Is it any wonder that in today’s world knowledge of computers/technologies is becoming so invaluable? It is evidently clear that almost all businesses are either having a dot com address, meaning are having a website of their own, or they are enjoying/relying on some sort of e-services provided by some companies – Example, UPS third-party billing – which invested in information system to carry out some of their organizational activities. To achieve some level of coordination and efficiency, using technology is inevitable in one way or another in this age in time, regardless of what business an organization is involved in.
This reality has made information system an essential variable of any modern-day organization. If you look at the math more and more companies have recorded success because of integrating their organization with information systems. Against this background, therefore, we are going to look at why information system has so much to offer in today’s business and what actually an organization will achieve by integrating information system in their business. Some examples will be given to show how some companies or businesses made a lot of progress by incorporating technology in their respective organizations.
Before we dive into the discussion, let’s make an important clarification between Information system and information technology.
What is Information Systems?
Information systems is a term that can mean different things to different people – depending on the purpose in which an individual view it. But one thing is for sure, no matter the interpretation a person chooses, information system scope is basically a combination of people, technology and organization. What this means is that, there can’t be information systems without technology and to be able to use and benefit from the technology people need to be there, and all this happens in an organized set up – an organization.
Technically though, it is defined as “combinations of hardware, software, and telecommunications networks that people build and use to collect, create, and distribute useful data, typically in organizational settings.” Culled from the book, Information Systems Today – Managing in the Digital World, fourth edition. Prentice-Hall, 2010. ↵
And according to Encyclopedia Britannica, information systems is an integrated set of components for collecting, storing, and processing data and for providing information, knowledge, and digital products. Business firms and other organizations rely on information systems to carry out and manage their operations, interact with their customers and suppliers, and compete in the marketplace.
What is Information Technology?
Information technology, on the other hand, is highly technical – as it is the technology itself. The hardware and the software are what makeup Information Technology. The computers, barcode scanners, the telecommunication hardware and so on, all are part of or some of the examples of hardware part of IT while the windows operating system, different software installed on our devices such as calculators, GPS application on our devices are some examples of the software part that make up the other part of Information Technology.
Technically, Information technology can simply be defined as the hardware and software a business uses to achieve its objectives.
According to SearchDataCenter, Information Technology includes several layers of physical equipment (hardware), virtualization and management or automation tools, operating systems and applications (software) used to perform essential functions. User devices, peripherals and software, such as laptops, smartphones or even recording equipment, can be included in the IT domain. IT can also refer to the architectures, methodologies and regulations governing the use and storage of data.
Therefore, looking at the above, we can conclude that, information technology is a subset of information systems because it only covers one aspect out of the three elements of information systems – people, technology and organization.
With this out of the way, let’s look at the reasons as to why organizations should integrate information systems into their business for optimal performance and result.
As you may know, every organization has some goals and objectives that they want to achieve. The goals could be specific to the organization at hand or generic. Sure enough, every single business organization wants to achieve these six core objectives; operational excellence; new products, services and new business model; customer and supplier intimacy; competitive advantage; survival. Let’s see them one after another in details, as well as in relation to information systems, shall we?
To achieve operational excellence
It is not news that every organization is always trying to achieve high performance and operational excellence. It is highly important for every business organization or non-business organization maintaining and improving efficiency. They work tirelessly to make just that. It is only through information systems that an organization can achieve high level of efficiency because of the simplicity and flexibility that different systems present today. There are many industries that today can attest to that. Take for instance UPS – a leading packaging service company in the world – has one of the most efficient package delivery services in the world, why, because it has heavily invested in information systems. Only with the help of Information system that a package can be traced right from the point of collection from the sender and the tracking continues in transit at every point until it’s been delivered to the receiver. This is done while making sure of the safety and speed of the parcel.
UPS uses an enterprise application of supply chain management system to streamline all these activities. They are only able to achieve this high level of efficiency that they are known for today because of the power of information systems. This high level of efficiency means more significant profit – which business wouldn’t want to miss!
