Discuss about the Information System of Amazon.
Effective use of the information system in the business potentially increases the competitiveness. The use of information system is to provide proper information to the people seeking them at the right time. The companies can use it for storing, tracking, manipulating and distributing the information from the gathered data to proper persons in the time of necessity. Various advantages and disadvantages can be identified in the in the use of the information system. With proper use of the system can provide potential advantages to the organization. Some companies build their own IT team for handling the data and use it as an integral part of the organization. Whereas, some companies outsource the information system work to the popular IT companies like IBM, Netflix, Google and many more (Laudon and Laudon 2016). The company under consideration is Amazon, an international e-commerce business that based in America. A brief background of the company and their product is provided along with an overview of the organizational strategy. A detailed study of the IT strategy and its competitive advantages in operations, business process, and competitive strategies is performed. A brief recommendation is provided at the end of the study.
Amazon is an e-commerce business established by Jeff Bezos in the year 1995. It was initially an online bookstore fulfilling the vision of its founder. In nineties, Amazon took the first initiative to bring all the big names in the book industries around the world to the doorsteps of the customers. The first orders were deliver within 30days to the customers of 50 states and 45 countries. In was a grand success for them as it was a big deal to work with this potential in the nineties. The customers had only one thing to do, that is search and select for the book and place the order to Amazon. The company opened their doors for the retailers and individual sellers in the year 2000. The service of the company now extended towards four types segment markets that are sellers, customers and enterprises and content editors (Amazon 2015). Only the customers are the segment who purchases the products, whereas the other segments use their services. Amazon is a platform for the later three segments to reach of the customers around the globe. In the mean time Amazon has shifted from selling book to all kinds of retail products. The customers can reach out the company through their official website www.amazon.com or using the Amazon smartphone app. Hence, Amazon is both a product seller and a service provider according to the target market. Since its starting time, Amazon had been a customer centric company. The business strategy for the company is hence to provide a vast selection of product in such a low price with maximum satisfaction level (amazon.com, 2017).
Initially the company focused on selling only books of the large publishing companies around the world. Now it sells almost any possible tangible thing to the customers. On the other hand, it also provides service to the customers such as retailers, manufacturer by providing online platform for them.
Amazon has perfectly aligned their IT strategy with company’s overall strategic goal with the help of Customer relationship management and information management. They have managed to keep their website system separate from the order system for a long time. Moreover, their IT played vital role in developing the company’s global development. Major contribution of their It lies in both streamlining the management activates and serving their customers with diversified offers at the same time. They have completely merged their IT strategy with their overall business strategy for achieving the company’s goal. It can be found in every business level of Amazon starting from sale to the delivery of the shipment. The utilize multi level e-commerce strategy. Their business has always been of two types that are business to business and business to customer model (questjournals.org, 2017). For the recent growth in e-commerce population, the business is now focusing more on customer value using the IT tools for getting their reviews and using them in value creation and customer satisfaction. Use of IT can be noticed in payment system and product selling where CRM of the business strategy comes in. They have blend logistics system in CRM to gain access to the customer information database (Khodakarami and Chan 2014). Moreover, they use incentive-marketing tool as an integral part in each of their marketing strategy in the process. The use of virtual store from on the other hand enabled Amazon to retain their current customer loyalty simultaneously attracting the new ones by the use of word of mouth marketing (Arvidsson, Holmström and Lyytinen 2014; Mithas and Rust 2016).
Company uses their information system in various aspects like transacting process, recommendation system, supply chain management, and many more.
Transaction process involves two types namely one-click purchase and secure credit or debit card payment. In one-click purchase, company’s information system stores the customer’s previous transaction and process accordingly. In secured transaction, customers’ private details are encrypting to secure it from the internet (Laudon and Traver 2013).
An intelligent recommendation system is implement by the information system of amazon that records the customers’ past purchase and searching data. It enables the company to recommend the customer his favorite items in the next visit. It is base on the linking and data mining. This system allows Amazon to provide maximum customer satisfaction (Walunj and Sadafale 2013).
It enables the customers to select desired item from the item catalogs where they can gain access to millions of items. All they have to do is use the searching tool in the company website (Lu et al. 2017).
Supply chain system is the reason behind the company’s success in the year 2004. As discussed earlier, the company invested a bulk amount of money to renovate their entire management and IT. For the enterprise resource management, Amazon utilize oracle that has a giant database to hold information that are related to the customers. It automatically locates the customers location and generate the supply process from the nearest warehouse for the fastest fulfilment of the distribution process. Customer Relation Management on the other hand looks after the customer satisfaction for the company. All the information related to customers are recorded, stored in the database of the company. The information system automatically initiate and utilize the data whenever the customer returns for purchase and make the customer to experience easy shopping experience (Al Imran 2014; Christopher 2016).
