INNOVATION IN DIGITAL ENTERPRISE

Module TutorsAmanda Foster, Lucian Tipi & June Clark.

Arun Kumar Sharma

NO OF WORDS 3,966 Student number: 0048715 Date: Friday, May 20th 2011

Table of Contents
Introduction ...................................................................................................... 3 Information System........................................................................................... 3 Role of Information System in an Organization ............................................... 4 Key Management Challenges (issues) ............................................................. 6 Challenge 1-Obtain business value though IS ................................................. 6 Challenge 2-Co-exsistence of complimentary assets .................................. 7 Challenge 3-Responsibility & Control Change. 8 Challenge 4-Customer Relationship Management ............................... 9 Solution ......................................................................................................... 10 Solution 1..................................................................................................... 10 Solution 2 ................................................................................................. 14 Solution 3... 19 Solution 4 21 CONCLUSION.. 22 Reference .. 24

INTRODUCTION:This document will explore and critically evaluate the change in prospect of business through Information System and Information Technology (IT) which has led immense opportunity in recognising the area of improvement in terms of building the business up-todate or advance with respect to the current competitor business practices. Eventually it will give the business the required push or edge to harvest more revenue than previously acquired, acting as the key driver in globalisation of the business. Information system are creating new opportunities for both business and individual, they are also a source of new problems, issues, and challenges for managers in organisation. This document will point out the issues & its solution focussing and critically evaluating the scope of management mechanism and activities that are available to IT & Business Managers which will minimise the effect of Conversion challenge. Therefore, leading to how much value IT adds in their business process as an investment and how useful it is as a tool and acted as a key driver in the organisation?

What is an information system (I.S.):

According to Loudon and Loudon an Information System can be defined technically as an interrelated components working together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualisation in an organisation. It also helps managers and workers analyze problems, visualise complex subjects and create new product. (P.laudon 2005)

ROLE OF INFORMATION SYSTEM (I.S.) IN AN ORGANISATION: AN Enabler- A Competitive Advantage Through IT a company can get the competitive advantage in different field. o increased sales, o better customer service, o improved customer relationships, o faster service, o more efficient service, o diversity or higher quality products IT as a Facilitator - New Markets Distance is not the question. Now the world is one market. Its just about tapping & gaining new market. IT to Provide Agility Its all about survival. IT can only provide the agility. IT can instantly help the company to take any change or form as per the market demands. IT to Enhance Decision Making Today with the different information websites, we have an access to abundance amount of information which can help the company to take decision.

Fig. Role of Information System in an Organisation (david boody 2008)

External Context

Organization
Input (people, finance material)

Managing Transformati on process

Information system

Output (Goods, Services Reputation)

Feedback

The types of a computer based information system process are: Electronic point of sale (EPOS) provides faster customer check out. Automated teller machine (ATM) support 24 hr banking

THE KEY MANAGEMENT CHALLENGES IN THE ORGANISATION, RESOLVING THOSE CHALLENGES THROUGH STRATEGIC OBJECTIVES
CHALLENGE 1:
The Information systems Investment challenge: How organisation obtain business value from their information system:One of the challenge management is facing today is to obtain meaningful returns from the money they spend on information systems, all companies do not achieve great return by introducing information system. Its one thing to to design, produce , deliver, and its another thing to make money implementing it.
What value will be delivered?

The issue in the organisation is they fail to realise that IS/IT is not the only solution. Investing heavily In IS/IT will not produce the productiveness until and unless a clear understanding of IS is developed within employee, which should proceed by keeping customer requirement in notice.

Where will value be delivered? Who will deliver value? when will value be delivered?

How will value be delivered?

IT Value is a multi layered concept

In this issue, the silver bullet thinking predominates (i.e plug in technology and deliver the bottom layer imapct). IT value has been analyzed as a multi layer concept and it is far more complex , than it first appeared. The value proposition can be identified and delivered. The managers must visualize first to peel the onion and understand the nature of IT value itself (Ginzberg november 2001) .

