INFORMATIONAL SYSTEM: DANGERS, ADVANTAGES AND BENEFITS

mr Ljiljana Peci, dipl.ing.ma, ljpecic72@gmail.com, +381606791485 IHP Prva petoletka Trstenik u restrukturiranju Abstract: Business enterprises and other types of organizations and individuals in modern society, depend on informational systems: for managing their operations and activities, for maintaining competence on the market, for managing different service offers, and also for improving competence and capacities. Information and knowledge are vital economic resource nowadays. There are companies which have drastically improved their performances with IT introduction, and on the other hand, there are some companies which spent millions for new technologies, and without results. This fact leads to conclusion that purchase of new technologies cannot be guarantee for success, it is necessary to analyze the problem very seriously, with participation and support of top-management. If there is no complete support of top-management for this project, and if it is not a part of strategic business plan, do not expect any significant results. Informational System Introduction will probably be the biggest project and process for the company, and for company's management IT introduction main dilemma is: improvement and glory or resignation. Key words: informational system, top-management, performances 1. INTRODUCTION

We can be engineers, economists, lawyers, biologists, pharmacists, doctors But, being informed at the right time, on the right place, in the exact way is most significant, and it is nowadays clear to everybody. Every businessman's wish is to have system for quick reply to inquiries. For example, modern corporations depend on computer informational systems, that are necessary for operating their financial and business transactions, management of human resources; city councils also depend on informational systems - they cannot provide citizens with basic services in effective and transparent way; some individuals use informational systems to improve their knowledge, for shopping, for bank accounts and transactions, as well as for different financial operations. Since informational systems have provided different human activities, and as a result - greatly affected the society and changed the lifestyle itself. Important fact is that modern business and technologies are so much connected, that it would be impossible to manage any modern company without informational technology, or in business words: investment in informational technology is the project which changes your business. 2. LITERATURE REVIEW

An example for successfully implemented IS is definitely DELL company. Here are some facts about this company: Dell manages one of the biggest commercial internet pages in the world, each day Dell sells computers in amount of 40 million dollars on their pages. Main characteristic of this internet page is Premier Page programme, which serves 40 largest companies, government and education customers all around the world. Namely, every bigger company, which becomes customer, gets its own Premier Page page. Premier Page has some smaller pages, which are often connected with customer's internet. Every day, 30 millions of Dell's contents are ordered this way. Each customer follows his order from company to his premises. Considering that Dell's suppliers have access to data about running orders, they can accord their own manufacture and delivery. In this way, suppliers immediately know about the changes in requests. Internet and unique marketing approach have in this case shown as an excellent combination. [4] Also, the case of company Cisco System is interesting. This company has business system on the internet, customers order goods via internet, and suppliers know what materials and what parts should be delivered to the company, because they are present in Cisco's dynamic ordering software. About 98% of orders go immediately, which is also time saving both for Cisco and the customer. Many problems clients solve by themselves, on the internet, because great deal of support is available on the internet, while engineers solve only bigger problems. Using this service, about 80% of inquiries is being solved. [4] Cisco's technical support productivity is in this way increased 200-300 times, and money saved is 125 million dollars for technical support staff. Downloading software directly from Cisco's page, about 180 million dollars is saved per year for distribution costs, packing and copying. Placing catalogue with prices and products to company page, another 50 million dollars is being saved. Also, every year 37 million dollars is saved by servicing employees. For example, only two persons work on following and booking documents related to travelling expenses of 17.000 employees. Total Cisco's money saved per year, by placing internet application, is 680 million dollars. Company Tenneco has also made some changes, and the results are significant. Data are standardized, common databases are formed, for coordinated market planning, equal resource distribution, united purchase of raw materials, optimal processing. During implementation process, cooperative acting between employees is encouraged, they improved employment by well informing,

keeping and improving employees . Following and rewarding individual contribution is connected, customers and products are also followed, in order to make decisions for the prices.[ 3] Company Procter&Gamble has also made a change by implementing IS in purchase and distribution chain. Cooperation is realized with suppliers, for creating virtual production capacities, managing customer's stocks in order to anticipate market changes. SajtReflect.com invites customers to choose form, packing, and package is sent directly.[2] An example of obviously bad implementation has been made by company Heshey Foods, well-known candy company . They invested 100 million dollars in ERP. New system was designed to automatize and modernize almost all Heshey's business processes. New contents should have supported after manufacture: forming prices, taking orders, managing raw materials, manufacture planning, truck loading, delivery schedule, booking accounts for orders, value evaluation for marketing campaigns However, situation was bad on the field. Because of bad training of the employees, they could not manage to deliver candies to customers on time, and the result was loss before Halloween and fall of 30% on stockmarket. [ 1] 3. RESEARCH RESULTS ANALYSIS

