Managing Information Systems - Essay Example

Managing Information Systems In recent years and for the foreseeable future, organizations have beenfacing rapidly changing business environments which have challenged their executives (both information systems (IS) and non-IS) to handle issues such as downsizing, outsourcing, leveraged buyouts, strategic alliances, flexible manufacturing, just-in-time scheduling, globalization, business process re-engineering and total quality management. These environmental changes have placed demands on there IS departments to support product innovation, new production techniques and changing organizational designs and to provide timely, high-quality information. Identifying and handling key issues in the management of IS is essential for executives to support and run their organizations efficiently and effectively. The investigation of these key issues by researchers serves to enhance the understanding of the concerns of executives and suggest relevant areas of investigation by management researchers. There have been some key issues studies which have involved data collection from non-IS executives as well as IS executives, but these have reported only aggregated results without specifically addressing the views of the respondent CEOs and other non-IS executives (Wang and Turban, 1994). As indicated in Table 1 (Appendix), there may be many different IS management issues. While most researchers accept that organizations must handle many technology management issues, there is a growing acceptance that there are many strategic management issues which are equally if not more important. Other issues can be classified as either systems development and data management issues and people and support management issues. The issues in each category are listed in Table 1 (Appendix). These issues have changed over time, but those included in Table 1 are identical to the most recent Australian study of CIOs (Pervan, 1997). Strategic management issues (which include strategic IS planning, developing and implementing an information architecture, business process redesign, IS organizational alignment and IS for competitive advantage) are organization-wide and relate to planning and facilitating change in relation to IS/IT and may be expected to be the primary focus of CEOs (Jones et al., 1995). Conversely, technology management issues (which range from managing and measuring the effectiveness of the overall IT infrastructure to handling individual technologies such as electronic data interchange (EDI), communications, collaborative systems and office automation) may be perceived by the CEO as the responsibility of the CIO. CEOs may hold a similar attitude towards systems development and data management issues such as software development (computer-aided software engineering (CASE) tools, distributed systems, the applications portfolio and legacy systems. Finally, people and support management issues may only be of concern if they are either organization-wide, such as organizational learning (Jones et al., 1995) or if they affect the CEO personally, such as executive support systems (Feeny et al., 1992). CEOs are usually not overly concerned with technology management; this is apparently contradicted by the appearance of IT infrastructure, disaster recovery and IS effectiveness/productivity measurement (all technology management issues). However, this should come as no surprise in such a rapidly changing technological environment. It is clear that the provision of a responsive IT infrastructure is a fundamental concern for the organization and that the ability of that infrastructure to respond to disaster situations is an organization-wide problem in the 1990s. Many organizations would not be able to survive more than a few days without their IT facilities so disaster recovery might be expected to be a major issue to a CEO taking an organization-wide view. Measuring the effectiveness and productivity of the organizations IS and IT is clearly of major concern to the CEOs given the scale of investment in this infrastructure. Clearly, the CEOs expect `value for money’ and rightly so. Educational issues also rank highly, with organizational learning and executive and decision support (which involves similar motivations and contains a significant user training/education component). Organizations (and the people in them) require continuous learning about ways to use their information resource better and integrate new technologies into the organization (Niederman et al., 1991). IT education is therefore critical and can lead to increased productivity and reduced applications backlogs. Significant increases in innovation and productivity from an organization’s IT investment can be derived from an emphasis on supporting and managing organizational learning in the organization (Henderson and Lentz, 1996). The high ranking of executive and decision support may be interpreted as a `selfish’ concern by CEOs for their own personal support, but these systems are also aimed at supporting other managers and decision makers in organizations, in some organizations EIS even being referred to as `everybody’s information system’ (Pervan 1997) and CEOs would see this as key to the effective operation of the organization. The strategic management issues which ranked highly were business process redesign, IS for competitive advantage and information architecture. Business process redesign has been a top issue among CEOs and CIOs for several years. Many organizations are focusing on a radical redesign of their business processes in order to achieve dramatic improvements in performance and innovative and effective applications IT are seen by many as a vehicle for achieving this. Further analysis revealed that business process redesign was seen to be significantly more critical for organizations planning to concentrate their activities more, perhaps rejecting that some radical redesign of existing processes may be necessary to achieve this concentration effectively. Further, through the innovative use of IT, organizations may find new ways to realize competitive advantage. Further