The Challenges Faced By Organizations When Managing Information Technology in a Global Business Environment - Essay Example

Critically Evaluate the Main Challenges Faced by Organisations when Managing Information Technology in a Global Business Environment, and their Impact on Firm Performance Introduction Information technology has emerged as one of the potent tools in integrating business sources and resources leading to business benefits and advantages in the long run. Information technology is based on using appropriate technologies helping in managing business processes and resources in a systematic manner. In last few years, a number of companies have made effective use of information technology helping them to grow and develop in the competitive business environment. The growth of new technologies embedded with wide arrays of benefits have made information technology an important part of the business strategies. Organisations often formulate business strategies to gain competitive benefits and information technology helps in gaining competitive edge and advantage in the long run. However, managing information technology is also considered as a challenge by a number of academicians and researchers. It is often believed that with a number of benefits; there are a series of challenges in the form of managing technologies, using them efficiently, and enhancing the acceptance rate. The major purpose of the discussion is to critically analyse and evaluate the main challenges faced by organisations when managing Information Technology in a global business environment, and their impact on firm performance. There is no doubt that with competition as a biggest challenge; forms often try to get more benefitted and ahead from others by making effective and efficient use of technologies. The impact of information technology is hard to analyse considering the fact that it requires thorough analysis of the firms’ productivity and value creation in last few years. Thus, the discussion revolves around analysing the views and opinions of other researchers in a critical manner to assess the overall impact in last few years. For this purpose, a number of academic papers, journals, and articles have been critically analysed to form general and later specific conclusion. Importance of IT in Organisations Carr (2003) stated that information technology plays an important and decisive role in transforming business strategies through innovative applications and technologies. Carr (2003) further added that few companies attain advantages from specialised applications that may not offer strong economic incentive for replication but there is no dearth of organisations using IT for business enhancing business processes and activities. Chen, et al (2012) stated that not many organisations are successful in delivering value from the IT investment and only handful of them become successful in terms of delivering value and business benefits. Davenport (2006) added that in last few years, the advantages and benefits of IT have been mitigated by the rising risk and challenges thwarting the growth and development of many small and medium organisations in the global business environment. Nolan (2012) believed that companies need to understand that IT solutions may not be fully beneficial until tested within the organisational framework in a critical manner. Carr (2003) and Chen, et al (2012) further emphasised on size and nature of organisations affecting the implementation of IT solutions. Carr (2003) stated that large organisations need to have a separate IT department for managing IT issues while Chen, et al (2012) supported this statement by adding that organisations with non-dedicated IT department and framework tend to suffer a lot while facing IT complexities and glitches. Peppard (2007) claimed that the major importance of IT framework is to integrate business processes and activities along with adding value to the business framework by streamlining business processes and saving time and money in the long run. Walsham (2012) believed that the importance of IT is well known within the business environment. However, with benefits there are a series of challenges affecting the business and functional benefits. Nolan (2012) added that IT benefits are perceived well but in reality benefits come with severe challenges. Saunders and Chan Analysis of IT Framework and Solutions Saunders and Chan (2002) stated that IT framework requires proper planning and support of employees in order to extract greater degree of value and benefits. In this regard, senior managers need to be involved in the decision making process pertaining to the implementation of IT solutions and framework. Thus, an open working environment is required so that employees can offer their suggestion along with understanding their responsibilities in a critical manner. Employees should have an understanding over the intricacies of IT frameworks being used along with an idea over their responsibilities to execute IT related work and applications. Hall (2005) further added that employees should have access to information but they should not have access to all sort of information required for the decision making. Saunders and Chan (2002) further added that organisations need to have partnership and strategic alliance with technology providers in order to facilitate the operational framework of IT applications. This also requires sharing of data and information that may require high degree of trust positive relationship. Harrison, et al (2000) added that partnering with right individuals and service providers define the overall success of technologies. It is not possible for organisations to execute technological related tasks and third party service providers are important in enhancing the technological appeal. Saunders and Chan (2003) further added that partnering does not mean having right partners and use of technologies but it includes process-reengineering before the system can be integrated completely. In this regard, Lacity, et al (2009) added that process-reengineering is a long process requiring help and support of many facilitating the technological changes. This in turn helps in taking technology related decisions in a critical fashion. Peppard (2007) also added that strategic alliance are useful only when partners are willing to share mutual goals along with helping each other to grow and develop in the competitive business environment in a positive manner. Saunders and Chan (2002) further stated that, it is important to safeguard data and information so that confidential details of companies are saved for the right purpose in the short as well as in the long run. Employees should not have access to all sorts of information as this may hamper the long term growth of companies along with jeopardising their