HOW INFORMATION SYSTEM IS EFFECT ON AN ORGANIZATION

HOW INFORMATION SYSTEM IS EFFECT ON AN ORGANIZATION Author- Younus Miraj Shanto-Mariam University of Creave & Technology UTTARA-DHAKA Information system Information system is an integrated set of components for collecting, storing, and processing data and for delivering 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. For instance, corporations use information systems to reach their potential customers with targeted messages over the Web, to process financial accounts, and to manage their human resources. Governments deploy information systems to provide services cost-effectively to citizens. Digital goods, such as electronic books and software, and online services, such as auctions and social networking, are delivered with information systems. Individuals rely on information systems, generally Internet-based, for conducting much of their personal lives: for socializing, study, shopping, banking, and entertainment. Components of information systems The main components of information systems are computer hardware and software, telecommunications, databases and data warehouses, human resources, and procedures. The hardware, software, and telecommunications constitute information technology (IT), which is now ingrained in the operations and management of organizations. A to Z [1] Computer hardware Today even the smallest firms, as well as many households throughout the world, own or lease computers. These are usually microcomputers, also called personal computers. Individuals may own multiple computers in the form of smartphones and other portable devices. Large organizations typically employ distributed computer systems, from powerful parallel-processing servers located in data centers to widely dispersed personal computers and mobile devices, integrated into the organizational information systems. Together with the peripheral equipment, such as magnetic or solid-state storage disks, input-output devices, and telecommunications gear, these constitute the hardware of information systems. The cost of hardware has steadily and rapidly decreased, while processing speed and storage capacity have increased vastly. However, hardware’s use of electric power and its environmental impact are concerns being addressed by designers. Computer software Computer software falls into two broad classes: system software and application software. The principal system software is the operating system. It manages the hardware, data and program files, and other system resources and provides means for the user to control the computer, generally via a graphical user interface (GUI). Application software is programs designed to handle specific tasks for users. Examples include general-purpose application suites with their spreadsheet and word-processing programs, as well as “vertical” applications that serve a specific industry segment—for instance, an application that schedules, routes, and tracks package deliveries for an overnight carrier. Larger firms use licensed applications, customizing them to meet their specific needs, and develop other applications in-house or on an outsourced basis. Companies may also use applications delivered as software-as-a-service over the Web. Proprietary software, available from and supported by its vendors, is being challenged by open-source software available on the Web for free use and modification under a license that protects its future availability. Telecommunications Telecommunications are used to connect, or network, computer systems and transmit information. Connections are established via wired or wireless media. Wired technologies include cable and fiber. Wireless, technologies, predominantly based on the transmission of microwaves and radio waves, support mobile computing. Pervasive information systems have arisen with the computing devices embedded in many different physical objects. For example, sensors such as radio frequency identification devices can be attached to products moving through the supply chain to enable the tracking of their location and the monitoring of their condition. Wireless sensor networks that are integrated into the Internet can produce massive amounts of data that can be used in seeking higher productivity or in monitoring the environment. Databases and data warehouses Many information systems are primarily delivery vehicles for data stored in databases. A database is a collection of interrelated data (records) organized so that individual records or groups of records can be retrieved to satisfy various criteria. Typical examples of databases include employee records and product catalogs. Databases support the operations and management functions of an enterprise. Data warehouses contain the archival data, collected over time, that can be mined for information in order to develop and market new products, serve the existing customers better, or reach out to potential new customers. Anyone who has ever purchased something with a credit card—in person, by mail order, or over the Web—is included within such data collections. Human resources and procedures Qualified people are a vital component of any information system. Technical personnel include development and operations managers, business analysts, systems analysts and designers, database administrators, computer programmers, computer security specialists, and computer operators. In addition, all workers in an organization must be trained to utilize the capabilities of information systems. Billions of people around the world are learning about information systems as they use the Web. Function of information systems Information systems support operations, knowledge work, and management in organizations. (The overall structure of organizational information systems is shown in the figure.) Functional information systems that support a specific organizational function, such as marketing