Roles Of Information Systems

Published Date: 02 Nov 2017

Firms can make use of information systems to create (or assist in creating) and identify and new products and services or/and to develop new/niche markets or/and to radically change business processes via automation (i.e., using digital modeling and simulation of product design to reduce the time and cost to the market (Chui & Fleming 2011). For example in Sheng Siong Group Limited, the modeling and simulation of the general merchandise such as toiletries and essential household products can be implemented as a new Information System innovation.

New initiatives of establishing pure online businesses/operation can also be worked on. At the same time, the Internet and telecommunications networks provide better opportunities and capabilities for innovation. "Combinational innovation" and Open innovation are two good examples of this. There are a large number of component parts on the networks that are very expensive or extremely different before the establishment of the networks, and organizations could combine or recombine components/parts on the networks to create new innovations (Manyika 2009). Meanwhile everyone is connected via personal computers, laptops and other mobile devices through cabled Internet or wireless networks or mobile networks, there are plenty of opportunities to co-create with customers, external partners and internal people.

Firms can also adopt other competitive strategies facilitated by information systems to shape their competitive position on top of the mentioned strategy. Some examples of these strategies include:

Raising barriers to entry through improving operations or/and optimizing/flattening organizational structure by increasing the amount or the complexity of the technology required (i.e., Google’s search engine and P & G’s digitization strategy/efforts-P & G is working on digitizing almost every aspect of its operation to make it the world’s most technologically enabled firm).

Locking in customers or suppliers by enhancing relations and building valuable new relationships via customer/partner relationship management systems/ applications (i.e., providing a bank’s customers with multiple touch points via telephones, Internet, fax machines, videos, mobile devices, ATMs, branches, the bank’s agents).

Building switching costs via extranets and proprietary software applications (i.e., Amazon’s user-friendly and useful B2C website and Alibaba’s B2B platform) so that a firm’s customers or suppliers are reluctant to pay the costs in time, money, effort, and bear the inconvenience of switching to a company’s competitors.

Innovation Strategy

Open innovation strategy

Open innovation emphasizes an organization’s efforts of engaging and collaborating withexternal sources and its partners in its innovation process (Lichtenthaler, Hoegl&Muethel2011). The telecommunications networks and Internet technologies have made the openinnovation more appealing to organizations. Open innovation strategy has been adopted bymany most innovative companies in the world. For example, 3M has been very successfulin developing smart products via its open innovation approach-10,000 R &D people in 73locations from 63 full-scale operating businesses across dozens of industries work togetheras well as working with large number of external partners via 300 joint programs andcustomers via 30 customer technology centers around the world (Jaruzelski, Holman &Baker 2011).

One of the biggest barriers to promote open innovation in the organization is to do withemployees’ attitudes of not-invented here and not-sold-here, some strategies to deal withsuch attitudinal tendencies include (Lichtenthaler, Hoegl&Muethel 2011):

• Clearly communicating open innovation strategy across the organization, especially thebenefits of opening up the given innovation process to outside expertise.

• Demonstrated top management support: senior executives have to be champions androle models of open innovation strategy and simply providing lip services is not going towork.

• Establishing incentive/reward systems: need to reduce the traditional emphasis oninternal-only innovation process and develop both monetary and non-monetary rewardmechanism (i.e., granting open innovation award, providing opportunities to work in thepartner organization for some time (especially in a different location/country) for openinnovationpractice.

• Fostering pro-open innovation environment by working on organizational culture andstructure.

Resources in firms need to be applied with organizational capabilities; strategic use of resources by organizations is not enough on its own for enterprise to gain competitive edge. Organizational capabilities are developed as a product of integration of knowledge with core business processes (Sohn 1998). According to O’ Brien; information systems are the main building blocks to successful knowledge integration. He further outlines five key elements of information systems;

The People resources

The Hardware resources

The Software resources

The Data resources

Information products (Sohn 1998).

Each of these information system elements outlined above can add value to firms and help create a competitive advantage over competitors.

