Strategic Information System in an Organization - Essay Example

College: Strategic Information System Introduction In any given organization, information is a critical resource the routine operations and management. According to Ramesh B. A, et al; FAO 1997, ‘Availability of relevant information is very essential vital for effective performance of managerial functions such as planning, organizing, leading, and control’. An information system within an organization connects all components together while ensuring that there is better operation in competitive business environment. The term information system usually refers to a computer-based system, one that is designed to support the operations, management, and decision functions of an organization. This study mainly focused on a business related company. An information system comprises of transaction processing systems, management information systems, systems for decision-making support as well as strategic information systems. The information itself consists of the processed data which is coded to the person using. A system refers to a set of elements that are designed to operate together so as to provide a common purpose Ramesh et al 1997). In information systems, the basic element is data which basically refers to raw, unevaluated details, figures, symbols, events and other resourceful facts concerning the origination’s needs. Hence data is converted by the processor which is mainly computers into meaningful information that is useful to the user who in turn uses it in making decisions. Good information should be relevant, be timely, accurate, cost-effective, reliable, usable, exhaustive, and have aggregation level. Information is only important if it is directed to improve decision making activities. It can also be important if it is able to reaffirm the previous decision. The role of information in decision making processes of an organization The process of decision making consists of four steps of four steps: knowledge, design, choice, and review. At the knowledge stage, data is collected, classified, processed, and presented defining the organization and its environment. This is very essential especially in identifying situations that require decision. At the decision stage, the decision maker derives alternative solutions, which requires actions to be taken Simon (1977). The data collected during the knowledge stage are then used by statistical methodologies and other models to forecast possible results for every alternative. Each alternative can also be studied in ensuring technological, behavioral, and economic viability. In making of the choice, the decision maker must choose the best alternative which is suitable contributing to achieving the goals of the organization. The choices made can in turn reviewed during implementation and monitoring so that the manager to can make necessary faults. Therefore, information is very critical in the four stages of decision making which only is made more effective by systems, Simon (1977). Strategic importance of information in organization through use of systems They are useful in supporting business processes and operations. Information systems help the manager in their daily routine operations so that they function properly and effectively. For instance accounts, payrolls, employee benefits data protection and so on. In particular, the managers are able to conduct their daily activities wit a lot of ease, timely, accurately by use of software. Secondly, IS are essential in decision-making processes for employees and managers. This is simply input of data, processing the finally generating information. Therefore, managers are able to use the information processed for finding various solutions to the organization. For instance, information systems are able to analyze existing historical data about the rate of flow of customers and make necessary improvements if the turn up is very low. They also provide support in making decisions critically for competitive advantages. Information systems can provide information concerning the type of items to launch in a given location so that the organization can counter their competitors at customers’ advantage. Similarly, the organization is able to perform its businesses differently than their competitors. Intense competition from other organizations has boosted the company’s effectiveness and efficiency by use of proper Information systems. Generally, the strategic importance is very essential company’s planning for the future. Business operations have become global. This organization is also becoming more global in terms of its procurement and marketing operations making it necessary to use information systems to reduce time and space .The organization has been undergoing various changes with increased mergers achievements. This has made the top management to recognize the need to have a flexible work through strategic information systems Levels of information systems to information flow + systems The overall objective of the study was to investigate the extent to which the UK organizations had adopted strategic information systems and its role to the company growth. In addition to this main aim, other subsidiary aims of the study included; 1. What are the levels of information systems to information flow in the company? 2. What is the strategic importance of information systems in the companies? 3. What is the data protection legislation that is used in processing of information? 4. What are the ways of incorporating data protection legislation in information system strategies? 5. What information system planning framework is used and its role in data protection legislation? Concerning the above questions, a number of methodologies were used in conducting the study. Qualitative study was conducted by carrying out a number of interviews as we as filling in questionnaires with the question touching on the above key issues. More information was acquired from the electron sources (company websites) and written documented materials from the library about the organization For the interviews conducted from the company, the following definition of information systems strategy was provided; An information system is a combination of tools that converges the business goals of an organization, simplify the information supporting those aims and the installation of computer based systems that are needed to provide the information . Therefore, it is a layout for the development of systems of the future important information for the company. The has four levels of information systems as follows; Operational-level Systems This level is very essential in supporting operational managers to maintain focus on the main practices and the organizations business. The main reason for the need of systems at operational level is to deal with the routine questions and make a follow up of the flow of transactions in the organization. The main areas covered at this level include sales, credit decisions, receipts, cash deposits, payroll as well as flow in and out of materials. It is at this level that the primary data from the organization is found. Knowledge-level systems The systems at this level are important for supporting knowledge and data to employees in an organization. The main aim of such systems is to assist the organization realizes, organize and