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Assignment - Managing Information Systems

Task - Prepare a paper that critically discusses how organisations apply the strategic use of IS/IT to achieve IS/IT-enabled innovation.

Answer - MANAGING INFORMATION SYSTEMS

Executive summary

This study discusses some of the innovations done in the domain of information systems and information technology. It discusses the innovation suing some examples. It explains the factors which were responsible for the success in the different examples. The factors examined are divided among internal and external types. It discusses the different factors and their implications on the innovations. It also makes some recommendations for the organizations in the field of innovation in information systems and technology.

Introduction

In the current age days of business, the importance of the information technology and the information system has grown manifold. Different organizations are using the information systems and technology to better their position in the business world. This study will discuss some examples where organizations have used IS or IT enabled innovation. It would discuss the various success factors and the lessons learnt from them. It would analyze the internal and external factors. It would point out which factors are more important in this context. The study would give some recommendations based on the analysis.

Q1: Critically discuss at least 4 examples of organisational attempts at achieving IS/IT enabled innovation.

ERP innovations at Starbucks

Enterprise resources planning are an information system which is used across the entire organization to coordinate various functions. As per the views of Seethamrajuet al. (2015), the ERP innovation helps the firms like Starbucks in carrying out operations under different departments smoothly. Business units like starbucks have their operations based on a sreries of process. Thsese activities are being syncronized as per the market demands and the number of customers they aree serving per hour. If the processes are manual then the process would be time consuming. However, if IT is being implemented in the process, the time taken would be quite less comparatively. For instance, Starbucks uses Oracle Olap ERP as part of its IT-IS innovation. That allows it to gather updated real time information across functions like processing of orders at counters, managing the flow of food items at its different stores. This, in turn, helps Starbucks to allocate resources as per the requirements of its different business process (Andre et al. 2018). In this context, it can be mentioned that Starbucks helps the management to streamline all processes. This include arrangement of human capital, allocation of financial resources accordingly.

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The firms like Starbucks have gone to the next level of innovation in the ERP. They are using electronic data exchange in the form of EDI to carry out the works under different divisions (Roztocki&Weistroffer, 2015). Operations of starbucks have been observed to be huge, the main reason being the companies multinational presence. ERP EDI systems helps the management of starbucks in tracking business operations of all units simultaenously. However, this has beenm possible due to implementation of IT/IS systems accordingly.Starbucks uses an EDI system based value added network which helps its suppliers to better connect with it in the value chain. Such ERP and EDI innovations help Starbucks to manage its operations better.

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Use of Transaction processing DBMS by Emirate airlines

The operation of aviation industries have been observed to be dybamic, the main r4eason being the dynamic nature of Aviation fuel pricces. This, in turn have drastic impacts mon flight fares and are required to be updated on a daily basis. The concept of online ticket reservation has made the peocess of Seat booking convenient comparatively. The actions involving the financial resources of the organization are known as transactions. Presently, most of the transactions are online and cash transfer takes few seconds. This has been possble due to implementation of Transactional database systems. This need to be better managed and monitored for the organization. Airlines like Emirate airlines use the innovations in the transaction based DBMS to give better experience to the customers who are booking their tickets with them. Emirate airlines uses an Oracle based DBMS which manages the transactions. Customer's data becomes relevant in the context of innovating with the transaction based database management systems (Chuang &Lin,2017). Database maintaining the transactions interact with the customers through the Transaction based-DBMS in fulfilling business steps. However, numerous transaction failures have been reported recently in online ticket booking processes. This is mainly due to technical glitches that occurs during transactions. In order to be safe, the company has implemented Transactional DBMS and the specialty of this system is that, cash deducted due to glitches gets refunded within few days.

Improved performance of transaction based DBMS helps the Emirate airlines to have satisfied customers. This transaction DBMS innovation in a way helps the airlines build customer centric business model. Innovation using the transaction based DBMS would work only if the organization guarantees that the DBMS passes the ACID criteria (Luthraet al. 2018). The criteria set that the database should fulfill the requirements of Atomicity, Consistency, Isolation, and Durabilityfor the transactions. These factors make this innovation a success.

