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The Impact of Information System Strategy on Organizational Balance

  • 13 Pages
  • Published On: 06-11-2023

Question 1

Normally, a majority of managers in organisations have a belief that upgrading or changing information systems as a whole or even some of its components will only have a positive impact on their business (Johnson, Scholes & Whittington, 2008). However, this is not always true. This is because by introducing changes in IS strategy or organisational strategy, then the Information System Strategy Triangle will lose its balance resulting in consequences in the business areas affected. For instance, in a case where a virtual organisation is built, and the management also fails to change its business strategy, significant disconnections may arise between the workers, managers, and customers. The building of a virtual organisation should be accompanied by a change in the organisation`s business strategy to describe something like “ensuring that the employees are productive and enjoy an environment with the highest growth opportunities”. If the employees of such a virtual organisation are not supplied with the necessary information system such as a laptop or a home computer, their productivity may be affected resulting in major some disruptions of the business operations. According to Vorhies and Morgan (2003), a business strategy comprises of a vision that is well-articulated in relation to where the organisation seeks to go and the roadmap to get there.

It is important for business strategy to drive organisational strategy and IS strategy as both depend upon business strategy. A real case example to illustrate the importance of business strategy to drive organisational strategy and IS strategy is one of a traditional manufacturing company that aims at benefiting from the internet and the web (Casadesus-Masanell & Ricart, 2010). A possible rational business strategy might be the provision of what is needed by the customer at the time when they want it. As such, the Internet serves as a platform for connecting with their clients, taking their orders while also linking with partners and suppliers. The process of manufacturing might be organised around a build-to-order system rather than relying on product histories and market analysis. However, a chain of organisational processes is needed as well as people who would ensure that the company has the ability to build products upon being ordered. Also, the IS strategy would support the business strategy by rethinking and reconsidering the use of the Internet as a delivery tool for information to employees, customers and suppliers. Therefore, as illustrated in this case, business strategy is an important drive to ensure smooth changes in both organisational strategy and IS strategy without necessarily making the IS Strategy Triangle unbalanced.

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In the case where business strategy was not the driver, then the Information System Strategy Triangle will be unbalanced. This has an implication that the balance existing among the three strategies will break which may result in an organisation`s failure. As stated by Kaplan and Norton (2001), it is hard for a team to succeed in the business world without having balance in its IS Strategy Triangle. Business strategy primarily focuses on how a given business competes in a certain market (Kaplan & Norton, 2001). It entails strategic decisions related to product choice, meeting customer`s needs, gaining a competitive advantage over market rivals as well as exploitation or creation of new opportunities. From these key roles that business strategy plays in the success of business, it proves the fact the that if it fails to be the driver, then the company stands higher chances of failure.

Business strategy delivers vital importance and benefits to business. To start with, a clear business strategy serves as a business guideline on how the organisation`s internal performance. Besides, such a strategy guides on how the organisation is performing against its competitors. According to Kaplan and Norton (2000), business strategy provides vital information about how a group can remain relevant into the future. Another importance of a business strategy is that it gives the organisation direction and vision. It is imperative to have all stakeholders within an organisation clearly understand the goals and follow the provided direction and organisation`s mission. A business strategy provides the vision needed while ensuring that individuals do not lose sight of the organisation`s aims. Additionally, a strategy helps in the identification of opportunities and trends in the future by examining the broader market changes such as social, technological or political changes. Simons (2013) argues that by looking into future consumer changes, a business strategy is able to develop tactics and strategies that the organisation can develop and modify in order to suit the predicted changes. Other benefits of a business strategy include giving the organisation the impetus and drive to perform maximally in efforts to move the business forward, allowing the generation of new business opportunities after regular reviews as well as providing time to re-look and reflect the various areas of the firm (Baye & Beil, 2006).

Question 2

The organisational culture in which the process of ISS formulation occurs is said to form a fundamental part of that system strategy. According to Martins and Terblanche (2003), practices, ideas, roles and organisational arrangements contained in a particular information system strategy often reflect the broader political economic and social-cultural context in which it occurs and is influenced by the context. Further, Leidner and Kayworth (2006) state that organisational culture supports linkages between the adoption of technology and the growth of an organisation. As such, organisational culture can serve as a key factor in the success of information systems formulation and implementation. As a result, it is vital to have a clear understanding of how organisational culture helps or limits the formulation process of ISS across nations. The process of ISS formulation can be viewed as a combination of material resources such as equipment, supplies as well as software and hardware with people to organise procedures and strategies that can provide information to managers for decision-making purposes (Peppard & Ward, 2004). At least, an information system should have some key elements such as input, processing, and output. A storage element is also included, which helps in storing data before and after it undergoes processing (Peppard & Ward, 2004). A complete understanding of the information systems strategy cannot be achieved without looking at the people involved, their culture, social relationships and practices at work.

