Information Systems Modernization of Organizations - Report Example

Information Systems Modernization of Organizations and Information Systems Modernization of Organizations Introduction The advent of technology, which includes items and competencies that make work easier, has created benefits for both consumers and businesses. Technology has made work easier in the present than in the past through increasing efficiency, saving time, increasing productivity, and enhancing communication. Businesses benefit mainly from the development of information systems. Information systems are sets of items such as computers that are interconnected through a network, and they support, process, and distribute information within an organization (Pearlson, & Saunders, 2010). Information systems control almost all aspects of an organization’s management ranging from planning, controlling, co-coordinating, and recruiting of new staff. The technology also s companies to conduct business in virtual locations within the cyber space. Information systems have also created new challenges to businesses; for example, hacking and identity theft, which are the commonest cyber crimes (Panigraphy, 2010). Therefore, understanding of the way information systems have revolutionized the way businesses work is critical in the digital age. This study will focus on creation of virtual organizations and reduction of bureaucratic inefficiencies as the main ways through which information systems have changed the working of firms. Virtual Organizations Virtual organizations refer to those that carry out business in implicit environments that have no physical locations. These companies use computers, information systems, and the internet in carrying out all their functions. The offices of such companies are paperless and the non-physical offices are assumed to be in the cloud (Winfan, & Davis, 2005). These companies do not have boundaries in their workplace in terms of the employees they recruit and the regions they reach. This is because cyber space allows them to employ workers and reach customers from all regions of the world. Amazon, Google, and E-bay are examples of virtual companies that sell their products and services through virtual offices, and their workers are located in every corner of the world. The existence of virtual organizations may be explained by the theory of social determinism, which argues that technology changes the society. This is because if it were not for the development in technology, these firms would not be in existence (Laudon, & Babston, 2013). Corporate Culture of Virtual Organizations Corporate culture determines the success of a company because it creates a notion of how activities should be conducted in the organization. Existing and outgoing employees of a company usually pass the organization’s culture to newly employed workers. The corporate culture of implicit organizations differs from physical companies because it requires workers and managers to possess characteristics such as trust, valuable leadership skills, and efficient communication (Hess, 1995). Trust is an essential factor in virtual organizations because it enhances managers to manage employees who work in different locations. This means that the lack of trust in these companies may prevent the firms from performing their functions efficiently leading to poor performance. Efficient leadership and communication skills, on the other hand, also help in ensuring that there is cooperation and coordination in the company (Clegg, Harris, & Hopfl, 2011). Lack of these qualities in a virtual company may lead to the breakdown of activities. Working Techniques used in Virtual Organizations Virtual organizations use unique techniques to bring workers together and to ensure that work is completed efficiently. These companies mainly use telecommuting to complete their jobs. Telecommuting is where workers are connected to the organization by information systems that operate through the internet. Managers connect with employees through emails and telephones (Putnik, 2007). The leaders of these companies may hold conferences in the virtual system when they want to communicate with all workers at the same time. Teleconferencing may involve using group telephones where the managers and the workers do not view each other, or it may be visual. The visual form of conferencing known as videoconferencing is enabled by the development of networks such as Skype (Laudon, & Brabston, 2013). This is a development that differs from the traditional forms of organizations that have to hold meetings in certain physical locations. The use of tele-centers is another form of coordination used in companies to ensure that workers perform their functions in virtual teams. Team members work from a similar virtual location, but they communicate through emails, fax, and telephones. Virtual tem working has enabled companies such as Google to operate in the cloud efficiently. The success of Google may be observed through its share price, which sells at approximately $85 (Protogeros, 2008). Sun Microsystems is another firm that conducts its business through virtual teams that are connected by information systems. The organization uses Electronic Data Interchange to communicate with companies such as Apple. The integration of communication between Sun Microsystems and Apple has enabled the companies to market their products efficiently and reap high sales and profits (Brown, 2012). Benefits of Virtual Organizations The companies reduce cost because they do not have physical offices where they pay rent, electricity, insurance, and water bills (Warner, & Witzel, 2004). The cutting of cost means that these companies have a potential of earning higher sales and profits that the traditional forms of organizations. The traditional forms of companies, which work from offices located in various physical regions, incur all these expenses, and this prevents them from developing faster than the virtual companies. The flexibility in these companies increases the productivity of workers. The work is flexible because workers and managers may work from their homes, in libraries, or other locations that they find suitable for completing their work (Carugati, & Resignoli, 2011). Since workers choose the locations where to carry out their work, it means that they choose the most suitable places that allow them to be more productive. Virtual organizations eliminate the inefficiency and slow decision making that is common in the traditional forms of companies. The practical companies are those that have hierarchies of power whereby authority is administered from the highest hierarchies to the lowest divisions. These hierarchies slow down the decision making process of companies that work from physical locations. The decrease in inefficiency that is brought about by bureaucracy in physical firms means that virtual companies are more profitable than the latter (Putnik, 2007). Challenges in Virtual Companies These organizations may lack coordination because of the lack of physical offices and boundaries. Coordination lacks in these companies because of the lack of an efficient system of management. Firms that have partners experience the lack of coordination more than those that operate independently in this class of organizations. The uncoordinated functioning of