Managing Information System (MIS)

21 Pages   |   4,427 Words

MANAGING INFORMATION – CRITICAL EVALUATION OF RELEVANT ISSUES

Executive Summary

Information manager holds a vital position in today’s digitalized world. It is imperative for organization, aiming to achieve success in the market, that a proper information system is available in the market. For a telecommunication firm, the information pertaining to customers’ needs and wants is essential. This information can be captured through CRM system. CRM system will allow organization’s sales and marketing function to work in coherence in order to achieve the management’s objectives. However, there are certain operational and ethical issues related to the implementation discussed in this report of the CRM system, which also needs to be considered for effective CRM implementation in the organization.

Contents

Executive Summary. 2
Introduction. 5
Information System as an Organisational and Management Solution. 5
Operational Efficiency. 5
Development of New Business Models. 6
Improved Relationship with Suppliers. 6
Assistance in Decision Making Process. 6
Competitive Advantage. 6
Environmental and Industry Analysis. 7
Level of Competition in the Market 7
Market Demographics. 8
New Trends. 9
PESTEL Analysis of the Industry. 10
Political factors. 11
Economic factors. 11
Social factors. 11
Technological factors. 11
Environmental factors. 12
Legal factors. 12
Porter 5 Forces Analysis. 12
The threat of the entry of new competitors. 13
The threat of substitute products or services. 13
The bargaining power of customers. 13
The bargaining power of suppliers. 13
The intensity of competitive rivalry. 14
An Information System That Will Help Meet the Firm’s Sales and Marketing Function. 14
Implementation of Information System.. 15
Customer Should Be the Focus of the System.. 15
Use of Practical Objectives. 16
Support of Top Management 16
Analysis of Business Processes. 17
Use of Correct Software Solution. 17
Ethical Concerns Related To Information System.. 18
Ethics in Collecting Consumer Data. 18
Ethics in Storage of CRM Data. 18
Ethics Related To the Usage of Data. 19
Ethics Related To the Deletion of Data. 19
Conclusion. 19
Bibliography. 20 

Introduction

Today, information systems are considered the foundation on which the organizations build their superstructure. Use of information system by an organization has become necessary for the organization to survive in the market. Resultantly, the significance of information manager has also become quite important. Information manager is responsible for managing information within the organization. Information manager is also needs to make sure that information is used in such a way, which provides organization with a strategic advantage.
 

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Information System as an Organisational and Management Solution

The information system holds vital importance for organization. It is due to the number of advantages provided by information system that organizations, today, are opting for information systems. In addition to this, there are also some extraneous factors, which have necessitated the introduction and implementation of information system within an organization. Shift of industrial economies towards the service-orientation, emergence of interdependence between capital markets and establishment of digital enterprises has made it necessary for firms to use information systems for their advantage (Ives & Learmonth, 1984).
Usually, information systems provide organizations with a number of organizational and management solution, which allows them to achieve following:

Operational Efficiency

Information system allows an organization to bring necessary changes in their operations in order to cut redundant costs. Resultantly, organizations are able to increase their productivity and efficiency. One pertinent example in this regard, is of Wal-Mart, which uses enterprise system with its suppliers in order to provide timely supplies to its stores (Ives & Learmonth, 1984).

Development of New Business Models

Information system can be used by management to introduce and implement new business models. New model usually entails the introduction of new products and services. Information system can allow management to capture consumer information, which can later be used to provide products and services, which fulfil the consumers’ needs (Ives & Learmonth, 1984).

Improved Relationship with Suppliers

Information system can be used by businesses to streamline its relationship with the supply chain partners including distributors, suppliers and logistics partners. This improved relationship eventually manifests in reduced costs and increased efficiency. As a result, organization is more equipped to satisfy consumers’ needs in more appropriate and timely manner (Lewis & Slack, 2003).

Assistance in Decision Making Process

Information is vital for decision making process. Without adequate and accurate information, business managers cannot make correct decisions. Information system collects information, filters and refines it and then, provides it to business managers. Similarly, by using techniques such as data-mining, information system can identify trends, which can help managers in future planning (Lewis & Slack, 2003).

Competitive Advantage

            All of the above advantages gained by organization eventually results in achievement of competitive advantage in the market. The objective of every organization is to achieve superiority over its rivals. Information system allows an organization to achieve exactly this advantage. By increasing operational efficiency, streamlining relationship with customers and supply chain partners and capturing information for decision making, organization is able to achieve competitive advantage over its rivals and establish its foothold in the market (Lewis & Slack, 2003) (Ives & Learmonth, 1984).

