Today, most organizations in all sectors of industry, commerce and government are fundamentally dependent on their information systems. In industries such as telecommunications, media, entertainment and financial services, where the product is already or is being increasingly digitized, the existence of an organization critically depends on the effective application of information technology (IT).
An information system is comprised of all the components that collect, manipulate, and propagate data or information. It usually includes hardware, software, people, communications systems, and the data itself. The activities involved include inputting data, processing of data into information, storage of data and information, and the production of outputs such as management reports.
Information systems support business processes and operations by:
- recording and storing sales data, purchase data, investment data, payroll data and other accounting records.
- recording and storing inventory data, work in process data, equipment repair and maintenance data, supply chain data and other production/operations records.
- recording and storing market data, customer profiles, customer purchase histories, marketing research data, advertising data, and other marketing records.
- to implement, control, and monitor plans, strategies, tactics, new products, new business models or new business ventures.
Information systems often support and occasionally constitute competitive advantages. Information systems, like business environmental scanning systems, support almost all sustainable competitive advantages. Occasionally, the information system itself is the competitive advantage. One example is Wal-Mart. They used an extranet to integrate their whole supply chain.
IT refers specifically to technology, basically hardware, software and telecommunications networks. It is thus both concrete (e.g. with servers, PCs, routers and network cables) and subtle (e.g. with software of all types).
IT facilitates the attainment, processing, storing, delivery and sharing of information and other digital content.
Effectiveness of IS/IT
A number of important forces affect the pace and effectiveness of progress in using IS/IT and in delivering business benefits. The relative weighting of each factor varies over time, and will also vary from one organization to another. These factors include:
o the capabilities of the technology
o the economics of deploying the technology
o the applications that are feasible
o the skills and abilities available, either in-house or from external sources, to develop the applications
o the skills and abilities within the organization to use the applications
o the pressures on the particular organization or its industry to improve performance.
Implementation of Technology via E-commerce and E- business
E-commerce can be viewed as the conduct of business commercial communications and management by using Internet technologies and through electronic methods, such as electronic data interchange (EDI) and automated data-collection systems. It may also involve the electronic transfer of information between businesses (EDI). E-business, on the other hand, has come to refer to the automation of an organization’s internal business processes using Internet and browser technologies.
In using the Internet, many organizations have looked to add more value to the tangible products they sell by providing additional ‘information-based’ services. These can include online support, order tracking, order history, etc. Many of these initiatives focus on deepening the relationship with customers and suppliers. Others have moved their trading platform either partially or entirely onto the Internet.
Several factors have a role in the success of any e-commerce venture. They may include:
o Providing value to customers. Vendors can achieve this by offering a product or product-line that attracts potential customers at a competitive price, as in non-electronic commerce.
o Providing a 360-degree view of the customer relationship, defined as ensuring that all employees, suppliers, and partners have a complete view, and the same view, of the customer.
o Providing an incentive for customers to buy and to return. Sales promotions to this end can involve coupons, special offers, and discounts. Cross-linked websites and advertising affiliate programs can also help.
Hindrance in Acceptance
o Concerns about security. Many people will not use credit cards over the Internet due to concerns about theft and fraud.
o The problem of access to web commerce, particularly for poor households and for developing countries. Low penetration rates of Internet access in some sectors greatly reduce the potential for e-commerce.
Applications of IS/IT and Competitive Advantage
Some information systems are totally automated by IT. For example, Dell Computers has a system where no human intervention is required, from taking customer orders, to delivery of components to the Dell factory for assembly, to shipment to customers. With this build-to-order model, perfect information and tight linkage match supply and demand in real time. The company can receive an order for a personal computer (PC) directly from a customer via its own website (www.dell.com).
Ryanair is one of the world’s most successful ‘low fares’ airlines. Its online booking facility was launched in 1999, migrating customers away from the more expensive travel agent and call-centre channels. Customers can now search for flights online and book them with a credit or debit card. As a ticketless airline, the customers are supplied with a reference number which is given to staff at check in. Over 90% of ticket sales are now taken on the website, which is also available in a number of languages including French, German, Swedish and Norwegian.
Amazon.com is an Internet venture that was launched in July 1995, and has probably become the most famous site in cyberspace. It initially started out with a mission to use the Internet to transform book buying into the fastest, easiest and most enjoyable experience possible.
Unlike traditional bookstores, there are no bookshelves to browse at Amazon.com. From the website, customers can search for a specific book, topic or author, or they can browse their way through the book catalogue and then complete the sale by entering their credit card information. Orders are processed immediately and books in stock, generally bestsellers, are shipped the same day. Customers are contacted by email when their order has been dispatched. All contact with the company is done either through their World Wide Website or by email. The company has also branched out into electronic auctions. It has also pioneered technologies such as customer profiling and ‘1-click’ shopping. The profiling technology has enabled Amazon to recommend books based on previous purchasing history and what other customers who have bought similar books are also reading. Even today, the company strives to maintain their founding commitment to customer satisfaction and the delivery of an educational and inspiring shopping experience.
In the 1980s, Otis Elevators, the US manufacturer of elevators, identified that one of the aspects of its service that would give its customers most satisfaction was a prompt lift repair service. So, it built an automated system, called Otisline, to dispatch repairmen. Where something started to go wrong with Otis’ lifts, they automatically called in their complaint to a computer–without human intervention. Otis’ rivals suddenly had to compete on quality of service as well as the price and quality of lifts themselves.