There are six reasons or objectives why businesses use information system: 1. Operational excellence. Businesses improve the efficiency of their operations in order to achieve higher profitability. Information systems are important tools available to managers for achieving higher levels of efficiency and productivity in business operations. A good example is Wal-Mart that uses a RetailLink system, which digitally links its suppliers to every one of Wal-Marts stores as soon as a customer purchase an item, the supplier is monitoring the item, knows to ship a replacement to the shelf. 2. New products, services, and business models. Information system is a major tool for firms to create new products and services, and also an entirely new business models. A business model describes how a company produces, delivers, and sells a product or service to create wealth. Example: Apple Inc. transformed an old business model based on its iPod technology platform that included iPod, the iTunes music service, and the iPhone. In smart phones Samsung taken over from Nokia with cheaper and better performing products etc. 3. Customer/supplier intimacy. When a business serves its customers well, the customers generally respond by returning and purchasing more. This raises revenue and profits. The more a business engages its suppliers, the better the suppliers can provide vital inputs. This lower costs. Example: The Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of information systems and technology to achieve customer intimacy. They use computers to keep track of guests preferences, such as their preferred room temperature, check-in time and television programs. 4. Improved decision making. Many managers operate in an information bank, never having the right information at the right time to make an informed decision. These poor outcomes raise costs and lose customers. Information system made it possible for the managers to use real time data from the marketplace when making decision. Example: Verizon Corporation uses a Web-based digital dashboard to provide managers with precise real -time information on customer complaints, network performance. Using this information managers can immediately allocate repair resources to affected areas, inform customers of repair efforts and restore service fast. 5. Competitive advantage. When firms achieve one or more of these business objectives (operational excellence, new products, services, and business models, customer/supplier intimacy, and improved decision making) chances are they have already achieved a competitive advantage. Doing things better than your competitors, charging less for superior products, and responding to customers and suppliers in real time all add up to higher sales, and higher profits. Example: Toyota Production System focuses on organizing work to eliminate waste, making continuous improvements, TPS is based on what customers have actually ordered. 6. Day to day survival. Business firms invest in information system and technology because they are necessities of doing business. This necessities are driven by industry level changes. Example: Citibank introduced the first automatic teller machine to attract customers through higher service levels, and its competitors rushed to provide ATMs to their customers to keep up with Citibank. Providing ATMs services to retail banking customers is simply a requirement of being in and surviving in the retail banking business. Firm turned to information system and technology to provide the capability to respond to these. Information systems are the foundation for conducting business today. In many industries, survival and even existence without extensive use of IT is inconceivable, and IT plays a critical role in increasing productivity. Although information t echnology has become more of a commodity, when coupled with complementary changes in organization and management, it can provide the foundation for new products, services, and ways of conducting business that provide firms with a strategic advantage.
Posted on: Mon, 29 Sep 2014 15:01:55 +0000
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