According to Hofstede and Peterson (2000), organisational culture can be viewed as a set of beliefs, attitudes, knowledge and customs that are commonly shared and held by a particular group. It is this culture that guides and governs how people conduct themselves within an organisation as well as the how operations are done in relation to language and communication, managerial and hierarchy power, work efficiency, meaning of authority, strategic change as well as knowledge creation and utilisation (Ismail Al-Alawi et al., 2007). The formulation of new information systems essentially changes the way an organisation carries out its operations leading to the development of a new organisational culture that will facilitate the changes in ISS. This implies that organisational culture is essential for successful changes in IS and hence the ISS process. This is further supported by Myers and Tan (2003) who argue that even if a well-organised, entirely relevant ISS that is also technologically sound is formulated, its immediate introduction into the organisation would be impossible. This is due to the fact that the formulated information system is used by people with certain attitudes, practices, and beliefs which require time to change. In the case where the formulated ISS fails to fit with the organisational culture, then the whole implementation process becomes unsuccessful (Martins & Terblanche, 2003). Therefore, for organisational effectiveness, the ISS and the organisational culture should be well aligned.

In a study by Myers and Tan (2003), it was established that a significant difference exists between the four types of cultures in all aspects of information processing. The scope and intensity of information search were found to be higher in a culture that is market-driven followed by adhocracy, clan, and hierarchy (Myers & Tan, 2003). In a hierarchical culture, the ISS formulation process is more intensive followed by clan, market-driven and adhocratic cultures (Myers & Tan, 2003). Ismail Al-Alawi et al. (2007) also state that organisational culture affects the formulation and implementation of ISS whereby the proper identification and understanding of power, norms, and meanings in organisational culture and its national context serves as a major step in ISS formulation. Additionally, the author argues that organisational culture plays a crucial role in the information systems adoption process.

Question 3

Various considerations should be taken into account when deciding to implement an enterprise resource planning (ERP) in a large organisation. One of the key factors to consider is the project start-up. This involves ensuring that the project is on the right track which can be done through the preparation of all the required information while sharing it with the right personnel (Al-Mashari, 2002). Some of the activities that can be useful at this stage include the preparation and review of the business strategy, the ISS, the ERP strategy and the project scope. Further, the organisation should be prepared for the new system and the process changes that will accompany it by applying appropriate strategies and techniques for change management.

The other consideration is management commitment. Given that the implementation of an ERP will impact the operations of a company by changing system transactions and updating business processes (O'Leary, 2000), it should not be treated as an IT area alone. The organisation`s senior and mid-level management should participate in the project right from its inception to completion. As such, the project gains proper visibility in the organisation while this also demonstrates to all the staff members that the project if necessary. Therefore, before deciding to implement an ERP, the management should be involved in the steering committee, project sponsorship, issue escalation, and resolution. The involvement will play a fundamental role in the maintenance of the directorate support throughout the project while keeping managers informed (Calisir & Calisir, 2004).

It is also vital to consider the scope of the project before deciding to implement it. In most cases, core ERP systems do not satisfy all the organisational need. This implies that there is a need to develop a proper ERP strategy and understand the ERP components as well as how it will be made to fit with other existing tools and systems. Thus, the project should be defined from a knowledge position while providing full details of what will be included in the project. To achieve this, it is vital first to understand the requirements of business and make a plan of how these requirements will be satisfied. Since the ERP satisfies some of the business requirements, it is important to show how other requirements such as business intelligence, data management, and social media will be achieved (Ehie & Madsen, 2005).

Project team is another key consideration whereby it should be made up of full-time personnel such as project managers and other core business areas representatives. A cohesive working relationship should exist between the core project team and the consultants (Al-Mashari, 2002). The identification of sets of resources from various business areas is helpful as it enables the provision of subject matter expertise. There are also other factors to consider such as change management, communication, and training, customization and modifications, budget and project closure (O'Leary, 2000).

