IT Systems Have a Deep Impact on Modern Businesses - Coursework Example

ASSIGNMENT By Name Course Instructor Institution City/State Date Management Information Systems Introduction The mobile and Internet technologies have moved markets nearer to the utopian status of ideal information by decreasing the asymmetries of the information between buyers as well as sellers. When a person wants to buy, it is much simpler to use internet for searching product substitutes, prices, vendors, and reviews concerning the product. Therefore, business organisations have unmatched suppleness to disclose or hide information to customers, suppliers, and competitors (Granados & Gupta, 2013, p.637.). Intricacy does not vanish as if by magic only because an IT firm has learnt to concentrate on aligned ventures instead of those that are less aligned. IT organizations offer devoted resources like data centres and application developers, to all units of the business so as to improve alignment. What’s more, they develop tailored best-of-breed solutions, which according to Shpilberg et al. (2007, p.53) is intended to serve all exclusive wants of the business. For the moment, they overlook the call for upgrading as well as standardization of legacy systems. Rather, they make a web of novel intricacy above the old, and thus, making enhancements of the system as well as infrastructure developments increasingly complex to put into practice and leaving considerable possible benefits unexploited (Shpilberg et al., 2007, p.53). According to Venkatraman (1994, p.74) the role of IT within business organisations has changed from its main concentration on automation to its position as an essential enabler in making and sustaining a supple interorganizational arrangements’ business network such as marketing agreements, partnerships, and joint ventures (Venkatraman, 1994, p.74). The usefulness that IT networks offer permits organisations to gain knowledge from as well as use the abilities of the extended business network. IT-Enabled Business Transformation Venkatraman (1994, p.74) in his article highlighted the distinguishing IT role in shaping the future operations within the business. Venkatraman argue that the business logic used in the 70s and 80s could be insufficient for the 90s and afar for the reason that the up-and-coming business setting needs a strategy rooted in three connected elements: high quality, low cost, as well as flexible and rapid response to the needs of the customer. Therefore, no element can singlehandedly lead to competitive advantage rather they function collectively. Whereas the high transformation levels point out possible superior benefits, they as well require a correspondingly higher scale of modifications in organizational practices such as informational flow, criteria for performance assessment criteria, logic of structuring, and so forth (Venkatraman, 1994, p.74). Therefore, according to Carr (2005, p.73) all firms must foremost identify the level of transformation wherein the benefits are corresponding to the possible expenses of the required changes within the orgnaisation. Eventually, still, higher levels could be needed, but it relies on the pressure in the competitive market as well as the desire to deliver superior value as compared to competitors. Level One: Localized Exploitation Venkatraman selected the phrase localized exploitation to point out that, in scores of instances, resolutions to deploy remote systems are decentralized to operational managers. After learning amongst the organizational managers concerning the benefits as well as limitations from deployment of isolated systems, Venkatraman attests that the effect is minimal (Venkatraman, 1994, p.75). This is contrary to Bhaskar (2004, p.55) assertion that every IT applications, when escorted by equivalent alteration in in-house organisational processes, can lead to noteworthy benefits. The gains from all IT application are significantly improved when the criteria for performance are realigned to echo the new IT-enabled business process. At level one, Venkatraman (1994, p.76) claims that it is imperative to know that no particular IT application even though influential is strategic in its generic structure. Rather than setting down a different class of information systems as strategic information systems, Venkatraman suggests that firms must make the needed changes in the business process that would capitalize on the system functionality. In consequence, Venkatraman argument is that not every order-entry systems can be strategic, even though several can offer vital sources for competitive advantage if suitable business process accompanies it (Venkatraman, 1994, p.76). Level Two: Internal Integration The second level involves two forms of integration: technical interconnectivity as well as business process interdependence. Technical interconnectivity sees to the interconnectivity as well as interoperability of various applications and systems by means of a universal IT platform. Business process interdependence, on the other hand, sees to the interdependence of roles as well as responsibilities in the organisation athwart different lines of functions. Importantly, neither of the two forms of integration is single-handedly sufficient (Venkatraman, 1994, p.76). Venkatraman during his research noted that more