Strategic Information Systems for Business and Enterprise - Citizens Gas Company - Case Study Example

STRATEGIC INFORMATION SYSTEMS FOR BUSINESS AND ENTERPRISE Name Course Professor (Tutor) Institution Date Table of Contents Executive Summary 3 Introduction 3 Evolution of Decision Making Processes 4 Transaction Processing Systems (TPS) 5 Decision Support System (DSS) 6 Executive Information Systems (EIS) 7 Artificial Intelligence (AI) 8 Supply Chain Management (SCM) 9 Customer Relationship Management 9 Enterprise Resource Planning (ERP) 10 Conclusion 11 References 11 Executive Summary This paper seeks to critically examine the relationship between information systems and business strategies. Of particular focus will be the continuous evolution of the former with passage of time. The study will seek to align Citizen’s Gas Company business strategy in line with the existing information systems – consequently the author will aim at establishing clearly the link between the two by discussing, in detail, the different aspects involved. Moreover, the common forms of business information systems will be highlighted together with the associated interrelationship. Further, the research will venture into the central role played by the business information systems with regard to the attainment of strategic goals. Though the different sections will be devoted to certain aspects of business information systems like management of customer relationship, planning of enterprise resources, and strategic making of business decisions, it should be born in mind that such systems need to work in tandem with each other for any business organization to meet its strategic business targets even in the face of stiff competition. The research paper will come in handy especially among business unit managers who wish to craft and execute new business strategies by way of data modeling. Introduction Organizations have been known to primarily utilize a wide range of information systems in running their day to day business operations. According to Devero (2007) such systems are basically transactional and majorly focus on the flow of data items with regard to the fundamental business processes like purchasing and supplies as well as delivery of orders. Oftentimes, such data items are rolled up and incorporated into top-level decision making support systems for firms to better understand the running of their organizations. In order to realize this, it is the duty of the various organizations to tightly integrate the business transaction platforms across the whole enterprises involved. By so doing, these organizations will not only be able to manage but also process ordinary business transactions in the most efficient and effective manner possible and consequently make informed decisions. According to (Tjan, 2011) Citizen’s Gas Company (CGC) is one of the world’s leading natural gas companies and it boasts of a client base of more than 200,000clients who fall into three categories – residential, commercial and industrial classes. Of the three, the residential group of customers leads in terms of revenue generation giving a total of $160 million per annum. However, the sales volumes have been found to be largely dependent on weather patterns. Also affected by weather patterns is usage among the commercial customers with the consumption rates among the industrial customers being affected entirely by business factors. Evolution of Decision Making Processes Over the past few decades, businesses have realized the existence of an inextricable linkage between information systems and strategy though the strategic impact of the former remains quite hard to quantify (Alton, 2013). The effect of technology and information systems on a business strategy has been found to enhance the competitive advantage of any enterprise hence placing the business at a better position to outshine its rivals. According to (Turban, 2014) the amount of information required to support any decision making process across the world is growing rather exponentially. As a result, the decision making process has turned out to be more difficult with subsequent increase in the amount of information available. Unlike in the past when information was quite limited and decisions could be made using manual processes, the modern day massive volumes of information available make the decision making process an uphill task. It is in light of this state of affairs that information systems come in handy. With each passing day, complex decisions have got to be made in increasingly limited time lines. It is still against this backdrop that varieties of models have been and continue to be developed to aid in the decision making processes (Gleeson, 2006). Model, in this case, is defined as the simplified abstraction or representation of a real life situation. Models have been found to be overly useful in assessing risks, changing study variables, manipulating time as a resource and also in understanding uncertainties. Often cases, models are built out of organizational information with an objective of lending insight into critical business opportunities or issues that in one way or another have far reaching ramifications (Ross, 2006; Gleeson, 2006). With particular regard to information systems, the decision making process effectively falls into three categories: executive information systems, transaction processing systems and decision support systems. Ross (2006) cautions that despite the glaring disparity in the models used, these systems have to be integrated for sound and proper decision to be arrived at. This means that presence of accurate and reliable data in the transaction processing system renders the decision making process at higher levels effective. Consequently, it remains imperative that data consistency at both the top level as well as lower levels is guaranteed otherwise the management faces real risks of making misguided decisions. Such an eventuality could easily steer the organization from its right course in pursuit of strategic objectives and goals. Transaction Processing Systems (TPS) Kothari (2014) explains that transactional information system comprises of all the information within a given unit of work or better business process. The author further observes that the primary objective of this information is to support the performance of the daily business operations. Such information will include but not limited to stock purchases and requesting for airline reservations. Transactional information has been found key especially in the performance of repetitive decisions like the analysis of daily sales reports so as to quantify the