There are many reasons for high ERP implementation failures. Among the main ones is the poor ERP selection which involves sacrificing the business results for implementation cost and speed. While a lot of focus is put on ERP`s implementation cost and speed, the two factors, however, should not be treated as more crucial than the system functionality within the company. The working of the system with the processes and practices of the company will significantly contribute to the organisation`s long-term success.

Another key reason for failure is the lack of executive involvement and support (Ehie & Madsen, 2005). Management plays a fundamental role in the success of an ERP, and hence it should be deeply involved with all implementation steps. This helps managers to be informed about important updates and events, understand the work`s scope and technical aspects as well as the amount of resources and time required for the process. Further, management plays a fundamental role in getting all the employees in the organisation on board since it is more likely that the managers were the ones who first decided to purchase the ERP software (Al-Mashari, 2002).

The high ERP failure can also be attributed to unrealistic expectation. In many instances, ERP vendors describe their ERP solution as quick in implementation but cost friendly (O'Leary, 2000); however, statistics have shown otherwise. For example, for a small-mid-sized company, the average execution time is 14 weeks, but regularly, vendors state that the completion can be achieved within, for instance, six months. Such time estimates that are unrealistic may introduce an element of delay in the implementation process which translates into extra costs and resources while making the process to be done in a rush.

Lack of training on the new system is also another reason for failure. While it is key to have the right system in place, this is ultimately useless in the absence of enough knowledge among the users on how to use it (Calisir & Calisir, 2004). Thus, an organisation should rely on the training options of the ERP vendor to assist in the process whether by all employees being trained or by preparing a section of the organisation`s employees and using them to teach the rest. Other reasons for high rates of ERP failure are the lack of a clear destination, lack of a proper plan, part-time management, underestimated resources for the project, overreliance of consultants as well as insufficient training (Al-Mashari, 2002).

Question 4

The two peer-reviewed academic articles that will be considered are Lakhani and Von Hippel`s, “How open source software works “free” user-to-user assistance” 2003, and “Open source software and the “private-collective” innovation model: Issues for organization science” by Hippel and Krogh (2003).

Summary of article 1

How open source software works: “free” user-to-user assistance by Lakhani and Von Hippel (2003).

This article explores how the mundane but necessary task of field support is recognized in the case of Apache web server software as well as why a number of project participants have a motivation to provide this service gratis to others. Some of the key findings in the paper include the fact that the Apache field support systems function effectively. The authors of this article also found that when the help system is partitioned into its component tasks, 98% of the effort used by the information providers has direct learning benefits to the providers. The findings of Lakhani and Von Hippel (2003) significantly reduce the puzzle of why providers of information have the will to perform field support for free.

Summary of article 2

Open source software and the “private-collective” innovation model: Issues for organization science by Hippel and Krogh (2003)

In this paper, Hippel and Krogh (2003) propose that the development of open source software is an exemplifies a complex innovation model containing elements of both the collective action models and the private investment. Further, the article provides details about the type of data that is available for open source projects. This is in efforts to ease the access of the data by researchers who are not familiar with it. The authors also offer some advice regarding how to conduct empirical studies on the development processes of open source software.

Similarities

One of the major similarities between the two articles is that the issues addressed fall under the field of Open Source Software. For example, the two articles discuss Apache, an open source software programme and its field support system.

Another similarity between the two articles is that both express the importance of open source software to developers and users and why these developers are willing to contribute freely to the field operations. According to Hippel and Krogh (2003), open source software development offers developers with the opportunity for an exceptionally clear understanding of their inner workings details. Similarly, Lakhani and Von Hippel (2003) state that open source software development serves to provide the developers with the enjoyment of working on tasks as well as the enhanced reputation as a result of their high-quality contribution to open source software projects.

Differences

Despite the similarity that exists between the two articles, there are aspects in which the two differ. The major difference that is apparent between the two articles is that while the article How open source software works:“free” user-to-user assistance by Lakhani and Von Hippel primarily focuses on developers and information providers, the other article, Open source software and the “private-collective” innovation model: Issues for organization science by Hippel and Krogh focuses on researchers and their interest, in addition to the role played by developers and information providers in open source software projects.

