Impact of Information Systems on Aalsmeer Flower Auction - Essay Example

Impact of Information Systems – a case of Aalsmeer Flower Auction Introduction The advancements of science and technology have revamped the way businesses had been running in traditional times, as a matter of fact today, not many businesses survive without the application of information communication technology. Information systems are a blessing in disguise as an off spring of information communication technology. As the world moves one step forward each day, the advancements in information systems moves a hundred step ahead, and has advanced to an extent that once considered as a support function, today information systems drive the business model for many organizations. An interactive information system of the base organization allows its stakeholders to interact with the system in various forms and modes, with differing rights and restrictions. The classical example of such a scenario is the Walmart-P&G strategic partnership whereby the IS is inter-linked allowing the supply chain to be automated for inventory replenishment as well as for ensuring that the right product is placed at the right place, in the right quantity. Auction websites follow a business model that is based in whole sum on the fundamental of information system. Classical example of such models has been applied at eBay, Souq, etc. Amazon is another classical application whereby online selling is displayed to perfection by the business. The right level of application of an IS has also led firms into a competitive advantage over their competitors, since most of the developments in IS by a particular business are patent for their usage. Intent of Purpose This report is the application of information systems to the case of Aalsmeer Flower Auction – later referred to as ‘the business’ in this essay – to gain a competitive advantage. Previously the business had been doing well till the right competition came through various channels by means of developing competitive offerings. The business is a mediator between the Dutch flower growers and buyers – it is a platform whereby they interact and enter into sale/purchase agreements. The business is often used as a price indicator since it presents the pricing where deals are made. Initially, the supply side ruled the markets; however, there are three trends that have changed the outlook of the respective industry, as stated by Bocij (2008): Development of e-markets Unsatisfied needs of retailers Mergers and Acquisitions amongst retailers, and professionalism growth amongst sellers With this, it seems visible that the business lacks an information system that can deal with these and the other growing trends in the industry – an IS that can swallow the current and the upcoming changes and trends in the flowers industry. Assumption Since the case does not provide any evidence of the fact that the business is run through an information system or the existence of anything likewise, it can be assumed that there is no IS functioning in the organization, and thereby, a recommendation of the same has been presented in the forthcoming sections of this report. Strategic Analysis – Need and Impact of IS As mentioned in the previous sections, Robson (1997) states that information systems have changed the outlook of various industries and organizations; in many cases, the competition has been won on grounds of advance systems of IS, while in some industries, the way of doing business has been changed. McNurlin (2008) states that auction, traditionally, was a system where buyers and sellers interacted physically, and if not so, then the auction site had to deploy numerous human resources to facilitate the same. With the e-auction set up, those costs can be tremendously cut and the benefit can be transferred to both the auction parties – the buyer and the seller. Additionally, the changing trends of the industry, as mentioned previously, require the deployment of IS more as a ‘need’ for the business rather than a support function, and the IS should be such that it supports not just the current competing values but also has the appetite to in-take the unforeseen futuristic values. Subsequently, the application of such a system would bring about cost cutting as well as a long term competing advantages against the competition. The tools used for the same are discussed as below: 1. Value Chain 2. Porter 5 Forces Value Chain For the purpose of this proposal, the recommended aspects for the business under consideration are: Inbound Logistics Operations Outbound Logistics Sales and Marketing In bound logistics would assist in updating the delivery of products as well as ease the order placement process. Operations would allow the application of online auction facilities such as bidding, cataloging of products, etc. The implementation of an IS would assist and ease both in bound logistics and operations of the business under consideration on the whole. The need would be the development of a website, and its back-end would contain all the relevant information. Users can be given their login information for them to see the information they want to and to target the information and catalogues according to their profile matches. With outbound logistics, updates can be provided on the status of the order with consent and status updates from the customer side and as for the delivery schedules. The sales and marketing side would also be enhanced through Customer Relationship Management tools and techniques available in and from the proposed system. Following is the pictorial