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Sample Essay on Strategic Management of Information Systems
The growth in technology has impacted the entire world in a rather perfect way as compared to the past decades. This has been catalyzed by the changing world of innovation which led to a revolution. While making its way across board all sectors have been impacted thus assisting in transforming the way we go about our daily experience; its adaption has led to immense gains. Initially most organizations employed the use of manual operations while carrying out their obligation. This could only be realized through a huge work force to initiate their agenda while carrying out their functions. It hampered their growth mainly due to lots of resource being spent while meeting the burden. More gains have been facilitated through its adaption which led globalization (Gunasekaran & Sandhu 2010).
In record history all are likely to come to terms with its adoption owing to its implication on the global scene, while championing its use, information systems spread out in organizations leading to significant progress as illustrated by an increased rate of cooperation. It has facilitated growth of ecommerce making it easy to transact business across the entire globe; without its adoption it could have been so hard to make any significant progress as seen in the past decade. It has also seen most players to readjust so as to take advantage of the existing situation (Putten 2013).
What is an information system?
Let begin by fast understanding what an information system is. The term though used by many is at times less known, it however, refers to a set of components working together to generate information used for the management of an organization. Organizations on the other hand embrace different level of operation (Maceviciute & Wilson 2005). In order to address its needs, every level is organized well and an information system tailor made to address its needs identified. An organization’s management can be classified in three levels as illustrated:
(i) Operational management
(ii) Tactical management
(iii) Strategic management
The level deals with the daily activities of the organization. These are the basic activities that the organization must perform in order to remain in business. As such, the role of managers at this level is supervisory. A good example of such activities at this level is order processing, inventory control, customer billing and production scheduling just to name a few. Information is derived entirely from internal sources and is relevant in the short term (Post & Anderson 2003). It is highly detailed as seen in daily reports of daily orders, daily bank deposits as well as daily list of patients. Decisions associated with these activities cover a relatively narrow time frame and are also delegated to the lowest possible level of the organization where they can be made quickly and effectively. Information is purely based on quantitative data, also decisions carried out tend to be recurring and as a result, the decision making process becomes routine and structured. A structured decision is one that is predictable and can be made following a well defined set of procedures such as inventory control; clerks will check inventory levels and reorder previously set amounts for items that have fallen below the reorder point. Executing an operational level decision gives results that have a high degree of certainty. Consequently, decisions have an immediate but short-term effect on the organization.
This is the middle level management. Managers at this level are concerned with how best to allocate and control the firm’s resources. The decisions are meant to implement the goals that the strategic management has set. Routines are thus encountered at such a level. Information required to make such decisions is derived from a more restricted range of sources most of which is internal and is relevant to both the short and the intermediate term but relatively summarized (Schermerhorn 2013).
It is concerned with setting long-term goals of the firm and therefore the decisions will provide guidelines on which the firm will run; for instance, which strategy to follow in competing against other organizations. Strategic decisions are highly complex and unstructured. They have a high degree of uncertainty and as such, demand the most experience (Brown, Stone & Patrick 2005). Decisions made here have a long-term impact on the firm and it is difficult to reverse the impact of a strategic decision. The decisions are directed towards such issues as; strategic planning, allocation of scarce resource as well as policy formulation. Information to make such decisions is derived from internal and external sources and is highly summarized. It may be prepared on demand basis and both quantitative and qualitative entailing;
- Transaction Processing Systems (TPS)
- Management Information Systems (MIS)
- Decision Support Systems (DSS)
- Expert Systems (ES)
Transaction Processing Systems
It refers to a computerized system that performs and records the daily transactions necessary to conduct the businesses; sales order entry, reservation, payroll, shipping, employee record keeping, production scheduling. It’s also an operational level system with monitoring capabilities of internal operations and able to act as a major so source of information for other information systems (Bernstein & Newcomer 2009).
Management Information System
These systems provide middle management with reports that summarize and categorize information derived from an organization’s databases. It is to help management to spot trends and to gauge all activities in order to control them. An organization is able to gain much owing to such systems being past and present oriented with a bit of analytical capability but internally derived. Managers are able to utilize them while arriving at decision making regarding routine related problems (Post & Anderson 2003). A lot has been gained while utilizing them, largely due to their relevance to the middle level management. One is thus advantaged to access quick reports generated by such systems and ideal while producing periodic reports needed on a regular basis.
Periodic Reports are produced at pre-determined intervals; this can be on monthly or annually basis but can also produce payroll reports, income statements and balance sheets, monthly sales analyses weekly production schedules. Exception reports are still generated and show the ordinary data or when an event occurs that deviates from the normal limits. On demand reports could as well be demanded by the relevant managers implying that these systems are of vital importance to any prospective organization. A lot is realized from their application not forgetting to mention summary reports produced while trying to check on how an organization may be fairing at any one given time.
Decision support systems
They allow the managers to consider a number of alternatives while trying to predict what might happen in the future given certain circumstances. Organizations are able to come up with a good decision without necessarily having to engage in it practically. Venturing in business is a costly affair to the organization and only implies that a lot be done to ensure an organization is shielded from unforeseen event (Sauter & Sauter 2010). Such systems are best suited for non routine, semi structured problems where part of the analysis can be computerized but the decision maker’s judgment and insight is needed to control the process. These systems use sophisticated software to simulate potential outcomes using analysis and modeling but doesn’t make decisions but can help predict outcomes of given situations.
Executive Information Systems
These are information systems that provide selected and summarized information to executive staff. They provided information on certain critical areas in an organization. The critical areas may be an organization’s activities drawn from internal and external databases. Several features are provided in these systems; fast, they are understandable owing to the well illustrated presentations with summaries but can as well manipulation it to allow executives to analyze and compare it while undertaking trend analysis (Kumar 2000). . The graphics are user friendly presentation with template provisions which allow executives to present the same type of data whenever they are required thus allow them to drill information from a high level to a lower level.
Such systems are used for exception reporting for instance, a manager may have been alerted that a given department is not well of in its budget. Then the manager will drill down by pursuing lower and lower levels of details to establish the main cause. He may first seek a breakdown of the departmental budget and the actual expenditure into the materials, labor and overheads. He would assess the expenditure in details in various overheads like; rent, telephone, and insurance, just to name a few. This way the executive can explore the system at will and get better assistance in planning and controlling. The main questions answered include; the exact state of the organization but can as well be used to identify competitors. A number of advantages are derived from them, such as the incorporation of the principle of exception reporting hence it reduces the amount of data to produced by executives and give customer tailored information (Shim 2000). It’s also possible to eliminate communication bottlenecks between the executives and subordinates that can slow down the decision making process and ultimately help improve their understanding of the organization’s environment.
It is an information system that performs tasks at the level of a human expert. They are created on the basis of knowledge collected on specific topics from human experts. Expert systems are used by management as well as other personnel to solve specific problems, such as how to reduce production costs and how to improve workers’ productivity. They are also blessed with a number of components geared at assisting the management such as; a database, inference engine as well as an interface through which an operator can access the system through. A good aspect associated with them includes their ability of making use of artificial intelligence which implies they can as well assist managers come up with well thought ideas (Rodriguez-Bachiller & Glasson 2004).
Organizations have gained much from the use of strategic information systems; and is the reason behind the growth momentum being witnessed in the market today. Others still have a long way to go but can learn from those leading the pack thus transform their growth initiative to higher heights (Shajahan & Priyadharshini 2004).
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