1. Executive Summary
In concern universe there is no replacement for right information at right clip. It is apparent that in last twosome of decennaries efforts has been made to develop systems which make information more precise, readily available and easy accessible throughout the administration. The development and usage of information systems is a modern tendency which is chiefly concerned with the aggregation, procedure and dissimilation of utile information that directs an administration for better planning, better determination devising and finally the better consequences.
Information systems and information direction is a huge topic. In order to discourse the importance of information systems for an organisation, the cardinal constructs like what is information, how it can be managed must be acknowledged. In this essay there will be brief debuts of these cardinal constructs and so there will be a instance survey of Volvo ‘s Knowledge Management System, the VPS which highlight the importance of information system and information direction in an organisation. Furthermore, it is non ever without a enlistment to follow and appreciate a new construct and information systems are no different. There are some issues and jobs in put ining and utilizing such systems which once more vary one administration to another. This essay will besides touch upon those troubles every bit good.
2. The construct of information in Organization
The universe information has different use in different contexts but in organisational context it becomes more complex and hard to grok. Zorkoczy ( 1981 ) defines information “as the significance that a human expresses by, or infusions from, representations of facts and thoughts, by agencies of the known conventions of the representations used” .
On the other manus in organisational context, Stonecash ( 1981 ) defines information by saying that “information is merely symbols ( informations, text, images, voices, etc. ) that convey intending through their comparative ordination, timing, form, context, etc. … information is the natural stuff for doing determinations for making cognition and fuelling the modern organization” .
In organisational context, information becomes more like a basic resource similar to work forces, stuff and money. Information is the adhering component that holds an organisation together. On the reverse, since it is intangible, information is rather different for physical resources and is frequently hard to construe and use in expeditiously in order to accomplish desirable results from the oragnisation. However, it is an built-in portion of organisation and should be decently managed to accomplish ends and aims of the organisation ( W.B. Adeoti-Adekeye, 1997 ) . Hence, it is importance to admit the importance of information in the organisational public presentation.
3. Information Management in Organizations
Many bookmans have recognized the fact that right information and its flow with in the organisation can drastically better the public presentation and achieve stipulated aims with easiness. But at the same clip it is of import to observe that there is no point of holding information which is non relevant to the organisaton. This is the point where information direction comes in to play. The premier aim of information direction is to do relevant information readily available for the administration in precise and comprehendible format.
Langemo, ( 1980 ) has defined Information direction as the “organization-wide capableness of making, keeping, recovering and doing instantly available the right information, in the right topographic point, at the right clip, in custodies of the right people, at the lowest cost, in the best media, for usage in determination making.”
Besides Best ( 1988 ) defines information direction as “the economic, efficient and effectual co-ordination of the production, control, storage and retrieval and airing of information from external and internal beginnings, in order to better the public presentation of the organization.”
4. The construct of Information Systems
Ever since its innovation, computing machines are going built-in portion of worlds and worlds are going more and more dependent on the services offered by them. In words of W.B Adeoti-Adekeye ( 1997 ) “the promotions in computing machine engineering have escalated adult male ‘s desire to obtain computing machine aid in work outing day-to-day jobs and more complex jobs: jobs which were considered entirely in the sphere of adult male ‘s intuitive and judgmental procedures, peculiarly in organisations, a few old ages ago. Therefore, information systems are going country of involvement in progressive and dynamic organisations. The demand to obtain entree handily, rapidly and economically makes it imperative to invent processs for the creative activity, direction and use of databases in organizations.”
Duff and Assad ( 1980 ) , has defined the information system as “a aggregation of people, processs, a base of informations and ( sometimes ) hardware and package that collects, procedures, shops and communicates informations for dealing processing at operational degree and information to back up Management determination making.”
In general footings, Information Systems can be defined as a set of interconnected constituents which accept informations or information ( meaningful informations ) as a natural stuff shop and so treat it to bring forth information as a merchandise to help and back up in determination devising and commanding activities of the organisation.
