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Question: Information systems in contemporary organizations tend to be interconnected rather than isolated from each other. From your understanding of organizations, business processes, and systems, suggest how the information systems in the case study may be interconnected (or could be made to connect with other informations systems within their respective organizations. Explain your reasoning and explicitly state any assumptions you make.?
Increasing the number of different kinds of Information Systems in a company creates a challenging task to link them together. “Over a period of time, corporations end up with a collection of systems, most of them older, and face the challenge of getting them all to “talk” with one another and work together as one corporate system” (Laudon, 2018). To deal with this problem, several solutions are available in the market.
One such solution is enterprise applications. Enterprise applications are systems, which are responsible for integrating similar sets of business functions and processes to improve the organization’s overall performance. Enterprise applications help to increase flexibility and productivity of the business by coordinating and integrating their business processes, thereby, enabling efficient management of resources and customer services. Four major enterprise applications are: Enterprise Systems or Enterprise Resource Planning (ERP) Systems, Supply Chain Management (SCM) Systems, Customer Relationship Management (CRM) Systems and Knowledge Management Systems (KMS) (Laudon, 2018)
The strategic business objective of CYB was to maximize value for its customers. CYB used a customer profitability BI application which was expected to identify valuable customer groups and differentiate the customers in terms of their profitability to bank. CYB adopted an approach similar to that of First American Corporation (FAC) and other companies, which transited from the traditional banking model to a customer relationship-oriented approach (Cooper et al, 2000). The type BI system that was used by CYB can be attributed to the Customer Relationship Management (CRM) System. “CRM system provides information to coordinate all of the business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction, and customer retention” (Laudon, 2018).
CYB’s BI application integrated data from databases across different business functions which served as an input to their customer profitability models. The model inputs were extracted from the customer personal (profiling) database, product and service databases (contains information about bank’s main products), the product and services costing models and the databases containing records of customers’ one-off fees and charges. The pertinent data which was collected and integrated then was processes as per their profitability model to estimate the profitability of the customers and analyze the trend in customer behavior. The BI output was summarized into profitability dashboards, analytical memorandums and other several other intelligences, which assisted CYB in decision-making processes at operational and strategic management levels. (Audzeyeva and Hudson, 2016)
The customer profitability BI application could be hybrid of a Decision Support System and an Executive Support System that provides reports for use of both operational managers and senior executive managers. Some reports are data driven DSS such as Business indicators for monitoring and improvement of performance while others are profitability dashboards for top executives. Given this scenario, the CYB could install an enterprise application that span functional areas, execute business processes across the firm and include all levels of management. The enterprise application would incorporate supply chain management system, customer relationship management system and knowledge management system. In addition, it will be cost effective and efficient if such a system is outsourced to Amazon cloud.
Wood Plc. implemented ERP Enterprise Resource Planning (ERP) systems developed by SAP to integrate data and business processes of different business units and functional areas for better coordination and control. ERP systems help organizations to manage their widespread business activities and processes through data integration and use of standard procedures. Also, ERP systems enhance transparency in the organization as it makes local activities visible through better accessibility of data regarding the organization’s processes and functional areas.
Wood Plc. particularly used ERP system to standardize, integrate and centralize its accounting practices and assumptions by making its business units (even non-German Subsidiaries) to comply with the German accounting logic (assumptions and beliefs developed overtime as to how accounting should be performed). Their idea was to use a centralized database for its dispersed business units to centralize various administration technologies used. “The new system led to tools and technologies being centralized at the HQ (Head-Quarters) to increase comparability and foster standardization among plants. This required the purchasing, production planning, accounting and other departments to substitute isolated solutions that were commonly only run in one country subsidiary with the universal SAP system” (Heinzelmann, 2017). Any modification to the SAP system were to be designed, tested, and implemented at HQ, then passed to the subsidiaries.
The research conducted on various organization’s decision processes that are supported by Business Information & Analytics (BI&A) indicates that the usage of integrator mechanism is high in the organizations having decisions that are either non-routine or uncertain. “The integrator is a lateral organization position that deals with the integration and distribution of information with the purpose of establishing a common understanding and reducing equivocality/ambiguity” (Kowalczyk, 2014) Such companies (having non-routine or/and uncertain decisions) gave importance to data variety. An explanation for this could be that using data from different sources would result in wider coverage and integration of different viewpoints for decision making, thereby, reducing ambiguity. These companies (having uncertain and non-routine decisions) could invest more in Enterprise Systems to integrate business processes from different functional areas, thereby, facilitate the flow of data from variety of sources.
The research also showed that planning plays a more important role in the organizations that have more routine and certain decisions. Such companies (with more routine and certain decisions) perhaps can use Knowledge Management Systems (KMS) to take advantage of relevant knowledge and expertise while formulating plans.
Regardless of the Quadrant that a company found itself in, the author emphasized what was referred to as a “3-V” model. The incorporation of business intelligence and analytics provides business processes with access to a greater volumeof information, a wider varietyof information, and information that is created with a faster velocity(Klein et. al. 2013, pp. 319–320). The addition of BI&A complements all information systems and harmonizes the organizational business processes as a whole.
The three articles provided multiple cases in which information systems were implemented by a business and by providing these examples, the reader was granted a different perspective of the complexity of this process. While the information systems are designed to unite the many aspects a business, the degree to which that is accomplished varies from business to business. The Clydesdale Bank and Yorkshire Bank article brought to attention that long-term BI benefits can only be maximumly extracted by a business with sound structure and a system in place to properly utilize the BI. In the second article, it was essential for the SAP system to be properly customized to each complex organizational process, as the Germanic accounting logic within the system faced challenges from subsidiary to subsidiary. Finally, the third article examined twelve cases and organized them into four quadrants that described the level of variety, volume, and velocity of data that the business processes utilized. It is apparent that information systems have the potential to support business processes and decisions, but the implementation must be designed in a way to cater to the organization and industry in which it operates in in order to create an overall interconnected and efficient system.