The Information technology industry, where nothing is predictable and constant change has become a usual trend, is now on its new phase of its evolution stages. According to Richard L. Nolan, MBA Class of 1942 Professor of Business Administration: “Information Technology is no longer being used as just a tactical resource, it’s now fundamentally influencing business strategy and competition” (http://www. alumni. hbs.

edu/bulletin/1997/april/text/theory_text. html 04. 02. 06).This paper will examine and analyze the issues and challenges like the one that has been raised by Professor Richard L.

Nolan.The essay will be based on the case study of the company called Canon, which automated all its documentation and information flow procedures by introducing new Information System Management. It has become one of the major solution companies, which serves Information Management issues for other firms and organizations. There have been dozens of profit and non-profit organizations who have invested tens of millions of pounds in introducing new technologies and systems, in order to operate more effectively and efficiently, and in order to adapt to any kind of change more rapidly than their rivals and competitors.The essay will be continued by discussing the necessities and aspects that made the organizations to spend so much capital on new technologies and so much effort to redesign the way they operated and ran the business. It would be wise to start by defining what the Information System is in general, and than examining the forces and factors that play such a big role in organizational redesigning in nowadays environment.

“An Information System can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization” (Laudon C. K. & Laudon P. J. 2005). Moreover, information systems can facilitate in analysis of problems, visualize complex subjects, and the most important it broadens the way of innovation.

There are four basic worldwide changes that forced the Canon and many more companies to alter their processes and operations. The first change is the globalization: the growing percentage of the majority countries’ economy depends on their export and import trading. This means that foreign trade, both exports and imports exceed the percentage of manufacturing domestically in such countries.Companies are outsourcing and distributing their core business functions in countries it can be performed more cost effectively. Businesses need to act and operate globally, on 24 hour basis. They have to communicate with their stakeholders constantly in order to have the up-to-date information, and be ahead of their rivals.

On the other hand globalization and improved communication systems may bring some kind of threats from the customers, as they have the access to the worldwide market and can get all the information on prices, quality and etc. herefore it increases the switching cost.Rise of the Information Economy is the second issue which implies that, all the major industrial powers are transformed from industrial economies to information-based service economies, and the manufacturing has been moved to lower-wage countries. In this new economy the key to success has changed from tangible resources such as capital and machinery, to intangible ingredients such as knowledge and information.

Here, market values of many firms are based on these intangible assets, which contribute to greater innovation and effectiveness.Physical assets, such as buildings, machinery, tools, and inventory, now account for less than 20 percent of the market value of many public firms in the United States” (Laudon C. K. & Laudon P. J. 2005).

The third change that influenced new information technology emergences is the way the organizations have to organize their work. In past – minority now – the most of the organizations were very hierarchal, had the formal and rigid rules, and strict boundaries. Whereas, nowadays it has reshaped and become flattened and more decentralized.In these organizations, managers rely on instant information to deliver mass-customized products and services uniquely suited to the targeted markets. The decentralized structure allows the managers to persuade informal commitments and networks to establish goals. In these kinds of organizations, managers appeal to the knowledge, learning, and decision making of individual employees to ensure proper operation of the firm.

Once again, Information technology can perform these activities in the best manner.High usage of Internet since the mid-1990s caused significant organizational redesign and has contributed the emergence of new phenomenon – Digital Firm. This is the fourth factor of environmental change which forced companies to introduce new information technology, and can be described as the firm where the most processes are enabled digitally, as well as relationship with customers, employees and suppliers. This is flattened organization where, any information required could be gained any time, anywhere in the firm.

The level of technology in such firm enables the managers to ‘sense and respond’ to its customers far more rapidly. For such managers, Information is not a simple handmaiden, but rather it is the core of the business and primary management tool.Although the advanced technology and efficient Information Systems bring many exciting opportunities such as: speed of processes and calculations, learn and information obtaining, efficient tools for services such as, ATMs, telephone systems and etc. innovation, access on 24/7 basis worldwide; it should be considered that ‘every coin has two sides’, in other words Information Systems can cause many problems and challenges to managers: first of all by automating all the services, organizations face the surplus of labour therefore they have to downsize, and it often has negative impact on the company’s goodwill; information systems allow organizations to obtain high confidential data, that is against the privacy policies; so many individuals and organizations are dependent on technology that its outage can cause shutdowns of businesses or medical services which may paralyze the community; there is a term called ‘technostress’ which implies the stress gained from sitting with the computer or other high technology machine for a long period of time, when the job requires to do so, thus it concerns a health and safety issue too; and also internet could be widely used for illegal purposes such as: distribution of illegal copies of software, books or other intellectual property.

