Knowledge Management, Information Systems, and Organizations - Assignment Example

?Question Primark Stores Limited is a retailer of affordable fashion that has a huge presence in the United Kingdom and Ireland, and additional stores in Spain, Germany, Belgium, Portugal and the Netherlands. Considering the slow economy in Europe, the Finance Director views an information audit as a waste of money in these stringent times. This paper seeks to inform the Finance Director that an information audit is critical to the organisations information systems strategy and more. A characteristic of this so-called information economy is that companies continue to invest considerable resources in information resources to enable them identify their core competencies. Many organisations continue to invest heavily on information technologies with the aim of increasing the effectiveness of their operations and information systems. However, technology tools alone cannot be used to address discordant organizational information structures. According to Petrides (2004) such technology-focused problem solving strategies may in fact do the opposite, which is to prevent organisations from successfully capitalizing on their use of technology because they tend to overlook organisation-wide symptoms. One major area that the above strategies fail to capture is the information tacitly held by employees that is critical yet rarely documented. Knowledge is universally recognized as the most important strategic asset that an organisation has. The challenge though is that knowledge cannot be managed directly. According to Streatfield and Wilson in Henczel (2000) only the information about the knowledge possessed by people in organisations can be managed. This is why the need for information auditing becomes critical. Good information management an essential prerequisite to knowledge management. Information audit will therefore be the first step in developing a knowledge management strategy or improving the strategy that Primark Stores Limited may already have to ensure that the organization is managing the knowledge it needs to manage to remain competitive and successful. There is no universally accepted definition of an information audit. According to the Association for Information Management in the UK, an information audit is “the systematic evaluation of information use, resources and flows, with a verification by reference to both people and existing documents in order to establish the extent to which they are contributing to an organisation’s objectives (Henczel, 2000, p.215)”. With regard to purpose, the information audit process will enable Primark Stores Limited to achieve the following four key functions: (1) to identify Primark’s information needs and assign each of these needs their level of strategic importance; (2) to discover and classify the resources and services currently provided to meet Primark’s information needs; (3) to map information flows within Primark and between Primark and its suppliers, buyers and rivals; and (4) to analyse inefficiencies, duplications or gaps and areas of over-provision so as to detect where changes need to be made. By fulfilling these functions, an information audit will enable Primark track and identify each resource and service that supports organizational objectives. The audit will also allow Primark to rate each resource according to its strategic significance. In which case, the information audit could be structured to include an examination of IT tools that can aid effective information management. At the corporate or strategic level, the results of an information audit will provide a knowledge base that can be used for making management decisions about information sources, identify strategic information needs via information needs assessment and can be used as the basis for formulating an organisational information policy. The Financial Director of Primark Stores Limited needs to understand that an information audit reflects the organisation in its entirety and how it works. The process is, preferably, conducted by an independent team so as to assure confidentiality while bringing a fresh perspective to the organisation’s information management practices and use. Confidentiality and fresh perspectives are needed because to gather data during the information audit, the audit team will need to interrogate different staff within the organisation. Use of a mix of survey tools such as questionnaires, interviews, focus groups and discussion groups is encouraged for triangulation. Questionnaires draw out specific information, discussion groups test conclusions, and focus groups explore particular issues and challenges. Another important attribute about information audits that the Financial Director needs to be aware of is that it necessitates both top-down and bottom-up approaches to tracking information flow within the organisation. To conclude information audits will give Primark five vital benefits that were identified by Downs as cited in Botha and Boon (2003). To begin with, the quality of planning and management within organisations is dependent on the quality of information available. A properly performed information audit will assure the management of Primark of accurate, relevant and valid information. Secondly, like any other organisational audit, information audits provide diagnostic benefit. Primark shall be able to identify the strong