What do we understand by Information System (IS) of a company? Business point of view.
In this article, we will study in detail some concepts that are widely used, but are also often misunderstood or confused. And we will do it because these concepts will form the basis of our structure of thought to begin to understand the role of information systems, to later talk about the technology inherent in them.
It is important to clarify that these concepts will always be treated from the business point of view, that is, describing their active role in achieving the business objectives.
First then, let's analyze what an Information System is:
The most intuitive view of the IS of a company is obtained simply by observing how information flows from one part of the company to another, and between it and its environment. From the moment a customer enters the premises, until he leaves it (with or without the desired product or service), an information movement is generated that is more or less given by the following events and flows: customer order; the seller generates the order and sends a copy to the warehouse to be served (probably checks that the customer has credit); in stock it is checked that it exists in stock and, if so, it is assigned to the order; a receipt is prepared and attached to the order and forwarded to billing; invoicing generates the invoice according to the conditions of sale, etc., and the shipment or delivery is originated at the moment.
All the information collected, processed, distributed and stored (customer data, suppliers, products sold), together with the processes that manipulate said information (generate an order, send a copy to the warehouse, etc.) make up the information system of the company. But to close the idea, of course, we must also talk about the objective pursued by said YES. Its objective is then, to support the decision-making processes necessary to carry out the business functions of the company in accordance with its strategy.
The SI is then another system, in the same category as other more traditional ones, such as the planning system, the control system, etc.
From a general perspective, the strategies adopted give rise to activities of planning, design and execution of actions to achieve objectives and control actions.
But "design and execution of actions to achieve objectives" can be divided into:
- commercial actions actions in the production area financial actions actions on information systems, etc.
(Hypothetical example: The objective is to increase the sales of a product "X" by 10% in the next 5 months. Within the commercial actions we can include advertising, promotions or others. Within the actions corresponding to SI I can establish that the system gives me weekly the percentage of sales growth of that product and thus establish how close or far it is from the achievement of said objective)
Let us then give a formal definition:
«An IS is a formal set of processes that, operating on a collection of structured data according to the specific needs of the business, collects, prepares and distributes the information necessary for the operation of the organization and for the corresponding management and control activities, supporting, at least in part, the decision-making processes necessary to carry out the business functions of the company, in accordance with its strategy. " (one)
Note that this definition focuses on the why of the SI, and not on the how. And it establishes that the information needs in time, form and place will be satisfied by the IS so that those responsible for making decisions, do so with the best possible knowledge of the facts and so that corrective actions are carried out in a timely manner.
This is how, on occasions, the business strategy itself may have an IS as an active part of it, so that the IS could be used as a tool to achieve competitive advantages.
Now, who then responds to the how of the YES? Information Technology is the answer.
But first let's see what technology is:
From a restricted point of view, technology is perceived as physical technology, related to the mechanization of the means of production of goods and services, and the replacement of human effort. This perspective is evidently mechanistic, since it highlights the visible manifestations of technology through devices and automation processes. This view that only associates physical artifacts with technology can be understood in the sense that it is its most obvious manifestation.
If we broaden the focus, it must also be taken into account that the application of knowledge is implicit. Thus, we have procedures, methodology, organizations, etc. In this regard, the following definition of technology by Kast and Rosensweig (1988) is clear:
«Technology is the organization and application of knowledge for the achievement of practical ends. It includes physical manifestations such as machines and tools, but also intellectual techniques and processes used to solve problems and obtain desired results.
Technology is therefore science applied to a specific technique.
Information technology (IT) is the technology that supports the functions of an IS. This, since it is applied to information systems, is also called "Informatics".
We must necessarily make an implication of these last two concepts, and it is that Informatics is not necessarily linked to computers. Today, the computer has become an important tool for the treatment of information, but in not many years, it may be another tool used, and the technology that makes it possible will continue to be computing.
This is how the conclusion we must reach is that the IS of a company is an integral part of the set of systems that make up the structure of the organization, and that IT will provide clear solutions to problems that arise in the implementation of said information system.
A final example is given by conventional mail and electronic mail: the mail system is not new, but with the application of new technologies, electronic mail - with all the advantages that this technology has brought - is today a means of communication that is supplanting little by little, but not definitely, the conventional one.
But technology, is it always applicable, is it always necessary, is it always desired? We will try to give that answer in our next edition.
(1) From the book "Strategy and information systems" Andreu-Ricard-Valor, Editoral McGraw-Hill.
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What is the role of Technology in general, and IT in particular. Is technology always applicable, necessary and / or desired?
In the previous edition we have recognized the differences between the Information System (IS) of a company and the Information Technology (IT) inherent to it; and we established that the point of contact between both concepts was given by the solutions that IT will provide, to a greater or lesser degree, in the implementation of the IS.
In this installment, we will delve into the role of Technology in general, and IT in particular, seeking to establish the answers to the questions previously posed: is technology always applicable, necessary and / or desired?
