Topic 3 - Corporate Information Strategy

In the exam, you are expected to describe:

The factors influencing an information system within an organisation:

• organisation and functions of management methods for planning and decision-making, legal and audit requirement, general organisation structure, responsibility for the information system within an organisation, information flow, hardware and software, standards and behavioural factors, e.g. personalities, motivation, ability to adapt to change.

Information flow

• Describe the methods and mechanisms of information flow within an organisation, both formal and informal, and the constraints imposed upon that flow by organisational structures.

Personnel

• Understand the levels of task/personnel within an organisation: strategic; implementation; operational. Relate the needs of these three levels to the information system.

All organisations need a business strategy, without which they will drift and never fulfill their potential.  Aimless businesses find themselves ripe for take-over by a rival, or more likely, being wound up.  There are compelling reasons:

• An agreed set of objectives so that all departments are working towards the same end;
• Resources have to be allocated so that new products can be produced or new equipment bought.  This can only be done effectively if the expenditure is carried out in the light of an overall company plan.
• Organisations have responsibilities to stakeholders, e.g. shareholders, banks, or employees.

Business strategies are often based on SWOT analyses (Strengths, Weaknesses, Opportunities, Threats).  The diagram sums this up:

An ICT strategy is a part of the overall business strategy, but ICT is becoming ever more important as a business productivity tool.  Modern businesses cannot function without it.  However developments of ICT systems have profound implications on businesses in that:

• They need significant resources to be allocated.  One gets what one pays for; pay peanuts and you get monkeys.
• The lead to significant changes in the way parts of the business operate.
• People – need a highly motivated workforce, embrace change
• Process – lean, robust
• Technology – to implement the processes

There is a risk in adopting ICT solutions in that the tail wags the dog.  ICT is there to serve the needs of the business, not the other way round.  Successful implementation of ICT solutions will depend a lot on the personalities of the managers and their employees.  Systems imposed imperiously from above will not work effectively.

End User Computing

In the early days of ICT, computing solutions were developed by computer professionals and end-users were provided with systems that gave reports.  Sometimes these systems were not particularly useful for all aspects of the work, and some computer-literate users would develop their own systems, end-user computing, that would do the job exactly in the way that they wanted it to be done.  Some managers would take very rigid control (monopolistic approach) while others would allow a very free reign for end-user development (laissez-faire approach).  The advantages of end-user computing are:

• Creativity and expertise of end users is put to use;
• Users’ needs are met in exactly the way they want;
• There is no need to wait for funds to be allocated to upgrade the existing system by a software house.

There are disadvantages:

• Resources are not used effectively;
• Hardware and software might be incompatible between departments;
• Systems can become badly designed (a little bit of knowledge is a very dangerous thing) and even worse documented.  So a system designed by one user may be impossible for others to use.
• Threats to data, as controls to who may access it or modify it may be missing.

We have seen how there are pressures on companies:

• From customers
• From suppliers;
• Better products;
• New competitors.

The company needs to have strategies to counteract these:

• Keep costs down;
• Produce better products;
• Create new products that no one else produces;
• Lock suppliers and customers into the company’s products and services, by looking after them really well, by providing them, for example, with excellent after sales service.

Information Flow

·        Informal information flows come from chance meetings, reading magazines or newspapers, or watching the news on TV.

Formal methods of information flow can be:

·        Computerised information systems;

·        Software packages like Lotus Notes that allow several people at different locations to have the same document on the screen and work on it at the same time.   Meetings can be arranged when everyone is available;

·        E-mail;

·        Company intranets.

The key point is that there is some kind of procedure in formal information flows.

In traditional hierarchical organisations, great store was set on information flowing through the structure.  Decisions had to be made at successive levels.  This could lead to delay.  Anyone who buys a house will understand the frustration that the legal procedures take.    It is quite unlike the procedure for making any other purchase whereby you pay your money and take the goods.  A long and protracted legal process occurs where methods more appropriate to the 19^th Century are employed.  Lots of bits of paper are shuffled about the country.  The legal profession does not like computers, and many conveyancing companies are scarcely computerised at all.  The whole process could be done within hours, not weeks.  However the legal profession have a vested interest in keeping the information flow slow and bureaucratic; they make lots of money from it.

More dynamic enterprises can pass information rapidly about within seconds.

Levels of Information

When decisions have to be made, the time taken to make a decision depends very much on the level at which is made.  There are three main levels:

• Operational Level – day-to-day decisions such as ordering new stock.  These can be made by junior managers and can be done almost instantly, although there will be a procedure for getting the payments cleared by the accounts department.  They tend not to like it when unexpected invoices arrive without an order number!
• Tactical level – should we promote a particular product and in which stores?  Tactical information needs to be made available to middle managers, and several may be needed to agree on the decision.
• Strategic decisions are made by senior managers, possibly at board level.   These need time and care, especially if the decision will require major investment, for example setting up a new plant.  Detailed forecasts are made and different computer models are applied to show what might happen.

Now try the Topic Quiz

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