3.1 Expectations Expectations from Informational System Introduction are huge, and unfortunately, percentage of successfully implemented is around 40%. It often happens that top-management of powerful companies is surprised: experienced managing personnel is engaged experienced consultants are employed team for transitional period is formed strategic plan is created big amount of money is invested

and there are no results. We cannot criticize these expectations, because what they hear is story about improvement in the following areas: disappointments and losses caused by bad communication between company and their partners are eliminated discord between customer's needs and development of reliable and lucrative products is reduced speed for raw material delivery and speed to produce finished parts can be increased receiving data, expertise systematization and sharing the knowledge can greatly improve business process and customer's services organizational bonds are cancelled, so executive managers can be in closer contact with their clients employees can have more independence when they do their jobs On the other hand, informational technologies provide: global communication possibility, which becomes faster and more reliable with modern networks, that provide great amount of data by very accessible prices standard hardware and software platforms, together with business data standards, and their exchange in the enterprise resources standard (ERP), made powerful business processes available all kinds of data - numbers, text, drawings, photos, sound, video - today can be digitalized, saved, operated and exchanged between computers, which are part of the purchase chain of some industry. Companies apply these kind of projects for many reasons: to improve business processes inside the company, to improve business process between facilities of the big company, to introduce new business processes, to create new ways of doing business between companies. 3.2 IDENTIFIED PROBLEMS THROUGH THE RESEARCH By summing up results of business improvement, advantages mentioned in this context are: improved informational system, improved flow of documentation, improved process connection, improved resource following and planning. As a consequence there are: Lower expenses Market expansion

Deep and wide economy expansion

Logigal question is brought up:Why there are no projects like this anymore? Namely, the situation is the following: Almost 1/3 of projects is finished before anticipated time Only 1/10 reaches its main goal Evaluate violation and activities schedule is around 100% Expected effects are around 50% from expected Paret's rule is reliable in this case: 80:20 Also, analized results show: The wider the company, communication between people is slower, and that causes additional logistics costs Time zones and cultural differences are also disturbing factor Organizational structures, management policies, ways to approve investments - are the biggest problem Diferrent existing hardware and software solutions are affecting changes immensely, and suppliers of earlier software and hardware solutions can also cause problems. Principally, all reasons can be sorted in four basic groups: a. Company's heritage b. Current business conditions c. Needed way of changes d. Non-existance of the goal Company's heritage is the factor which mostly affects business of the most successful companies. Technological old-fashion is the highest risk, because there is always pride for the trademark and brand. Being afraid to change what is well-functioning, innovative and organizational processes are avoided, and the most ambicious and intelligent employees are most likely finding better opportunities in other companies. IS investments are small and local, with many various applications. This situation is especially present in companies ruled by governments, unions, politicians or some satisfied buyer(supplier), and they disable conversation about radical changes. In these conditions, it is hard to create positive mood inside company for high risk projects and long lasting. Regarding that these changes are huge, these activities exceed all business made before. New employees are needed, also salaries will have to be changed. Changes within company, will make the change in partnership, and investments are necessary in this segment as well. Regarding current business conditions, companies that need radical changes, are usually having organizational stress and financial pressure, and in this way they avoid high money investments, time and emotional energy. In companies like these it is hard to approve spending millions of dinars for management expenses for IT structure, when other business structures are aiming to spend much smaller amounts of money. In these companies employees are burdened with increased productivity programme, they are physically and mentally exhausted. Resistance to changes is growing and instead of making changes A.S.A.P, it seems logical to wait and check how things are going. In the end, biggest obstacle for company changes is non-existance of any description of company's future, which could be used to explain why, what, where and how will the organization change - vision that could start imagination, resources and company's energy. This problem often manifests when there is no strong changes-protector in the company, or when there is no strategic plan with clear specifications of resource schedule, business goals, responsibility, delivery schedule. A team of sharp and energic managers who can think about possible company's future and making company changes must be created. This group should be challenged to ''think beyond usual limits'' and ''to break existing rules'' if necessary, in order to create new business models, with significant advantages for their company. Sometimes even best iniciatives of these groups fail because: management's attention and support is lacking management's orders are often inappropriate attempt to enter the field they don't know not realizing reasons for investment decisions of various interest groups, etc. Globally, all these stated obstacles are mostly not of technological nature. Failure can arise from mistakes in management policy, strategic planning process, way to approve investments and defined ways of successful evaluation. Dramatically improved company's business demands equal dramatic business process and management changes. It is nave to hope that only investments in chosen technology will lead to strategic business change, and to expect that business processes will merely adjust to new infrastructure.

