Impact Of Information Systems On Business: A Case Study Of Woolworths, Essay.

Learning Outcomes

a) Analyse the impact that Information Systems has on organisations and the consequent changes which have occurred to business managerial roles and competitive advantage

b) Analyse management information systems using a range of analytical approaches and their impact on business process engineering

c) Identify the elements that combine to form an information vision and information technology (IT) strategy for an organisation

Objectives:

• Develop innovative approaches and creative thinking;
• Clearly describe the process used to analyse strategic issues;
• Develop awareness of ethical and social considerations for strategic solutions;
• Enhance global perspectives for strategy;
• Awareness of ethical and social considerations for strategic issues;
• Assess organisational strengths and limitations.

Analysis of the impact of information systems

Information system is the formulation that describes an automated system that covers organizational resources such as people, machines as well as arranged methods or process to gather, process, store, transfer and distribute data depicting representation for the user or client.

Woolworths is considered as the biggest supermarket chain in Australian retail industry and it is owned by the Woolworths Limited, which was established in 1924 at Imperial Arcade of Sydney. The company has developed and established itself as business giant in retail industry of Australia (Woolworthsgroup.com.au, 2018). The following section of the report analyses the impact of the information systems on WoolworthsCompany as well as on the business managerial roles and competitive advantage. Then the report explains the MIS in the light of different types of analytical approaches and evaluates the impact of MIS on business process engineering.Finally, the report determine those elements of IS that can be used to create information vision and IT strategy of the company.

Analysis of the impact of information systems:

The purpose of a particular IS in an organization is to provide support to the organization’s functions or operations as well as to the management in decision-making. In view of business organization or company, an information systemis referred to as the information and communication technology that the company and the people uses for supporting the business processes(Bilbao-Osorio, Dutta and Lanvin 2013). It is notable here information systems of a company are absolutely different from its business processes. Thus, a business organization or company views the IS as a work system where humans and machines uses resources to perform activities and processes for creating and providing products or services to the customers. Hence, IS can be considered as a work system that captures, transmits, stores, retrieves, manipulates and display information.

The main objective of information system is to integrate IT solutions with the business processes to fulfil the information requirements of business and other organizations. However, the benefits of a particular IS may differ from one organization to another as they depends on economic sector where the business operates and business processes based on which the IS was built (Bajdor and Grabara 2014).

1) Using the technology of IS result in automation of production process which leads to the requirement of less capital and labour for producing and delivering a particular product or service. Thus, economically, information systems are regarded as free substitutes for labour and capital.

Impact of IS on organization

2) As per the theory of transaction cost theory, the reasons for the company’s growth in size is its acquiring of several services or products inwardly at a lesser costthan approaching external firms at market. However, by reducing the market participation cost the technology of IS allows company to acquire services and goods at a relatively cheaper price from external sources. Thus, information systems helps Woolworths in raising revenue while narrowing its size.

3) The technology of IS assist in decreasing agency costs as well as costs of coordinating various activities and people, so that every manager or supervisor can manage a  huge number of employees.

4) The technology of IS helps to flatten the hierarchies by expanding the information distribution that result in empowerment of lower-level employees and maximize management efficiency.

Thus, information systems can potentially change the structure, strategy, business processes and culture of the company. Hence, by incorporating appropriate and relevant information systems, Woolworths can bring about change through simultaneous changing of tasks, people, technology and structure. In addition, the internet technology can increase the storage, distribution and accessibility of the company’s information as well as assist in the development of the key business processes (Whitmore, Agarwal and Da 2015).

Consequent changes to business managerial roles and competitive advantage: By exploiting the capacities of its information system,Woolworths can capitalize the maximum benefit from it. The effectiveness of the IS can be increased in the following areas.

