The role of information systems (IS) in the success stories of many businesses continues to be a glittering historical and contemporary phenomenon. The great advent of the Internet and emerging enablers in the information and communications technology (ICT) space empowered people with instant global access and interconnectivity. The notable advances in ICT drastically changed how life is lived and how business is conducted. Businesses exponentially grew as both brick-and-mortar and online business institutions capitalized on the ubiquity, power, efficiency, accuracy, convenience, and cost-effectiveness of most IS-based solutions. Investments in IS have grown in substantial dimension as businesses chased incremental and sustainable growth through technology strategy. In the process of investing into the future with IS, it remains an undeniable reality that massive investments have also been lost, and are being lost each year, due to unused or under-used IS infrastructures, equipment, and projects. This situation has created fairly significant impression that IS may not at all matter, and in effect, has raised a key question: Is “information systems” really necessary for the conduct of business? Following a fundamental research-based study, this paper will present and analyze what information systems is in terms of its context, categories, business users, multi-dimensional business applications, transformation potential, and impact on careers, skills, and knowledge across business environments. In light of the analysis, the paper will discuss the results of the study, answer the key question, and address the thesis: “Without information systems, a business organization cannot be expected to survive, grow, and achieve competitive advantage.”
Context of Information Systems
Types of Information Systems
One information system used in many business organizations is the Office Information System (OIS). The OIS functions to improve work flow and raise the quality and efficiency of communications among employees; everyone uses computers and other electronic gadgets instead of doing it manually. With OIS, instead of photocopying and mailing registration updates to all students, a school registration department will just need to post the registration schedule on the Internet and email the students on the registration update. OIS uses word processing, spreadsheet, databases, graphics, email, and other software applications, including voice, data, video, and mobile technologies, to support enhanced communication connectivity. Transaction Processing Systems (TPS) is another adjunct of IS that captures and processes data which a company’s routine business transactions generate such as those pertaining to payments, order, return, reservation, billing, payroll, taxes and other similar engagements with customers, suppliers, and other parties (Riley, 2012). With the marked increase in power and functionality of computers, most TPS now adopt the online transaction processing (OLTP), a system that completes data processing as transactions are accepted and entered into the computer. Borne out of TPS, Management Information Systems (MIS) pertains to an IS branch that yields on a timely and accurate basis organized business information. The idea is for managers and other users to make informed decisions, address issues, administer activities, and monitor the progress of projects and business activities. Integration with the TPS makes MIS a very powerful source of business information (e.g. sales and collection summaries, account balances, fast moving items, inventory levels) that provides management with excellent basis for actions on opportunities, issues, and decisions (UNCC, 2000). Decision Support System (DSS) processes and generates distinct information not available from the regular output of TPS and MIS. DSS-generated information, utilizing internal and external sources, involves special requirements like sales quota formulation, statistical analysis, spreadsheets, graphics, financial modeling, and pricing sensitivity analysis. Expert System is another IS field that captures and holds in storage the knowledge of human experts and then replicates human reasoning and decision-making activities for persons or team members who may possess limited expertise. Expert System (ES) is part of computer science known as Artificial Intelligence (AI), which is the direct application of human intelligence to computers, with the capacity for speech recognition and logical reasoning, as well as reactive reactions (UNCC, 2000). Further innovations in relevant technologies have evolved Integrated Information System (IIS), which denotes the consolidation of vital information from OIS, TPS, MIS, DSS, and ES into one, integrated, and seamless information system.
Specific Application of Information Systems
In the realm of IS application for the conduct of multi-dimensional business activities, United Parcel Service (UPS) makes an excellent example as to how IS can positively impact the growth and strategic vitality of a company, while gaining competitive advantage. From a small company that started with a borrowed capital of $100 in 1907, UPS has grown to a $55 billion business empire (UPS Annual Report, 2013; Yahoo Finance, 2014). UPS is a global leader in “package delivery services” which involves the delivery of 16.3 million pieces of small packages a day (4.1 billion pieces annually) in 220 countries through integrated ground, air, and ocean global networks (SEC, 2013, p.1). UPS has three major business segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. UPS serves the global market for logistics services, which include transportation; distribution; forwarding; ground, ocean, and air freight; brokerage; and financing. It is in this broad, diverse, complex, and dynamic cross-border business context that UPS has to leverage a robust, stable, and reliable IS platform to keep the entire value chain working perfectly, to the satisfaction of every customer as mandated by UPS customer first policy. In the midst of the IS agenda to integrate different subsidiaries of UPS, IS remains central to UPS package delivery services (i.e. UPS core business) that has to effectively handle and track customer orders from the point of acceptance to the point of delivery, including post-delivery customer access. As UPS admitted, the information flow from UPS technology is what drives improvements for UPS and its customers in reliability, flexibility, productivity, and efficiency of their respective businesses (SEC, 2013, p.1).