After considering these factors, that enable organizations, and especially large organizations to operate more effectively, the requirement of Information Systems emerges, as it is the tool for controlling and cultivating an information in such manner that it will contribute to organizations growth in this information – knowledge economy. As the case study states, Canon is the corporations which operates worldwide, has to communicate to its stakeholders on a constant basis, therefore the complex corporation like the latter, needs to have Information System which, has the ability to facilitate its flow of Information as much as possible.As the Project Management Center magazine called Baseline, with academic Paul Strassmann state: “Information is important, but how it is managed is even more important. While data scrubbing, equipment maintenance and other systems chores are important hygienically, savvy managers who know what to do with the information that is stored, sliced and diced make all the difference” (http://www. strassmann.

com/pubs/baseline/2004-10-a. php 27/01/06). In other words, if a business wants to gain some competitive edge by using information technology, it has to fully understand, why is the information needed and how will in contribute to the organization.This means that firms have to integrate their information systems to their strategies in order to gain some kind of synergy, which will contribute to emergence of new competitive advantages.

The system that operates upon the organization’s corporate strategy is called Strategic Information System. As Canon wants to create a situation where it can introduce its new products to the market as quickly as possible, the information system has been developed for knowledge management purposes. In theory there have been several general Strategic Information Systems models, and each of these models highlight the best practices that should be carried out in order to gain a competitive advantage.The most famous model that has been developed is called Value Chain model, and it serves the evaluation of an organization’s core functions, divided into two dimensions: Primary activities consists of activities that are directly related to the production and distribution of firm’s products and services, such as: Inbound logistics, receiving the raw materials from suppliers; operations, transformation of delivered inputs into outputs; Outbound logistics, the delivery and distribution of manufactured products; Sales and Marketing, promotion of end products to the outside world; Service, this includes the maintenance and repairs of firm’s goods and services, also service after sales. In addition to primary activities, support activities play as a tool role in organizations, which ensure that delivery of primary activities is possible and consists of: organizational infrastructure, human resources, technology, and procurement.There are four Generic Strategies developed by Frederick Taylor, and the Information Technology can boost up these strategies that include: Cost Leadership, Differentiation, Focused Cost Leadership, and Focused Differentiation.

Organizations can gain competitive edge over their competitors if only they could provide more value to their customers or the same value but with a lower cost. Information Systems enable organizations to lower costs as well as innovate and serve the niche market. It can track down the preferences of the customers and help the firm in decision making, of how and what to offer the customers on an individual basis. “Manufacturers and retailers are starting to use information systems to create products and services that are custom-tailored to fit the precise specifications of individual customers” (Laudon C. K.

& Laudon P. J. 005); Dell is a great example of such companies.It has assemble-to-order manufacturing system.

Customers can buy the computers on the basis they need. Such systems treat existing information about the customers and stakeholders as a source that organizations can “mine” to increase profitability and market penetration. The third famous strategic system is called Supply Chain Management, which would be very cost effective if the right Information System is implemented. Digital networks between the customers and suppliers reduce the cost of inventory, by eliminating enormous spaces of warehouses and stocks. This way of organizing stocks and materials is called ‘just-in-time’ supply method.

Just-in-time method works in the following way: the suppliers and customers are linked with digital networks, whenever a transaction is done, such as procurement; the retailer’s computer sends the bar code of the product to the supplier’s system, which tracks and allocates the amount of products that should be delivered in order to match up customers’ demands. The evolution of just-in-time method has been introduced by Company called Baxter which is a major supplier of two-thirds of all product used in United States hospital. Baxter uses supply chain management called ‘stockless inventory’.“When hospitals want to place an order, they do not to call a salesperson or send a purchase order – they simply use a desktop computer or terminal that can link electronically to Baxter’s supply catalogue either through proprietary software or through the web” (Laudon C.

K. & Laudon P. J. 2005).

Information Technology can create such environments where, organizations have to place a small amount of stock, as well as they can entirely outsource the distribution and have ‘stockless inventory’. These are the strategies that could be used using Information Systems. Canon’s knowledge management system is slightly different to ones described above, but could be linked with differentiation strategy, as it gives the opportunities to small firms or non-profit organizations (as stated in the case study) to have the Information Systems by designing technology on the basis they need, in terms of target market and the size of the company.The emergence of outsourcing such functions to other companies as the school did in Canon’s case study is, that many businesses find it difficult to design, implement and integrate information systems to their corporate strategy. Some businesses think that just implementing the technology would bring the success, but the true is according to Weill: “critical function is how the organization uses Information, not the information system” (http://www.

indiainfoline. com/bisc/crea. pdf 03. 02.

06). In the last part of the essay, the emphasizes would be on the power of the Information Systems in nowadays economy, when companies are striving to gain as many competitive advantages as possible.Information systems sometimes require organizations to change the procedures, rules, culture and even the core business essence. These kinds of changes need careful planning and management. These changes are called Strategic Transitions.

It involves changes in communications between customers and suppliers in terms of intimidated links and sharing each other’s responsibilities. If the company ensures in a right way that the Strategic Transition which would occur in the business, it will need strong Information Systems in order to facilitate future control and maintenance of its processes in a more effective way, and which has become the biggest competitive advantage in the business industry.References