analysis revealed that this issue was more critical for the revenue-generating government organizations, all of whom are facing an increasingly deregulated and competitive operating environment. Corporate information architecture is a high-level map of the information requirements of an organization (Feeny et al., 1992) which is used to identify key information needs and how this information related to key business processes. Its development is necessary in order to guide the development of these innovative applications and facilitate the integration and sharing of data (Niederman et al., 1991). Further analysis revealed that this issue was significantly more critical (specifically, more important but not more problematic) for more decentralized organizations. This indicates that this high level information map may be more vital in more decentralized organizations where the information needs may be more varied and sharing and integration are important. The CEOs also perceived the effective use of the data resources and the effectiveness of software development as critical issues. The data resource in most organizations is becoming larger, more complex and greater in cost and value. It is claimed that the data resources are often poorly recognized, difficult to access and poorly used. This issue was more significant for those organizations planning greater acquisitions which would require the effective use and integration of data resources to operate in a more complex internal operating environment. Effective IS can provide users with timely, accurate and relevant information, but the backlog in the development of these systems remains as unacceptably high levels in many organizations. This is exacerbated by changing hardware platforms and new software development tools arriving on the market, which the developers have to learn and use. The CEOs, understandably, are particularly concerned with maximizing the return from their substantial investment in IT and having it available on time, in budget and with the right form and content. In summary, the most critical issues were revealed to be a mix of technology management issues, strategic management issues, people and support management issues and systems development and data management issues. This rejects a broad range of concerns for the CEO in relation to IT. However, a closer examination of the issues reveals a major concern for organization wide issues and optimizing the return from their IT investment. Issue: Decision of Outsourcing by a Financial Institution Outsourcing is a strategic decision to use an outside supplier to perform work that is typically performed within a company. A strict definition of the term covers only activities that were once internal to the company and includes only the process of moving the activity to the outside. Most people involved in outsourcing, however, use a much broader definition. In this sense, the term can be applied to using a third party to service a financial service product for the first time or using a technology provider to move into new delivery channels and markets. Outsourcing also encompasses the enterprises continued management of the relationship with its provider, or outsourcer, because nothing is more likely to lead to an unsuccessful venture than neglecting a partner. The general idea behind outsourcing is for a financial institution to do what it does best and let the experts do the rest. Few institutions take this radical approach, choosing instead to outsource only essential processes. Essential non-core processes stay in-house, unless outsourcing offers a strategic advantage. In general, reducing costs is not reason enough to begin outsourcing IT. Sound reasons should include one or more of the following: a change or expected change in market conditions that increases the need to concentrate management efforts and resources on core competencies; a well-developed outsourcer market that offers advanced technology, specialized professional expertise, significant capital investments, or innovative solutions and techniques that the company cannot match; the opportunity to shorten cycle times for such things as product development, market delivery, or customer response. To compete in the new economy, financial institutions must be constantly innovating and redefining themselves. They must be among the first to market with new ideas and products. These institutions must be able to provide total solutions for their customers, not just individual products. Competition can come from any direction, sometimes without warning. And, the competition may be based on business models that are less than a year old. The conflict between existing sales channels for retail customers and the Internet is driving change for many Financial Institutions. A recent Banking Strategies article called this internal conflict one of the most formidable challenges facing e-commerce executives: "Most czars lack an independent power base. Many depend on the cooperation and resources of other departments. They have to coax and cajole, and the process of re-directing human and financial resources creates lots of friction." (Elizabeth 2000) To support these strategic objectives, both existing and newly forming enterprises need to restructure themselves around five organizational imperatives: focus, speed, flexibility, efficiency, and access to instant information. Outsourcing enables banks to accomplish all five imperatives quickly. Focus. Management must be focused on the institutions key strategies and supporting areas of competitive advantage. With the rapid changes in the competitive landscape, management cannot afford to be distracted by internal issues with non-core operations. With such a low cost of entry to many businesses, any competitive advantage of established companies will be short-lived. Keeping up to date with rapid changes becomes the responsibility of the outsourcer. Speed. The speed of change in the business environment is increasing, so institutions need to be able to make and implement decisions quickly. The larger the infrastructure, the slower this ship will turn. Depending