The Information System contains information about the organisation and its environing environment every bit good. The environing environment includes clients, supplies, rivals and other stakeholders of the organisation. The basic three activities input, processing and end product generate the meaningful information that organisation demand. There is another indispensable component of system known as feedback. It is end product returned to allow governments in the organisation to measure input ( Laudon and Laudon 2006 9th Ed. ) . It can be represented in figure as follows ;
through one or more transubstantiation procedures
It comprises the undermentioned functional elements which relate to the organisation and its environment
5. Importance of Information System in Organizations
Directors must hold relevant information that increases their cognition of internal procedures and external concern environment. This cognition reduces the grade of uncertainness and makes managerial determinations more rational and practical. Without relevant information most of the determinations made by directors will be like test and mistakes, which in bends decrease the efficiency and profitableness and increase the uncertainness with in the organisation. The chief benefits if an information system can be discussed as follows:
1 Economic Importance:
Even though the cost of installing and care of an information system rather high ( depends upon sort of system ) in the beginning, but in due class the costs beads and appears just trade when compared to sorts of benefits enjoyed with the aid of it. Besides with the transition of clip cost of information systems tends to diminish, whereas, costs of its replacements ( for case labor ) has been historically tends to lift ( Laudon, 1990 ) . Furthermore, information systems use webs, which help an organisation to cut down the dealing costs, by doing it worthwhile for organisation to contract external providers alternatively of utilizing internal resources. For case, the Chrysler Corporation reduces costs by obtaining more than 70 % of its parts from other provider by utilizing computing machine links ( Laudon and Laudon, 9th Ed. ) .
2. Information Systems Improve Performance:
Information Systems are designed to better the overall efficiency and effectivity of a procedure. The information systems speed up the procedure and cut down the clip by taking non-value adding stairss in the operation. For case, Citibank developed the Automatic Teller Machines and Bank Debit Cards in 1977 ( Laudon and Laudon 9th Ed. ) . It made fiscal minutess easy and was a immense success. Further, Bankss continued to introduce and these yearss with the aid of dependable and unafraid information systems from TEMENOS, Infosys, Oracle etc, most of the client can make bulk of dealing from their place computing machine or even from nomadic telephone. Furthermore, information systems provide existent clip information which reduces the range of mistakes, hence, increases the quality of the end product of the procedure.
3. Importance in Decision Making:
Information Systems provides the tools for directors enabling them to supervise, program and prognosis with more preciseness and velocity so of all time earlier. They besides enable directors to react more quickly and adapt fleetly to the fast changing concern environment. The Decision Support Systems can significantly better consequences both on quantitative and qualitative foreparts. For case, there are around 142 million employees working in United States bring forthing $ 12.2 trillion of Gross Domestic Products. If the determination doing quality of these employees could be improved by merely 1 % in a twelvemonth the GDP might be expand well. “This implies for any organisation the ability of director or employees to do right determination at right clip with the aid of right information can hold extraordinary concern value” ( Laudon and Laudon 9th Ed. ) .
4. Organizational Behavior Change:
Behavioral researches illustrate that information systems facilitate flattening of hierarchies by broadening the distribution of information to authorise lower-level employees. It pushes the determination doing rights to the lower degree in the organisation as the lower degree employees receives the information they need to do determinations extinguishing the demand of in-between directors ( Laudon and Laudon 9th Ed. ) . This besides leads to the decrease is the administrative costs of the administration. For illustration, after put ining ERP system Knust-SBO Precision Machining1 of Texas, reduced the administrative staff by 50 % and at the same clip improved the truth of on -time bringings from56.5 % to 95 % .
6. Case Study Illustration
The efficient public presentation of an organisation is dependent really much on the public presentation of the internal resources of organisation and their synchronism with external environment. To exemplify the usage and importance of a direction information system in organisational public presentation the undermentioned illustration of Volvo from Pull offing Knowledge in MNCs-The instance of the cognition direction enterprise in the Volvo Group by Sona Gevorgyan and Boban Ivanovski ( 2009 ) will show that how Volvo achieved superior public presentations by deploying their Knowledge direction system.
6.1 Volvo Group and Knowledge Management
The Volvo Group is one of the leaders in its industry with production installations in 19 and gross revenues in more than 180 states. In 2008 it employed more than 90,000 employees worldwide bulk located in Sweden, France, USA, Japan, Brazil, China, and South Korea. The industry in which Volvo Group operates is extremely engineering driven and cognition intensive. Its merchandise scope comprises building equipment, trucks and coachs, aircraft engine constituents, thrust system for Marine and industrial applications. Since it operates globally the Group is comprised of legion subordinates, known as merchandise related Business Areas ( BA ) and back uping Business Units ( BU ) .
The major map of Business country is to industries merchandises, whereas Business Unit of measurements are responsible for procurance, merchandise planning ‘s and fiscal facets of the concern. As the Group continued to turn, it recognized that the diverseness that the subordinates represent could function as chance to use all the cognition within the Volvo Group. The group acknowledged demand of the planetary Knowledge Management System which could assist in extinguishing waste of resources in footings of animating cognition in one subordinate, while already possessing it in another. Furthermore, such enterprise could potentially function as agencies of detecting new synergisms in the Group that may take to smooth and efficient operation of the Group ‘s activities. Hence, the Volvo Production System Academy was launched in 2008, taking to set about and back up such a common group Knowledge Management enterprise ( Gevorgyan Ivanovski,2009 ) .
