The Impact of Information Technology on Organisations
Essay Preview: The Impact of Information Technology on Organisations
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The technology I have chosen to look at in this report is Executive Information Systems (EIS) and I will focus on its impact upon the automotive industry. I will firstly introduce EIS and the automotive sector, then assess the impacts that implementing EIS would have, try to recommend the best course of action when introducing EIS and finally try to sum up the implementation of this technology in an executive summary.
Introduction
The term “Executive Information System” was first coined in 1982 by Rockart and Treacy and is used to describe a flexible application that provides support needed for high level decisions to be made by executives of a company. It usually provides easy access to a wide range of up to date information, relevant to the strategic goals of the company on a simple graphical user interface. It is deliberately made simple to operate due to a perceived lack of advanced information technology skills in high-level management. The data for an EIS normally comes from a wide range of sources such as production systems, financial systems, sales systems and stock systems. It is important that data is kept online to make sure that multiple users accessing the data will be accessing exactly the same data and therefore ensuring that all decisions are based on the same up to date information.
To explain briefly the different ways of implementing EIS, there are four main methods used, firstly using a text based software such as Microsoft Word to compile a simple but labour intensive report, with this method the set up will be relatively cost free and simple but will require more effort for the user and to up date it.
The second is using a database for example Microsoft Excel, once again this method will be fairly labour intensive to update but less time and resource will be needed to set up the application.
The next step up is called Graphics base where visual media, such as time series charts, scatter diagrams, maps or comparison-oriented graphs, are used to present the data for ease of interpretation by the executives. This type of system is fairly easy to set up using a standard database program.
The final step in an EIS would be a Model base, which would be more expensive to set up and implement but would require less input to update, in this case the EIS models contain statistical analysis alongside financial or other quantitative analysis.
I have chosen to focus on the use of EIS within in the automotive sector due to the wide range of activities that it encompasses, this will make the use of an EIS more important as an executive will need a wide range of data available to in order to make properly informed decisions. The industry its self is a global one with intense levels of competition; it is dominated by a few main companies as barriers to entry are high. Recently there is a trend for mergers and acquisitions in an attempt to become more competitive, however some small-scale marques still exist to serve niche markets.
Impacts of EIS
I am going to discuss impacts that EIS would have upon a manufacturer in the motor industry, these are by no means exhaustive but ones that I think are key to the workings of EIS and should be taken into consideration when deciding whether or not to implement this technology.
The first impact Id like to highlight is the ease that an executive can access all the information that he needs, in order to make a properly informed decision. EIS will mean that a user will only have to look at one source for all the information needed covering a wide range of business areas. This will mean that the user will save time switching from source to source and will gain a greater understanding of the information, as it is in a common and easy to interoperate format. All of this will mean that the strategy decisions made by the management team will be of a higher standard and hopefully this will gain the company an advantage in the market place. This is of particular importance in the motor industry as it is so competitive. It is important for an executive to have all this information at his disposal and to be able to drill down to the detail if necessary in order to make better decision and to improve the companys position in the market place. I feel that the investment of EIS would help to give any company in this market sector a competitive advantage.
However there are also some drawbacks of implementing this system, the first that I have decided to highlight is the limited capabilities of the system to perform calculations on the data that it provides. The EIS is deliberately kept simple so that users with little or no technical skills can use the system to their benefit. Unfortunately this can also have a negative impact on the system as it means that no complex calculations can be performed by it, if these are a necessary requirement for the user it will mean that the company will have to invest in a separate system to do this. A firm who has already spent a lot of resource developing and implementing an EIS system will then have to spend more on developing a system to perform the other functions that they need. Therefore a company needs to take into consideration any of systems that need to put in place alongside the EIS, when in the development stage of the process. Introducing EIS into a company can be a costly procedure, not only can the development costs be high, but it will take time for users to gain an understanding of the information and the format that it is presented to them, leading to some down time when the information flow is weaken, having a knock on effect in the decision making process. However if this period is handled properly with the correct level of training there is no reason for it to have a significant impact and certainly not one that will out weigh the improved information once it is up and running. To sum up this point I think that when I company is implementing EIS they need to make sure they have the resource available to build other systems that maybe required to run alongside EIS.
The second advantage of a company implementing an executive information system is that it will make sure that all users, even remote ones, will have access to the same data. When all people involved in the decision making process are forming their opinions from the same data it is easier for them to discuss and decide on the best cause of action. It is of particular importance in the motor industry as stock, production, and sales levels fluctuate heavily on a daily basis and can be easily influenced by monthly and yearly spikes. Therefore it