these firms leads to inefficiency (Warner, & Witzel, 2004). The lack of trust between employees and workers in these companies may lead to the sluggishness in the performance of duties. This deteriorates the performance of these companies leading to low sales and profits (Hess, 1995). The boredom that is associated with the performance of unchanging duties and locations may de-motivate workers. Employees get bored also because of the lack of recognition and rewards for their duties (Panigraphy, 2010). Information Systems Reduce Bureaucratic Inefficiencies in Organizations Max Weber describes bureaucracy as arrangements of activities in the form of hierarchies in an organization. Authority is distributed from high to low hierarchies in such firms, and it is formal meaning that there are rules in these firms. Employees in bureaucratic firms are promoted according to the skills and qualifications (Taylor, 1993). This indicates that there is rigidity in bureaucracy, which may lead to inefficiencies such as slow decision-making processes, and painstaking development of goods and services in all departments if a firm (Hess, 1995). The development of information systems has reduced the inefficiencies brought about by bureaucracy in organizations. This means that the systems have not eliminated bureaucracy completely, but their presence is better than when they are absent. Visualizing Entire Work Processes One of the ways through which information systems have reduced inefficiency is by enabling the monitoring of all departments in an organization from the computer. Visualizing of activities is enhanced by the development of dashboards that monitor the way employees work in a firm (Zammuto, Griffith, Majchrzak, Dougherty, & Faraj, 2007). Managers view the work that employees are carrying out in their computers, and through this, they are able to determine when workers are not performing their functions. Thus, when managers are able to look at the work of employees, they coordinate the functions of an organization more efficiently than when they are not able to observe employees’ work. The observation of workers duties also helps in saving time that department managers use to move from one office to another in a company to monitor employees (Mackenzie, & Wajcman, 2006). Companies also observe the work in progress on goods through the development of technologies that track goods, for example, the Radio Frequency Identification (RFID) (Zammuto, Griffith, Majchrzak, Dougherty, & Faraj, 2007). RFID is a micro chip technology that managers attach to goods to track their location and condition. The micro chip sends the location and condition information to managers in their computers through signals. This technology is mostly used in manufacturing companies that perform numerous functions on goods at different stages. RFID saves the time that departmental leaders would use to move from their offices to the manufacturing points to observe the state of goods and the work in progress. The information sent through RFID is accurate, meaning that it is more reliable than that which would be collected from workers through telephones and physical observation, in companies that do not use information systems (Brown, 2012). An example of a company that uses visualization to coordinate the functions of stakeholders such as workers, suppliers, and managers is Wal-mart. The company uses a logistics tracking system that enables employees to view goods from when they are in the supplier’s warehouse until they reach the stores of the firm (Zammuto, Griffith, Majchrzak, Dougherty, & Faraj, 2007). The visualization of work processes in a company enables departments to cooperate and coordinate their activities faster leading to efficiency brought about by fast decision making. Processing Goods and Services more Rapidly Information systems enhance the quick processing of products and services. An example of a system that enables this is the Transaction Processing System (TPS). The TPS is used by the lowest level of workers in a firm to record their activities, for example, the hours that employees work in a day. The system processes the input data and produces reports that the highest level of management use to manage companies. The processing of payroll in large firms such as Google and Apple that have numerous employees is enabled by the use of information systems (Pearlson, & Saunders, 2010). Improvement of the Decision Making Process Information systems such as the Decision Support Systems (DSS) enable the management of companies to make strategic plans faster than the manual system of decision making. The systems enable managers to communicate to all the stakeholders of a firm through databases. The information that managers receive from these systems enable them to make strategic plans and decisions in a timely manner (Laudon, & Brabston, 2013). The National Health Service (NHS) is one of the sectors that has benefited from the advent of information systems. The institutions use information systems that coordinate the functions of nurses, doctors, and other physicians. Hospitals in the United Kingdom use the Electronic Patient Record system that records the information of patients in a central location. The information of patients in these systems may be viewed in numerous hospitals enabling patients to visit the clinic of their choice. This automation increases accuracy in the treatment and issuing of medication in patients because doctors are able to view the medical history of their clients (Laudon, & Brabston, 2013). Challenges that Information Systems face when Reducing Bureaucracy The main challenges that companies undergo is the lack of qualified personnel to operate the technology. The high costs of purchasing and maintaining information systems also discourage firms from acquiring the technology. Since companies lack capital to purchase the expensive systems and personnel to operate them, it means that bureaucracy remains in such organizations making them inefficient (Clegg, Harris, & Hopfl, 2011). Conclusion Information systems have revolutionized the way businesses carry out their functions. The two main ways through which technology has changed business is the reduction of bureaucracy in firms by automating activities, and the creation of virtual organizations. Virtual organizations carry out their functions in the cyber space meaning that they do not occupy physical space. These companies use teams, telecommuting, videoconferencing, and emails as the main means of communication. The ability to operate in virtual locations enables these firms to reduce cost thus, increasing their efficiency. Information systems such as DSS and technologies such as RFID that track the activities of employees and goods enable the management of firms to coordinate their functions better than companies that do not use the inventions. The challenges that face companies using information systems include cyber crime, high costs of the technologies, which discourages firms from purchasing them, and lack of skilled personnel to use the innovations. References Brown, C. V., 2012. Managing information technology. Upper Saddle River: Pearson Prentice Hall. Carugati, A., & Rossignoli, C., 2011. Emerging themes in information systems and organization studies. 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