on the solution selected, an outsourcing solution can be up and running in a very short time. Flexibility. Financial Institutions need to be flexible to be able to adjust to new competition. They may need to adjust to a rapid contraction in some businesses and even more rapid growth in others. This years strategy may not be optimally supported by last years organizational structure. Outsourced solutions may provide the flexibility needed. Efficiency. With the low structural cost of new competition and the price transparency that the Internet offers to consumers, institutions cannot ignore inefficient operations. Geography no longer protects against cheaper interest rates, because consumers can use the Internet to shop nationally. Therefore, financial institutions must minimize costs, especially for processes that do not touch the customer and that institutions consider to be noncore. If properly managed, outsourced solutions may be more efficient. Access to instant information. To react quickly, management needs high-quality but instant information to drive decisions; old information is virtually worthless. For example, the old financial reporting process that delivers information a month or more after the event may not be sufficient to compete where product offerings can and need to be refined constantly. The Internet provides no cushion for slow decision making. Outsourcing enables management to keep up technologically with its competitors. In the new economy, outsourcing plays a significant and financially beneficial role. But ignoring its risks can have a negative financial impact. By understanding the risks and regulatory requirements, your financial institutions can apply outsourcing best practices to succeed in the new economy. Conclusion This paper has presented that the most critical issues are a mix of technology management issues (IT infrastructure, measuring IS effectiveness and disaster recovery), strategic management issues (business process redesign, competitive advantage and responsive information architecture), people and support management issues (organizational learning, and executive and decision support systems) and systems development and data management issues (effective use of the data resources and effectiveness of software development). IT outsourcing was ranked surprisingly low) considering its apparent popularity), but it did rate as a more critical issue for those organizations actually planning to implement IT outsourcing in the next few years. These same organizations considered the recruitment and development of their IS human resources as less critical, as the outsourcing of IT would lead to fewer internal IT staff with a narrower range of functions. The most critical issues in the study were generally perceived to be both important and problematic. These included effective use of the data resources, organizational learning, competitive advantage, IT infrastructure, business process redesign and senior management IT education and support. The issues perceived as more important than problematic related to information planning and the management of the organization’s information and communications infrastructure. The CEOs apparently see that, though these issues have a major impact on the organization, they are reaching a stage where they have the technology, policies and procedures to keep them under control. On the other hand, the issues which are seen to be not so well-managed (and so more problematic than important) were mostly associated with the effectiveness and productivity to the data, systems and infrastructure. Works Cited Elizabeth J. (2000) Leap of Faith. Banking Strategies (May/June 2000): pp. 37-44. Wang, P. and Turban, E. (1994) Management information systems issues of the 1990s in the Republic of China: an industry analysis. International Journal of Information Management, 14(1), 25-38. Pervan, G.P. (1997) Information systems management: an Australasian view of the key issues - 1996. Australian Journal of Information Systems, 4. Jones, M.C., Taylor, G.S. and Spencer, B.A. (1995) The CEO/CIO relationship revisited: an empirical assessment of satisfaction with IS. Information and Management, 29(2), 123-30. Feeny, D.F., Edwards, B.R. and Simpson, K.M. (1992) Understanding the CEO/CIO relationship. MIS Quarterly, 16(4), 435- 48. Niederman, F., Brancheau, J. and Wetherbe, J. (1991) Information systems management issues for the 1990s. MIS Quarterly, 15(4), 474-500. Appendix Table 1 List of key issues and categories Technology management issues Building a responsive IT infrastructure Measuring IS effectiveness and productivity Developing and managing electronic data interchange Planning and integrating multi-vendor open systems technologies Integrating data processing, office automation and telecommunications Managing data and document storage Planning and managing communications networks Implementing and managing collaborative support systems Establishing effective disaster recovery capabilities Strategic management issues Improving IS strategic planning Developing and implementing an information architecture Aligning the IS organization within the enterprise Outsourcing selected information services Determining appropriate IS funding levels Facilitating and managing business process redesign Using IS for competitive advantage People and support management issues Recruiting and developing IS human resources Facilitating organizational learning Educating senior management in relation to IT Increasing the understanding of the IS role and contribution Facilitating and managing end-user computing Facilitating/managing executive and decision support systems Systems development and data management issues Improving data integrity and quality assurance Improving the effectiveness of software development Selecting and integrating packaged applications software Making effective use of the data resource Managing the existing portfolio of legacy applications Developing and managing distributed systems Improving information security and control Planning and managing the applications portfolio Planning and using CASE technology Read More