CHALLENGE 2:
The Strategic Business Challenge: What complimentary assets are needed to use information technology effectively? In any given organisation it is very important to understand that addition of one of the process is not enough. It will need other support to the sole process for the successful outcome/result. The productivity of hardware and software has grown much more than the ability of the organization. In order to achieve benefit from the information technology, getting genuine productivity and to become more competitive and effective they have to redesign their organization When a company doesnt understand the relevance of combined process they often incur loss after making heavy investment which lead to misconception that IT & IS are just the hype, traditional form of business are much efficient & effective. Henceforth, Fundamental changes are required in employee and management behaviour aspect, development of new model is required, old models need to be retired and eliminate the outmoded business process and organizational structure because implementation of new technology alone cannot bring the desired result.

Ex- The port of Rotterdam (www.portofrotterdam.com) it has 126 departments each with its own IT systems and has more than 100 applications. The IT manager Chris Van De Weerd confessed that working with multiple applications was unmanageable. They moved from departmental structure to a process based organisation. The redesign of the information structure and limiting the resourceful IT implication helped the arrival and departure of ships.

CHALLENGE 3:
The responsibility and control challenge: how organisations ensure that their information systems are used in an ethically and socially responsible manner? How can we design an information system that people can understand and control? Information systems have provided enormous benefits and productivity it has also created new challenges which business managers must be aware. Managers do face problems of security and control. Information system are so essential to business government and people that organisation must take special steps to ensure they are accurate, reliable, and secure. Information systems must be designed so that they function as intended to do human can control process. Managers will need to ask, Can we build information systems that respect people rights of privacy? (Laudon 2005). Ex- amazon.com, Ebay.com is the websites which stimulates online shopping. Their main priorities are to sell their products through online shopping. Every transaction done on the web not only delivers the products but makes a database for the customers keeping their name, age, sex, job, address etc which in term help the organisation to understand their
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customer better, but from a customer point of view their privacy is no more in generalised concept. Their important credit card information is shred which is the major concern for all buyers. So organisation like Amazon and EBay are under immense pressure which has made them to tie up with pay pal which helps them to provide security to their process.

CHALLENGE 4:
Organisational and management issues in CRM:A study by Gartner group (www.gartner.com) CRM projects has higher failure rates, it has failure rate about 55%. A survey done by Bains management tools CRM ranked 3 rd from the bottom in terms of user satisfaction (Bains 2001).CRM not only fails to deliver profit growth but also damage old customer relationship, according to a survey of 451 senior executive (Rigby 2002). According to CRM forum 4% are software problem and 1% is bad advice, 87% pointed on CRM programme failure on the lack of adequate change management. Implementing successful CRM is depended more on strategy rather than technology. CRM lacks direction without a clear customer strategy and may disrupt relation with important customers.

The solutions:
CHALLENGE 1 (SOLUTION) There are two types of barriers which are often seen responsible for not achieving a great value after implementing IT proposition:1) Organizational barriers- Effective implementation of IT often requires reviving the current business process (Chircu 2000). Human are not open to changes easily and organisation is run by more than one person therefore the reluctance to changes increases tenfold. Hence, it is very important for the all managerial level to come out of their comfort zone and give the change a chance for the betterment of the company. They must understand that the change is not The Threat but The Opportunity to evolve into effective and efficient company than before. 2) Knowledge barriers- New technology and processes make the working employee to work differently. They develop a new understanding and skills which help them to fit in the technology scale better (Chircu 2000). A change in itself doesnt accomplish anything in itself until & unless the understandings of change in the required area of expertise/ field of operation are not understood by the people who are going to operate the information system. Training is the answer to all the doubts and reluctance. The company should give on and off the job training to its employee through seminar or a training program. a must

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The relevance of the above two barriers can be seen in the case study where a company has retained it position for more than 90 years. The key success is there strategic objective and the coordination of IT with the Employees. It has not only given increasing profit as well has retained his position in the competitive world.