points and weak points of its information management. Thirdly, when conducting an information audit staff members become sensitized on the on the value and benefits of the use of information as a corporate resource. Fourthly, employees do not only benefit from sensitization during an information audit but the organization could take advantage of the process to train its staff. The information audit provides the ideal opportunity to train employees about the philosophy, processes and structures that support the usage of corporate information resources. The impact of having a well-trained staff on use of corporate information resources cannot be gainsaid. The fifth benefit of conducting an information audit is what Botha and Boon (2003) referred to as feedback benefit. The information audit can inform management on whether specific information inputs deliver the desired information outcomes or not. This way an information audit feedback on information that can be used to plan and implement corrective actions where necessary. Finally, the information audit is not a one-time affair. It needs to be conducted regularly to reflect the organizational changes which influence information needs and flows change. Also, if conducted regularly the quality of the process, the awareness, cooperation and participation of the staff and outcomes of the process will all naturally become better and improve the overall quality of the activity. Question 2: Organizations primarily exist to serve their stakeholders, who are best served when the organizations operate in a way that ensures their missions are accomplished. To accomplish their missions in a logical and systematic way necessitates organizations to develop strategies. Strategy encompasses those sets of goals that an organization must achieve in a specific period of time. The Information Systems (IS) strategy is a part of an organisation’s business strategy. In formulating this strategy, it is important to identify the information needs of the organisation. Also, the IS strategy must be led by the needs of the organisation and not by the availability of the technology. One manner that an organisation can use to devise its information systems strategy is through the use of a set of critical success factors. According to Rockhart (1979) critical success factors refers to the limited number of key areas within an organisation in which satisfactory results will guarantee competitive performance for the organization and enable it to achieve its mission. Critical success factors (CSFs) are an important component of a strategic plan that must be achieved in addition to the organization’s goals and objectives or else the organization may fail to accomplish its mission. To fully appreciate the importance of CSFs to the development of an IS strategy we shall first describe the types of CSFs and their dimensions. It is within the context of these descriptions that we shall see how Primark Stores Limited could use them to contribute towards its information system strategy. There are five specific sources of CSFs for the organization: industry, peer, environmental, temporal and management-position CSFs. Each of these types of CSF is important for the organization to achieve its mission. The term “industry” is often used to refer to a group of organizations that have similar vision, mission and purpose of existence. The concept of industry critical success factors is that every segment of industry has its own unique set of operating conditions and challenges that are inherent to it. For example, retail fashion stores such as Primark are characterized by short production lead times due to the rapidly changing fashion industry and consumer tastes. Customers here are often looking for the latest, trendy designs. Industry CSFs therefore refer to that distinctive set of CSFs that organizations in that particular industry must achieve to increase or maintain their competitiveness, achieve their goals, and accomplish their missions (Caralli, 2004). Continuing with our example, this could imply that Primarks and other fashion retailers may, say, need to include in there IS strategies “support short lead times” as a critical success factor. Within each industry, organisations tend to be segregated further according to their relative market positioning to their rivals. An organization may be a laggard or a leader within its industry for example, in 2010 Primark was UK’s largest clothing retailer, closely followed by ASDA and Marks & Spencer (Shields, 2010). Here the idea is that companies define their CSFs according to their competitive position in which case companies that are peers generally have similar CSFs. using our example, one may argue that Primark, ASDA and Marks & Spencer as market leaders – and peers – may have CSFs that are aimed at ensuring they maintain or increase their market share against other companies within the UK’s value fashion industry. All organisations operate within a macro environment that they have little or zero control over. Factors that a company outlines when conducting a PESTLE (Political, Economic, Social, Technological, Legal and Environmental) analysis generally fall within this category. Environmental CSFs reflect these environmental factors by making them explicit so that the organization can at least be mindful of them and actively monitor its performance relative to these factors (Caralli, 2004). For