordination among the different areas of the organization.
The main types of information systems include the following: executive support systems; management information systems; decision support systems; knowledge management systems; transaction processing systems; and office automation systems (“Types of Information System,” n.d.)
An emerging trend among organizations is the use of cloud computing systems. Cloud computing is a technology that allows users to remotely store software and files instead of storing them in a hard drive or office server (Arno, 2011). Examples of cloud computing services include file backup, file synchronization, file storage, Customer Relationship Management, and software as a service (Saas). It is also possible for an organization to have its own private cloud where specific services are available and where access can be limited to specific users. Cloud computing services are cost effective, flexible, and mobile (Cloud News Desk, 2008). They are also highly automated where system administration is no longer necessary, allowing the organization to focus more of its resources on innovation.
List and describe the four information systems serving each of the major functional areas of a business.
The four information systems that serve the major functional areas of a business include the following: sales and marketing information systems; manufacturing and production information systems; finance and accounting information systems; and human resources information systems (“List and Describe the Four Information Systems,” 2012).
Sales and marketing information systems enable organizations to identify potential customers for their goods and services, as well as the customers’ preferences. These systems also enable organizations to sell their goods and services and provide support for their customers and salespeople. Manufacturing and production information systems provide organizations with the necessary information for planning, developing, and producing goods, as well as for scheduling services and controlling the flow of goods and services.
Financial and accounting information systems, on the other hand, help organizations with the management of their cash flows and financial assets, while human resource information systems help organizations with the management of employee records, employee compensation and benefits, employee training, job performance, and employee skills.
List and describe six reasons why information systems are so important in business today.
One of the reasons that information systems are important is that they enable organizations to achieve operational excellence. Information systems make operations more efficient and productive, which in turn results in increased profits (“Why are Information Systems,” n.d.). They also enable organizations to develop new services, products, and business models where the business model serves as a guideline on how the organization produces, sells, and delivers their goods and services in order to gain profits. In addition, information systems promote customer/supplier intimacy. The use of information systems lead to better customer service, which in turn leads to customer satisfaction and repeat business. This then leads to increased profits. Information systems also lead to better decision making, as managers are provided with real-time data that they need for making the right decision.
Finally, information systems enable organizations to survive on a daily basis. Technology is a necessity in their business operations and information systems enable the implementation of such technology. They also enable the organization to quickly and easily respond to their customers’ needs.
What are transaction costs? List and describe at least four ways that the Internet can reduce transaction costs.
Transaction costs are the costs incurred with the selling or purchase of securities, which include the spreads and commissions of brokers (“Transaction Costs,” 2012). In other words, this is the difference between the price at which the dealer obtained a product and the price at which the product is sold.
In a traditional business, transaction costs are higher when there are fewer transactions made (Lorette, 2012). On the other hand, a large number of transactions can overwhelm distributors and staff. However, with businesses that are conducted over the Internet, the transaction costs are the same regardless of the number of transactions made. In addition, transactions that are made online have a high level of accuracy such that it saves time and effort that would otherwise be spent on solving invoice or order problems.
As well, conducting a business online eliminates the costs incurred for maintaining a brick and mortar store as well as the salaries and benefits of salespersons. Rather than spend for these, the revenue gained from transactions can be spent on maintaining the online store, which is far cheaper than maintaining a brick and mortar store. Finally, conducting a business over the Internet eliminates the need for an inventory, which would entail the purchase, receipt, unpacking, displaying, and storage of extra items. These items would also need to be sold as quickly as possible. With an online business, other options may be considered such as renting a warehouse space or drop shipping.
Given a business scenario, explain how information systems can be used for strategic competitive advantages and the relationship among information systems, organizations, and business processes.
A digital firm must be able to adapt to new technologies in order to maximize their profits and minimize their costs (Laudon& Laudon, 2006). For example, if the Internet enables a company to create and distribute information in an easier, more cost-efficient and timely manner then they should adapt to that technology. They should also learn to adopt new techniques. If subscribing to a cloud computing service such as SaaS (Software as a Service) will be more cost efficient than having one’s own servers then cloud computing should be considered.
They should update their business model to adapt to the current trends and technologies. For example, they can change their business model to have both an online and physical (brick and mortar) presence to cater both to customers who want to shop from the comforts of their home as well as those who prefer the traditional way of shopping. This increases the scope of the company’s market, which in turn increases their profits. Companies can also choose to adapt a business model that profits from Internet advertisements. As well, they can consider using social networking media to promote their products and services as well as to build and foster customer relationships.
Information systems can also be implemented to gather information about the company’s goods and services as well as about their target market so that they can use this information to increase customer satisfaction and gain a competitive advantage. Moreover, information systems can automate the supply chain so that the various logistics involved may be processed electronically, which would lead to less errors and a faster and easier completion of tasks. In addition, the real-time data that information systems provide help managers make better decisions, which then leads to sound management.
The text describes Michael Porter’s view of the Internet as somewhat negative. What negative influences does Porter see? Describe several positive influences the Internet has on business. Do these outweigh the negative influences?
Porter believes that the Internet caused the destruction of some industries and continues to threaten more (“Week 4 Quiz- IS535,” n.d.). It would also intensify rivalry as it would allow more competitors to enter the market. This in turn forces price competition, raises the customers’ bargaining power, and lowers profits. These are all somewhat negative.
On the other hand, though, the Internet also offers a lot of benefits for businesses, which outweigh the negative influences. It enables the creation of new markets and new businesses. The Internet would also reduce telecommunication costs and allow for the building of brands and loyal customer bases. In addition, it leads to the creation of new opportunities and the lowered barrier to entry.
Whether the Internet has a positive or negative impact would ultimately depend on a particular company or industry. For example, the postal service might see the Internet as something negative due to the prevalence of email communication. However, multinational companies would see the Internet as positive as it would facilitate communication within their company.
How have mobile devices and social media changed the work environment?
Although mobile devices and social media have undoubtedly added as a distraction for employees in the workplace – leading companies to impose restrictions on their Internet usage – the emergence of mobile devices and social media does have its benefits, too. For example, it promotes effective communication among employees, customers and clients (Comline & Arrant, 2010). Social media can also be used to create brand eminence where the business’ human side can be depicted and which can be used to develop customer loyalty and manage the business’ reputation. In addition, it allows employees to coordinate more easily and it provides them with a venue where they can create and share their ideas (Comline & Farrant, 2010).
Given the demanding and changing role of corporate databases, evaluate various tools, technology and trends that can make databases more accessible and useful.
Some of these technologies include data warehouse appliances and databases in the cloud (Gill, 2011). On the other hand, some of the current trends in database management are data governance and predictive and in-database analytics. (Gill, 2011).
Data warehouse appliances are a great solution for organizations that maintain a large database, as data warehouses are highly scalable.
Databases in the clouds are a great solution if there’s a need for elasticity. For example, database activity would be higher during the daytime than during the night such that the database system might be overloaded during the day but under-used at night. With cloud computing services, which are subscription-based, companies need to pay for only what they use so that no database resource is wasted.
Data governance, on the other hand, is a mechanism that allows for the integrity and quality of data while predictive and in-database analytics is a technology that allows for the identification of patterns in transactional and historical data, which in turn enables the identification of opportunities and risks for the business.