or production, have been supplanted by cross-functional systems. Such systems can be more effective in the development and delivery of the firm’s products and can be evaluated more closely with respect to the business outcomes. A to Z [2] Figure 1: Process of information, communication and technology. Support of knowledge work A large proportion of work in an information society involves manipulating abstract information and knowledge (understood in this context as an organized and comprehensive structure of facts, relationships, theories, and insights) rather than directly processing, manufacturing, or delivering tangible materials. Such work is called knowledge work. Three general categories of information systems support such knowledge work: professional support systems, collaboration systems, and knowledge management systems. Management support A large category of information systems comprises those designed to support the management of an organization. These systems rely on the data obtained by transaction processing systems, as well as on data and information acquired outside the organization (on the Web, for example) and provided by business partners, suppliers, and customers. MANAGEMENT REPORTING SYSTEMS Information systems support all levels of management, from those in charge of short-term schedules and budgets for small work groups to those concerned with long-term plans and INFORMATION COMMUNICATION TECHNOLOGY budgets for the entire organization. Management reporting systems provide routine, detailed, and voluminous information reports specific to each manager’s areas of responsibility. These systems are typically used by first-level supervisors. Generally, such reports focus on past and present activities, rather than projecting future performance. To prevent information overload, reports may be automatically sent only under exceptional circumstances or at the specific request of a manager. Managing information systems For an organization to use its information services to launch a new initiative, those services have to be part of a well-planned infrastructure of core resources. The specific systems ought to be configured into a coherent architecture to deliver the necessary information services. Many organizations rely on outside firms—that is, specialized IT companies—to deliver some, or even all, of their information services. If located in-house, the management of information systems can be decentralized to a certain degree to correspond to the organization’s overall structure. Organization of information services Information services of an organization are delivered by an outside firm or by an internal unit. Outsourcing of information services helps with such objectives as cost savings, access to superior personnel, and focusing on core competencies. In many organizations, information systems are headed by a chief information officer. The activities of information services are usually supervised by a steering committee consisting of the executives representing various functional units of the organization. In the organizations where information systems play a strategic role, boards of directors need to be involved in their governance. As described below, a vital responsibility of an information services unit is to ensure uninterrupted service and integrity of the systems and information in the face of many security threats. Information systems security and control With the opening of information systems to the global Internet and with their thorough infusion into the operation and management of business and government organizations and into the infrastructure of daily life across the world, security issues have moved to the forefront of concerns about global well-being. A to Z [3] Information systems security Information systems security is responsible for the integrity and safety of system resources and activities. Most organizations in developed countries are dependent on the secure operation of their information systems. In fact, the very fabric of societies often depends on this security. Information systems are at the heart of intensive care units and air traffic control systems. Financial institutions could not survive a total failure of their information systems for longer than a day or two. Electronic funds transfer systems (EFTS) handle immense amounts of money that exist only as electronic signals sent over the networks or as magnetized spots on storage disks. Information systems are vulnerable to a number of threats, which require strict controls such as countermeasures and regular audits to ensure that the system remains secure. Computer crime and abuse Computer crime is illegal acts in which computers are the primary tool costs the world economy billions of dollars annually. Computer abuse does not rise to the level of crime, yet it involves unethical use of a computer. The objectives of the so-called hacking of information systems include vandalism, theft of consumer information, governmental and commercial espionage, sabotage, and cyber war. Some of the more widespread means of computer crime include phishing and planting of malware, such as computer viruses and worms, Trojan horses, and logic bombs. Information systems controls To ensure secure and efficient operation of information systems, an organization institutes a set of procedures and technological measures called controls. Information systems are safeguarded through a combination of general and application controls. General controls apply to information system activities throughout an organization. The most important general controls are the measures that control access to computer systems and the information stored there or transmitted over telecommunications networks. General controls include administrative measures that restrict employees’ access to only those processes directly relevant to their duties. As a result, these controls