Information Systems in Business

An information system is any organized combination of people, hardware, software, communications networks, and data resources that stores, retrieves, transforms, and disseminates information in an organization (O'Brien & Marakas, 2006). Information systems have three main roles in business: support strategies for competitive advantage; support business decision-making; and support business processes and operations. This fall in line with the six major strategic business objectives (Operational excellence; New products, services, and business models; Customer and supplier intimacy; Improved decision making; Competitive advantage; and Survival).

Operational excellence

Operational excellence involves the improvement of efficiency to attain higher profitability. Information systems enabled by technology are reliable tools for achieving greater efficiency and productivity. Customers should be able to perceive operational excellence as it transmits through ease in customer purchasing.

A good example of a company that exercises operational excellence is Walmart. It is the most efficient firm in the Retail industry. Walmart has attained first position thanks to its RetailLink system (information system) that links suppliers to stores for a superior replenishment system.

New products, services, and business models

Products and services are differentiated on the basis of tangibility. Products have a tangible form while services are intangible in nature. A business model describes how a company produces, delivers, and sells product or service to create wealth.

Information systems and technology are a major enabling tool for new products, services, and business models. They give new products and services exposure to a ready and wide customer base. This is the main reason why many new firms, products, and services have been launched within the last decade. Examples of information systems that fulfill thisobjective are: iPhone, iTunes, iPad, Apple’s iPod, Google’s Android OS, and Netflix for movie sales and rentals.

Customer and supplier intimacy

Customer intimacy

Customer intimacy can only be achieved by establishing good relationships with customers. When customers are well served, customer loyalty is gained. It also leads to a high customer retention rate and a low customer defection rate which is good for business. The end result is increased revenues and profits. Popular and successful online sites use recommender systems to suggest purchase ideas to consumers. 

Examples of firms that exhibit customer intimacy are high-end hotels that use computers to track consumer preferences and monitor and customize the environment e.g. Hilton’s OnQ.

Supplier intimacy                                                                                                    

Supplier intimacy creates sustainable ties between the company and the suppliers. Eventually, the company gains lower rates, more bonuses, and discounts which catapult sales and profits. Also, vital inputs given by the supplier could create the difference between a company and competitors by lowering costs, offering a competitive edge. An appropriate example is J.C. Penney’s information system which links sales records to the contract manufacturer.

Improved decision making

Information systems improve on managers’ ability to take critical decisions, with a lower margin of error. This is achieved by providing managers with qualitative and quantitative information in their domains of interest. Without accurate information, managers are condemned to using inefficient tools in decision-making such as best guesses forecasts and best guesses, and in extreme situations, luck. This results to poor outcomes like the following:

·        Poor response times,

·    Overproduction, underproduction of goods and services, and

·        Misallocation of resources

These poor outcomes in turn leads to customer defection; and increased costs accompanied by decreasing revenue; hence it is a chain of negative events for the company. Verizon’s Web-based digital dashboard, for example provides managers with real-time/synchronous data on customer complaints, network performance, line outages, etc.
Competitive Advantage

Information systems and technology enable a firm/company achieve competitive advantage by providing the following:

·        Delivering better performance

·        Charging less for superior products

·        Responding to customers and suppliers in real time

Achieving any of the aforementioned business strategy objectives concludes to achieving competitive advantage.

·     Apple, Unlimited Power Supply (UPS), and Walmart (Pearson Education, 2011) have acquired competitive advantage thanks to information systems; Tecno as well.

Survival

Information systems are not a luxury, but are a necessity if a business is to withstand competition, and economic crises in order to survive.  If a firm is to survive and adapt to industry-level changes, it must arm itself with information systems. This was the case when Citibank had to introduce ATMs (Automatic Teller Machine).

We might need to use information systems in order to conform to government regulations that impose record-keeping. U.S. government regulations that impose record-keeping include the following acts: The Toxic Substances Control Act and The Sarbanes-Oxley Act (2002).

Works Cited

O'Brien, J., & Marakas, G. M. (2006). Foundations of Information Systems in Business. In J. O'Brien, & G. M. Marakas. United States of America: McGraw-Hill Corporation.Inc.

Pearson Education, I. (2011). Information Systems in Business Today. In Managing The Digital Firm 12th Edition. Pearson Education, Inc.