future prospects. Hall (2005) stated that open source environment has been preferred by a number of companies but this offers employees access to plethora of information that may or may not be used as per the companies’ policies in the long run. Thus, companies need to form a systematic approach by sealing the knowledge and information existing in the company along with taking adequate security and safety measures. Markus (2004) stated that employees often leave companies for better prospects and access to information can affect the business prospects of organisations in a serious manner. Thus, along with analysing the benefits of IT from employees’ perspectives, it is also important to assess the drawbacks in a rationale manner. Saunders and Chan (2007) further added that IT solutions have exposed many users and companies in legal dilemma in last few years. With the advent of e-commerce and social networking, a number of private and confidential details of users get stored affecting the overall privacy of users. In last few years, companies like Google, Twitter, Facebook, and LinkedIn have been accused of using private information of users. Furthermore, this affects the overall business model and framework of these organisations. Peppard (2007) stated that companies need to follow strict rules and regulations while safeguarding the details of users. Furthermore, employees should be signed legal contract for not sharing the details of users with anyone without companies and users’ approval. Saunders and Chan (2007) stated that senior managers should facilitate a healthy and ethical technological environment so that information can be stored and used in a rationale manner without affecting the privacy and confidentiality of organisations and customers. Guidelines for IT Use as per Saunders and Chan Guideline Background Response Managing Cash Flow Large companies have adequate cash flow but still requires good managers for managing the IT framework Expertise and skills are required to be successful in the competitive business environment An Open Work Environment Open work environment helps in sharing data and information. However, this may affect the overall privacy and confidentiality of data and information and thus, sharing of information should be restricted. Choosing Partners and Alliances Choosing right partners and strategic alliances is important for effective and systematic use of IT However, this requires higher degree of trust and also sharing of similar goals and objectives in order to be successful. Finding Right Employees It is important to find and hire right employees who can make proper use of IT solutions along with add value Employees often need training to facilitate technological tasks along with understanding their responsibilities. Internet and E-commerce E-commerce affects the privacy and confidentiality of information It is important for companies to sign legal contracts with employees and third parties to protect the sharing of data and information Effective Communication Effective communication is required to facilitate technological advancements It is important for senior managers to communicate the IT needs and responsibilities Won Kim’s Analysis of IT Problems and Solutions Kim (2007) in his research found that information technology plays an important role in managing and making appropriate use of information. However, it also causes issues in terms of effective management of information. The biggest problem in terms of managing information is in the form of accessibility that can be divided into the distributed information and semi-structured data accessibility. Distributed information is often stored in different computers managed by different applications and software. It also becomes important to understand whether access requirements of distributed information are known or not. In order to solve these issues, there are a number of solutions in the form of data warehousing, data integration, supply chain management, enterprise resource planning, and customer relationship management. On the other hand, semi-structured data are easy to manage considering the fact that they are stored on other platforms and are in the form of e-mails and XML documents. Hall (2005) stated that accessibility issues can be considered as a serious issue especially while making decisions. In order to take decisions, it is important to analyse wide arrays of information and absence of relevant information can affect the entire decision making process in a negative manner. Lacity, et al (2009) added that distributed set of information are hard to manage as they are stored on different platforms and are accessed using different software and applications. On the other hand, semi structured data and information are easy to manage and handle requiring instant access that is often hassle free. Smith (2005) stated that organisations require information technologies to manage information and making effective use of them to attain competitive benefits. For this purpose, it is important to have an integrated technology helping in accessing series of data and information in a hassle free manner. However, majority of organisations require the use of distributed and semi-structured set of data and information for better accessibility. Kim (2007) further added that organisations often face issues in terms of option overload problem. As a matter of fact not every function of the system can be operated or handled using designated keys or buttons. A number of companies use ERP and CRM applications for integrating wide arrays of relevant information. Furthermore, these software have a number of functions that cannot be handled with designated keys and buttons. Some related functions are clubbed together with an option of one accessibility key. This often creates issues in terms of finding required function. Organisations often have to incur huge cost in terms of training their employees for a better understanding on the use of software, functions, and different keys. With number of functions exceeding number of keys, it becomes all the more confusing for employees as well as customers to understand the usefulness. Markus (2004) stated that option overload problem attracts huge investment on training that could have been used on other business processes and activities. Furthermore, the investment does not promise instant results as employees may find it difficult to learn and operate instantly. Another problem is in the form of categories of information exceeding the number of elements in the list (Kim, 2007). This means that in order to get relevant information, organisations are required to access other fields and information taking good amount of time. In many cases, to access relevant information, it is important to use password and keywords creating