example, Europe is currently in an economic crisis which means that consumer spending is going down (if it has not gotten there yet) and Primark – like any other company – will be focused on reducing its expenses such as IT spend which will impact its information systems strategy. Under these conditions, a possible CSF for Primark with regards to its IT systems would be: “optimise use of IT resources”. Often, businesses encounter temporary situations that would necessitate temporal CSFs to ensure that the company remains on course to accomplish its mission. All the same, organisations must be vigilant to watch out for temporary situations that may result into a permanent change in the industry, operating environment or competitive position. In such cases the temporal CSFs may be adopted as a long-term organizational CSF because of its strategic importance (Caralli, 2004). A good example of this would be the economic crisis in Europe. In 2008, there was a global recession, during which companies such as Primark may have instituted temporal CSFs. However, as America and Asia are recovering from that recession, Europe’s crisis has gotten worse. The question that Primark may need to ask itself as it develops it CSFs is whether the European economic crisis will here for a short time or for a long time to come. Finally, there is management-position critical success factors (CSFs). The rationale here is that within most organisations, there are different levels of management that reflect the roles and responsibilities, perspectives and focus for each manager. This implies that each level of management translates to different CSFs. Corporate managers and operational unit managers have different areas of focus within the same organisation for Primark’s Finance Director at the company headquarters in UK may have CSFs that focus on risk management whereas a Primark store manager in Rotterdam, Netherlands may have CSFs that address inventory control. Furthermore, CSFs can be categorized into four dimensions – internal, external, monitoring, and adapting – that further clarify the company’s current focus and positioning among its peers. Internal CSFs are those that are within a particular manager’s span of control while external CSFs are those over which a manager has very little control. This categorization provides managers with better insight for setting goals. On the other hand, monitoring CSFs emphasize monitoring the organization’s performance in a few critical areas (Rockhart, 1979), such as compliance with regulations while adapting CSFs are focused on improving and growing the organization. By encompassing all these different sources of CSFs, Primark will have an enriched knowledge base on which to develop its information systems strategy. CSFs can reduce organizational ambiguity for example using the internal and external CSFs approach, Primark strategists shall be able to outline areas within there is strategy that managers can handle such as ensuring IT resources are secure at the retail stores and those that they cannot handle such as securing IT resources from denial-of-service attacks on the Web. Also, use of CSFs is more accurate than use of organisational goals in developing strategy because goal setting tends to be a yearly activity whereas CSFs are more dynamic and tend to reflect current operating environment of the organization. Question 3: We cannot commence discussing how an organisation’s structure may affect it information availability, flow and exploitation without first understanding what we mean by the term organisational structure. There are numerous definitions on what is organisational structure. A quick internet search reveals that an organizational structure is the way the company is organized to perform work or a way to organize employees in some kind of structure to meet goals. However in this discussion we shall adopt the definition proposed by McShane and Travaglione (2003) that organisational structure refers to the way tasks are divided up and the patterns of coordination, communication, power distribution and workflow associated with this. It is important to note that there are two fundamental requirements that have to be fulfilled for there to be an organisational structure, namely: division of labour and coordination of that labour. According to McShane and Travaglione (2003) coordination is accomplished in three ways, through informal communication, formal hierarchy, and standardisation. However beyond this there are four key elements of organisational structure that delimit information availability, flow and exploitation within organisations. These elements are span of control, centralisation, formalisation, and departmentalisation. Span of control refers to the number of people directly reporting to the next level for example to a manager. Organisations with tall structures have narrower span of control in comparison to organisations with flat structures. Flatter structures offer greater communication because of the fewer layers of hierarchy but at the expense of control, given that managers will have to delegate more work. Centralisation refers to the distribution of power throughout the organisation. A centralised organisation has power concentrated at the top or corporate / executive level / within a small group of people. According to Tolbert and Hall (2009) the tendency to centralise is driven by organisational crises, management