The company started its venture in 1995 using website system and order fulfilment system in separate process to obtain the security. They used Digital Alpha Servers for running their servers in that time. The company underwent renovation in the year 2000, spending $200 million on analysis software from Epiphany, new DBMS from oracle and logistics from Manugistics. Moreover, Amazon used Amazon Web Service and Simple storage Service for maintaining their wide range of products and millions of active customers. Amazon built both the software themselves. On to it, they sealed deal with Excelon for business-to-business integration system. They also use Customer Relation Management system for taking customer information through their data mining, searching, wish list and many more. It records the choices of the customers without filtering them on the basis due the purchase made. CSR also facilitates in keeping the system reliable, secured, and fast. The company built Smart Analysis Search also known as SAS for tracking fraudsters, which helps to decrease and detect fraud in their web page using behavior pattern analysis. It participates in measuring and personalizing customer and help the company in performing efficiently to provide the best service to their customers. The web page Amazon.com is back up by Service Oriented Architecture, which focuses on multiple applications instead of bigger process (Al Imran 2014).
The reason behind the building some of the information system by their own and simultaneously outsourcing some is because it is an e-commerce business. Amazon is a service provider and product seller. Shifting from this industry to IT would have cost them much more than their investment. They try to outsource the more complex ones to the IT companies where as simple systems are build by them only.
Information system is an integral part of amazon and can never be separated from the company because of its importance in running the business. The complete business of amazon is based on the utilization of information system to record customers’ data and provide them the best experience they can ever get. It also contributes in customers’ satisfaction and the value creation of the company.
The chief Information officer and the Chief Technology Officer of Amazon is Werner Vogels who is responsible for looking after whatever is going on in the information system of the company (forbes.com, 2017). He oversees the use of information technology in the company and responsible for devising company’s IT strategy and setting objective. He is authorized to select and implement the necessary technology best suited for streamlining all the internal operation fro optimizing their strategic benefits. The customer satisfaction provided by the company is the end-product of vogels’s work where he designed and customized the technological system to provide the platform. He is also authorized in taking decisions for making partnerships with IT providers and approving purchases of software and technological equipment on behalf of the company (Singh and Hess 2017). It is Vogel’s duty to analyze the value, cost and risk in the sphere of information technology and propose the strategy accordingly. This process includes tracking the changes and advancement in technology for discovering the way for gaining competitive advantages in the market. In short, the role of CIO is to oversee, direct, organize, and implement the IT projects and framing strategies for gaining the competitive advantage in the market (Whitler, Boyd and Morgan 2017).
Various recommendations can be made basing on the above discussion. Amazon faces phishing issues that need to be resolved. Moreover, they need to enhance their sorting of product to provide the customers the exact as per their demand. They need to focus on their operation on the social networking for marketing and acquiring more customers. Integration of tehir website into social networks can help them increase their business. On to it, they must offer touch point to the customer in each point of time. Implementation of artificial intelligence and intelligent virtual agents can help enhancing their business. Last but not the least, establishment of customer relationship management interventions across the business operation of the company can show positive signs in the improvement of the business.
Conclusion
It can be conclude from the above study that, Amazon has implemented there is in their business strategy in such a fashion that it cannot be seen as separate entity. They use their own developed software and some from the other for maintaining the uninterrupted flow in their business. Their IT strategy is incorporate and embedded deeply into their business strategy from the beginning and one can hardly make distinction between them. They provide a secured and easy transaction process to their customers using there IS. Amazon’s IT shows its efficiency in providing the customers the best online shopping experience with the best customer satisfaction. However, some modifications are recommended that can be devised by the company to increase its efficiency as well as the customers’ level of satisfaction.
References
Al Imran, M.A., 2014. A Study On Amazon: Information Systems, Business Strategies And E-Crm.
Amazon, E.C., 2015. Amazon web services. Available in: https://aws. amazon. com/es/ec2/(November 2012).
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Arvidsson, V., Holmström, J. and Lyytinen, K., 2014. Information systems use as strategy practice: A multi-dimensional view of strategic information system implementation and use. The Journal of Strategic Information Systems, 23(1), pp.45-61.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
forbes.com. (2017). Amazon CTO. [online] Available at: https://www.forbes.com/sites/ericsavitz/2011/06/21/amazon-cto-werner-vogels-on-the-state-of-the-cloud/#3e1d9b5e1c13 [Accessed 4 Sep. 2017].
Khodakarami, F. and Chan, Y.E., 2014. Exploring the role of customer relationship management (CRM) systems in customer knowledge creation. Information & Management, 51(1), pp.27-42.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.
Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson.
Lu, Y.J., Nguyen, P.A., Zhang, H. and Ngo, C.W., 2017, January. Concept-based interactive search system. In International Conference on Multimedia Modeling (pp. 463-468). Springer, Cham.
Mithas, S. and Rust, R.T., 2016. How Information Technology Strategy and Investments Influence Firm Performance: Conjecture and Empirical Evidence. MIS Quarterly, 40(1), pp.223-245.
questjournals.org. (2017). Case Study. [online] Available at: https://questjournals.org/jrbm/papers/vol4-issue11/B4111117.pdf [Accessed 4 Sep. 2017].
Singh, A. and Hess, T., 2017. How Chief Digital Officers Promote the Digital Transformation of their Companies. MIS Quarterly Executive, 16(1).
Walunj, S.G. and Sadafale, K., 2013, May. An online recommendation system for e-commerce based on apache mahout framework. In Proceedings of the 2013 annual conference on Computers and people research (pp. 153-158). ACM.
Whitler, K.A., Boyd, D.E. and Morgan, N.A., 2017. The criticality of CMO-CIO alignment. Business Horizons, 60(3), pp.313-324.
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