Quality and Information Systems Strategies - Essay Example

SMEs (Small Medium Enterprises) and larger organisations require different considerations to derive a satisfactory strategic plan Introduction Firms that operate within the modern market have to continuously update their strategic plans making sure that they remain competitive. The above efforts are characterized by the development of the various organizational sectors especially those related with the gathering and evaluation of knowledge across the organization. Indeed, in the study of Skyrme (1997) it is revealed that ‘the interest in knowledge as a strategic lever in business is not new; in the 1970s and 1980s there were great expectations that knowledge based computer systems (expert systems) could harness knowledge to solve many business problems’ (Skyrme, 1997, 1). In accordance with the above study, the ability of firms around the world to capture and interpret knowledge is depended on a series of factors; the size of the firm and its financial strength has been proved to be critical factors regarding the ability of a firm to manage knowledge throughout its departments. The various forms of knowledge within modern organizations can be observed in Figure 1 (Appendix) where these forms are set hierarchically in order for the importance to be identified. The effective management of knowledge in modern firms is crucial in order for the various strategic plans developed within a specific organization to be appropriate, i.e. to lead to the achievement of the targets set by the firm’s strategic management team. The above assumption is also supported by Steyn (2004) who stated that ‘successful organisations are knowledge-creating organisations, which produce, disseminate and embody new knowledge in new products and services’ (Steyn, 2004, 615). In other words, gathering, evaluation and distribution of knowledge across modern organization is a highly important part of the organizational activity supporting the development of strategic plans that are effective both in the short and the long term. For this reason, firms of all sizes have tried to establish IT systems that will be able to capture, evaluate and distribute the knowledge required for the ‘smooth’ development of all organizational activities as well as for the growth of the firm in the long term. Establishing the IS required for the development of corporate activities is a challenging task for all managers worldwide – no matter the size of the firm involved. Towards this direction, it is supported by Reid et al. (2004) that managers in modern organizations should have a ‘strategic foresight that can play a significant role in the long term success, or failure, of business corporations in the sense of understanding the future’ (Reid et al., 2004, 237). The above strategic foresight could help the managers of modern firms to identify the actual needs of their firms and propose the most appropriate strategic plans (referring to the feasibility of these plans in accordance with the resources available). Current paper focuses on the development of IS systems specifically by SMEs; the success of the above project is closely related with the prior design and application of effective strategic plan – through an opposite direction it could be stated that effective corporate strategies can be developed only if firms establish effective IS systems in all their departments. The potential differences between the needs of SMEs and those of large corporations (regarding the development of effective strategic plans) will be also examined and the role of IS systems in the growth of firms of all sizes will be highlighted. 2. Basic elements of IS strategy in modern corporations In order to understand the role of IS in the development of modern business activities, it is necessary to refer primarily to the context of this system as it can appear within modern organizations internationally. In accordance with Grainger – Smith et al. (1994, 324) ‘an information system (IS) is a group of formal processes that together collect, retrieve, process, store and disseminate information for the purpose of facilitating, planning, control, co-ordination and decision making in organisations’. Such a system will be able to support the development of corporate activities either in the short and the long term. In any case, technology and Internet have been found to be of crucial importance for the increase of a firm’s competitiveness within the modern market. The specific issue is also highlighted by Porter in his study conducted in 2001. In that study it is made clear that ‘Internet allows customers to gather extensive information about products easily; because the Internet reduces the importance of location, at least for the initial sale, it widens the geographic market from local to regional or national’ (Porter, 2001, 66). In other words, Internet is an indispensable part of the organizational activity – the only way to use Internet for the increase of the firm’s performance is through an effective IS system. On the other hand, it is made clear by Pollack (1982, 104) that ‘not every information system, however, efficiently provides managers with the information needed for effective planning and agency administration or for responding to the increasing and changing requirements for accountability and program justification’. For the above reasons, it is necessary that firms’ managers that are involved in the relevant effort – development of an effective strategic plan through the use of Internet or other technology – related strategic tools are aware of all technological developments – related with the activity of the firms operating in the specific industrial sector; at a next level, managers in modern organizations – no matter of the organizations’ size – should be able to understand the needs of each particular technological scheme, its usage for their firm and its potential for the firm’s growth in the future (i.e. the payback of the system as such a system is expected to be extremely costly). In accordance with the above IS system can be extremely helpful towards the development of activities of modern organizations; other factors should also exist, like effective leadership; appropriate HR practices and so on. The specific issue was examined by Han (2001) who supported that ‘first of all, there must be an effective leadership support structure in place; in addition, the implementation requires an alignment of the needs of knowledge management with the business strategy … and the recognition of the benefits of knowledge management’ (Han, 2001, 34). Under these terms, the development of effective strategic plans in firms of all sizes is depended on a series of factors; the firms’ leadership is a factor of crucial importance for the success of the relevant initiative; at a next level, the ability of managers to identify the needs of organizations and propose the appropriate technological and financial support is also a significant factor towards the increase of effectiveness of a firm’s strategic plans. 