In the private sector organizations; the information systems department is responsible for information systems innovation, whilst in the public sector organizations, dedicated and specialized departments are set up and organized to make decisions pertaining information systems innovation. Innovation is described by 3 key features:

1. A Creative idea,

2. A Rapid implementation

3. Marketplace adaptation (Rohloff 2011).

Organization innovation is realized by the stimulation of creative ideas that can be implemented or applied within core business processes or within the marketplace. Innovation in the private sector is desired by firms so to outshine the competition, whereas innovation in the public sector increases the quality of national service delivery.

E. Burton Swanson describes 3 major sources of private sector innovations (E. Burton Swanson 1994). Type one innovation is a process innovation (involves the enhancement to the effectiveness of the information systems). A good example of type one innovation is software maintenance. Type two innovations involve the improvement in the administration work processes of organizations. Examples include: payroll systems, decision support systems. Type three innovations involve a combination of both type one and two. This type of innovation gives firm a competitive edge. Type two innovations include the adoption of technologies such as E-Commerce or the adoption of ERP systems (Enterprise Resource Planning systems) (Rashid et al. 2010).

The main objective of a firm is to stimulate and sustain a competitive edge over their competitors. Michel E. Porter elaborates enterprise competitiveness using a tool known as the "value chain" (Porter & Millar 1985); firms tend to capture competitive advantage when their information systems become an important component to their profitability. The value chain of the firm is a series of interdependent linkages; firm gains competitive advantage by making the flow between linkages faster and more efficient, hence reducing the time spent bringing products or services to market. The general assumption that information Systems are used by firms to gain that competitive edge over their completion has long been proven conclusively (Johnston & Vitale 1988), for instance, the successful implementation of an information system called "Apollo" by American Airlines in 1946 was a catalyst for mass implementation of information systems by rival firms (Johnston & Vitale 1988).

The refining process of existing information systems to ensure they continue to satisfy vastly changing business requirements is known as Information Systems Maintenance (ISM). Several studies have been published on the management of innovation, most notably the challenges encountered during this process. Global competition has been on the rise over the past ten years. Companies such as Apple and Google have presence in many countries all over the world. In times of intense global competition, innovation has become a crucial factor for the survival of enterprise (Rashid et al. 2010)

Information systems have three very distinct uses that foster innovation. They:

To support business processes and attract new customers, information systems innovation is a key element in gaining competitive advantage; companies need to respond to market increase and decline at a fast pace.

The delivery of a lot of standard business processes is dependent on internet technologies; many setbacks are associated with the management of these processes. These setbacks entice management to apply information systems to manage business processes.

Running a global business is a very difficult task, senior line of management have been put under heavy pressure to adopt process innovation to stay relevant and continue to compete with the rest.

For many of companies, it is their Enterprise Architecture (EA) that is the building block of their global operations. Enterprise Architecture is a set of various technologies composed to align business and IT processes (Rohloff 2011). For firms to stimulate innovative inventions they must reflect these possible changes (for example changes to product offerings or enhanced business process) within their Enterprise Architecture before commercial value can be earned from these changes.

With the increase in the global recession; private and public sector firms are under intense pressure to improve their products and services and so does Sheng Siong Group Limited. There is need for further improvements in product offering, adopt e-commerce and other value added services to keep improving their competitive position.

question b

The cost and complexity of the Innovation – Some of these innovations for example ERP systems might introduce a huge financial challenge to the firm. These systems are very expensive and only the large multinationals can handle this challenge. Their flexibility is also part of the problem, because rather than using the standard templates that come with the system, the firm might be tempted to make too many unnecessary modifications.

Threaten the fragile balance of power and control - Old systems allows departments and several individuals control the type of information that is produced – and ultimately control the dissemination of data. The new information systems might destroy all of that can be quite threatening.

Human Factor and Resistance to Change – The human factor in these innovations might be a hindrance to these innovations. Employees might resist change. They don’t get it, they don’t like it, or they don’t like you. Any of these is capable of stopping the project dead in its tracks. And what you need to counter these is the exact opposite of all the three: employees need to get what it’s all about, need to like it and be more than willing to take part in ensuring it is a success, and also need to have confidence in you. Change management will need to be handled effectively

Leadership- Strong leadership is important. The top management will determine the success or the failure of the project. Employees need to be incentivized and motivated to participate; otherwise they will keep doing their own thing. This will improve on the project management of the same.