External Environment

Organisation

Process

People
Output information

Input data

Data transformation process

Software

Hardware

Feedback

The elements of computer based IS (david boody 2008)

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CASE STUDY:United Parcel Service (UPS) is one of the worlds largest air and ground package distribution company started in 1907.There strategy for this business was best services at the lower rates implemented by Jim Casey and Claude Ryan in 1907. UPS delivers more than 13 million parcels everyday in United States and more than 200 countries and territories. The company face stiff competition from competitors such as FED EX and Airborne express. UPS retains his position by investing in advance information technology and continuous knowledge development among the employee. UPS has invested nearly one billion dollar in a year into technology and systems to boost customer service while keeping the cost low and streamlining its entire operation. Operation takes place through a handheld computer called Delivery Information Acquisition Device (DIAD), it detects customer signatures automatically along with pick up, delivery and time card information, and then the UPS driver places the DIAD in the truck adapter which transmits the information connected cellular network. Package tracking information is the transmitted to the connected software in UPSs main computers in Mahwah, New Jersey and Alpharetta , Georgia. The information centre provides all the details to customers with proof of delivery and even responds to customer queries. Through the automated packing system UPS monitors its all the details throughout the process as such , sender to receiver, bar codes present at the packages send message to the computer and filters the information and sends it to customer to see the status of the package.

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UPS web site is designed to provide information about package movement, check delivery routes, and calculate shipping rates, time in transit and schedule a pick up. UPS also provides tools such as CISCO systems to embed UPS function in their own website to track and calculate. The customers dont needs to visit UPS site to check all the details (Laudon 1944). Self Evaluation:The understanding of what the company need for the competitive edge and infusing that need into the revaluated business strategy with the advance information technology has brought the UPS to the level where it will acquire more market share than before. Training of employee and proper understanding of IS has not made impact not only within the organisation but also outside the organisation. The consumer will prefer UPS over any other company because of a) Transparency of cost, time and trust. b) The significant reduction of any chance of error ( i.e. wrong package delivery, misplacement of the package, time error and all) c) The ISSP (Information System Strategic Planning) process involves a long range planning for the funds, human service, technical expertise and hardware and software capabilities need to exploit such opportunities (Baker (1995)) Thats the reason why the extensive use of internet has made people to join themselves with UPS. Organisations like UPS can achieve more success by developing software for smart phones as more and more mobile phones are connected to internet so a user can directly enter from

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the mobile platform and access all the details provided in the website. It will also resist the customer to use the website often and will be less time consuming.

CHALLENGE - 2 (SOLUTION) BUSINESS PROCESS REENGINEERING AND PROCESS IMPROVEMENT:Just bringing the change doesnt fulfil the requirement to achieve success. Most of the time the managers in an organisation is self believed to get the best possible outcome by introducing an IS in Business process & making it a digital firm. Instead the senior level management should brainstorm with the entire functional manager to understand which area needs the help. That way they are saving themselves from extra cost and saving themselves from future trouble because of realising that the first attempt was complete waste of time and money. Most importantly it would have a significant impact on the company goodwill if the problem area is not detected & treated at the right time. We need to reconsider our business process. 1. Business process reengineering: It is a radical design in a business process, combining steps to cut waste and eliminating repetitive paper intensive tasks in order to improve cost, quality and service, and to maximize the benefits of information technology (Laudon 1944, 452-453).

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Ford Motor Companys invoice less processing: Ford had 500 people in North America in accounts payable organisation. The accountants and clerks spent most of their time resolving issues in purchase orders, receiving documents and invoices. Ford witnessed the problem and issues were throwing both departments in jeopardy and affecting the manufacturing process. Ford reengineered its accounting payable process, instituting the system where the purchase department enters a purchase order into an online data base that can be viewed receiving department to receive the ordered items. If the goods matches with ordered placed its automatically sends the check to the supplier. The reengineering process reduced the headcount in accounts by 75% and produces more perfect accounting information. Henceforth it obsoletes all the major issues in accounts department (Hammer 1993). 2. Business process management (BPM): It enables organisation to manage incremental process change that are required in many areas of the business. BPM includes workflow management, business process modelling, quality management, change management and tools for reaffirming business process into a standardised form where they can be manipulated. Organisation who is using BPM would use business mapping tools to identify and document to identify existing process and create a process for new models. This can be transferred to software systems. There are vendors like IBM, BEA Systems, Vitria, intaglio, File net etc which supply business process management products.