Knowledge Management Systems are designed to hive away and treat the cognition available in organisations ( Wickramasinghe, 2003 ) , and at the same time back up contextualized application of that cognition ( Maier, 2004 ) . Workers are meant to utilize this engineering in sharing information about past experiences and doing sense of this information, while executing their undertakings ( Wickramasinghe, 2003 ) .
Volvo Production System Academy ( VPSA ) is the Centre for research, development and invention in the Volvo Group. The Academy is meant to represents a cardinal research and development unit which provides the basicss for the KM enterprises. It developed the Knowledge Management System for the Group, the Volvo Production System.
The premise is that operational excellence, sustainable profitableness and client satisfaction is more likely to accomplish if the workers operate in conformity with the VPS guidelines. The VPS theoretical account is described in item through internal paperss known as Reference Material, stored in cardinal database and provided through the VPSA Intranet portal. The database and the Intranet portal on which the information from the database is available, represents the nucleus of the KMS provided by VPSA. The ‘good illustration ‘ of VPS theoretical account is an indispensable portion of the feedback and larning facet of the theoretical account. It is represents a ocular illustration of exceeding executing of a specific faculty described in the VPS theoretical account, this acts as a communicating tool to promote employees to reiterate the desirable behaviour.
Good illustrations from assorted mills are stored in the cardinal database in add-on to the rules, and available on the Intranet portal. The good illustrations are either submitted by the mills and so quality-proofed by VPSA, or spotted in the appraisals that VPSA behaviors. By sharing them through the Intranet portal, good illustrations are meant to function mills from different subordinates to locally implement the VPS faculties by working common synergisms and larning from each other ‘s cognition and experiences. ( Gevorgyan Ivanovski,2009 )
The Knowledge Management Systems are one of the most complex information systems. The Volvo Group has realized that their merchandise and services are non limited to physical resources but besides on the intangible assets i.e. cognition. Since it operates globally and most of its concern unit are geographically, demographically and culturally dispersed, therefore it was utterly of import for the Group to synchronies its cognition and do it available wherever and whenever it is needed to back up the concern procedures and managerial determinations. The Group achieved it with the aid of an information system, the Volvo Production System.
However, put ining an information system does non automatically ensue in success, unless uninterrupted engagement of all single workers in procedures is ensured. In this instance workers have struggled ab initio to get by up with the alterations the system brought in, but the strong organisational civilization motivated them to acquire involved in the procedure.
Problems with Information Systems
There might be different grounds, but despite of many success narratives there are illustrations of great failure of implementing information systems in organisations. For case ( web resource1 ) ;
- Hershey Foods – The taking cocoa maker in United States accounted 19 % bead in net incomes was caused by an unqualified SAP ERP installing that caused distribution upset during one of its most profitable seasons.
- AA FoxMeyer Drug s – The pharmaceutical distribution company was forced to declare bankruptcy after an unsuccessful ERP execution.
- NASA – . The ERP system was non able to shut year-end books on a Cal Tech contract which consequences in coevals of inaccurate fiscal studies.
- Bang and Olufsen – In 1999, the Danish Hi-Fi audio- picture shaper claimed that SAP systems has damaged relation with its retail merchants
It is frequently argued that most of the issues in ERP systems catastrophes were non proficient but were chiefly related to employee and organisational civilization of the house. Many of the failures can be attributed to hapless managerial pattern in the signifier of unequal preparation ( Pang 2001 ) . The opposition to alter from with in the organisation, deficiency of high flexibleness in footings of customization of information system and inadequate IS execution scheme may be considered as the major factors for such a drastic failure of the information systems in certain instances.
It is of import to observe that information direction and information systems are the agencies non the terminal of the procedure. Both are the powerful tools in the manus of direction, which when deployed suitably can convey dramatic alteration in the manner an organisation perform and accomplish its aims. Appropriate use of information systems benefits both the organisation and its employees and its stakeholders. But when misapplied, they can blow enormous sums of clip, attempt, and money.
To carry through successful information direction and cut down the opportunities of failure in future, an information system must be designed and operated with due respect to organisational civilization every bit good as technological factors. There should be an equal part from both the concern direction and the information professionals while planing and implementing a new information system. There is no uncertainty that better exchange of ideas between organisational direction and information professionals has the possible to develop information systems which will wholly alter the mentality how we run concern today.
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1The New ERP System Halves the Administrative Staff, Modern Machine Shop, Feb2002, Vol. 74, p142