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Supply chain management system in McDonalds

The supply chain management of Mc Donalds is huge as it requires outcourcing of different raw materails to serve their customers effectively. organizations like McDonalds have gained competitive advantage by using the IS/IT based innovation in the form of supply chain management system. This innovation involves the stages in the supply chain from procurement, planning of supply chain, logistics, and the processing of order (Roztockiet al. 2015). For instance,McDonalds use E-procurement softwareslike Coupa and Microfaxas part of their SCMS. It helps them perform better increased visibility of factors like the inventory, supply and demand of the finished products across the vertical chain. Use of E-procurement software helps McDonalds to manage their time of operations better.

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Technology companies like Oracle and SAP are regularly developing the improved versions of supply chain management system.Supply chain management innovations in McDonalds using IT have helped it to develop its value web. As per the views of Gavidia, (2016), a company is able to maintain proper tracking of its inventory stocks and this helps the management in meeting the market demands accordingly. Value web has made the SCMS a huge success.

Artificial intelligence use in Intercontinental hotels

The development in the field of Artificial intelligence has spread its applications in almost every field of business. Use of AI improves the efficiency of the organizations working in domains like finance among others. AI based innovation helps the organization identify patterns in important data sets (Dimitrov, 2016). Hotel chains like intercontinental hotels UK have tried to use AI in their business models. This makes them use the AI based innovations to use data of the customers. AI helps the hotel chains to respond to the changes in the patterns like customer preferences.

Platt et al. (2019), mentioned that implementation of IT-IS services like AI, requires high funding. However, in case of hotel chains like Intercontinental hotels, funding for implementing IT-IS services are often limited. Hence, IT-IS services cannot be implemented in full potential. However,Wilson et al. (2018), Argued that, AI innovation is helping organizations to better customize their products and services as per the customer choices. Customized service delivery can be reflected as the key to succdess in case of any service based organization. In case of hotels, it includes, automated room temperature control, mood lighting systems, Room service alerts to management can be considered as some of the instance. This can be achived with the help of AI in process. Hence, it can be stated that, implementation of AI would change the service delivery process for Hotel chains like Intercontinental Hotels. This, in turn would boost the revenue generation processes accordingly.

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Q2: Critically discuss the success factors and lessons learned - Highlight some success factors for the successful examples and lessons learned (i.e., what went wrong) for your unsuccessful examples.

In this section the success factors and the lessons learnt would be covered with respect to each of the innovations covered.

Success factors

Innovation based on the ERP solutions allows the participation of the higher management of the firms like Starbucks in the business processes and steps. It ensures that there is commitment from the top management in overall functioning of the company. Another factor of success for ERP is the immediate communication of change across departments (Andréet al. 2018). In Starbucks ERP solution helps the top management to monitor the functions across department and across stores. ERP innovation helps Starbucks in judicious use of their resources.

Similarly, there are success factors for the transaction based DBMS. In case of Transactional database, data and details related to transaction are retained even in case of Transaction failures. The algorithms used, initiates automated refund, if any amount is being debited from the customer's account. The time taken for refund can last a few hours however maximum limit is capped to five days. This is ensured by the Atomicity property of such DBMS. Atomicity also ensures that either the transaction would occur in its entirety or would not occur at all (Lai, 2017). The transaction DBMS innovation ensures for the airlines that multiple transactions can be carried out independently. This helps the airlines manage data of a large number of passengers at the same time. This is mainly beneficial in case, transactions are made for "Code share" airlines belonging to the same segments

As commented by Hohan, Olaru&Pirnea(2016), innovations like the SCMS have the capacity to decrease the delay in the different processes in the supply chain. For McDonalds, this means the large number of customers at their various stores can be better served using the benefits of the supply chain management system innovation. It allows the company to have data across the different levels of the supply chain in a proper format so that data retrieval is easy at any time. Eprocurement systems like Coupa provide better communication between McDonalds and its suppliers. Hence, the process of tracking as well as managing the vendors becomes more easily comparatively. Apart from it, the company can also maintain diverse sources of procurement accordingly.