1) Communication systems: The role of a portion of management is to gather and distribute information and IS provides more efficiency to this process by assisting managers to communicate promptly. Though communication through email is fast and effective, yet managers efficiently uses IS by storing documents in the system and sharing them to employees as per their requirements. This mode of communication results in systematic collaboration of employees as every employee can make changes by providing inputs that are tracked by the system. The manager gathers inputs and sends the target audience the freshly revised document (Kerr and Hiltz 2013).

2) Operation management: By offering more complete, accurate and recent information, the IS allows to efficiently operate the company. By capitalizing the IS, the company can have the cost advantage over its competitors as it offers better customer service. Through studying the sales data in the IS the company can understand the customers buying preference. This facilitates the company to produce or stock its items. In addition, IS helps instreamlining the company’s operations (Rushton, Croucher and Baker 2014).

Consequent changes to business managerial roles and competitive advantage

3) Decision-making: By providing all the required information for the company, the IS facilitates in making better decisions as well as models the results of the decisions. A decision implies selection of a course of action among the available alternatives and carrying out the interrelated tasks with the selected alternatives. In case more than one alternative seems appealing, then IS can be used to examine the results by running different scenarios. To determine which possible alternative provides the most profitable result, the IS computes the key indicating factors such as costs, profits and sales (Velasquez and Hester 2013).

4) Record-keeping: The IS records all activities of the company for determining the cause of problems and suggesting corrective action as well as for regulatory and financial reasons. The IS records and stores the revision histories, documents operational data and communication records. This capability of record keeping is exploited by arranging the data and presenting those data as beneficial historical information.Those information helps in preparing cost estimates and analyses how the key indicators get affected by the actions of management (Felsher 2013).

The above activities and factors can be included to develop the retail information system of the Woolworths, which can have the following impacts (Wixom, Yen and Relich 2013).

• The retail information system connects all the company’s stores.
• The information system allows both the stores and the management to exchange instant information.
• The information system handles customer analysis and different aspect of product management.
• The information system allows store managerto apply flexible pricing.

1) Customers: They are the beneficiaries or recipient of the services and products that the information system provides. Customers can be external and internal. External customer can be people that visits company website or company stores or outlets look into company’s products for shopping purpose. While internal customer can be company’s employee that access his/her salary from payroll system or employee performing stock or inventory checking (Toufaily,  Ricard  and Perrien 2013).

2)Products and services: Based upon the industry it is developed, the IS can generate services and products. Thus, on basis of design IS can create different types of services and products. However, an effective IS must supply services and productsas per customer expectations and needs (Lee, Kao and Yang 2014).

3) Business processes: Business activity involves various business processes such as communicating the customer to understand his/her needs, making product according to requirement, providing post sales service. A business process may not always necessarily be formal and structured. IS can improve or modify a business process and this can have a direct impact on the business performance (Berg and Kilambi 2014).

4) Communication technology: Computer systems or terminals and communication technology are the central elements of IS. Technology improves external communication by means of website and internal communication by means of chat, email. IS enable faster access to valuable and relevant information, which can create competitive advantage for the company (Bloom et al. 2014).

MIS and its impact on business process engineering

Thus, IS model focuses on the role of IS in achieving the efficiency of any work system.

Analysis of management information systems and their impact on business process engineering:

A management information system (MIS) is referred to as an IS that has been developed particularly for decision-making purpose as well as for performing management level activities such as control, coordination, visualization and analysis of information about an organization. At the company level, the ultimate objective of using MIS is to maximise the value and profit of the business. MIS can be used at everyand any level of management. The information officer and technology officer are responsible for the company’s total technical strategy and they are the decision makers in the MIS implementation process. These officers are also responsible for ensuring the availability of the data, information, network services along with data security. Upon implementation of MIS, all the assigned and authorized users will get the appropriate access to the required and relevant data or information.

It is notable that everyone not necessarily needs to be at management level for entering data into MIS as most of the inputs are performed by the non-managerial users though they have rare access to platform of decision support and reports (Laudon and Laudon 2016). Woolworths maintains the following different types of MIS.