confusion. From customers’ perspectives; getting hold to a software or application requires passing through different fields and categories (Peppard, 2007). All these things are often confusing and challenging in nature affecting the overall acceptance level of information technologies software and applications. Smith (2005) stated that while using ERP or CRM, garnering relevant information and data requires too much of time often affecting the decision making process. Thus, there are a number of challenges pertaining to the use of IT that needs to be analysed and assessed in a rationale manner. Guidelines for IT Use as per Won Kim Problems Issues Current Solutions Accessibility Problems Distributed information, semi-structured information with issues like known and unknown location Data warehousing, data integration, application integration, and search engine index Functions Exceeds the number of keys and thus creating handling issues Thorough training and development programs for quick and better understanding of software management and functions Categories of information Exceeds the size of the total list Thorough training and development programs for quick and better understanding of software management and functions Data Integration Large set of data are often integrated and finding required set of data is a cumbersome task Use of dedicated keys and functions along with search options to find required set of information Introduction of New Technology New technologies often replacing old technologies Users accessibility should be retained along with enhancing the overall operational framework for a better flow of information Challenges Faced by Organisations while using IT Strassmann (1995) stated that organisations face a number of challenges while using information technologies. Some of the challenges are in the form of integrating business information and processes. While integrating business information, complex set of software and applications are required often taking too much of time. Furthermore, organisations also need to incur expenses on training and development. Weill and Aral (2006) stated that organisations cannot store and integrate information on their own and require help and support of service providers. This exposes them to security threat in the form of theft and misuse of data and information in the long run. Young (2009) added that organisations use technologies for enhancing their business processes and strategies and lethargic approach and lack of understanding can affect the overall benefits in a negative manner. Pfeifer, et al (2005) stated that organisations often use set of technologies that may affect their IT portfolio. It is important to use relevant and appropriate technologies rather large numbers of technologies. Weil and Aral (2006) further added that organisations use information technologies to create value for customers and business. When customers face issues regarding theft of private details and complexities in using technologies, the overall value creation process gets affected in a serious manner. Hall (2005) also supported this statement by stating that IT governance is very important in safeguarding IT strategies and solutions. However, not many organisations have effective and efficient IT strategies and governance. This affects the execution process in the long run. Young (2009) also added that IT strategies and solutions should match with the skills and expertise of human resource. Lack of integration and balance between the two can affect the entire value chain. Overall, it can be said that understanding the challenges of IT are more important compared to implementing and executing IT strategies in the competitive business environment. Maximising Benefit from IT- Major Issues to be considered As per the research conducted by Weill and Aral (2006), it was found that generating premium return from IT investment is quite possible through effective use of business and IT strategies. It also involves using IT for internal and external communication and also for internet use and digital transactions. At the same time, it is important to integrate IT strategies with human resource skills and expertise. At the same time, it is important to understand and analyse IT portfolio from different perspectives. It is important to analyse whether the portfolio needs to be shortened or more compact while focussing on enhancing business appeal and strategies. Smith (2005) stated that companies need to evaluate their IT strategies with those of competitors in order to analyse the rise and significance of their IT strategies. Furthermore, it is important to understand the risks of using IT. Major risks can be in the form of investing too much of capital that may not offer instant benefits and advantages. At the same time, it may affect the operational and functional framework in an alarming manner. Harrison (2000) stated that companies need to facilitate IT culture where IT governance should be offered top most priority. IT governance is important in keeping a close eye on IT strategies and ethical practices. Additionally, IT strategies can be formulated on papers and executed using software and applications. However, when it comes to managing them, right set of skills and expertise are required. In this regard, it is important for companies to select skilled and expert employees possessing IT skills and expertise. This will help in saving training and implementation cost to an extent. Overall, it can be said that there are end number of IT challenges requiring proper attention of organisations to remain successful and competitive in the business environment. Moreover, the success of IT strategies often results in organisational success and development in the long run. Conclusion On the basis of the above discussion, it was found that IT services and strategies help organisations to integrate business processes and activities but they also offer immense challenges to remain value oriented. Some of the biggest challenges discussed were management of IT solutions, investment, training and development, privacy and security, and maintenance. Overall, it was concluded that with right skills and expertise, these challenges can be mitigated to an extent in the long run. References Carr, N. G. (2003) IT Doesn't Matter. Harvard Business Review, May, 41-49. Carr, N. G. (2005) The End of Corporate Computing. Sloan Management Review, Spring, 67-73. Chen, H., Chiang, R. H. L. and Storey, V. C. (2012) Business Intelligence and Analytics: From Big Data to Big Impact. MIS Quarterly, 36(4), 1165-1188. Davenport, T. H. and Harris, J. G. 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(2012) Are We Making a Better World with ICTs? Reflections on a Future Agenda for the IS Field. Journal of Information Technology, 27, 87-93. Read More