The AI based innovation has an important feature which helps remove the human errors from the steps where it is integrated. As opined by Andre et al. (2018), the processes carried out by AI are better in tune with the customers' preferences. This innovation help the organization mine huge amount of data and make business sense out of it.This innovation has been a failure in the case of hotel chains like Intercontinental hotels. The main reason would be lack of financial resources available to the management.

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Lessons learnt

The ERP are enterprise wide information system. Implementation of ERP becomes a costly aspect in the business.This leads to huge expenses by the firms like Starbucks using it.Luthraet al. (2016) stated that, many of the ERP implementations do not go through due to multiple factors. For instance, Gavidiaet al. (2016), mentions, If the organization is not able to properly define the goals of the intended ERP, then it would be an issue in setting up the enterprise software. If the business process which would be monitored using the ERP is not defined, it can be an issue in the implementation step.

The SCMS monitors and manages the supply chain data across the various levels in supply chain covering various locations (Kozlenkova, 2015). One of the functions of the supply chain management system is to forecast the needs of various levels like the distribution chain. In McDonalds, if the people handling the SCMS enters wrong data, that can lead to problems across the supply chain. Hence, improper training of the people handling the SCMS can lead to inaccurate data being generated in the management system.

A crucial learning in the case of the transaction based DBMS in the Emirate airlines is the need of training of staff who would handle the DBMS. If Emirate airlines have insufficiently trained people working on the transaction based DBMS that can lead to problems in transactions for the customers booking tickets.This can lead to dissatisfied customers for the company. In the case of innovations driven by the AI, the main issue faced by the organizations is the issue of the AI replacing the human capability in the concerned business process The intercontinental hotel chain could not fully develop an AI based innovation because of issues with the technology vendors. It did not have enough expertise to develop an AI system in house.

Q3: Critically discuss the impacts of internal (e.g., organizational, individual, and management factors) and external factors (e.g., market, industry, social, economic, technological and political/policy factors) on the success (or the failure) of the IS/IT enabled innovation.

Internal factors

Organizational: Innovations like ERP and management system for supply chain depend on the way an organization functions. Organizations like starbucks need to set up the time, budget and other resources to be allocated for the intended IS/IT to be implemented. Starbucks can place business improvement plans to better use the ERP innovation. If the organization sets up business improvement steps like setting up the implementation action plan which would include identification of the problem by the intended Information system to be implemented (Andréet al. 2018). Such business improvement would determine the direction which would guide the setting up of the intended ERP or SCMS.

Individual: Intended system whether it is ERP, SCMS or a transaction based DBMS, implementation is incomplete without involvement of trained people from the organizations like the McDonalds, Emirate airlines or Starbucks. As commented by Luthraet al. (2018), the role of individuals is important for implementation of such Information systems because they help in feeding the complex data into the system. Well trained individuals would be required for the implementation for the systems like ERP or supply chain management system.

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Management: The management environment in the organization helps determine the role of the intended systems like ERP, SCMS or the transaction based DBMS.Structure of the systems to be implemented, would be impacted by the business needs of the managementsin the organizations like Starbucks, McDonalds, or Emirate airlines.Amount of resources to be allocated for the projects would be decided by the management. Such projects like the enterprise resources software require large amount of data which can be related to customers of the steps in their production process. Impact of the decision of the management in the organization would impact these systems. In the case of innovations like artificial intelligence, the role of management of the intercontinental hotel becomes important as they may have to decide which of the human roles would be given to the AI system.

External factors

Market The market scenario in current days is changing all the time. This dynamics guide the requirements of the organization for the systems like ERP, supply chain management system to increase their competencies. Various factors like the demand of the products of the Starbucks and the services which the company produces guide the business processes. Implementation of ERP or other systems are influenced by the organization's need to perform better with respect to the competitors (Seethamraju, 2015). Hence, market impacts the decision of the implementation of such innovation based systems.