1) Decision support systems (DSS): It provides support in problem solving and helps in making decisions through accumulation of information from large range of resources. It is generally used by the higher and middle management of the company (Demirkan and Delen 2013).

2) Executive information system (EIS): It is a reporting tool that provides summarized reports from company’s every level and department such as operations, accounting and human resources (Galliers and Leidner 2014).

3) Office automation system (OAS): It supports the productivity and communication of the company through automation of workflow and elimination of bottlenecks. OAS could be implemented at any and every level of management (Patil and Reddy 2013).

4) Accounting information system: It deals with the company’s accounting functions and activities.

5) Marketing information system: It manages the marketing aspects of company’s business.

6) Human resource management system: It focuses and deals with the company’s personnel aspects.

7) Enterprise resource planning (ERP): It is a software application that facilitates information flow across every business functions within company boundaries and manages contacts with external stakeholders (Hoch and Dulebohn 2013).

Benefits of MIS:Woolworths can attain the following benefits by using the MIS. They are as follows(Laudon and Laudon 2016).

• The generated report of the MIS provides the overall picture and position of the company in the market.
• From the revenue report and employee performance record, the company able to identify its strengths, weaknesses, opportunities and threats.  The company can improve its operations and business processes on the basis of the identification of these aspects.
• From the available customer data and feedback, the company aligns its business processes as per customer requirements. The company can conduct direct marketing and sales promotion activities by effectively managing the customer data.
• MIS can be used as a tool for planning and communication.
• The company can gain and achieve competitive advantage with the help of MIS.
• MIS reports help in decision-making along with reduction of downtime for actionable items.

Elements that combine to form an information vision and IT strategy

Applications of MIS: They are as follows (Laudon and Laudon 2016).

1) MIS helps the company in planning, controlling and managing core business processes throughout multiple locations.

2) MIS helps in managing supply chain through integration of links that is associated with wholesalers, suppliers, retailers, manufacturers and customers.

3) MIS allows the company to manage its relationship with business partners, current and potential customers throughout sales, service and marketing.

4) MIS facilitates company in managing knowledge through acquiring and creation of knowledge from company’s internal processes and outside world. The company includes the accumulated knowledge in its policies and methods and then distribute that knowledge to the stakeholders.

According to Van Der Aalst (2013), business process engineering is the technique through which company perform analysis of its existing business processes and accordingly develop new procedures to improve and revise operational costs, efficiency and productivity. Thus, business process engineering examines how the company operates its business and long-term goals as well as provide recommendation so that business can operate smoothly and attain the overall improvement. Thus, a company uses business process engineering technique to fulfil company objectives as well as to take the company to best position. The MIS has an impact on the business process engineering as it develops and provides a strategic approach in modification of the process. Business process engineering shows the power and potentiality of the MIS. The role of MIS is to create an effective strategy as per the business requirement. Except the MIS, no other system can change the company’s overall business as MIS sets the right system at the right place. Information is the key resource of a company and MIS measures the business process and business performance of a company. Good and appropriate information makes company’s position better in the market. By using the strategy of the customer, the company gathers information outside its boundaries such as acceptability and popularity of the product in the market place or how the product is performing in the market, and then implement the MIS to decrease the time of gathering and recording such information. The company needs to focus on its business process first and then only apply IT tools such as MIS on those business process.

The MIS signals for organising the business operations to build an effective system design. This result in cascading of operations, which makes the system design, complicated. By accompanying a discipline in business operations MIS greatly improves the business administration since everyone needs to follow as well as use the procedures and systems. This method results in bringing professionalism of high standard in the company’s overall business operations.

The purpose and objectives of the company’s business derives the MIS objectives and goals. By availing the relevant information to company, MIS discursively take the company entirely in one direction towards corporate objectives and goals. In maintaining and presenting information MIS deals with database and transaction processing which results in transferring the tediousness of clerical job into the computerized system. This relieves mind of the non-managerial or clerical personnel for performing better work.

