We are in the age of information. Today there are more than 23 million managers and 113 million workers in the labor force depend on information system to accomplish their business in the United States of America. Information systems are essential to achieve strategic business objectives. Today’s global economy, transformation of industrial economies, transformation of the business enterprise, and the emergence of digital firm require information systems essentially in business. Information system is the pillar for excessing business today. In many businesses, survival and the ability to achieve strategic business goals is difficult without extensive use of information technology.
There are six reasons or objectives why businesses use information system:
Operational Excellence:
In any business improves its efficiency and accuracy of their operations in order to achieve higher profitability. Information systems are also important managers for achieving higher levels of efficiency and productivity in business operations. As an example I can include that Wal-Mart uses a Retail Link system, which digitally links its suppliers to every one of Wal-Mart’s stores.
as soon as a customer purchase an item , the supplier is monitoring the item , knows to ship a replacement to the stores.
New products, services, and business models:
Information system is one of the main elements for organization to create new products and services, and also a completely new business idea. Example, Apple inc transformed an old business model based on its iPod technology platform that included iPod, the iTunes music service, and the iPhone. Customer and supplier intimacy:
If a firm service its customers well, the customers normally respond by coming again and purchasing more products or services and firm can increased revenue and profits by that.
The more a business engages its suppliers, the better the suppliers can provide vital inputs. These 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. There is another example; UPS got a tremendous result right after they introduced online tracking system. This made UPS the first choice of most of the target customers.
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 complains network performance. Using this information managers can immediately allocate repair resources to affected areas, inform customers of repair efforts and restore service fast.
Competitive advantage:
Only proper information system can make is possible to have important information about the competitors and ensure to have advantages from that. If a firm does not have the necessary information about its competitors, the firm could lose business. It is very important to have proper information about how the competitors how they are pricing and other things about the same products.
Survival:
Business firms invest in information system and technology because they are necessities of doing business. These 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 ATM’s 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 turn to information system and technology to provide the capability to respond to these. I would like to conclude with my personal experience in my work place.
Olympic Industries Ltd which is one of the largest manufacturing company in Bangladesh. This company has a number of factories and office alone with a head office. The company used to has a customized program developed by its IT department but the managers were not happy with the performances of the program. Recently the industry successfully installed SAP (Systems Applications and Products in Data Processing) and the manager found the program really helpful. They got a keen controlled over the every part of the industry from the corporate departments to the production unites. It is like the company in controlled in just one switch. Which means for better business Information System is must.
Citations
Text Book
http://wiki.answers.com/Q/Why_are_information_systems_so_important_in_business_today http://www.ups.com/search/navigate?type=quick&results=25&view=both&match=ALL&query=dele%20very%20system&loc=en_US
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