The Role of Information Systems in The Improvement of Banks Performance - Research Paper Example

The role of Information Systems in the improvement of banks’ performance Table of Contents 1. Introduction 1 2. Literature Review 2 3. Research Methods 5 3.1 Description of research methods 6 3.2 Reasons for choosing the specific research methods 6 3.3. Data collection and analysis 7 3.4 Limitations of research 7 3.5 Problems of research 8 3.6 Ethics of research 9 4. References 10 5. Appendix 11 1. Introduction Information systems have a crucial role in the improvement of banks’ performance. The following issues will be examined in this study: a) the level at which information system can influence the business performance – especially of banks; b) the role of information systems in modern organizations and c) the prospects of information systems as tools for the increase of organizational profitability. Through the study, the interaction of business management with the information systems is also highlighted – business management is used for the monitoring and the administration of business activities, which are developed through the information systems. 2. Literature Review In the context of the literature review the following resources will be examined: Bocij et al.(2006), Curtis et al. 2008), Dong et al. (2008), Gelinas et al. (2009), Irani et al. (2008), Knoll et al. (2001) and Stair et al. (2009); In accordance with Stair et al. (2009) information systems (IS)can support the business performance both directly and indirectly; at the first level, IS are used in the development of various business activities and in this way the have a crucial role in the firm’s performance; however, their indirect support to the business is also important; Databases implemented in a firm’s hardware can be used for ‘business-intelligence purposes, i.e. for gathering enough of the right information in a timely manner and a usable form and analyzing it so that it can have a positive effect on business strategy’ (Stair et al., 2009, p.2008). The importance of information systems for the development of a firm’s performance is also highlighted in the study of Gelinas et al. (2009); in the particular study an extensive analysis is made of the role of IS in a firm’s accounting department; in this context, it is noted that through appropriately customized information systems it is possible for a firm’s manager to evaluate who of the employees has the skills to develop a specific task (when information systems are used in the hiring process) but also to evaluate which of the projects undertaken by his organization has most chances to be completed successfully (Gelinas et al., 2009, p.7); additional benefits of the IS on firm’s performance can be identified using different criteria – the organizational environment is expected to have a critical role in the performance of IS across an organization; the high performance of IS results to many benefits for the organization. Through a similar view, information systems can be considered as part of the business strategy; more specifically, in accordance with Curtis et al. (2008) ‘more businesses are modeled and managed in a functional way’ (Curtis et al., 2008, p.48); information systems are characterized by Curtis et al. (2008) as functions included in business management in the following context: every business need to develop appropriate strategies regarding its various departments and activities, for example a strategy regarding its human resources, a strategy regarding its information systems and so on. Under these terms, information systems are elements of the business strategy. The involvement of information systems in business activities may have different forms; for example, information systems are likely to be used for ‘the control of processes’ (Knoll et al., 2001, p.71). In this context, information systems are used for the development and the monitoring of the various business operations; this view is aligned with the one of Curtis et al. (2008) – presented above; in accordance with these views, information systems are part of the business strategy or tools for the achievement of the targets set in the context of business management. One of the key issues regarding the performance of information systems in business is the ability of the leader to manage these systems effectively – the management of the IS in this case can include all phases of these systems’ operation, i.e. their initial establishment in the organization, their tuning, their operations, their monitoring, their maintenance and their replacement/ update (if necessary); this issue is highlighted in the study of Gottschalk (2000) who noted that IS leaders (named also as information systems executives) can have three different roles in their organization: a) informational, b) decisional and c) interpersonal (Gottschalk , 2000, p.32) On the other hand, in the study of Bocij et al. (2006) a paradox is identified: information systems are – generally – important for the development of most business activities; however, a relevant research proved ‘the poor correlation between organizational investment in information systems and organizational performance measured by return on equity’ (Bocij et al., 2006, p.578); the above paradox could be possibly explained using the following arguments: a) the criteria of the measurement of the return on equity were not carefully set, i.e. the time period to which the research refers might be a difficult period for the specific organization – in terms of its productivity; i.e. the level of organizational productivity during the specific period has been extremely low compared to the firm’s common performance, b) the return on equity could appear low under the influence of other factors that are likely to affect the organizational performance only temporary, for instance the