inventory. On the other hand, analytical information takes care of the general organizational information whose primary purpose is to back up the analytical tasks of the management (Jones & Johnson, 2007). The pair points out that analytical information encompass the industry and market information as well as transactional information. In sum, the analytical information will include projections for future market growth, product statistics as well as sales trends. Analytical information is particularly important in making ad hoc decisions like the construction of a new manufacturing of processing plant or even the hiring of new personnel in the sales department (Stackpole, 2013). Furthermore, it cannot be gainsaid that the occurrence of various organizational activities assumes pyramid as its typical shape (Zhang & Zhou, 2012). Since different cohorts of people exist in any given organization, their respective information needs are unique hence calling for varying sets of Information Technology tools. The lower levels of organizational pyramid the common tasks involve processing of transactions. Information is captured using either Online Transaction Processing (OTP) or Transaction Processing System (TPS). According to Liu, 2010) online processing of transactions entails capturing event information through technology from where, such information entered, is then processed in line with the established business rules. TPS is the most fundamental system in business that supports transactions at operational level. Operational accounting is one of its TPS’s facets and it constitutes both the order-entry and payroll systems. Moreover, up the organizational pyramid,, the management, handles finer details whose aggregations are conspicuously more meaningful and as such helps make broader decisions touching of the business strategy (Ross, 2006). The top hierarchy of the organization makes use of Online Analytical Processing (OAP) to come up with concrete business intelligence that in turn supports the process of decision making for strategic purposes. It is such form of information that Citizen’s Gas Company will seek to leverage on in its strategic realignments. Decision Support System (DSS) Citizen’s Gas Company will aim at dispatching billions of cubic feet of natural gas in the most efficient manner possible. This initiative will definitely call for a real-time system of dispatch that takes care of weather, customer needs, traffic as well as the inventory. Such a system will have to combine the above four aspects with a view to enhancing efficiency. In view of this, three quantitative models will surely come in handy while making such a decision: Sensitivity Analysis – According to Heslin (2008) this is a study aimed at analysing the impact of the change in one or more parts of a model onto the other model parts. The study involves the deliberate and repetitive alterations of one of the model variables with a keen observation of the resultant effects on the other variables. What –if Analysis – this model seeks to gauge the impact of a alteration in a given assumption on a certain proposed solution e.g. the impact on the overall supply chain with a reduction in holding inventory from 20% to 15%. Such changes will need to be repeated to fully comprehend the effects of different situations. Goal Keeping Analysis – this model seeks to identify the inputs that are required in the realization of a particular goal such as the resultant levels of outputs (Heslin, 2008). The model works by setting a target value often referred to as the goal for a certain variable then the other variables are constantly changed till the desired value is achieved. A classic example could be, ‘‘How many new clients should Citizen’s Gas Company absorb to raise the profits by 20%?’’ Executive Information Systems (EIS) This is a specialized decision support system that supports executives at the senior-most level within a given organization or business structure. The system, is however different from DSS, in that it typically constitutes of data from both internal as well as external sources madding it ideal for adoption by Citizen’s Gas Company. In addition, the system has the capability to offer slice and dice, drill-down, and consolidation avenues (Heslin, 2008; Ross, 2006). Slice-and-dice – this is the ability to view the same information at varying perspectives or angles. In such a case, a simple section of the overall information could give a clear display of the products sold during a particular promotion where as another could show all the sales from a single product in several promotions. Drill-down – this capability in the Executive Information Systems enables one to view the finer details of information available. Consequently information can be viewed on hourly, daily, weekly or even monthly basis. Consolidation – this aspect provides for information aggregation featuring simplified roll-ups as well as complex categories of information that is closely interrelated. This would go a long way in enabling Citizen’s Gas Company keep track of financial details not only at the localised regional level but also at a global platform. However, among the outstanding key features of EIS is its digital dashboard (Ram, 2014). This gadget plays a vital role in the integration of information obtained from a number of components and subsequently tailors this information in line with individual preferences. The digital dashboard often makes use of customized indicators that aid the management in identifying the critical factors in the success of business .The commonest features of these digital dashboards include: outstanding list of alerts and respective status of resolution; a current line graph of actual versus planned production over a 24-hour period and headline news on natural gas supplies. Artificial Intelligence (AI) According to Ram (2014) Executive Information Systems have started to leverage on artificial intelligence to enable organizational executives make key and strategic decisions. By adopting this system, Citizen’s Gas Company, will have a strategic advantage with regard to business information services. Further, the company will be able to keep track of the pricing policies, product offerings in addition to promotions done by online competitors. With campaigns and new products being introduced at an increasing rate, the whole world, through e-business, will be able to monitor the level of competition in the prevailing environments (Ram, 2014; Ross, 2006). Supply Chain Management (SCM) The supply chain begins with customer placement of an order with a dealer (Global Exchange, 2011). Effective