limit the damage that any individual employee or employee impersonator can do. Fault-tolerant computer systems installed in critical environments, such as in hospital information systems or securities marketplaces, are designed to control and isolate problems so that the system can continue to function. Organizational impacts of information systems Several essential organizational capabilities are enhanced by information systems. These systems provide support for business operations; for individual and group decision making; for new product development; for relationships with customers, suppliers, and partners; for pursuit of competitive advantage; and, in some cases, for the business model itself (e.g., Google). Information systems bring new options to the way companies interact and compete, the way organizations are structured, and the way workplaces are designed. In general, use of Web-based information systems can significantly lower the costs of communication among workers and firms and cost-effectively enhance the coordination of supply chains or webs. This has led many organizations to concentrate on their core competencies and to outsource other parts of their value chain to specialized companies. The capability to communicate information efficiently within a firm has led to the deployment of flatter organizational structures with fewer hierarchical layers. Nevertheless, information systems do not uniformly lead to higher profits. Success depends both on the skill with which information systems are deployed and on their use being combined with other resources of the firm, such as relationships with business partners or superior knowledge of the industry. The use of information systems has enabled new organizational structures. In particular, so- called virtual organizations have emerged that do not rely on physical offices and standard organizational charts. Two notable forms of virtual organizations are the network organization and the cluster organization. Information systems development Information technology departments in larger organizations tend to strongly influence information technology development, use, and application in the organizations, which may be a business or corporation. A series of methodologies and processes can be used to develop and use an information system. Many developers have turned and used a more engineering approach such as the System Development Life Cycle (SDLC) which is a systematic procedure of developing an information system through stages that occur in sequence. An Information system can be developed in house (within the organization) or outsourced. This can be accomplished by outsourcing certain components or the entire system. A specific case is the geographical distribution of the development team. Information System development is done in stages which include: A to Z [4] • Problem recognition and specification • Information gathering • Requirements specification for the new system • System design • System construction • System implementation • Review and maintenance. [4] PORTER’S VALUE CHAIN ANALYSIS The value chain as the internal processes or activities a company performs “to design, produce, market, deliver and support its product.” Apparel industry is a peculiar player of the fashion market, whose action oppose to most of industry representatives. Common industry practice is to focus on design and branding issues to concentrate on the core business. But Apparel acts differently, they are fully-integrated: from dye house and knitting factories to international fashion retail chain. At the same time company cares a lot about marketing that may be rather provoking, though cheap and efficient and logistics processes. By combining these specific factors company has created its image and has taken a strong market position – due to their specific business model that involves harsh control on all levels. PRIMARY ACTIVITIES • Inbound logistics • Operations • Outbound logistics • Marketing and sales • Service Figure 2: Flow chart of primary activities of value chain. SUPPORT ACTIVITIES • Procurement • Technology development • Human resource management SERVICES MARKETING & SELLSOUTBOUND LOGISTICES OPERTIONSINBOUND LOGISTICES • Firm infrastructure Figure 3: Support activities of value chain. VALUE CHAIN ANALYSIS To better understand the activities through which a firm develops a competitive advantage and creates shareholder value, it is useful to separate the business system into a series of value-generating activities referred to as the value chain. In his 1985 book Competitive Advantage, Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. Porter identified primary and support activities as shown in the following diagram: Figure 4: value chain analysis. VALUE CHAIN ANALYSIS OF WAL-MART One of the primary goals of any business is to gain an edge on their competition. One way to do so is to conduct a value chain analysis, which examines what organizations can do to create a competitive advantage, while at the same time provide the greatest value to their consumers. The value chain analysis involves identifying each part of the value chain and seeing where improvements can be made either from a production standpoint or a cost perspective to ensure consumers are getting the most bangs for their buck. When consumers TECHNOLOGY DEVELOPMENT PROCUREMENT FIRM INFRASTRUCTURE HUMAN RESOURCES MANAGEMENT are getting the most out of a product for the cheapest cost, businesses will benefit in the long run. Now we are discussing about value chain analysis of Wal-Mart. Figure 5: value chain analysis of Wal-Mart. FIRM INFRASTRUCTURE Wal-Mart has 2485 stores, 682 Supercentres, 457 Sam’s Clubs, 5 Wal-Mart Neighbourhood Markets and 1007 units of Wal-Mart International. It serves over 100 million customers weekly worldwide. There are 1035000 associates, and the company is America’s largest private