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3. Enterprise resource planning(ERP): An ERP system helps to co ordinate and link all facets of business, including planning manufacturing, sales and finance (Schwarz 2006),and has the ability to eliminate expensive links between isolated IS in different business function. ERP provides a single interface to for managing all routine activities performed in manufacturing. It can integrate several hundred applications. It plays a critical role in getting small and medium sized manufacturers to focus on business process. ERP is standard software that automates key aspects of the business process of an organisation. Systems Application and Products is the world leading ERP provider. The figure illustrated below shows the business and technology drivers that lie behind wide process of ERP (david boody 2008).

Business drivers
Changing business environment Globalisation Information intensity Ecommerce

Business process changes

Integrated organisation Firm-wide overview Quick integrated decision making Totally unified information system Customer driven business process.

Technology drivers
Internet Database technology Available of networks IS capable of tightly coupling and coordinating decision making of entire industry

In order to implement all those above structure we need to evaluate strategy implementation in the organisation which is been discussed further:-

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Conversion:
It is the process of changing old system to a new system. There are four main conversion strategies which can be employed in implementation (P.laudon 2005):-

1) Parallel strategy - both the old system and new system are run together to assure
new one has the potential to perform new function effectively. In the event of errors or processing disruption the old system can be used as a backup. However this approach is expensive as it may require an additional staff to run the extra system.

2) Direct cutover strategy replaces the old system with the new system on a desired
date. It is less expensive than the parallel strategy but if there is a problem with the new system then it turns very costly than the parallel strategy. There is nothing left for the backup dislocation, disruptions, and the cost of correction may be enormous.

3) Pilot Study strategy - Introduces a new system to only a limited area of the
organisation as such a single department of an organisation. When the operation is countered successfully then it is installed to all the respective departments.

4) Phased approach strategy it introduces new the new system in stages either by
functions or by the organisation departments. For an example it can be introduced to a salary of workers where they are paid on hourly basis later after six month it can be applied to monthly salaried employee, if this system is introduced corporate headquarter needs to be converted first followed by operational unit four month later.

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ZARA:
In Zara retailers often take 12 months to move from idea to a product which means they focussed on long time fore cast which was major issue and drawback in Zara and any organisation in same scale. Zara developed a fast garment design and production process which enables them to take market keeping customer demand. The diagram illustrated below represents the older and newer process system in Zara (www.zara.com).

DESIGN

PURCHASE RAW MATERIAL

MANUFACTUR ING

DISTRIBUTION

SELLING

DISCOUNT

TRADATIONAL BUSINESS PROCESS IN ZARA (8-12weeks)

SCAN FASHION SHOWS

SIMPLIFY AND PRODUCE LIBRARAY OF DESIGNS

MATERIALS BUY RAW

FINAL DESIGN OF NEXT BATCH

MANUFACT URING

DISTRIBUTION

SHOPS

EXPERIENCE IN SHOPS, BUYING PATTERNS.

ZARAS BUSINESS PROCESS (1-2 WEEKS)

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CHALLENGE 3 (SOLUTION)
World Wide Web (www) expansion has led immense growth with the internet usage vulnerability. Constant usage of internet has minimised the work load and community services has attracted such as orkut, face book , linked in , has set a majority of the population but they are unaware of their personal details are even getting shared. For example - hundreds of web sites allows Double Click( www.doubleclick.net), an internet advertising broker to track the activities of the visitor in exchange of revenue from advertising based on visitor information. Double click uses this profile of each online visitor. Another example NORA (non obvious relationship awareness) is a technology that can find hidden connection between people and other entities by analyzing information from many different sources to correlate relationship. PRIVACY AND FREEDOM FROM INTERNET AGE:Privacy is the claim of individuals to be left alone, free from surveillance from individual organisation. Countries like U.S, Canada, Germany has made constitution to give privacy to respective organisations. They have made certain amendments such as Video privacy protection act1988, computer security act of 1987; federal managers financial integrity Act 1982 etc which comes for privacy but the organisation has to reveal their work assessment. Internet technology has posed new challenges for the protection of individual privacy. Information travelling in this wide network may pass through different network before reaching its final destination. There are some serious threats cookies, web bug, spyware are computer codes which keep the track without knowing the consent.