3. SMEs and Information Systems strategy – characteristics and evaluation Even if IS has been found to be equally important for firms of all sizes, its development is differentiated under the influence of a series of factors (that have been already developed above). On the other hand, because of the increase of competition in markets worldwide, managers in SMEs have to identify the most appropriate plans of action in order to design and implement strategic plans that will be effective no matter the market conditions (at least that will be only partially influenced in case of strong political, social and financial turbulences in the local or the international market). Moreover, the development of effective IS strategic plans in SMEs is an extremely challenging task taking into account the fact that the financial strength of these firms is usually limited; therefore they would not be able to develop IS systems of high quality. Referring especially to the SMEs Deleryd et al. (1999, 341) supported that ‘in order to stay competitive most small and medium-sized enterprises (SMEs) need to make decisions and improve their processes in a more efficient way’. From a different point of view, Sum et al. (2004, 221) stated that ‘small and medium enterprises (SMEs) are recognized as playing a pivotal role in the economic growth and technological progress of many countries’. In other words, contradicted views seem to exist regarding the strength of SMEs to influence the markets internationally and develop IS systems that will be competitive even with those developed by large corporations. In any case, when attempting to develop a IS strategic plan – no matter of its cost – SMEs around the world should follow a specific procedure constituted from the following steps: ‘1) requirements analysis, 2) conceptual framework, 3) logical design, 4) physical system implementation and 5) testing and revision’ (Chen, 1989, 28). Of course, differentiations to the above plan would be possible in case that appropriate configurations are made by these firms’ managers making sure that these systems will perform to their full potentials. The fact that specific procedure is required when implementing an effective IS system is also supported by Milner (2000, 7) who noticed that ‘the process of managing data with a view to transforming it into information is a complex strategic one, which should be informed by an understanding of the way in which the organisation itself works’. In accordance with the above, even if having limited resources available, managers of SMEs should make sure that all parts of organizational activity (referring specifically to SMEs) are carefully reviewed and evaluated before attempting the implementation of any IS system. In fact, the above requirements refer not only to SMEs but to firms of all sizes operating in the modern market. The specific issue is highlighted by Wright (2001, 15) who noticed that firms that seek ‘to develop truly sustainable competitive advantage in the knowledge economy need to capture, catalog, transfer, and institutionalize knowledge that precludes peoples daily actions’. The above suggestions refer not only to SMEs but to firms of all sizes. However, because specific differentiations can exist to the methodologies used by firms of different sizes when having to establish an effective IS system, for this reason it would be necessary to refer to these differentiations as they can be observed in modern market making sure that all corporate initiatives will be equally evaluated using objective criteria. 4. SMEs v larger organizations as of their strategic choices when developing IS plans The development of effective IS strategic plans by modern organizations is a challenging task – no matter the size of the organization involved. However, as in all business projects, a specific procedure has to be followed when implementing such a plan – even with limited resources available. The specific issue is noticed by Jacob (1986) who stated that the development of effective strategic plans by the managers of modern firms should also include the following steps: ‘involvement of the users during the lifetime of the project, both in the provision of the information and in the validation of the analyst’s understanding’ (Jacob, 1986, 312). Under these terms, the firms that have access to a high volume of knowledge are more likely to develop effective IS plans compared to the firms that their access to knowledge (or their ability to capture, evaluate and distribute knowledge across their departments) is limited. Towards this direction it is noticed that ‘firms with more knowledge can engage in superior trading opportunities with greater confidence in the viability of their plans, in their ability to carry them out, and in the value they will achieve in the prevailing conditions’ (Buckley et al., 2004, 371). In accordance with the above remarks, large corporations have an advantage towards the SMEs in terms that their ‘knowledge depository’ is vast compared to that of SMEs. Moreover, large corporations can have an increased access to knowledge and they would also be more effective when trying to gather, evaluate and distribute information across their departments because the resources available are significant. The above assumptions are also in accordance with the views of Skyrme (1997, 2) who noticed that ‘the value of knowledge as manifest in an organisations products, its intellectual capital (such as patents and licences) … and processes (structural capital) is very evident when the book value of a company, as measured by traditional accounting methods, is compared with its market value’. In other words, SMEs have less chances to develop effective IS strategic plans as their potentials (referring to the funds and the resources available for the realization of the relevant project) are limited compared to large corporations. On the other hand, it is noticed by Gabrielsson (2007, 511) that ‘a strong and vigilant board can have a significant influence on the value-creating potential of medium-size companies; yet, how best to conceptualize this relationship remains controversial’. In accordance with the above study, there are still chances for SMEs to develop effective IS strategic plans; however, the terms and conditions for the achievement of this target for SMEs are not too clear yet; additional research would be required for the identification of the potential of SMEs to compete large corporations in the specific field. 