Overview of Information Systems and Their Use in E-business - Essay Example

Introduction Information systems are generally considered as the set of interrelated components or building blocks that gather (Input), develop (process) and distribute (Output) the given information in order to meet the specific purpose. In other words; according to Cegielski and Rainer (2010) study of corresponding software and hardware networks that are used by businesses to collect, sort out, produce and share data are known as information systems. Many types of information systems are employed by organizations in different departments which include: accounting information system, marketing information system, finance information system, human resource information system. Each functional area is supported by the information system. Information system in which computer technology is used called Computer based information system. Some are being mentioned below: 1. Enterprise Resource Planning (ERP). 2. Transaction Processing System (TPS). 3. Electronic Information Systems (EIS). 4. Office Automation System (OASs). 5. Business Intelligent Systems (BIS). 6. Experts System (ES). 7. Digital Dashboard System (DDS). 8. Electronic Data Interchange (EDI). 9. Management Information System (MIS). 10. Supply Chain Management System (SMS) 11. Customer Relation Management (CRM) Information technology is used as a synonym of computer networks and computers. Information technology refers to the application of computer programs and telecommunication equipments that is done to pile up, manipulate, retrieve and convey data. According to Alter (2012) information technology is obliging for the improvement of internal processes, reduce cost, minimize waste, and decrease extra activities and increase development of product. Information technology provides support in marketing and selling processes. With the increasing use of internet and online activities, a new form of has emerged in the recent years. This is termed as online business or ebusiness or E-commerce business. E-business and e-commerce is used as synonym of each other, their distinction can be seen through the detailed study. E-commerce is considered a sub set of E-business. E-business is the usage of technologies in order to improve different business processes (Combe, 2012). E-business includes the management of internal and external processes for instance internal processes include administration, financial and human resource systems; and external processes include customer relationship, supply of services and goods, and marketing and sale activities. The utilization of internet, intranet and extranet is done through e-business for the empowerment of commercial processes (Ashrut, 2012). OVERVIEW OF INFORMATION SYSTEMS AND THEIR USE IN E-BUSINESS Combe (2012) stated that through Information technological development (formation of World Wide Web, hypertext transfer protocol and text mark language) consumers and businesses both are having several benefits such as the demand of businesses especially e-businesses is increasing rapidly. Through these technological developments, e-businesses has got the competitive advantage over other businesses particularly because of low cost of ecommerce businesses and higher Returns On Investment (ROI). Ecommerce can be generally defined as the activity that involves selling and buying of products online. There has been a lot of advancement in the recent years in ecommerce and online businesses. Technology has improved and now selling and buying of activities is not restricted to products only. Electronic Data Interchange (EDI) is another form of e-commerce activity and it is the development of electronic data interchange (EDI) system makes the exchange of documents possible between enterprises in normalize electronic form. Some examples of these documents are purchase orders; material information and invoices, through these actions businesses save the cost and make their processes more effective. EDI eliminates the paper work, reduces the cost of inventory, administration processing, transactions’ posting and increases the efficiency of transactions and customer service, and reduces business cycle and blunders. Some websites charge money for sharing of these documents. Enterprise resources planning system (ERPs) helps the organization in managing different resources and enhances the capability of management. Enterprise resources planning (ERP) system is designed to enhance the effectiveness of communication. ERP is also important for online businesses in order to manage the overall operations and resources of the company. Through the common database, ERP integrates the functional areas of an organization and reduces the lack of communication among departments therefore it is considered that ERP plays a great role in the productivity of an enterprise. Ecommerce websites today have complete ERP solutions as well. Some of the websites that offer online selling and buying have a complete database and a complete ERP that integrates different functions of the company. The scope of ERP information system varies with organizations. However, this system plays the role of purchaser in which it orders particular items needed for organization or e-businesses. In current e-businesses ERP information systems support, sale, consumer services, distribution and human resource functions. Improved work processes and increased access to well-timed data – can be adopted through ERP – for decision making. All information systems have been used in different areas of e-businesses