Business Value of Information Technology - Coursework Example

Business Value of Information Technology. The ways in which computers have been used has changed significantly with time, it was firs use as a tool for eliminating the labor intensive processes (Ward and Griffith, 1996), secondly it was on the developments of Management of information Systems that availed information for operational decision making and finally it was used as a transformation enabler through creation of novel products, product delivery methods, processes and market opportunities. Where Do we Create Business Value? There are functions that address the question, where to create the business value? The functions are inbound logistics, outbound logistics, customer service, operations, marketing and sales. 1. Inbound Logistics: It entails procuring and capturing the input resources which are necessary for an organizations manufacturing, assembling and finally creating the output product. Since data is a very crucial resource in very many organizations and data capture being a very intensive activity, Information Technology can significantly increase the procurement efficiencies which are necessary for just in time manufacturing, data interchange, and supply chain management. Organizations are also in a position to reduce their operation costs since they can easily participate competitively in electronic market places. 2. Operations: This entirely focuses on organizational processes. Re-designing organizational processes by usage of information technology products can improve a products quality, cost and speed up the manufacturing process which has a definite and direct advantage to the organization. 3. Outbound Logistics: This is the way products and services are usually delivered to the clients of an organization. Some of the IT enabled revolutionary changes pertaining to outbound logistics are the hotel reservation systems, ATM machines and electronic commerce. These changes have proven to save time and money to an organization and improve on customer-organization relationship. 4. Marketing and Sales: This is how organizations promote and sell their goods and services. It contributes business value in sales and marketing through the information widely distributed on the internet, short messaging services or “Bluetooth marketing” Organizations save on marketing costs. 5. Customer service: Customer Relationship Management system which are I.T triggered, add value to the organization by increasing knowledge of a particular clients purchases, contacts and behaviors with the organization. Online customer service increases the value of speed by enabling organizations and clients communicate with expediency around the clock, this also save them time and hence money. Disintermediation which allows clients to access information directly, has also contributed directly to quality customer experience that in return enhances the client-organization relationship. Major Process Re-design activities. These are action triggers that direct end users within the process of triggering the model and is based on principles of Business Process Re-engineering. Here we concentrate on how processes may be altered in gaining business value. In order to change process and gain value, organizations may be forced to review non-value added process, integrate, simplify and automate their activities. Elimination of Non-Value Added process: Here new products may be posted on the organizations website in form of an electronic catalog with the most recent price list instead of manually mailing them to the agents or clients. This eliminates unnecessary costs for the organization and increases speed of product delivery which are crucial business values. Instead of transporting forms for clients, they can be posted on websites for easy instantaneous downloads. Minimize Non-value added process: Here processes such as handling of client personal details such as credit worthiness or social security number may be automated in such a way that they are handled online and the customer should be given a very instant feedback after the verification process which should also be online. This will save time and money for the organization and ensure that clients are given the best quality in terms of customer service. Simplification: Procedures such as filling in of forms should be simplified, there should be proper communication within the entire organization down from the sales to the top level management, and this can be achieved by installing an automated communication system. Also the communication between the organization and the customers should be simplified with both levels of the organization hierarchy able to communicate directly with the customers. Integration: Suppliers should be properly integrated into the organizations system such that they are able to supply raw materials immediately the level reduces. They should also be in a position to supply for instance parts under warranty to the customers wherever they are needed, this may be made possible with proper communication between the organization, customer and the suppliers and this may be enabled by an I.T system. This will generally improve the relationship of supplier-organization and organization-customer. Automation: Difficult tasks such as detailed product design should be I.T automated. Data capture & transfer and error checking should also be automated by using I.T this will significantly reduce errors and the process of entering data will be speeded up completely. Re-design activities applicable to the case. Consideration of contributory values of some group of technologies is very appropriate since these technologies and processes should be evaluated how they will deliver business value to their end users. 