Information vision is a written assertion or statement regarding the use and management of information in a company. The information vision provides a link among business objectives, business strategy and IT strategy. The following elements form the information vision of an organization.

1) IT architecture: Itspecifies or directs the way of utilising information resources of the company. Thus, the architectureparticularize about how information resources are available to user groups or user as well as use of IS to meet information vision (Alaeddini and Salekfard 2013).

2) Values: It guides the IS in decision-making and is affected by following factors such as user and manager role, professionalism, service coordination, quality prioritization and productivity.

3) Vision: The vision statement must conform the following requirements.

• It must be future oriented which means it must adapt with future scenario;
• It must reflect the values and uniqueness of the company;
• It must clarify the purpose and direction of the company;
• It establishes the standards of excellence.

4) Information strategy: It provides detailed guidance regarding where should the IT finances or investments be targeted for delivering the greatest value to the company (Kuznetsov and Štefan 2016).

5) Information management plan: This plan determines how the key information will be defined, stated, delivered, managed and protected as well as identifies which people will be responsible for stating, describing, delivering, managing and protecting the key information (Galliers and Leidner 2014).

Steps of developing an information vision: They are as follows.

• Review the present situation;
• Analysis of the strategic management for company’s business;
• Understanding the trends of the general technology;
• Choosing the architecture;
• Communicating vision and architecture to the management and people;
• Migration or shift plan.

IT strategy is referred to as the overall strategic plan that outlines the process of how the technology has to be used with IT to fulfil the business goals of the company. In other words, the strategy is a detailed documentation of the various factors that affects company’s finance in course of its action on the use of technology (Cegielski, Bourri and Hazen 2013). The following elements form the IT strategy of an organization.

1) IT infrastructure: It involves the following (Liu et al. 2013).

• Infrastructure applications, whichconsist of processes that create, modify and repair applications that exclusively define a business process such as database design, customer relationship management, procurement and general ledger.
• Infrastructure operations, which consist of processes that support, modify and maintain databases, workstations, mainframes, servers, middleware, operating systems and networks.

2) Application group: It consists of those applications that provide the most valid platform on which company’s business processes create and manage revenue. As applications define the way,the work has to be done so they provide direct reflection of the business.

3) Operations group: It manages the company’s IT infrastructure and delivers daily service in efficient, cost effective and responsive way as per the company’s budget.

4) Business strategy: It is required to formulate the company’s IT strategy.

5) Architecture: It defines the infrastructure elements or building block of IT and the elements are necessary for strategy execution as well as for linking IT application strategies and IT operation strategies.

6) Integration of business process: It exhibits the level to which the company works as a single unit. This element defines the required transformation for integrating the applications that control the business processes.

7) People: This element determine the sources of all people that are required to execute the IT strategy. The element also defines company’s structure for IT operations and IT applications strategies.

Conclusion:

From the above discussion, it draws conclusion that for getting proper benefit the organization must have a clear understanding of the way information systemsmust be builtthe way they are to be used.In addition,the company must consider itsculture, environment, politics, structure, business processes, primary interest groups affected by the system. The discussion also depicted how IS allowed the business organization to manage and carry out their business operations such as interacting with customer and supplier and makes them to compete in marketplace. The discussion also mentioned that how MIS can improve the company business and helps in attaining optimum efficiency in terms of cost and performance. The discussion also described how MIS helps decision makers by providing information during different decision-making stages in order to achieve their planned objectives. Thus, if the MIS is not properly designed, implemented and maintained then it may provide obsolete, inaccurate or irrelevant information, which can be fatal to the company. Further, the discussion also stated the role information vision in implementation of the company’s strategy. Finally, the discussion also showed that every company must invest in IT strategy to fully utilise the potentialities of technology and capitalising the IS.

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