desire for control and cost reductions strategies. In such scenarios, information flows from the centre – in this case the corporate level – outwards or downwards. Formalisation refers to the specification of behaviour through the use of rules, policy, procedures, and training. Highly formalized organisations have several sets of written rules and regulation and they carry out strict enforcement. Information availability in such setups would be restricted and one would expect there to be several policies in place to offer guidance on information use, flow and availability. Departmentalisation element outlines how jobs or teams will be categorised within the organisation. Teams could be created based on function, products, clients or geographic area. Teams could be created using either one or a combination of these categories. A study conducted by Kleinbaum et al. (2008) found that formal organization structures and office locations sharply delimit interaction patterns. This means that information availability, flow and use will also be determined by how the organisation structures its departments. There are three other factors that influence organisational structure and would also have an impact on the information flow within an organisation. They are company size, technology, and external environment. As a company’s size increases there arises a greater need for effective control which may be accomplished through departmentalisation or increased formalization depending on the company’s core business. This may also be affected by technology available to the organisation. Technology advances of the past decade have vindicated the forward-looking vision of a networked organizational form that light-handedly coordinates the activities of heterogeneous, geographically diverse team members. Technology has flattened the world (Friedman, 2005). Companies now have a plethora of technology tools – ranging from sophisticated, enterprise-wide information technology systems to a myriad of web 2.0 collaboration tools, and massive Internet bandwidth – that they could use to facilitate increased real-time communication. Technology actually has the ability to disrupt the principles that underlie all the other elements. Finally the external environment depicts the competitive forces that shape the industry that the company is operating. There are four states of the external environment that the organisation may find itself facing: a dynamic or stable environment, or a simple or complex environment. McShane and Travaglione (2003) provided the following sample response to each of these states of external environment. A dynamic environment is characterised by high rate of change e.g. telecommunications industry therefore the organisation should adopt an organic structure. An organic structure has low formalisation, wide span of control and low centralisation. This makes the firm very adaptable. In a stable environment such as mining the firm should adopt a mechanistic structure – high formalisation, narrow span of control and high centralisation. In a complex environment, the firm should decentralise whereas in a simple environment there will less need for decentralisation. Another less highlighted and often ignored element that may influence information availability, flow and use in organisations is the informal structure. According to Kleinbaum et al. (2008) informal structures of power, influence, and information exchange do emerge within organizations and they may significantly influence interaction patterns within the organisation. Some studies cited by Kleinbaum et al. (2008) do suggest that the informal organizational chart that arises from these informal structures of power, influence are often held to be more consequential than the formal one. References Botha, H. & Boon, J.A. (2003). The Information Audit: Principles and Guidelines. Libri. 53. p.pp. 23-38. Caralli, R.A. (2004). The Critical Success Factor Method: Establishing a Foundation for Enterprise Security Management. Pittsburgh, PA: Carnegie Mellon University / Software Engineering Institute. Friedman, T.L. (2005). It’s a Flat World, After All. [Online]. 3 April 2005. The New York Times. Available from: http://www.nytimes.com/2005/04/03/magazine/03DOMINANCE.html?_r=1. [Accessed: 24 November 2011]. Henczel, S. (2000). The Information Audit as a First Step towards Effective Knowledge Management: An Opportunity for the Special Librarian. Inspel. 34 (3/4). p.pp. 210-226. Kleinbaum, A.M., Stuart, T.E. & Tushman, M.L. (2008). Communication (and Coordination?) in a Modern, Complex Organization [Working Paper]. Harvard Business School. McShane, S. & Travaglione, T. (2003). Organisational Behaviour on the Pacific Rim. Sydney: McGraw-Hill. Petrides, L.A. (2004). Knowledge Management, Information Systems, and Organizations. Educause Center for Applied Research. [Online]. 2004 (20). Available from: http://net.educause.edu/ir/library/pdf/ERB0420.pdf. Rockhart, J.F. (1979). Chief Executives Define Their Own Data Needs. Harvard Business Review. 57 (2). Shields, A. (2010). Primark reclaims top spot in market share battle. [Online]. 27 October 2010. Retail Week. Available from: http://www.retail-week.com/data/primark-reclaims-top-spot-in-market-share-battle/5018632.article. [Accessed: 11 December 2011]. Tolbert, P.S. & Hall, R. (2009). Organizations: Structures, Processes and Outcomes. 10th Ed. New York: Pearson Education.  Read More