according to the need of businesses. In 2011 E-bay developed its Enterprise system in order to compete with its online competitors such as Amazon. This system is helpful for the receiving and processing of orders. ERP system is also useful in processing the transactions, through this system customer can make transactions through their mobile phones and other devices (Reynold and Stair, 2012). Transaction processing system (TPS) is another type of information system and considered an effective system for an organization because it helps in collection, monitoring, processing and storage of data from the basic transactions of business. Management information system (MIS: is used to make different types of reports. Many areas like marketing, finance, manufacturing, production and many other areas are supported by MIS. Management information system provides the standardized reports through ERP or TPS. MIS plays the following important roles for an e-commerce business: It plays the role of communicator and provides the detailed picture of organizational activities, It distributes the multifaceted material throughout the business, It helps in reducing the cost of extra and manual activities, through the provided reports related to employee performance and revenues (Reynolds, G and Stair, 2012). It helps the company in easily finding the strength and weaknesses It helps in recognizing different activities that company undergoes and how these activities can be improved It helps in gathering of customer’s feedback and data and enable the company to fulfill the customers’ needs Direct marketing and promotional activities can be performed through the effective management of customer’s data, support the goals and strategic direction of the business, and company can achieve the competitive advantage (Joshi, 2013). Electronic information systems: Electronic information systems enable businesses to do their transactions electronically. EIS systems are generally based on internet and considered as vital for rapid and safe transactions. These systems are most frequently used by many organizations. e-businesses or e-commerce businesses are managing their businesses as carefully as a traditional businesses. These businesses manage their administration and other activities. Office automation system (OASs) is a system that is used to generate electronic calendars, manage word processing, e-mail, video calls and conferencing and for group discussion and to manage other administrative work (Reynolds, G and Stair, 2012). The role of teams is critical in ensuring success for an Information system. This team would include; managers, stakeholders, used and numerous personnel and this team is known as system development team (Reynold and Stair, 2012). Information technology is used mostly in network organizations in which people do electronic communications for the accomplishment of a particular task. Much technological advancement have made organizations highly competitive in their sector such as computerized reservation system of American airlines, ATM system of different banks, package tracking system of FedEx and Amazon. Com. The impact of Information technology can be analyzed in banking sector in which IT brought a great change; IT improved the efficiency and effectiveness of banking sector (Sharma, 2011). HOW THIS TOPIC IS USED BY CASE STUDY ORGANIZATIONS Information technology and information systems are being used by different organizations today. Different businesses have established their Information systems, ERPs, MIS, EDI, and other important concepts that have been discussed. Online businesses need to understand these systems and then use these systems in the most appropriate manner. For an online business, it is important to integrate the system with all the employees and managers so that everyone is aware about the progress of any order or project. Even big names in the industry such as eBay, Amazon, Alibaba, and others have established their information systems and with these systems these organizations are able to manage their operations successfully. EVALUATION OF INTERNAL AND ENVIRONMENTAL DRIVERS Internal Drivers: The most critical internal drivers of information technology/ information systems are presented below: Process-centric initiatives improvement of infrastructure Ability to analyze the demands and manage Innovation and creativity Cost reduction Offering the best value to the consumers Increasing reliability on the overall system Better service to customers and compliance Alignment of the policies of a firm Access to advanced services Improved processes and communication. External Or Environmental Drivers: Some of the most important external environment includes: Technological changes and advancement Political factors Socio-cultural factors including consumer behavior, trust on ecommerce websites Economic environment Legal environment and policies of the country (Ashurst, 2012). BENEFITS, LIMITATIONS AND ALTERNATIVE SOLUTIONS: Enterprise resource planning system is being broadly employed in many organizations and serving many benefits. ERP is as critical for an e-business as it is for a traditional company (Azevedo, Romao, and Rebelo, 2012). Benefits of Enterprise resource planning system: Enterprise resource planning system for an online business makes all important processes visible throughout the organization. Enterprise resource planning system for an online business provides the automatic work flow from one to another department that ensures the efficiency of transaction and process completion. Enterprise resource