illustration of a Value Chain: Porter 5 Forces The Porter five forces are discussed as below, with reference to Fuller (2007): Bargaining Power of Customers: Customer’s bargaining power is on the higher side since they have other auction sites that are existing and providing them a set up to use, while this business would be developing a new one. Bargaining Power of Suppliers: Likewise is the case with the bargaining power of the suppliers. Threat of New Entrants: New entrants are easy to come through but would be difficult for them to gain mass attraction for buyers and sellers and developing such a repute for gaining such attraction would definitely take some time. Threat of Alternatives: With the advancements of information communication technology, threat of alternative remains on the higher side because a new firm may come with a huge investment and bring in an advance IS. Competition within the Industry: There is a tremendous competition within the industry with the competitors aiming at targeting the existing customer base (supplier or buyer) to take their respective services. Recommended IT/IS Strategy Studying the overall positioning and existence of the industry, the implementation and application of a web based information system would definitely make a huge impact on the industry, on the whole. A web based architecture would require a tremendous hardware set up with servers and their backups, ensuring a close to ‘zero’ down time, because down time tends to reduce customer satisfaction. It would definitely enhance the supply chain management, customer relationship management as well as the integrated enterprise resource planning. Supply chain management is about the value chain essentially defining the chain through which the products reach the customer from the supplier. Customer relationship management is broad for this case since even suppliers are the customers, and appropriate relationship management with the customers would lead to higher levels of customer satisfaction. Enterprise resource planning is essentially planning the inflow and outflow of products and services in a manner that leads to optimal costing, significantly reducing the storage costs, and other over heads; the prime advancements by Japan in this case has been Just-In-Time (JIT). SCM & CRM systems would be recommended since they are easier and cheaper to build and re-build to in-take any future values, and additionally, since it is an e-business proposal, it would be integral to have the supply chain lined up for customer satisfaction. The proposed solution would be using internet and e-commerce technology as it would be floating on the internet, allowing the utility of the website from anywhere across the globe, and e-commerce giving birth to electronic trade, primarily within Dutch but across the world as well. There are certain limitations of the SCM & CRM as well; SCM mechanisms tend to avoid the internal organizational issues and fail to combat the internal issues related, as it moves through the external layer of the organization. CRM mechanics are highly customer centric in approach, which tend to become its benefits and disadvantages as scenario may be. System Development Methodology This section of the report refers to the system development methodology, and aims at studying the six models, acquisition mechanisms and implementation techniques, while concluding each sub section with a recommendation to complete the system development lifecycle on the whole. Six Models & Comparative Analysis The six models of methodology of deployment are explained briefly as below, as stated by Laudon (2009), alongside their advantages and disadvantages: 1. SDLC SDLC is a systematic process for software development. It moves in a chain effect so much so that the sequence and hierarchy needs to be stringently followed and next step in the cycle cannot be moved towards before completion of one. It is a step forward structural approach. Its major advantages include the inclusion of management and control at each level, monitoring of the project at all levels, detail break down structure, evaluation of costing, checking completion of targets, well defined documentation, user input definition, ease in maintenance, and standardization. It also has major disadvantages associated; it has higher degree of cost and time associated, and a good upfront definition of the system is integral. The system is rigid, and estimations of costs and time become difficult, while the user input is also very limited. 2. SSADM Structured System Analysis and Design Method – as the name suggests, it is all about analysis and design, and no implementation, thus presenting an incomplete methodology. It mainly consists of modeling techniques for logic, data and entity behavior. The advantages include the fact that this mechanism is mature in terms of its evolution, has well defined documentation and techniques, involves the user for development, and gives the three dimensional picture of the system. 