effort and concentration was allocated to technical interconnectivity as compared to business process interdependence. Notably, endeavours related to technical interconnectivity have been improved by considerable progresses in connectivity abilities, like heightened accessibility of integrated IT solutions as well as encouraging trends with regard to cost-performance. Venkatraman (1994, p.77) gives an example of Merrill Lynch, which was successful with its Cash Management Account (CMA) not just as a consequence of its technical complexity, but as well due to its capability to generate a business process that was interdependent. Another examples presented is that of Baxter, which became successful in the exceedingly competitive marketplace (pharmaceutical distribution), and its success was not just because of the use of its famed Analytic Systems Automated Purchasing (ASAP) system, but due to its capability to deliver products and services of high quality and its ability to leverage the IT infrastructure (Venkatraman, 1994, p.77). According to Lacity et al. (2009, p.133) current business organisations are heavily relying on IT systems to integrate all their business processes and also to gain competitive advantage over their competitors. Importantly, these systems are connected to crucial financial elements of the business such as payroll, and routing, thus making business operations easier. Level Three: Business Process Redesign Level three reveals that the benefits from the functionality of IT cannot be entirely realised if overlaid on the present business processes regardless of how integrated they could be. This according to Venkatraman (1994, p.78) is for the reason that the present business processes approve of organizational principles set that dealt with the industrial revolution. Therefore, Organizational concepts like specialization and span of control are all anchored in the organizational principles. Therefore, as mentioned by Venkatraman (1994, p.78) and Pepparda and Ward (2004, p.169) business organisations must start business process redesign after establishing a noteworthy changes in its business processes of its main competitors, in order that it can put together suitable counters in advance. Therefore, a cautious examination of the benefits as well as costs of the present business design aligned with a practical set of alternatives enables the organization to implement a coordinated strategy for redesign. The majority of business process redesigns to operational crisis as examined by Venkatraman were seen as quick and dirty responses, which were both ineffective and incompetent in responding to competitive actions (Venkatraman, 1994, p.76). Undoubtedly, business process redesign have scores of benefits, but all are limited in scale in case the organisation fails to extend the business processes outside the main boundary of the organisation to recognize alternatives for redesigning associations with the other firms that take part in eventually bringing value to the client. Level Four: Business Network Redesign Level four as per Venkatraman characterises the redesign of exchange nature in the midst of manifold partakers in a business network by means of successful use of IT capabilities. According to Merali et al. (2012, p.126), information systems functionality facilitates resourceful exchange of information. And the possible benefits as per Venkatraman (1994, p.79) are that all cohorts have the ability to leverage the capabilities within the extended network devoid of turning to the expensive alternatives of vertical integration. Successful business network redesign needs a coordination of different relationships’ strands using a universal information system platform. In the past, companies dedicated heightened concentration in restructuring outside relationships: departments for marketing tried to reconfigure the process of customer service as well as product delivery and all that. However, Venkatraman (1994, p.81) noted that business relationships redesign in functional domains has taken place autonomously (similar to level one). These autonomous efforts have as a result heightened the efficiency of operation, but regrettably have failed to make the most out of the business network redesign potential. Venkatraman deem that the actual IT power for any organisation does not take pleasure in efficiency enhancements (that is restructuring internal operations), but rather in streamlining the connections in the extended business networks to control a wider scope of capabilities that will bring better-quality products as well as services. Level Five: Business Scope Redefinition The final level directly seeks to enlighten the role played by IT in influencing the scope of business as well as the business relationships logic with Level four’s extended business network. According to Venkatraman (1994, p.84) concepts of strategy are being substituted by novel concepts like partnerships, alliances as well as virtual business networks with a noticeable highlighting toward a corporate scope that is more flexible. Business networks redesign to knowledge networks has direct consequences for the business scope logic as well as the ensuing revenue redistribution and streams of profits in a known market. This according to Venkatraman is for the reason that a number of tasks