1. Elimination of non-value added processes: Non value added processes such as manually mailing of the products catalog to Midwest agents. tracking Midwest trucks and their availability, each plant being in control of its own inventory control, order for the replacement parts have neither interested Midwest nor the agents themselves 2. Minimize non-value added processes: These may include manual data entry of customer details by the order department and at the same time verifying it manually, the order department manually checking the credit history and worthiness of the customer, manually mailing of re-supply orders to suppliers. 3. Simplification: Here the forms, procedures, communications, technology, workflow and contacts are simplified. Here manual mailing of catalogs, determining the price for the home and the dealers sitting with customers and filling out the paper order forms manually, the pricing department uses spreadsheets in determining prices of homes, final contract copy being manually delivered to the accounting department for setting up a receivables file, inquiries from agents during the order fulfillment process are referred to individual plants. 4. Integrate: customer service department answering agents after a long time, agents also don’t want to be bothered with replacement for parts and the organization is not set up for direct business to customer sales, order department examining where the home should be delivered and the amount of labor available. 5. Automate: difficult tasks, data capture and error handling should be completely computerized. Dealers using the base price list and the PAS in determining a preliminary price for delivering a home, dealers sitting with clients and filling the order form, taking up to 20 days from the time the order is submitted initially by the agent to the time it is set up for “active status” Re-design Activities. Action item no: 1 Redesign activity: Eliminating waiting times for new product updates, this may be achieved by building an online client catalog. Value added: Both clients and sales representatives such as the agents may be able to view the latest products instantaneously online, this will enable them perform sales decisions with expediency and delivering the information to the clients quicker. It also eliminates unnecessary cost such as printing and mailing manual product catalogs. Enabling technology: Intranet, extranet, internet. Action item no: 2 Redesign activity: Automating data entry & confirmation contract processing. Value added: Entering & verifying of data online will significantly improve on the quality and speed of the data so that it may be quickly available for operations decision such as financing and checking a client’s credit worthiness. Enabling technology: A shared enterprise class Database Management System e.g. oracle, Sybase or SQL. Action item no 3 Redesign Activity: Eliminating the bulk and manual paper form filling in methodology, and also manually mailing of the final copy of the contract. Value Added: Both the client and the organization will save on time needed to fill the form and deliver it to the organizations management. And also the organizations will save on resources such as acquiring labor for sending the forms to the accounting department. Enabling technology: Internet, Extranet, Intranet, Database management System. Action Item no 4 Re-design Activity: The customer service department should not take a lot of time in answering agent queries and also the agents don’t bother much with customer’s part replacement. Value Added: Customer service and organization-customer relationship will be greatly improved, there will be direct communication between the clients and the organization itself. Enabling technology: Customer Relationship Management System. Action Item no 5 Re-design activity: Automating difficult tasks such as where the home is to be delivered and checking the labor resources available. Value added: Time will be saved on deciding where the house is to be delivered and also tasks such as quantifying the labor resources will be performed with expediency. Enabling Technology: Supply Chain Management System, Enterprise Planning System. ITBV Matrix This is a two dimensional matrix that entirely focuses on what are the business values & where they can be applied on an organization and action triggers that completely focuses on the discovery of value opportunities. The horizontal axis consists of 5 value parameter; Quality, cost, speed, innovation and relationship while the vertical axis consists of five functional areas such as: Inbound logistics, outbound logistics, operations, marketing/sales and customer service. Quality Cost Speed Innovation Relationship Inbound logistics 1 1 1 1 1 Outbound logistics 2 2 2 2 2 Operations 3 3 Marketing/Sales 4 4 Customer Service 5 5 References. 1. John A, Medonca. (2003). A Model and Sample Case for Teaching the Business Value of Information technology. Volume 2. Purdue university, West Lafayette U.S.A. 2. Ward, J. & Griffiths. (1996).Strategic planning for Information Systems. New York. John Wiley and Sons. Read More