Business Transformation through Information Systems
An MIT study on the transformation of UPS through information technology (Ross, Draper, Kang, Schuler, Gozum, & Tolle, 2002) presented illuminating insights as to how UPS leveraged its partnership with IS to bring about sustainable competitive advantage. The results of the study had the following relevant highlights: (1) in addressing the information technology needs of the UPS Package Delivery service, UPS implemented a robust physical infrastructure that supported enterprise applications and accommodated centralized databases; (2) UPS built two (2) large data processing centers (i.e. second center built for redundancy) with 15 mainframe computers that can process 92 million online transactions and 460 million batch transactions daily, with around 35% of the processing capacity earmarked for tracking systems; this provision included 57 mid-range servers supporting UPS Web functionalities, including the daily handling of 6 million tracking requests; (3) UPS adopted a flexible telecommunication network strategy that sequentially involved (a) starting from a group of networks that was more internally-oriented in its processing context until the late 80s, (b) building in early 1990s an x.25 packet switch private network for its global expansion and package tracking services, (c) making a major network upgrade to public frame relay to meet demands for reliability, higher circuit speeds, scalability, and cost-effectiveness; and (d) adopting a broad cellular network that afforded the uploading of package data from the delivery vehicle to UPS databases on a real-time tracking mode, which move required the signing of contracts with around 100 cellular carriers covering 97% of the US; and (4) UPS strategized to enhance package delivery information and customer databases, and for that purpose, developed and executed four IS portfolios: customer automation, operations, business development, and general and administrative.
Had UPS management failed to embrace and implement the IS strategic platform in the Package Delivery application, UPS would not have built loyal and massive customer base. IS enabled UPS to expand with great industry impact in e-commerce, as mandated by its vision: to synchronize the world of commerce by developing business solutions that create value and competitive advantages for our customers (Christy, 2011). Operationally, targets were achieved at minimum cost and least risk exposure, affording UPS great cost leadership. Had UPS ignored an IS agenda, UPS would not have achieved business differentiation, and sustainable competitive advantage -- the UPS capacity to outperform competition in terms of higher net profits for over a long period (Porter, 1980, pp.34-46; Porter & Millar, 1985, p.1; David, 2005, p.177).
Impact on Business Careers, Skills, and Knowledge
In the contemporary knowledge economy, the complex, diverse, and dynamic context of business demands the processing of massive new information in all functional areas of business, defining new roles and requiring new skills. Based on earlier studies (Evans, 2002), there are eight major career clusters that can be expected to thrive within the IS/IT discipline: (1) database development and administration; (2) digital media; (3) enterprise systems analysis/ integration; (4) network design and administration; (5) technical support; (6) programming and software engineering; (7) web development and administration; and (8) technical writing. Evans (2002) added that in these clusters there evolve commons skills requirements like project management, task management, problem solving, trouble-shooting, and other process skills. Incremental skills that will be likely required include technical, leadership, communication, organization, critical thinking, team orientation, decision-making, and customer relations skills.
Discussion and Conclusion
Based on the foregoing discussion and analysis, in answer to the key question, there is adequate reason to conclude that “information systems” is vital and necessary for the conduct of business. While it is true that there have been lost investments in several unused or underused IS infrastructures, equipment, and projects, this dysfunction in IS usage has been due to behavioral factors, and bears on the lack of motivation on the part of IS users (Malhotra & Galletta, 2004). Clearly, the behavioral fault originates from failure to consider the tripartite factors of people, technology, and organization in the conception, design, and execution of IS initiatives. It must be noted that IS dwells on the skills, knowledge, and motivations of people tasked to ensure that technology satisfactorily meets the key information concerns of the organization. The span of business importance of IS remains incontrovertible as it addresses the day-to-day business needs and the strategic directions of the organizations. IS resides from the basic function of an average employee to the highly sophisticated function of central management. The UPS success story illuminates how IS can be embraced to achieve the strategies of business differentiation and cost leadership to ensure sustainable competitive advantage against equally capable competitors. IS permeates the operational and strategic vitality of every business organization, whether it is a large, medium, small, or start-up venture. Based on preceding representations, it is submitted that the thesis: “Without information systems, a business organization cannot be expected to survive, grow, and achieve competitive advantage” has been fully supported and addressed.
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