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Cookies are tiny files deposited on a computer hard drive when an individual visits certain websites. When they return to the site they get updated and provide relevant interest in respective fields (laudon 2005).

Web Bugs - are tiny graphic files embedded in e-mail messages and web pages that are
designed that are designed to monitor who is reading these messages? They transmit all the details to the user to the monitoring computer (Laudon 2005).

Spyware can secretly install itself on an internet user computer by piggy packing on
larger application. Once installed it can track user movements on the computer and send it to a source (laudon 2005). Is in a world where internet is facing security and privacy there are some vendors which provides technical solution.

p3p is a software which enables websites to translate their privacy policies into a standard
format that can be read by the users web browser software. (Laudon 2005). Microsoft internet explorer, cookie crusher, Paraben cookie manager helps in managing cookies (Kenneth C laudon 2005). BHO Cop, AdSubtract controls ads that pop up based on user profiles and prevents ads from collecting and sending information (Laudon 2005). Pretty Good privacy (PGP), Ziplip.com, Safe Message.com scrambles so they can be read (laudon 2005). Privacy of personal information has been raised to new level. All companies need enterprise wide privacy policies that need to be addressed the highest privacy standard required in the
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working environment. Privacy is about respect for personal information, fair and ethical information practice.

CHALLENGE- 4 (SOLUTION)
If a company wants to develop better relationship with its customers it first need to re think the key business process which relate to customers, from customer service to order procurement. It may also include job description, performance measures, compensation systems, training programs. If there are choice for customers as such e-mail, web, telephone then marketing sales are no longer treated separately. A customer may call for order by phone use the website to check the status of the order or sent a complaint by mail. For those companies which focus on product and services, this means re-centring on customers which could be a radical change in company perspective and culture, especially who are in marketing, sales, services and other customer relied functions. As example in some call centres employees are rewarded on their ability to solve a customer problem as fast they can. This type of strategy reflects shorter telephone lowers the cost. A CRM approach would focus on customer satisfaction per calls not on just call handling efficiency (Mahieu 2002). Another reason for the failure of CRM projects is poor management. More time, effort and money have been spent exclusively on managing organisational issue. It is difficult to move from a conventional customer strategy to CRM philosophy. CRM projects are cross

structure coordination: It, Marketing and Production operate in same wave length though they have different orientation and culture. Success of CRM depends on projected by all departments within an organisation not by a single individual unit.
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For example: in terms of computers and laptops what was available in the market we had to purchase and be satisfied/ content with that. Dell came up with the revolution-it allowed its target customer to go online and order the customised product which would suit their needs and requirement. It became a tailored product which proved to be a successful strategy through information system & technology. Looking at DELL computers who has made an immense business by developing a better CRM within customers by allowing them to customise their lap top and providing immense service now other big organisation like HP, IBM others are getting into Customer Relationship management.

Conclusion:
Information system in today century has become so important that its unthinkable to exist without it. Consumer rights, the right to information, ethical society and other legal system backing up the human race. Today geographic area is not measured by its length but by its reach and availability but by developing concept of IT/IS. If the world of internet did not exists then business like face book, twitter, Amazon, eBay, online- distance learning programme, FedEx, UPS, DHL wouldnt have become a multibillionaire company and not to forget Bill Gates. They would not exist. Now a company is not restricted to their own land for market share. Today, world is one market and we all are their consumers. Today Intel design software for heavy duty trucks with the software which keeps them plugged with their company. Those software helps the company to track their trucks, the

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route hence it leads to reduction in fuel consumption and hardly any chance for the truck to loose their way or ask for help if any required. Information system is required from hospital to state security system. Without these two active functioning with the kind of population-we would have never felt safe. Therefore, I agree that in today century-our business needs to update itself with the right technology in order to survive in this cut-throat competition with implementing right strategy.

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