Six reasons why information systems are so
important for business today include:
1. Operational excellence
2. New products, services, and business
models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
1. Operational excellence. Business improve
the efficiency of their operations in order to achieve higher profitability.
Information systems are important tools available to managers for achieving
higher levels of efficiency and productivity in business operations. A good
example is Wal-Mart that uses a RetailLink system , which digitally links its
suppliers to every one of Wal-Mart's stores. as soon as a a customer purchase
an item , the supplier is monitoring the item , knows to ship a replacement to
the shelf.
2. New products, services, and business
models. Information system is a major tool for firms to create new products and
services, and also an entirely new business models. A business model describe
how a company produces, delivers, and sells a product or service to create
wealth.
Example: Apple inc transformed an old
business model based on its iPod technology platform that included iPod, the
iTunes music service, and the iPhone.
3. Customer/supplier intimacy. When a business
serves its customers well, the customers generally respond by returning and
purchasing more. this raises revenue and profits. The more a business engage
its suppliers, the better the suppliers can provide vital inputs. This 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 preffered room temperature, check-in time, television programs.
4. 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.
5. Competitive advantage. When firms
achieve one or more of these business objectives( operational excellence, new
products, services, and business models, customer/supplier intimacy, and
improved decision making) chances are they have already achieved a competitive
advantage. Doing things better than your competitors, charging less for
superior products, and responding to customers and suppliers in real time all
add up to higher sales, and higher profits. Example: Toyota Production System
focuses on organizing work to eliminate waste, making continues improvements,
TPS is based on what customers have actually ordered.
6. Day to day survival. Business firms
invest in information system and technology because they are necessities of
doing business. This 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.