3. Prototyping Prototyping is a mechanism for software development whereby a sample (prototype) is developed and is altered as per the requirements of the user and alterations are done till the point where the user is satisfied. It is effective because it leads to all discrepancies between user and developer resolved prior to the development of the final work piece. It mainly reduces time and cost for development, since the models presented are just ‘models’ and do not require documentation or development. It also has increased user involvement throughout the development process. This approach has disadvantages; there is confusion between the final development and the prototype at the user end, there are insufficient analytics involved, often a misunderstanding of requirements takes place, developers are more devoted towards prototyping, and more time and cost goes towards developing prototypes. Following is an illustration of how a prototype is, as illustrated it is primarily a model, and not the exact product: 4. RAD Rapid Application Development implies that there is little planning; pre-planning is given minimum time, thus the coding and other stages can be done faster. The advantages include quick shoot out time, reduced cost, customer and user involvement, development in functionally working chunks, and prioritizing of modules. The disadvantages are the delays associated with the final output since modules are quickly developed and disbursed for feedback. Additionally, the product may go beyond the initially defined scope with ease. Ultimately, satisfaction may be difficult to obtain. 5. Enhanced Waterfall Enhanced water fall is the ‘enhanced’ version of SDLC, whereby, more sequential steps are added towards the existing model to reduce its disadvantages. Despite the same, cost and timing remain its major disadvantages. Other than that, it is not ideally suited because in accordance with it, the next stage cannot be moved towards, till one is precisely completed by all means. The advantages include the fact that it is a complete and comprehensive mechanism of reaching the required output. 6. Spiral The significant feature of spiral model is its constant risk assessment at all stages, subsequently, its application is mainly over significantly large scale, internal software development scenarios. Spiral is generally time consuming and requires a lot of coordination efforts, which makes it enviable for majority of the general situations. 7. Parallel Running Another successfully identified model for the implementation of an information system, whereby, the new system is run ‘parallel’ to the existing old system, and gradually, as users become aware and gain expertise in the new system, the later takes over. In parallel run, the old system can be taken off in on-shot over night or in modular phases. Following is a pictorial illustration of the same: The advantages of this include high level of user involvement in implementation leading to ease of acceptability and ease of data conversion The disadvantages include the added time taken and data entry to both systems when it comes to the time spam where both systems are live. The recommended mechanism hereby for this project would be prototyping because through this, the right level of user involvement can be taken. Since the users would mainly be those not related to the firm itself, it can have mock trials with the end users and see where they are comfortable, and the right thing should be chosen. Acquisition Mechanism For acquisition of this development, there are three major choices: 1. In house development 2. Outsourcing for development 3. Off the shelve implementation The names of these mechanisms are quite self explanatory. Subsequently, their benefits and disadvantages are discussed as below, as stated by McManus (2002): Advantages Disadvantages In house development - Highly customized - Enhanced in-house expertise for the system - Quick and all time availability of expertise - Reduced costs - No added hiring needed - More control - IT dept knows the existing resources and would make a system accordingly - Time needed for development - Limited expertise and scope of developers - IT team is devoted to a greater extent to this purpose - Investment needed in support function Outsourcing - Maximum expertise and experience from outside sources - Indulging best practices from similar cases - Out of the box idea - Evaluation of service providers possible to choose the best - Higher Cost - More time to explain business functions to developers - Lengthiest development time - Lack of control - IT team needs to be trained and maintenance contracts need to be given - Possible purchase of IT equipment - High costs of development Off the shelve implementation - Standard system that can be customized in accordance with the requirements of the business - Lack of expertise - Need for hiring experts - More training for IT dept. - Licensing cost For the purpose of the case under consideration, it is recommended to have the system developed through outsourcing of the development. This is because the development scenario that exists needs to embed within itself the best practices not just within the industry but from cross-boundary industries as well, that have similar functionalities such as Amazon, Souq, eBay, etc. The two major disadvantages of outsourcing are lack of control and requirement of excess IT equipment; thereby, in this case, the control feature can be applied since the functionality is very objective in nature and the IT equipment needed shall not be a huge threat for the application. Implementation This section discusses the implementation of the system, and more specifically, in terms of the equipment and hardware that needs to be taken care of. There would be need of systems with zero downtime, and backup systems running to avoid any unforeseen downtime. Installation of hardware should be done via tender or invitation for bid and the bidder providing the equipment and services needed within a reasonable budget should be allocated the order; the term reasonable is highly subjective in nature and the concerned departments should allocate appropriate budgets to the same. In