employees in a specific organizational department do not perform at the usual level because the number of employee has been decreased and no initiative was undertaken for covering the relevant positions. Dong et al. (2008) examined the relation between the business strategy and the information systems; in the empirical research developed by the above researchers it was proved that ‘information system strategic alignment is a better predictor of business performance than business strategy or information system strategy alone, although business strategy can significantly influence business performance’ (Dong et al., 2008, p. 348). In accordance with the above view, information systems can be used in order to measure and evaluate the business performance – towards this direction information systems are closely related with the business management and they can influence the organizational performance. The relationship between information systems and business management cannot be doubted; the major characteristic of this relationship is that it has different forms, under the influence of the organizational environment and the resources available. In many cases, information systems are appropriately customized in order to better respond to the needs of the organization; this issue is highlighted in the study of Irani et al. (2008) where it is noted that ‘strategic information systems can support or even shape business strategy’ (Irani et al., 2008, p. 14). By influence the business strategy information systems have a critical role in the development of business management; this role can be of different level in each organization – in accordance with the organizational aims, the nature of the organizational activities and the resources available; however, there is no case that information system are not involved in organizational performance – directly or indirectly as explained above. The studies presented above prove that information systems are closely related with the organizational performance. The relationship between the information systems and the business performance is also analyzed in the study of Chan et al. (2001); the above study refers to the use of information systems for developing effective e-business schemes; in this context, information systems can affect the business performance; indeed, if the e-business scheme implemented in a particular organization performs in accordance with its standards, then it is likely that the organizational performance will be significantly supported; this fact is of high importance for the banks which are strongly based on e-business schemes – known also as e-banking schemes – for communicating with their clients; these schemes also provide to the customers the chance to develop a series of transactions; in this way, information systems directly affect the organizational performance. 3. Research Methods 3.1 Description of research methods Current study is based on two different research methods; more specifically, both primary and secondary research will be employed in this study in order to offer credible and updated information on the issues under examination. The secondary research will be based on the review of literature, i.e. of studies that are related with the specific field – as defined by the study’s main subject – and that have been published from 2007 onwards (older studies may be used but only in cases that there will be no other way of identifying important material on the study’s issues); the primary research will be based on a survey which will be conducted through a questionnaire under the terms explained in the sections that follow. 3.2 Reasons for choosing the specific research methods The use of two different research methods is expected to help to the increase of the study’s credibility; on the other hand, each research method has its own benefits/ advantages: the literature review includes studies the results of which have been tested using appropriate academic research methods; on the other hand, the primary research, i.e. the survey, will help to identify the current status of the study’s main issues; the views of participants reflect the current role of information systems in the performance of banks; in this way, the primary research helps to align the findings of the past with the findings of the present in regard to the study’s subject. 3.3. Data collection and analysis As noted above, the study will be developed using both primary and secondary research. The primary research will be conducted through a survey based on a questionnaire. The questionnaire will include 20 questions each of which will be followed by suggested answers; the participants will be asked to choose the answer that best suits to their perceptions. The questionnaire will be divided into four parts: the first part will include the personal details of the participants – name, surname, age, gender, educational background and position in the organization. Contact details of the participants – phone, address- will be also included in the study (in case that the verification of their answers is required); the second part of the questionnaire will include the questions each one of which will be followed by a series (3-5) suggested answers; in the third part of the questionnaire participants will have the chance to state their own view on the survey’s issues; finally, the last part, the fourth part, of the questionnaire will include the terms and the ethics of the research; participants need to sign at the end of the questionnaire verifying that they have read the terms and the ethics of the research and that they agree. At the next level, the participants need to be identified; the employees of three known British banks have been chosen in order to participate in the survey; 150 employees – in total, i.e. 50 in each organization – of Barclays, HSBC and NatWest will be asked to participate in the survey. The questionnaire will be sent to the participants through the e-mail and will be gathered in the same way; a deadline of 15 days will be given to the participants for the return of the questionnaire – see Gantt chart in the Appendix section. After gathering the questionnaires the researcher will categorize them setting specific criteria (for instance those that are fully completed will be put separately from those that are partially completed); the findings of the survey will be critically discussed using the views of the literature – i.e. no statistical methods of analysis will be employed in the study; on the other hand, the findings of the research will be graphically represented using a text-processing software (e.g. the Microsoft Office). 