5. Conclusion Through the issues developed above it is clear that SMEs require different considerations than large corporations when having to develop an effective strategic plan. The above assumption refers to strategic plans of all types, including IS strategic plans. Starting by the laws regulating the specific issue, it should be noticed that different regulatory framework exists regarding the activities of SMEs and those of large corporations; of course, there are common rules referring to firms of both sizes; however there are also many different principles and terms that need to be taken into consideration when relevant disputes appear. The specific issue is highlighted by Mesdag (1984, 26) who noticed that ‘governments manage through legislation, rather through managerial ability, and so business is being subjected to an ever – broadening stream of new laws’. In other words, the size of firms seems – at least at a first level – to be of low importance for legislators globally. This assumption could support the view that common approaches can be used by SMEs and large corporations when having to develop effective strategic plans. However, this is not the case; in practice many differences exists in the laws related with the activities of SMEs and large corporations – even if the criteria used for the development of these strategies seem to be common for firms of both sizes. On the other hand, a series of additional differentiations between SMEs and large corporations seems to exist when having to develop strategic plan. The dependence of the former on the cultural and social ethics of a specific nation cannot be denied – whereas the latter usually operates internationally. In this context, it is supported by Paquin et al. (2007, 427) that ‘the success of a productivity intervention may depend on the fit between the intervention and the country in which it is implemented’. In other words, the fact that SMEs operate within a specific country while large corporations activate globally can be a significant criterion for the development of their strategic plans which are normally expected to have different basis (in terms of the public targeted and the regulations applied) and different outcome; the chances for the strategic plans of large corporations to be effective are more if compared with the relevant chances of SMEs’ strategic plans. Under these terms, the approaches used by SMEs when developing their strategic plans have to be different than those used by large corporations. Common points in the relevant effort continue to exist. We could refer here to the view of Day et al. (1988, 453) who stated that ‘when several methodological concerns are addressed, it is evident that executive leadership can explain as much as 45% of an organizations performance’. Moreover, it is supported that ‘developing a mindset which takes into account the importance of strategic marketing, the necessity for relationship marketing and the interactivity offered by technology, are of interest to marketers who are employed within a strategic capacity’ (Trim, 2002, 259). The above issues should take into consideration by managers in SMEs – as well as in large corporations – when having to establish effective strategic plans of all types – including the IS strategic plans. The needs and the potentials of each organization are of critical importance for the success of any relevant effort while the differentiation in the approaches used by SMEs and large corporations when developing their strategic plans cannot be denied for the reasons developed throughout the paper. References Chen, Y. (1989) Organizational strategies for decision support and expert systems. Journal of Information Science, 15: 27-34 Day, D., Lord, R. (1988) Executive Leadership and Organizational Performance: Suggestions for a New Theory and Methodology. Journal of Management, 14(3): 453-464 Deleryd, M., Garvare, R., Klefsio, B. (1999) Experiences of implementing statistical methods in small enterprises. The TQM Magazine, 11(5): 341-351 Gabrielsson, J. (2007) Boards of Directors and Entrepreneurial Posture in Medium-size Companies. International Small Business Journal, 25(5): 511-537 Godbout, A. (1999). Filtering Knowledge: Changing Information into knowledge assets. Journal of Systemic Knowledge Management, 6(2): 3-11 Grainger-Smith, N., Oppenheim, C. (1994) The role of information systems and technology (IS/IT) in investment banks. Journal of Information Science, 20: 323-333 Jacob, D. (1986) The design of integrated information systems using business analysis. Case study. Journal of Information Science, 12: 311-315 Milner, E. (2000). Managing Information and Knowledge in the Public Sector. London: Routledge Paquin, A., Roch, S., Ku, M. (2007) An Investigation of Cross-Cultural Differences on the Impact of Productivity Interventions: The Example of ProMES. The Journal of Applied Behavioral Science, 43(4): 427-448 Pollack, G. (1982) Information System Design and Implementation: Strategies for Success. Journal of Applied Gerontology, 1: 104-114 Porter, M. (2001) Strategy and the Internet. Harvard Business Review, 63-78 Reid, D.M., Zyglidopoulos, S.C. (2004). Causes and Consequences of the Lack of Strategic Foresight in the Decisions of Multinational Enterprises to Enter China. Futures, 36(2), 237-248 Skyrme, D. (1997) From Information Management to Knowledge Management: Are You Prepared? , available at http://www.skyrme.com/pubs/on97full.htm Steyn, G. (2004). Harnessing the Power of Knowledge in Higher Education. Education, 124(4): 615-623 Sum, C., Kow, L., Chen, C. (2004) A taxonomy of operations strategies of high performing small and medium enterprises in Singapore. International Journal of Operations & Production Management, 24(3): 321-345 Trim, P. (2002) Corporate intelligence and transformational marketing in the age of the Internet. Marketing Intelligence & Planning, 20(5): 259-268 Van Mesdag, M. (1984) How to design your Management Information System. Business Information Review, 1: 24-30 Wright, D. (2001). Using technology to derive value from knowledge communities. KnowledgeNets, May 15-17: 1-5 Appendix Figure 1 – Hierarchy of meanings in modern organizations (Godbout, 1999, 5) Read More