planning system can be used by different departments of an ecommerce company and there is no need to purchase different software for different departments. Web based order processing and tracking can be done through this software Numerous models of ERP have been presented for an online business such as sale, marketing, human resource, finance, accounts, manufacturing, customer relationship management, project management, supply chain and others. The integration of other systems with ERP systems can be done through application programming interface. Order, sale forecasting, revenue, inventory and other related activities can easily be tracked and managed through ERP for an online business. Major Limitations assessed in Enterprise resource planning system: Even though the Enterprise resource planning system is widely used by many organizations still there are some criticisms and limitations. These criticisms and limitations are presented below: The Enterprise resource planning system is considered as inflexible due to its limited use (Azevedo, Romao and Rebelo, 2012). The switching cost of Enterprise resource planning system is high and this can damage the negotiation power of vendor (Mellado and Rosado, 2012). Enterprise resource planning system is not efficient in the prediction of future planes and if different scenarios are used to predict. (Ogg, 2012) Great customization can be problematic for Enterprise resource planning system. Some ERP systems do not perform graphic designing for such system SAS and SAAP systems. Solutions for Enterprise Resource Planning System: Alignment risk can be controlled through the detailed specification of requirements. Resistance of ERP systems can be overcome through proper training. The high cost of ERP projects can be minimized through the effective management of project and this cost can also be cut down through the minimization of customization. The ERP system based on “open source” have been developed by the internet communities through which people have free access to the source code software and this step can improve the ERP to fit with the organization. Most EPR users use SaaS as an alternate solution and it is popular in customer relationship management (Shehab, Sharp, Supramaniam, & Spedding, 2004) CONCLUSION AND RECOMMENDATION Conclusion: It has been seen that information systems are being used by the majority of e-businesses such as Amazon.com, Dell computers, Apple computers, eBay, Buy .com, COSTCO.com, Alibaba, SMARTBARGAINS.com, and many others. Implementation of diverse information systems have been discussed and enterprise resource planning system (ERPs) is important for the success of any business including e-business or e-commerce businesses. Information systems are considered the foundation of electronic businesses. For running a successful e-business and having the understanding of organizational operations one needs to understand information systems. Recognition of these ISs leads an organization towards a successful advantage. However, it is important that all the departments are integrated through this system. Recommendations: Proper association of business activities can make the implementation of ERP useful. For the successful running of e-business the application of enterprise framework and ERP should be done. The processes of e-businesses should be divided appropriately. Businesses that have clear and defined processes can successfully implement the ERP. For the successful customization of ERP, e-businesses should have sufficient information related to technology and ERP. Appropriate resources and time should be assured for the successful application of ERP system. Personnel should be trained because if they do not know how to use the system no benefit can be achieved. References Alter, S. (2012). Information Systems: Foundation of E-Business, 4th edition. New Delhi, India: Saurabh Printers Pvt. Ltd. Ashrut, C. (2012). Benefits Realization from Information Technology. Britain, Macmillian Publishers Ltd. Azevedo, P. S., Romão, M., & Rebelo, E. (2012). Advantages, limitations and solutions in the use of ERP systems (Enterprise Resource Planning)–A case study in the hospitality industry. Procedia Technology, vol. 5, pp. 264-272. Cegielski, G. C and Rainer, K. R. (2010), Introduction to Information Systems: Enabling and Transforming Business, 3rd edition. United States, Quebecor World Versailles. Combe, C. (2012). Introduction to E-business. Routledge. Eskell, J., Helnonen, S., Matinmikko, T., Parviainen, P and Pussinen, P. (2004). Enterprise Resource Planning – An integrative review, Business Process Management Journal, vol. 10, no. 4, pp. 359-385. Joshi, G. (2013). Management Information Systems, 1st edition. New Delhi, Oxford University Press. Mellado, D and Rosado, G. D. (2012). An Overview Of Current Information Systems Security Challenges And Innovations. Journal of Universal Computer Science, vol. 18, no. 12, pp. 1598-1607. Ogg, F. (2012). Overcoming ERP limitations, QUINTIQ, Available from http://www.quintiq.com/blog/implementing-a-planning-platform-2 [Accessed February 13, 2014] Reynolds, G and Stair, R. (2012). Fundamentals of Information Systems, 6th edition. United States, Joe Sabatino. Sharma, N. (2011). Applications of Information Technology in Banking Sector, International Journal of Information Dissemination and Technology, vol. 1, no. 2. Shehab, E. M., Sharp, M. W., Supramaniam, L., & Spedding, T. A. (2004). Enterprise resource planning: An integrative review. Business Process Management Journal, vol. 10, no. 4, pp. 359-386. Read More