3.4 Limitations of research The research conducted for this study it is partially limited; the subject of the research has been examined in the literature, but the studies that have been published recently on this subject are not adequate to cover the issues examined in the context of this study; for this reason, the empirical research has been used in order to help clarifying all points of the study that are not adequately discussed in the literature. Moreover, the use of studies that are older, i.e. published 5-10 years before, has been considered as necessary. Another fact that could be regarded as a limitation of the research is the continuous development of information technology; in this context, the development of a study related with the information systems can become outdated within a rather short period of time; the studies included in the literature are as many as possible trying to explain all aspects of the study’s subject. The expected limitations of the research – as explained above – have been minimized by developing an extended questionnaire – of 20 questions as explained above – so that all points of the study’s subject that have been possibly left unclear to be analytically explained and evaluated – through the responses of the participants. 3.5 Problems of research No severe problems are expected to appear during the development of the research; in fact, the only problem of the research is related with the return of the questionnaires; participants will be given 15 days for the return of the questionnaires; however, there is no way of enforcing the participants to return the questionnaires on time; on the other hand, the questionnaires will be categorized after their return to the researcher; at the next level, their findings will be critically analyzed – in the context described above; the delay in gathering the questionnaires would result to the delay of the whole project – see the Gantt chart in the Appendix. For this reason, it is stated clearly in the questionnaire that questionnaires, which will not be returned within the period of 15 days, will not be taken into account. 3.6 Ethics of research The research conducted for this study will be based on specific ethical principles: a) the participants will be informed in advance – i.e. before returning the questionnaire completed – on their rights in regard to the research, b) the personal details of the participants will be kept safe – no one except from the researcher will be allowed to access these details, c) the participants will have the right not to answer in one or more questions; the freedom of the participants to answer to the questions they wish to cannot be limited, d) the questions included in the questionnaire will not refer to issues that can be characterized as unethical; particular attention will be paid to the content of the questions so that only the absolute necessary issues are addressed and always in the context of ethics of the academic research, e) the participants will have the right to be informed on the results of the survey after its completion, f) the questionnaires – and their results – will be used only for the completion of this study. The participants will be informed on the ethics of the research; in fact, the ethics of the research will be included in the questionnaire – in its third part; the participants will verify that they have been informed on the ethics and the terms of the research and that they agree. 4. References Bocij, P., Chaffey, D., Hickie, S., Greasley, A., 2006. Business information systems: technology, development and management for the e-business. Pearson Education Chan, E., Swatman, P., 2001. eBusiness and Information Systems: Academic Programs in Australia and New Zealand in the e-Age. 14th Bled Electronic Commerce Conference, Bled, Slovenia, June 25 - 26, 2001 Curtis, G., Cobham, D., 2008. Business Information Systems: Analysis, Design and Practice. Pearson Education Dong, X., Liu, Q., Yin, D., 2008. Business Performance, Business Strategy, and Information System Strategic Alignment: An Empirical Study on Chinese Firms Tsinghua. Science & Technology, Volume 13, Issue 3, pp. 348-354 Gottschalk, P., 2000. Information Systems Executives: The Changing Role of New IS/IT Leaders. Informing Science, Vol.3, No.2, pp.31-39 Gelinas, U., Dull, R., 2009. Accounting Information Systems. Cengage Learning Irani, Z., Love, P., 2008. Evaluating information systems: public and private sector. Butterworth-Heinemann Knoll, H., Kuhl, R., Lukas, W., Moreton, R., 2001. Optimising business performance with standard software systems: how to reorganise workflows by chance of implementing new ERP-systems (SAP, BAAN, Peoplesoft, Navision ...) or new releases. Birkhäuser Stair, R., Reynolds, G., 2009. Principles of Information Systems. Cengage Learning 5. Appendix 5.1 Gantt Chart Weeks/ Research activities 1 2 3 4 5 6 Design of research plan Questionnaires are sent Literature Review Gathering, evaluating of results Development of conclusion/ recommendations sections Overview of the project/ additions, changes Read More