incorporate new as well as existing knowledge to the business. Another important role is to control the flow of paper work which is always tiresome. These information systems at this level are in the form of collaboration elements, workstations as well as office stations. Management-level Systems This is another important information system level that is has been designed to monitor, control, assist in decision making, direct administrative concerns of the middle level managers. It is very essential in providing periodic reports instead of instant information that can not be monitored periodically. In addition, the system at this level helps the organization in making decisions on matters that are not of routine nature as well as purposing on limited structured decisions which do not usually have clear information. The kind of information required here is from the operational level of the company as well as from the outside the company. Strategic-level systems This is an information system level in the company that is very essential assignments of senior management team. It helps the senior management in tackling and addressing strategic concerns as well as long-term development within and outside the organizational environment. The primary focus of the system at this level is to match the capability of the organization to various changes as well as opportunities that that takes place in the medium to long term preferably 5-10 years within the external environment, Battaglia, (1991). This organization has all the mentionsioned information systems well established at all functional levels. This is because the organization has adopted a standard management model that is able to incorporate all the information systems at all essential levels. Fig 1 showing different types and levels of systems Source Battaglia, (1991 p. 24) Characteristics of management level systems Different systems are characterized depending on the four elements namely; information inputs, processing, information outputs and users. The table below provides a summary of characteristic of different types of information systems. Source Battaglia, (1991 p. 21) Operational level systems At this level we have Ttransaction-Processing Systems (TPS). This is the basic systems of the business. They are important in performing the usual routine transactions that are important for the function of the business. At this level, tasks, resources and goals are well elaborated and structured. Here, there are generally four different categories that are identified. They include; sales and marketing systems, manufacturing and production systems, finance and accounting systems and human resource systems Battaglia,(1991). The major function of sales and marketing systems include; management of routine sales, market research for customer flow and competitors, promotions, Pricing and identification of new products. The major applications of marketing systems are in the order of sales, market research system and pricing system. Secondly, the major function of manufacturing and production systems includes; making schedules, receiving goods, and major operations. Its primary applications are; material resource planning systems, purchase order control systems, and quality control systems. Finance and accounting systems has its principal function as budgeting, making general ledger, billing and cost accounting. They are generally applied in general ledger, accounts, budgeting as well as management of funds.In the part of human resource systems, the functional applications are; keeping personal records, accounting for benefits and compensations, labour relations and training practices. The main application systems in this category are payrolls, workers’ benefits and career path systems. Knowledge level systems This is mainly practiced in Office Automation Systems (OAS). Here, it is purposed to accomplish the knowledge needs of data employees within the organization. Importantly, Office Automation Systems handle and manage documents and then does the arrangements and communication unlike data workers who are always involved on processing information rather creating information, Battaglia, G (1991).. Knowledge Work Systems (KWS) These systems are majorly targeted at accomplishing the knowledge needs of knowledge employees in the company. In the company, most of the knowledge employees are degree graduates whose their main work is to create new information and knowledge. Therefore, the knowledge work systems are very important especially in promoting, disseminating and integration of new knowledge in the company, Battaglia, G (1991).. Management-level Systems Here, there are Management Information Systems (MIS)The main function of management information systems is to make sure that managers are provided with reports and accessing of the organizations online previous and present records these systems mainly focuses on the internal practices of the company which are usually shot-term. Generally, MIS provides summary and reports concerning the primary activities of the company depending on the present Transaction Processing Systems of the company’s data, Battaglia, G (1991). Source: (Lochlan & Triner n.d) Decision-Support Systems (DSS) The Decision-support systems perform to satisfy the needs of the management level of the organization. They assist the managers in making decisions that are half way formulated, unique or undergoing changes. To accomplish their task, they use internal information from the TPS and MIS as well other information from external sources. They are characterized by greater analytic power unlike other systems. They also integrate modeling elements, aggregation and analytical tools. In addition, they also support alternative or accidental issues. For more efficiency, they should provide sound user interactive tools. Strategic-level systems At this level, we have Executive Support/Information Systems (ESS/EIS) which points out decisions that are not framed. In addition, they play a great role in creation of a comprehensive computing as well as communications environment instead of focusing fixed or specific applications. This kind of systems is designed to tackle diverse problems but not specifically on finding solutions. ESS/EIS are very essential at the strategic level system due to their designed duty to integrate data concerning external activities like new tax laws and competitor. Similarly, they draw summarised information from internal MIS and DSS. In addition, these systems acts as filters, compressors, and trackers of important data while ensuring the reduction of time and the energy required to acquire the information that is essential to the executive management team. Finally, ESS/EIS provides more effective graphics that can be seen clearly and easy facilitates easy representations of composite information as well as the current trends of the business,Pant, S et al (1994). However, as much as various types of information systems are essential are essential at individual organizational levels, they are inter-related at the functional level. Source: Lochran & Trinder.n.d Data protection legislation and how it affects processing of information by UK business systems According to the Data Protection Act 1998, it requires all UK organizations that hold information about living, and have identifiable individuals to