management of a supply chain, involves the careful management of the flow of information among or between stages for a given supply chain so as to maximize the profitability of the organization or business enterprise. According to Thompson et al. (2010) the basic components that make up the supply chain include: Supply Chain Strategy – the strategy applied in the management of resources that are necessary to meet customer needs for products and services. Supply Chain Partners – the various parties authorized to deliver the raw materials, finished products and services including delivery, payment, pricing and metrics that concern monitoring of partner relationship. Supply Chain Operations – the series of the production process starting from testing, packaging etc. Productivity and quality are key parameters to gauge the success at this stage. Supply Chian Logistics – this encompasses the processes involved in product delivery like warehouses, orders, defective product returns as well as invoicing. Since to carry out the above four components successfully, a number of steps are involved, it will be necessary to incorporate Supply Chain Management Software that will subsequently see the flow of information automated. At Citizen’s Gas Company, effective and efficient management of the Supply Chain will have a number of positive outcomes: increased supplier power, decreased power among the buyers or customers, entry barriers to suppress the proliferation of new market entrants, cost leadership giving undue competitive advantage and efficiency. Customer Relationship Management Nowadays, most competitors are just a click away forcing business organizations to make a dramatic shift from sales focused approach to customer focused strategy (Ram, 2014). Management of the customer relationship involves a careful re-organization of the various aspects touching on the customer-business interactions with a view to enhancing customer retention and loyalty. This will come in handy for Citizen’s Gas Company as the organization will gain clear insights into customer shopping or buying behaviour. Among the best ways the company can enhance this will include; direct sales to individual clients, maintenance of a permanent e-mail address and up-to date websites in addition to creation of manned call centres. Following up on customer communication all the way from accounting to order fulfilment will provide the company with a rare avenue from which to communicate with each and every customer and consequently understand their services or products. Importantly, it will be easier for any customer care representative to review customer history through the CRM system getting information such as complementary product information, expected delivery dates as well as customer billing and payment information. Enterprise Resource Planning (ERP) Enterprise Resource Planning refers to the integration of the various departments as well as functions throughout a given organization in a common IT system (Alton, 2013). A considerable number of organizations have miserably failed to uphold consistency in their business operations owing to disharmony in the way various departments perform their tasks. The result is the isolation of companies’ operations. Citizen’s Gas Company will leverage on ERP system for effective control and planning of resources that are required along the supply chain process. Though the vendors for the ERP software vary, the fundamental functions remain the same with a clear focus on accounting, marketing, human resource management, operations, and financial services. It, therefore, follows that an ERP system is a guarantee to a safe investment. However, Heslin (2008) warns that a good ERP system should reflect the business processes at the respective company of use. Additionally, a good ERP system should have the capacity to carry out a number of tasks. The three common aspects of such a system according to Tjan (2011) include: Overall Fit – this is the existing degree of gaps between the ERP system and a business process. Such gaps should be minimal but in case of the contrary, the software should be customized or tailored to properly fit the particular business processes. Proper Business Analysis – In order to select the best fit strategy, a thorough examination of the business enterprise is key. Ten percent of the project budget can be set aside for this including documentation of all the business processes to aid in vendor selection. Solid Implementation Plans – this is important as it helps in the maintenance of quality objectives and realistic timelines. It is here that workflow analysis as well as job combination is optimized. Conclusion There is no doubt that the role of information systems has continuously evolved since the first systems were developed. The original idea of automating the then existing manuals has lately been succeeded by system rationalization and integration. For, many businesses the market environment is getting quite volatile and unpredictable. The rise in demand for customer tailored products has shortened product life cycles and increased global competition to unprecedented levels. Consequently, to gain competitive advantage, business enterprises have limited choices but to tap the power of information systems and associated technology for survival. This paper has examined the various factors that have had an impact on the current business strategies in the corporate world in conjunction with the evolution of the information technology systems. The various models that can be adopted in successfully grounding any business strategy are highlighted as well. The effect of technology and information systems on any company cannot be underestimated and that is why this paper makes an important proposal for the case of Citizen’s Gas Company. References Alton, I, 2013, Data Modeling with Entity-Relationship Diagrams, Chapter 12, pp., 137-151. London Devero, A, J, 2007, Business Information Systems, Bloomington, IN: Author House Gleeson, M, 2006, The link between business strategy and information systems, Dublin Institute of Technology, Kevin Street, Dublin 8, Ireland Global Exchange, 2011, Applying Supply Chain Best Practices from Industries, Global Exchange, LLC Heslin, P, 2008, Understanding and developing strategic corporate social responsibility Organizational Dynamics, Vol. 37, No. 2 http://www.organizational-dynamics.com Jones, J, & Johnson, E, 2007, Data Modeling for Business Intelligence, Newbury: Corwin Press. Kothari, C, R, 2014. Competitive Advantage with Information Systems. New Age International. 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