Contribution to the body of software management knowledge

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The article by Lakhani and Von Hippel; How open source software works: “free” user-to-user assistance makes a significant contribution to the knowledge body of software management by creating an understanding of why information providers perform their tasks willingly for free. To achieve this, the authors select the delivery of high-quality field support to open source software users as the mundane but necessary task. Field support includes providing assistance to users who may be experiencing difficulties with a particular product, in this case, an open source software product. Such problems may arise due to product defects or the user lacking the necessary understanding. The article successfully identifies the reasons behind the voluntary contribution of information providers. One of the reasons identified is that there is an intrinsically rewarding aspect of the task setting whereby the posting of questions triggers the information provider`s interest to research more hence gaining valuable information (Lakhani and Von Hippel, 2003). Another reason is that there is the possibility of gaining reputation.

Similarly, the article by Hippel and Krogh; Open source software and the “private-collective” innovation model: Issues for organization science also makes a thoughtful contribution to the body of software management knowledge. First, the authors provide a detailed history of open source software development projects while also highlighting their characteristics. A brief history of open source software is also provided in efforts to set an appropriate context for the exploration of the interest that the open source software phenomenon holds for organisation science researchers.

References

  • Al-Mashari, M., 2002. Enterprise resource planning (ERP) systems: a research agenda. Industrial Management & Data Systems, 102(3), pp.165-170.
  • Baye, M.R. and Beil, R.O., 2006. Managerial economics and business strategy (Vol. 5). New York, NY: McGraw-Hill.
  • Calisir, F. and Calisir, F., 2004. The relation of interface usability characteristics, perceived usefulness, and perceived ease of use to end-user satisfaction with enterprise resource planning (ERP) systems. Computers in human behavior, 20(4), pp.505-515.
  • Casadesus-Masanell, R. and Ricart, J.E., 2010. From strategy to business models and onto tactics. Long range planning, 43(2), pp.195-215.
  • Ehie, I.C. and Madsen, M., 2005. Identifying critical issues in enterprise resource planning (ERP) implementation. Computers in industry, 56(6), pp.545-557.
  • Hippel, E.V. and Krogh, G.V., 2003. Open source software and the “private-collective” innovation model: Issues for organization science. Organization science, 14(2), pp.209-223.
  • Hofstede, G. and Peterson, M.F., 2000. Culture: National values and organizational practices. Handbook of organizational culture and climate, pp.401-416.
  • Ismail Al-Alawi, A., Yousif Al-Marzooqi, N. and Fraidoon Mohammed, Y., 2007. Organizational culture and knowledge sharing: critical success factors. Journal of knowledge management, 11(2), pp.22-42.
  • Johnson, G., Scholes, K. and Whittington, R., 2008. Exploring corporate strategy: text & cases. Pearson Education.
  • Kaplan, R.S. and Norton, D.P., 2000. Having trouble with your strategy? Then map it. Focusing Your Organization on Strategy—with the Balanced Scorecard, 49.
  • Kaplan, R.S. and Norton, D.P., 2001. The strategy-focused organization: How balanced scorecard companies thrive in the new business environment. Harvard Business Press.
  • Lakhani, K.R. and Von Hippel, E., 2003. How open source software works:“free” user-to-user assistance. Research policy, 32(6), pp.923-943.
  • Leidner, D.E. and Kayworth, T., 2006. Review: a review of culture in information systems research: toward a theory of information technology culture conflict. MIS quarterly, 30(2), pp.357-399.
  • Martins, E.C. and Terblanche, F., 2003. Building organisational culture that stimulates creativity and innovation. European journal of innovation management, 6(1), pp.64-74.
  • Myers, M.D. and Tan, F.B., 2003. Beyond models of national culture in information systems research. Advanced topics in global information management, 2, pp.14-29.
  • O'Leary, D.E., 2000. Enterprise resource planning systems: systems, life cycle, electronic commerce, and risk. Cambridge university press.
  • Peppard, J. and Ward, J., 2004. Beyond strategic information systems: towards an IS capability. The Journal of Strategic Information Systems, 13(2), pp.167-194.
  • Simons, R., 2013. Levers of control: How managers use innovative control systems to drive strategic renewal. Harvard Business Press.
  • Vorhies, D.W. and Morgan, N.A., 2003. A configuration theory assessment of marketing organization fit with business strategy and its relationship with marketing performance. Journal of marketing, 67(1), pp.100-115.

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