Industry The industry has presence of old organizations as well as new. New entrants generally pose a threat to the existing players in the industry (Hohanet al. 2015). If the new players have the benefits of the information system or information technology, that would give them an advantage. For each of the firms like Starbucks, McDonalds, Emirate airlines and the IHG hotel group, number of players in the industry would decide the need of the innovation. It would also decide the cost factor of the innovation. In the case of the hotel groups the implementation of AI based innovation would become a matter of high cost. This was a major reason of the failure of IHG in implementing the AI innovation. In such cases, the existing organizations must harness the innovation and set up such systems which would help them streamline their production processes in alignment with the industry.

Social The social backdrop in which the organizations like Starbucks or McDonalds is located or set up also affects its innovation in the organization. It forms the source for the majority of its employees. Extent to which the employees would accept the new set up of information system like enterprise resource software would guide the acceptability of the innovation projects being taken up by the organization (Lai, 2017). Thus the social angle also impacts the adoption of innovation in IT by the firms.

Economic Innovations in the field of IT are cost intensive. On their implementation, the end product or the services provided by the organization can become costlier as the company would add its profit margin. Level of income of the customers would guide the acceptability of the organization's products in this context. Thus economic factors also have a bearing on the innovations carried out by an organization in information systems.

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Technological The development of newer types of systems in the information systems make the cost of such technologies goes down. It drives further improvement in the information systems setup of any organization (Hohanet al. 2015). Increasing technological development compels the organization to go for innovations like enterprise resources software or AI.

Political or Policy factors The government's assistance in the development of the new innovation through policy also affects the information technology innovation (Dimitrov, 2015). Inclination of the political leadership to technological development also affects the innovation in this space. If the policy favors the innovation, the companies would feel encouraged to go for the innovations.

Which ones are more important-internal or external

The internal factors are more important in the context of innovation in the information systems and technology. If any company is the first mover in the market in terms of an innovative system in the domain of IT, its effect would be felt in the entire market. The decision to implement an innovation comes from an internal source, either the management or specific individual in the organization like the CIO. Effects of the internal factors impact the entire market and the industry.

Q4: Suggest recommendations and guidelines for helping organizations succeed in their efforts of embarking on using IS/IT for innovation with good explanation and discussion.

The organizations can use the following recommendations to succeed in their efforts to implement and use information systems and technology innovation:

The organizations must first clearly define the functional roles of various departments on a long term. It would help them to properly define and allot a part of that job to the information system which they intend to implement.

Company should invest time and resources to properly train its personnel in the new system which would be implemented in the organization. It would make sure that the newly implemented system is under trained hands.

The organization should ensure that a due diligence norm is set up before the setting up of a new information system. It would ensure that the personnel using the new system are following the required steps to use the new system.

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Identification of the business processes which would be handled by the new innovation based IT system is a must.

The organization should also take care whether any of their existing employees need to be laid off as a result of the new system to be put in place. It should address the issues related to employee resentment which may arise due to the new information system.

The company going for a new system implementation should check and monitor all of its competitors. It must find out what systems are being used by its customers. This step would help it to select the proper system it needs.

The organization should also take inputs from the suppliers and its vendors in case it wants to set up a new supply chain management system. This would ensure that the new system has proper data in the proper silos before it goes online.

Conclusion

This study examined four innovations in the field of information systems and information technology based innovations. The chosen systems for the study were enterprise resources planning software, management system for supply chain; transactions based DBMS and artificial intelligence. The study critically discussed the success factors of the different innovations. It also explored the different factors which impact IT innovations like the internal and the external ones. The internal factors included were management, organization and the individuals. External factors covered were the political, economic, social and technological among others. Factors like market and industry were also discussed. The study also gave some recommendations as to how organizations can succeed in their information system innovation.

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