employer. [5] HUMAN RESOURCES MANAGEMENT Almost 60% of all managers in Wal-Mart stores started as hourly associates. The employees are encouraged to communicate openly, offer new ideas, take risks, strive for excellence and have fun. Employees are getting competitive wages and comprehensive benefits. In recruiting new associates the company begins a comprehensive recruitment program in the community where the store is to identify candidates. When new employees start at Wal-Mart they are presented to the two basic rules of Wal-Mart. These are: Rule 1: The customer is always right Rule 2: If the customer happens to be wrong, refer rule 1. TECHNOLOGY DEVELOPMENT Wal-Mart set up its own satellite communication system in 1983. Wal-Mart uses Bar-coding & RFID technologies, different processes like efficient picking; receiving & proper inventory control of the products along with easy packing and counting of the inventories was ensured. Electronic data interchange is a computer-to-computer exchange of business documents PROCUREMENT Wal-Mart’s process of procurement involves and reducing its purchasing costs as far as possible so that it can offer best price to its customers. The company procures goods directly from the manufacturers, bypassing all intermediaries. [...]... customer group The marketing mix is used to establish an effective strategy; any competitive advantage is clearly communicated by the use of the promotional mix It involves activities like advertising, promotions, sales force organization, segmentations, and selecting distribution channels, pricing, and managing customer relationships In this company has own buyers and other buyer has come for few... FLOW-TIME ANALYSIS Wal-Mart’s merchandise replenishment cycle is no more than 48 hrs Point-of-sale system captures data in real-time Data is transmitted to warehouses for Inv Mgmt Orders are generated from previous-day sales Merchandise is loaded onto trucks using cross-docking Retail Link transmits data to supplier Customer made a purchase Merchandise is manufactured based on historical and real-time... amounts on store design and refurbishment For example, in USA American Apparel tends to choose locations for their stores, with rent is about $200 per square foot – company uses low amount of investments in their distribution premises At the same time, company operates and works a lot on an e-shop that is also a very important distribution channel nowadays, and share of e-sales in company’s financial... Human resource management American Apparel cares a lot about their employees and offers them a range of extremely convenient options included in employees’ basic salary This kind of approach shows that company wants to establish a relationship with each and every worker, and the result would be workers extended commitment and higher quality of work done Basically, people is the foundation for company’s... to recruitment, training, development, promotion, incentives, and payment of people working for an organization Firm Infrastructure Firm Infrastructure involves the structures and routines of the organization and its management, planning, accounting, finance, and quality control mechanisms Secondary Activities Porter’s Value Chain - Secondary Activities: A Summary - Purchasing of Resources Procurement... has a focus on location of production facilities of their goods – being a strong USA brand, each item being tagged with that, and there are branding implications from that point One specific thing that depicts company’s approach to infrastructure was installation of a solar battery on the roof of their factory Acting this way company attracts attention to its premises and location of the premises – you... company’s strategy – they could have production in China with much lower wages, however being a throughout USA brand is what American Apparel has always been doing The tag “Made in USA” is really rare, especially in the fashion industry, so this issue is the core value-adding factor Company focuses greatly on the control of its operations and the quality – that is the consequence of vertical integration,... representatives Common industry practice is to focus on design and branding issues – to concentrate on the core business, but it acts simply as like as other company of garments, they are fully-integrated: from dye house and knitting factories to international fashion retail chain Figure 10: Flow time analysis of Massco Knit Composit Ltd Inbound Logistics It involves supplier relationships and refers to... Operations Infrastructure - Leadership Structure/Management - Planning/processes - Finance - Information Systems Human Resource Management - Recruitment - Selection - Training - Reward & Motivation Figure 12: Secondary activities of Massco group VALUE CHAIN OF AMERICAN APPAREL LTD Vertical integration of American Apparel core business has resulted into simplification of inbound processes – company simply... shipment and so on Primary Activities Porter’s Value Chain - Primary Activities: A Summary - Receipt of inputs (materials) - Storage Inbound Logistics - Stock Control - Internal Distribution of Inputs - Transformation of inputs into final product Operations - Use of Labor - Manufacturing Technologies Outbound Logistics - Distribution of finished goods - Stock Control & Inventory - Distribution of final . HOW INFORMATION SYSTEM IS EFFECT ON AN ORGANIZATION Author- Younus Miraj Shanto-Mariam University of Creave & Technology UTTARA-DHAKA Information system Information system is an integrated. work, and management in organizations. (The overall structure of organizational information systems is shown in the figure.) Functional information systems that support a specific organizational. control and isolate problems so that the system can continue to function. Organizational impacts of information systems Several essential organizational capabilities are enhanced by information