register their use of 'personal data’. While doing so, they should be open and clear on how the same information is used. Organizations are also required to abide by a set of legally enforceable rules of handling good information according to the eight 'data protection principles'. The Act also requires the rights of accessing information that is held about them be it corrected or deleted information. This Act applies to businesses including public, private and individual entrepreneurs. All these entities are required to register with the Information Commissioner's Office (ICO) or visit the government’s website to register for an organization or individual business, Beath, et al (1994). Specifically, the details required during registration should bear the information about living individuals of the company on the computer or such information to have been processed by the computer. If the company uses the filing system, such information of living individual in the file should be availed. According to the legislation, the information of the organization registered at ICO should be always updated to provide the current existing information. The organization will only be allowed to have been complied with the Act if it cooperates with the eight data protection principles as per the Act and failure to do so is considered a criminal offence. The legal responsibilities of the organization to the legislation include the following; The organization should notify the Information Commissioner about the processing of personal data as well as the information describing the type of business and the purpose of holding such business. The organization will then have its information accessed in the public register. Any personal data that is held by the organization is processed and if it is a sensitive data, there might further requirements or restrictions. Additionally, the organization has to allow access of personal data of its individuals whenever required by the by the ICO. To make sure that data is held securely, the information systems that are used to store data that is not necessary, should be destroyed to avoid other confusions. A the organization’s staff members are usually trained to ensure that they comply with the Data Protection Act 1998 and made aware that only accurate data is given. For the purpose of use of information systems, it is the responsibility of the organization to ensure that the stored information in soft wares or hardware is safe and secure. Therefore, while designing a strategic framework for information systems, the principles of security, accuracy, safety, accessibility and easy usability are not useful to the company’s activities and goals but also essential in complying with the UK Data Protection Legislation Act. Information systems planning framework A strategy is defined as a formally documented element that is initiated by the board, monitored by planned reviews and provides the information concerning the key indicators, critical success factors or a well elaborated analysis of management information needs Wilson T, D (1989). The company has a well established formal, documented business strategy. A strategic information system planning framework refers to a disciplined and a systematic approach that is used in identifying the most effective and efficient way of making the organization reaches its information needs. It is a hierarchical and a structured approach involves technical effort as well as managerial processes in management of the systems. The strategic information system is characterized by a system of hardware, software, facilities and data, Barlow, J.F (1990). Personal information is identified and defined through a detailed design and analysis so as to gain a cost-effective system that is able to satisfy the needs of the organization Different organizations; public or private, have different methods of identifying the information needs planning elements to fill the needs. The framework is meant to guide an organization in systematically identifying and evaluating the needs of information and hence make a layout of disciplined process to make sure that the needs have been achieved, Strassman, (1985). This is a framework that has specifically designed for the use by Business Company or organization accounting matters. It is also essential in for internal and external auditors, program managers as well as other oversight organizations to serve as a guide in making plans of acquiring or upgrading information systems, Strassman,(1985). Relationship between information system strategies to the company The company regards the information system strategy as a function of the whole the whole company which has made information as the focal point of the company’s effectiveness. All the departments recognize the strategy as an overall organization’s strategy according to the responses of the workers and managers, McFarlan,(1988). In addition, the Information system strategy is properly related to the organization’s strategy because the board is usually is usually involved in information systems management. In this company, at least three information system professionals were member of the board. In addition, members from all the information system levels in the company reports to the Board member Wilson (1989). Features of strategy or Information system implementation Concerning the literature materials, there are various elements that are essential to be integrated in the strategy. These elements have specific importance to the company operations according to Wilson, (1989). Development of computer based applications to assist in business transactions like in production, marketing, selling etc. this would be a key functional concept in product delivery as wel as service delivery as the basic advantage to counter competition. Management information systems to be developed for effective control of the business; this would especially reduce paper work and improve efficiency in communications so that people are able to get timeliness of data. Creation of umbrella systems and valued architecture for technological functions, applications as well as data processing .Development of information systems as the key function of business planning.To provide improved productivity through use information systems as well as computation. This would especially influence high volume of business production that would allow increased product production and evolution of product and the organizational structure. Development of internal support systems for instance, in terms of payroll, personnel, pension, benefits, wages etc.In conclusion, all organizations should integrate the information systems in their program for efficient functioning of organizational activities. References Ahituv, N., Neumann, S., & Riley, H. N. (1994). Principles of information systems for management (4th ed.). Dubuque, IA: Wm. C. Brown Communications. Davis, G.B., & Olson, M. H. (1985). Management information systems: Conceptual foundations, structure, and development. New York: McGraw-Hill. Barlow, J.F (1990) Putting Information Systems Planning Methodologies Into Perspective, Journal of Systems Management, pp. 6-9. Battaglia, Greg (1991) Strategic Information Planning: A Corporate Necessity, Journal of Systems Management, pp. 23-26. Martin, J. 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