For success, it is necessary to have: Clear aim - meaningful plan with business goals and realistic evaluation of starting point Strategy with clearly defined achievement evaluation and responsibility distribution Changes in organizational and management structure, as well as investments in new company's abilities and skills of employees Providing resources and management reliability, in order to take courage to do sth. 4. MANAGEMENT ROLE IN THE IMPLEMENTATION PROCESS

By analyzing many practice examples, as well as these two, we concluded that two deciding factors: development strategy and topmanagement support, are necessary to create minimum conditions for process realization. From that aspect, organizational changes approach and investment in IT has to be considered through their influence to: environment, strategy, processes and infrastructure. It can be realized as passing from one business structure to another. Also, organization must prepare all the necessary activities that will take place during process of passing from one business structure to another. This can be treated as transition management. The third important segment are available resources. In this context we suggest model with four phases: diagnostics phase, strategy defining phase, preparing phase and performing phase. In all these phases, management should be stronglly involved. 4.1 MANAGEMENT AND DIAGNOSTICS PHASE Diagnostics phase includes environment evaluation. It must answer to questions: why do we want to make a change, what is the environment like, financial organization status, market position, what are competitive and legal threats. After this it has to consider status quo and strategic alternatives. (Which strategic activities are desirable, and which are necessary, which is necessary process change degree and what can actually be done). First step is to diagnose existing business status and needs. Status recording takes time which is by all means measured in months and done by expert team. Recording can be done by company's expert team, or team outside the company, engaged as consulting house, or mixture of these two options. Managementt should make this decision and it is suggested that the engaged team is created from people of different company facilities, of diferrent competencies, these people should be real experts, dedicated to work, dynamic but stable persons. It is necessary to diagnose strong reasons for change. As long as executive management does not decide which business strategy they will follow, they cannot take over control of necessary changes. You must insist to bring strategy, THERE IS NO JUSTIFICATION FOR NOT BRINGING! In this phase, it is important to ensure that management understand importance of organizationa culturel, which has two basic components: basic values conviction of employees. Striving to change the culture by force is not characteristic of business manager, so business strategy has to be the same as the beliefs of people who carry it out. Changes of basic values and convictions of employees can be carried out in a long-term period, by re-shaping organizational structure, management process, and group of authorities.

4.2 MANAGEMENT AND DEFINING STRATEGY PHASE Defining strategy phase leans on knowledge acquired during diagnostics phase. In this case we have some important elements. In this phase strategy and vision for the change is defined, and also strategy to achieve this goal. Strategy must hit sensitive balance between desirable and possible. To define strategy, general manager has to respond to main question: where and how will we compete? And that means answering to some important questions: which are business opportunities that our company will follow, what is our goal regarding other companies and geographic markets, what products and services will we offer, how will we differentiate our products and services from competitors, what is our company doing better than any other competitor, what can our company do better than competitors to survive on the market. In defining strategy, management should try to hear as much opinions as it is possible. Getting opinions has to be a process.If people are involved in making stratgy, they would be devoted to them. On that way, resistance is going to be on the smallest level.