accordance Cadle (2007), three critical aspects of implementation are: Data Conversion: It is about transforming the existing/past/historic data from its conventional formats to the newer ones; this would require data entry done of the most recent data, for example the previous six months. Batches of six months would allow ease and module wise conversion of legacy data, which would be fruitful and a demand of the users. Training: Training is critical because it literally teaches users how to use the system, and advance level of the same teachings to ensure that not all routine jobs but also exception handling has been taught. Training should be done in batches e.g. supervisors followed by mid level managers and so on, starting from the bottom towards the top. Cut-over: Cut over defines the point where the new system takes over the legacy system. It is recommended that a parallel run is made of both legacy and new system, and gradually, the usage is transferred to the new system. This would give a good adjusting time to the users. Following is an example of the cut over diagram: In addition, according to Cadle (2007), there are following consideration that also needs to be taken care of: Testing of Hardware: Testing of hardware should be done under critical circumstances with maximum output checked to ensure that full capacity output can be checked. Acquisition of Software: Acquisition of software should be from a reliable and renowned vendor, who provides a bundle package of service and support, and is known for good and ethical practices in the industry. Installation of Hardware: Installation of hardware is a critical point because it is then only that a number of flaws in the structuring is needed – this is a tedious and long process. Installation of Software: This is the most important aspect when it comes to the implementation of an information system; generally it is done over long weekends so that the systems are ready to be used when the end users are back. Organizational Issues related to Implementation Transforming an organization towards an IS is a major task in an organization, and as per the assumption stated in the initial part of this report, this deployment would be a radical change for the organization. More often than not, such circumstances face organizational issues and these would be discussed in this section. Following would be some major issues: Chaffey (2004) states that Change Management, or more precisely, resistance to change would be a critical aspect to look for, because while bringing about such a major decision, employees often get an insecure feel about their job – they think that either they are not capable or that there would be downsizing on the jobs. It is the duty of the management to ensure that such thoughts are eliminated prior to them being developed. This can be done by some prior training courses that bring the employees close to judging themselves about the advantages of the change. In accordance with Chaffey (2004), Security of Data and Data Protection are two critical factors as well, particularly since the firm is new to e-commerce, it should ensure the maximum possible best security and data protection practices to be deployed because in such circumstances, when organizations are new to this set up, it really becomes difficult for them to oblige by the data protection act requirements. Therefore, to save themselves of any unforeseen issue, it is critical to have appropriate design of such policies and procedures. According to Chaffey (2004), control is a critical aspect; as mentioned repeatedly, the business is new to the IS setup and therefore, appropriate controls are needed to ensure that data is safe and no misusage of data takes place within the organization or beyond the boundaries otherwise. Last but not the least, in accordance with Chaffey (2004) the firm needs to develop practices for disasters that are unforeseen by means of having backups and recoveries of the data and information stored at their ends, because with the advancements of web based infrastructure, the number of viruses have also advanced and tend to get the data dozed off from the systems. With these precautions, it is believed that the recommended solution would definitely enhance the outlook of the business in the industry in the long run. References Barbara McNurlin, Ralph Sprague, Tung Bui (2008) Information Systems Management – International Edition. 8th Edition. Pearson Education Dave Chaffey, Steve Wood (2004) Business Information Management – Improving Performance using Information Systems. Pearson Education James Cadle, Donald Yeates (2007) Project Management for Information Systems. 5th Edition. Pearson Education John McManus, Trevor Wood-Harper (2002) Information Systems Project Management – Methods, Tools, and Techniques. Pearson Education. Ken Laudon, Jane Laudon (2009) Management Information Systems. Global Edition. 11th Edition. Pearson Education Mark Fuller, Joe Valacich, Joey George (2007) Information Systems Project Management - A Process and Team Approach. Pearson Education Paul Bocij, Andrew Greasley, Simon Hickie (2008) Business Information Systems – Technology, Development and Management for the E-Business. 4th Edition. Pearson Education Raymond McLeod, George Schell (2008) Management Information Systems. International Edition. 10th Edition. Pearson Education Sasan Rahmatian (1995) Management Information Systems – Learning Exercises and Applications. Pearson Education Wendy Robson (1997) Strategic Management and Information Systems – An Integrated Approach. 2nd Edition. Pearson Education Read More