Creation of new products, services, and business models
Information systems enable business owners to create new products and services or even entirely new business model. This can happen because now companies that use technology effectively can gather information from customers and that will enable them to improve what they are offering or better come up with new ones. Take, for instance, the music industry’s business model used to be a distribution based on CD’s, cassettes and vinyl records to different outlets. Now Apple Inc came up with a new innovative business model by offering online music platform in their devices, Apple iPod. People can now subscribe and listen to music online at a cheaper price and in the most convenient possible manner – all on their mobile phone or any digital mobile device. All thanks to information systems and technologies.
Customer and supplier intimacy
If businesses integrate information systems and technologies in their businesses, they will be able to create customer and supplier intimacy. How? You may ask. Is only through information technology that a company can get to know their customer really well because they’re so many systems out there that support these kinds of business need. Once business understands its customer well, then they will serve them really well, just the way they wanted be served. And a happy customer is repeat customer which means more sales and higher profit.
On the suppliers’ side, having a system that will enable an organization or business to connect with it supplier will yield better input and minimal waste. Example of this is Walmart – the world largest retailer – GRS (Global Replenishment System). This system helps Walmart to connect with suppliers, whenever a product is sold it will notify to supplier to supply the product to shelve. This way, Walmart saves cost of storage because it does not have to provide the storage facility and of course have a close connection with the suppliers who in turn will supply the right inputs in the right amount and at the right time. Because of that, Walmart is able to provide the right quality products at a cheaper price. Its customers are happy, and the relationship with their supplier is stronger. A win-win situation for everyone!
Improved decision making
Decision making, as we know, is at the centre of every organization, both for-profit and not-for-profit organizations. It is a daily recurrent problem. All organizations don’t want to be taking best guesses or luck to make decision, and this is where information systems come into play. Google analytics exemplifies this, let’s say you are an online content provider, if you connect google analytics to your site, it will be providing you with an analyzed data that will show you the most viewed content, the contents which people stay the most on, the most frequent keyword search and so many vital data that will help you focus your contents to the need of the people that you provide for. You don’t need to assume what people like; you have real-time data at your fingertips. Definitely, I believe you will use it appropriately in order to increase your traffic. This is just one example of how information systems and technologies are helping managers, businesses, entrepreneurs to make informed decision.
One of the core objectives of every business is to gain advantage over its competitor. At this age in time only through integrating information technology can a business achieve that. So many companies are top in their industry because they embrace the use of technology and its applications in their systems. Usage of technology can help business achieve one or more of the above-mentioned objectives – operational excellence, improved decision, customer and supplier intimacy and so on. By achieving one or more of these objectives, it shows that a business has earned competitive advantage over its competitor. An example is Toyota TPS (Toyota Production System) of “just in time system” and complete elimination of waste policy/philosophy. With the help of a substantial investment in information systems, Toyota is able to achieve its TPS philosophy of high efficiency and quality. Now it can offer excellent quality vehicles at a reasonable price to its customers.
As more and more companies or businesses are turning to information systems and technologies to solve their organizational problems and to come up with new and innovative ideas that propel them to the top, other companies have no choice but to join the bandwagon in order to survive. If a company has no intention of integrating information systems in its operation in this information-driven world, then I’m afraid, they are about to go out of business sooner or later. One example of this is the introduction of ATM machine in the banking industry today almost there’s no bank that doesn’t have the machine. Now customers rely so much on ATM machine to withdraw their money or even make payment – they don’t need to go to the bank for these transactions.
Sometimes, it’s government regulations that can drag some businesses to using information technology. Government may decide to ask all businesses to have to put enough information about their products or services online in order to protect customers’ right.
To conclude, information systems in the business world today is like two sides of the same coin. They exist together. It is almost certain that a business cannot succeed without the aid of technology one way or another nowadays. Therefore, our entrepreneurs and small business owners should pay attention to the changes around them and make sure they utilized information systems in their business operation no matter how small.
Let me know in the comment section how information systems have helped your business or the effort you’re making to integrate technology in your company.