Plan for needed investments has to be adopted, and also the programs which will define development plan for the following period, as well as detailed time schedule for these programs. For some plan to succeed, company's management must understand and like the plan. By presenting facts exactly, stronger support is reached and presenting results should be continued, in order to keep the same intesity of support. 4.3 MANAGEMENT AND PREPARING PHASE In preparing phase it is necessary to prepare for the new organizational infrastructure. We suggest engagement of the outside company to estimate the situation, and also to choose experienced leader because of the segment's importance. Important segment of this preparing phase is preparing for new IT structure which includes: range and amount of financial investment. IT programme schedule depends on priority schedule, project progress, given resources. After this, some more important decisions have to be made: choice of unique ERP for the complete system, in accordance with stated and established criteria for evaluating solution (experience from companies of similar size and manufacturing programme should be used), choice of modul that will be used shaping and making corporative intranet establishing standards for table computers in the whole company depending on working place needs. By carrying out detailed analysis in diagnostics phase, if there are failures in skills and management, program ''management education'' is probably needed and also ''business infrastructure improvement''. After identifying weaknesses, it is necessary to organize seminars to increase expert level and knowledge from the following areas: Informational systems Accounting management Process re-engineering Team spirit development TQM Operational execution Strategic plan Industrial marketing Increase of working efficiency Top management should visit these seminars individually, to assure that the rest of the team misses nothing. As additional effect, seminars create new team spirit and optimism. It is very important to choose good team for implementation, which means: decision to engage experts from outside, with help of own staff, or mixed structure. We suggest choice of combination, and from each company 15 sharp, energetic, hard-working employees should be delegated. They should pass the education of the company engaged to introduce implementation. Training must be adequate and should last 3 to 4 months. 4.4 MANAGEMENT AND PERFORMING CHANGES Before realization, performing plan should be checked again (time, modul schedule from starting point, where is each modul taking place) With implementation beginning, starting from common data definition, problems are appearing. Some of them are: local habits, government regulatives and market demands, resistance to common practice objections of regional managers because of operational difficulties and new ways of booking data. Objections are solved through organizing project activities designed to give answers and remarks immediately after performance, management board meetings are always organized, as well as meetings on local level, which are visited by executive manager if

necessary. Objections should be solved in an adequate way, people should even be told to find some more appropriate job if they do not want to accept changes. Management board meetings should be organized always, for example on Fridays, so that all team members affected by the project can express their interests. In this way, it is followed whether jobs are done by the development plan. It is necessary to follow installing moduls one by one. It is important to have fasibility plan. 5. CONCLUSION

Investments in ERP are probably the biggest, most expensive and potentially most dangerous resource investments in company's history. Detailed state recording enables viewing weaknesses and brings decisions how to exceed them. It enables detailed financial calculations. For the success of complete implementation process, manager competence deficit must be removed. One of the main problems of manager practice is that management must become educeted in the field of: managing projects, managing risks, managing people.. Standard ERP model should be chosen, which can be installed easily, and introduction plan should be followed by detailed plan of necessary resources and comparison with other possible solutions. Also, it must be invested in IT sector personnel (they are overloaded, because they also do running jobs and preparing or doing new jobs, so new salary system should be introduced). Existing resources should be used maximally, but consultants should be engaged where there is time, scientific and financial basis. Transition and re-engineering goals must be clearly defined, and for insurance you must provide support from general manager. Without this obvious support, you should not enter the project. Weekly revisions of projects are desirable, and possible changes require intervention. If there are some big changes, for example: deadlines, implementation range, new requests, it is necessary to do project revision with defining new deadlines, necessary finances, as well as needs in other resources. Implementation must not be accelerated for the cause of quality. What you must count on in this project is resistance inside the organization. These resistances will be out of: fear of new, conflict with tradition and habits, because of various personal interests and interests of the interest groups. And they will be very dangerous, where silent resistance is greater danger than public. Each company started these projects expecting the best possible results, but results were diferrent. After analyzing international and domestic experiences in IT implementation, the conclusion is: it is always easier to criticize for some days or months, than make the right decision unpredictable things often do happen, than not unpredictable factors result in making decisions that nobody wanted some decisions understand only those who were directly involved in the process for company's management IS introduction is main dilemma: improvement and glory or resignation IS introduction is process.

LITERATURE:

1. Severance, D.,Passino, J., IT u primeni, Poslovna kola Univerziteta u Miigenu, Miigen,2002 2. Shanmagan, R., Forcht, K., Busing, M., SAP R/3: A Reengineering toolat Tenneco, Inc, Journal of Computer Informational System, Fall 2000, Vol 41, Issue 1, 3. Himelstein, L., Galusyka, P., Procter&Gamble gives a birth to a WEB baby, Business Week, 09/27/99, Issue 3648, 4. Trommer, D., Transformation of the business into a multimilion- dollar company, ,Electronic Buzers' News, 12/21/98, Issue 1140, ISSN 0164-6362