could be eradicated, several tasks could be optimally rationalized across the boundaries of the organisation, and a few tasks could be expanded. Therefore, Porter (2001, p.64) suggests that companies must go with the present online strategic drive toward core competency to integrate the vital competencies in a way that is up to standard to the buyer. Evidently, IT capabilities significantly improve and ease the endeavours of integrating the needed competencies. Thus, IT for strategists is not just a utility but an essential basis of business scope reconfiguration for redefining the rule of the game by means of redesigned business processes and redesigned business networks (Venkatraman, 1994, p.84). As a consequence, the main logic of business strategy should include the higher levels from the transformational framework: redesigning the business processes redesigned to maintain the redefinition of business scope as well as the explicit positions within the business network. Relevance to Current Business Environment Proportionate to the trajectory of the Information system, the current signifies a possible keystone instant between the future as well as the past. The up-and-coming digitally linked socio-economic framework is complexly intertwined with the use of IT capabilities, mentions Venkatraman (1994, p.86). According to Merali et al. (2012, p.137), the surfacing literature with regard to research of the future information systems recommends a change in practice and research model to handle the heightened confusion, doubt and vitality in the competitive market. Merali et al. (2012, p.137) further noted that the key setback in the IS field will mainly concentrate on intricacy of technical, dynamic as well as economic contexts. Therefore, alignment between the organisation’s IT management strategies as well as competitive strategy can result in unique IT management competencies for all competitive strategy. Carr (2005, p.69) argue that there subsist no solution for alignment predicaments, instead as observed in Level one and three of the transformation model, it is the organisational alignment capabilities that facilitate it to leverage IT-related technologies to achieve competitive advantage. Without doubt, strategic alignment can determine organisational change descriptively (that is to say, by exemplifying the value of up-and-coming technologies), prescriptively (that is by examining situations theoretically and proposing feasible options), and dynamically (Chan & Reich, 2007, p.306). IT, according to Chan & Reich (2007, p.306) determines the organisational influence and reach, and so organizations that always perform better have created capabilities to align and harness IT. Therefore, alignment of IT should at all time be management concern, above all due to its possible impact on the performance of the organisation. Information systems are pervasive in ever business sectors and organisations across the globe, and. new-fangled technologies have multiplied and continue multiplying. Even third world countries have realised the benefits of IS, mainly through the unusual increase in usage as well as ownership of mobile phones. According to Walsham (2012, p.88) technology is ever-present and currently most people are using it for personal and workplace undertakings. Through a range of social networking technologies, businesses have introduced their services and products online where customers can do shopping online. Rather than developing legacy systems, Upton and Staats (2008, p.121) suggests that managers should create systems that can be enhanced quickly and constantly after the systems starts operating. Statically, firms at present use almost 5 percent of their total revenues on IT (Upton & Staats, 2008, p.122). Whereas there is an enormous variation in this 5 percent, the benefit firms achieve from their IT has even greater variation. The already discouraging undertaking of selecting the suitable IT systems that has the ability to offer a competitive advantage, support the organisational strategy, as well as double as a development platform is becoming progressively challenging. Carr (2005, p.69) say is for the reason that the alternatives are superior, are altering quicker, and are becoming growingly multifaceted with the arrival of low-priced processing power as well as difficult IS vendors in developed countries. Therefore, businesses have to concentrate on developing IT systems that must improve; however, this viewpoint can be extremely distressing for conventional managers who believe that building up an IT system is akin to erecting a warehouse (Upton & Staats, 2008, p.122). Based on 2008 survey carried out by Gartner, they established that spending on IT between 1988 and 2008 have continued to increase and grew by 4.5 percent to more than $3.4 trillion in 2008. This sudden increase was attributed to the ensuing pressures at the competitive marketplace; but businesses have begun examining this spending. So as to try and solve alleged inadequacies in internal IT systems operations, decrease expenditure, and still be able to access novel technologies. That is the reason why a number of organizations have opted to outsource fractions of IT system operations (Berg & Stylianou, 2009, p.235). Concurrently, the paradigm for outsourcing has advanced and providers as