APPLICABLE TECHNOLOGY
IT, like many other technologies, has gradually changed its role in organizations:
- At the beginning of the development of IT, it was used to carry out routine and repetitive tasks - for example: printing lists, sheets after hours of operation -, it was very expensive in time and money and was considered an extra cost in the activities As time passed, the technology became more economically permissive and began to perform more complete and complex tasks: accounting books, invoicing, etc. After this, IT began to integrate all the activities of the company, trying to become a support tool for decision making and for the achievement of strategic objectives. Its cost of obtaining continues to decrease and it is no longer considered as an inherent cost to the activities, but as an investment.Today, the possibilities that IT gives us,It is to be the competitive advantage of the business in itself, the costs of obtaining it have decreased exponentially, and it is considered for the company, together with the SI, as another asset.
Therefore, IT also plays an important role, not only as an implementation tool for parts of the IS, but also because of the opportunities that it opens up to companies.
Many companies are in a phase of uncoordination, with increasing uses of IT / IS, but without a clear process of planning of the same. For companies in this situation, the symptoms of complaints by users about the lack of criteria in setting priorities and the disconnection between systems activities and other company activities are clear. In these cases, the company as a whole must be made to learn about the opportunities in the use of IT / IS. Learning is perhaps much more important than the outcome of the process itself.
For those companies that have succeeded in breaking down the wall that traditionally insulates systems activities from the rest of the company, new perspectives are born. Business needs are better received by IT professionals. They begin to know the business and suggest opportunities based on IT / IS, which then play a role not only of support, but of another instrument of the business itself, even as a business opportunity in itself.
In conclusion, technology is always applicable, regardless of the sector or activity carried out by the company, and its current technological configuration, and this is because, in general, it is available for use. It remains to be seen then what technology will be necessary.
TECHNOLOGY NEEDED
According to Michael Porter, of all the things the competition rules can change, technological change is among the most prominent.
But the use of technology is not important by itself, it is important if it brings with it the achievement of a competitive advantage. The importance of technology to competition is not a function of its scientific merit or its prominence in the physical product. Technology is important to competition if it significantly affects a company's competitive advantage.
Therefore, technology is always more or less necessary depending on the strategic objectives pursued by the business.
Thus, when choosing between the technologies on which to invest, a company must base its decisions on a deep knowledge of each important technology in its activities and not on simple indicators such as the current market supply. Sometimes all it takes to produce technological progress is effort and investment. In other cases, advances in subtechnologies may allow improvements in currently used technologies. However, efforts to improve very old technology can often be futile. In these cases, the best course of action is to try to skip it. The decision of a company to discard its own technology can be difficult, but this choice can be essential to maintain the competitive position of the company.
Cases in which technology helps maintain the competitive advantage of the business:
- If it lowers the costs of the business or increases its differentiation and this quality is sustainable and can be protected from imitations Technological change changes the guidelines of cost or exclusivity in favor of a company. For example: a new assembly process, more sensitive than the previous one, will benefit a company with a large participation, even if its competitors adopt this technology. Being pioneers in technological change translates into first mover advantages in addition to those inherent in technology Even if an innovator is imitated, pioneering leads to a variety of cost advantages or differentiation that remain after the technology guide is gone. Technological change improves the overall structure of the firm's business sector.
Another case in which its use is necessary is one in which the technology used in a valuable activity is widely used within the company's business sector. For example, the invention of the milk pasteurization process was surely adopted at first by a single dairy company, but it has forced the rest of the companies in this sector to adopt this technology so as not to be in a disadvantageous position with respect to the first This also requires that every company that enters the sector today must include this process. This is because, even if technology does not provide a competitive advantage to any company, it can affect the profit potential of all companies in the sector.
Consequently, the technologies necessary to be developed in the company will be, neither more nor less, those that will contribute the most to the achievement of the strategic objectives of the business.
DESIRED TECHNOLOGY
Technology implies changes, not only the most obvious ones -such as, for example, using printers to make an invoice, instead of making it by hand-, but also others, such as those caused by the idiosyncrasies that surround it -for example, salespeople. virtual stores have had to learn new methods of induction to purchase through a channel not used so far: the Internet- and the accelerated pace of evolution of applied technologies.
And the changes today can be seen from two points of view: threats from the environment that promise negative effects or business opportunities that imply future strengths; And given that today "change is a constant", we should capitalize on it in the way that suits us best, despite the fact that resistance to it at first seemed natural to humans.
People are reluctant to change, even when it may very well be to their advantage. Cicero formulated this maxim more than two thousand years ago: "You cannot confer benefits on those who do not want them." Therefore, if a change is something imposed on someone, it will not happen.
Thus, if you want to use new technologies in the implementation of the IS, it will often not be possible to simply do the same as before and in the same way, only using a different technology. This does not mean that we should be slaves of technology, but it does mean that we must be aware of the changes it brings. Taking into account the characteristics of the technology to be used can then lead to reconsidering the ways of doing the things necessary for the IS to work well.
Therefore, the use of new technologies is often unwanted by people who have to sacrifice the "old ways of doing things" to accept the changes that it brings. Individuals must be willing to change, be interested in learning and want to be different. It is the leader's role to create conditions for that to happen.