observed by Berg and Stylianou (2009, p. 236) have heightened their IT capabilities and grown to be more stable. Furthermore, the departments concerned with internal IS have refocused as well as retooled to grow to be more competitive with external choices. Consequently, decisions concerning outsourcing continue being vital since they have turn out to be more common. Therefore, Venkatraman’s IT enabled framework offers a robust means of modelling internal management desires, to spot gaps as well as build up action plans. However, as noted in Willcocks and Feeny (2006, p.55) study, putting the framework into practice also offers diverse challenges. This is because it needs distinct sets of skills behaviours, as well as attitudes from those established in more conventional IT tasks. Furthermore, technical capability is no more adequate since the current IT needs distinct combinations of technical, interpersonal, and business skills in most roles. Besides that, the framework for IS capabilities need high performers whose are ready to face challenge and rewards as well as incentives could widen the present retention policies, HR systems, as well as processes for career development (Willcocks & Feeny, 2006, p.56). The modern computerized systems for decision making like Decision Support System (DSS) are most appropriate for decisions that have to be made hastily and often, through electronic accessible information. The criteria used for decision as well as knowledge in such systems must be highly structured as mentioned in Venkatraman’s level four of the transformation model, and the considered factors have to be well comprehended. Through IT systems professionals can gladly codify the organisational rules of decisions and with accessible data, they can easily automate the decision. For example, using Decision Support System to help make decision concerning whom to appoint as chief executive, may be a poor selection. Rather most organisations prefer the traditional way of selection, like choosing a person on the basis of personal chemistry, which undoubtedly cannot simply be integrated into a computer model (Davenport & Harris, 2005, p.85). However, there are a number of decisions that, even though rarely made, can be automated: especially instances where speed if decision is essential needed abilities that all organizations have to display, how such competencies truly take place is less specific. According to Peppard (2007, p.337) the key setback for the businesses is how to coordinate as well as integrate the essential knowledge along with skills supporting all of IT capabilities. Knowledge according to Davenport and Harris (2005, p.83) occupies a specific form in the midst of entity organization members, but the entity’s capability to incorporate knowledge to IT capabilities is limited by cognitive limits given that it is hard for people to make an effort of gaining knowledge owned by other professionals. Knowledge integration to IS does not only entail bringing together all IT professional in the organisation, but also involve top management who need to support the project through funding and motivation. Being a social process, Davenport and Harris (2005, p.85) posit that the knowledge integration as well relies heavily on the combined generation of knowledge, such as solving a predicament in an IT project. Summary In a nutshell, it is evident that IT systems as predicted by Venkatraman have a deep impact on modern businesses. Noticeably, successful businesses in the modern setting do not see IT systems as channel for offering idiosyncratic strategic advantage. Rather they are distinguished by their capability to envisage the sense of the novel business world as well as leverage IT systems to generate a suitable arrangement in the organisation so as to support the business logic. What’s more, the significance of integrating Internet and traditional techniques generates possible benefits for reputable companies. These days, nearly all businesses are essentially reliant on IS and would promptly stop functioning if the technology that supports their activities shut down. As predicted by Venkatraman, IT has turn out to be inextricably linked with modern businesses and so most organisation over rely on the successful application of information technology. The levels of the transformation model, particularly levels three, four, and five are exceedingly relevant to modern’s business operation since there espousal does not only increase the business productivity, but also makes the business become more and more competitive. References Berg, B. & Stylianou, A.C., 2009. Factors considered when outsourcing an IS system: an empirical examination of the impacts of organizational size, strategy and the object of a decision. European Journal of Information Systems, vol. 18, pp.235–48. Bhaskar, R., 2004. A Customer Relationship Management System to Target Customers at Cisco. Journal of Electronic Commerce in Organizations, vol. 2, no. 4, pp.53-73. Carr, N.G., 2005. The End of Corporate Computing. MIT Sloan Management Review, pp.67-73. Chan, Y.E. & Reich, B.H., 2007. IT alignment: what have we learned? Journal of Information Technology, vol. 22, pp.297–315. Davenport, T.H. & Harris, J.G., 2005. Automated Decision Making Comes of Age. 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