Environmental and Industry Analysis

The UK telecommunication sector has experienced phenomenal growth in last few years. In 2007, it was able to generate revenues of £61.5bn, which made it one of the largest industries in the country. There are many firms competing in the industry but, there are only few which can be characterized as major players. Among these players, British Telecom is the oldest player but, lately has been losing its market share from new vibrant competitors. Other than BT, the major players in UK telecommunication industry are Orange, Vodafone, T-Mobile, O2 and Virgin (Gallacci, 2006).

Level of Competition in the Market

The competition is high in the industry, which has forced competitors to indulge in both price and non-price competition. Mobile retail is the leading factor in industry’s revenue stream. New technologies such as 3G are also gaining popularity, which has further stepped up the competition. Voice and data-related revenues have reached the figure of £15.1 billion. In a similar fashion, revenues form SMS has also seen an increase of 28%.  The figures relating to the industry paint a very healthy picture (Ofcom, 2010). Following table shows some of the data relating to the industry:
Subscriptions 3.7 million new subscriptions
3G connections increase of 60%
SMS 59 billion SMS in 2007 alone (an increase by 28%)
MMS 59.1 billion
Revenue revenues rose by 4% in 2007
SMS revenue per connection 17% increase
Adopted from: (Ofcom, 2010)
O2 is currently the market leader as it took the number one position in 2007. It enjoys fine run as it shares keep on increasing in comparison to other competitors. The position of O2 can be measured from the fact that it generated revenue of about £4.1 billion whereas T-Mobile and Virgin Mobile generated revenue pf£2.7 billion. Following table shows subscriptions of each major player (Ofcom, 2010):
Vodafone 16.5 million subscriptions
O2 20.0 million subscriptions
T-Mobile 17.3 million subscriptions
Orange 15.7 million subscriptions
3UK 4.0 million subscriptions
Adopted from: (Ofcom, 2010)

Market Demographics

United Kingdom has a total population of 60 million. Around 48 million people use mobile phones, which not only show consumer inclination towards cellular technology but also make visible the potential of growth. Moreover, around 70 million people have active connections which show consumers’ preference for multiple connections (Ofcom, 2010).
Around 57% of the mobile users belong to male gender, whereas the rest are female users. It also indicates that advertisement targeted towards male members of the society is more effective than their counterparts. In addition to this, mobile are mostly used by population under the age of 34. Around 59% of mobile usage is done by market of age 34 and below. On the other hand, people above age of 65 represent the smallest segment for mobile companies. This can be seen from the fact that this segment makes only7% of total calls while their contribution towards SMS stands at 5% (Ofcom, 2010).
Mobile internet has been very popular in public and has fuelled the demand of not only mobiles but also service providers. In 2007, there was an increase of 7.8 million 3G connections, which only substantiates the popularity of new technology in public.

New Trends

Mobile advertisement is one of new trends, which have gripped the UK telecommunication industry. This trend has taken birth from the explosion of mobile internet and new devices such as iPhone and Google Android phone, which are more internet friendly than other mobile devices. These mobile devices are more supportive to multimedia content such as YouTube, which are very popular among the general public. Resultantly, mobile advertisement has increased manifolds. It is estimated that there have been an increase of 300% in this segment. It is also estimated that mobile advertisement segment will stand at £187m by the end of 2011.   Similarly, mobile devices have also witnessed different trends. As technology intensive field, it has seen many new innovations, which have completely reshaped the landscape of the cellular technology. Apple iPhone and the iPhone 3G have completely revolutionized the market. Similarly, O2 has also changed the market dynamics with the introduction of unlimited bandwidth utility. However, there is still potential of growth in the internet mobile market. Only 11% of mobile users use mobile for the purpose of accessing the internet. This market segment is leveraged by mobile companies through the introduction of pay-as-you-go models which makes around 22% of the mobile broadband connections. Following are some of the other new trends that have recently emerged in the mobile market of the United Kingdom (Trauth & Pitt, 1992).
  1. Around 37% of mobile users have used their mobile devices for the purpose of recording videos.
  2. Around 50% of the consumers give preference to Bluetooth enabled mobile sets when making a buying decision regarding new mobiles.
  3. More than 20% of mobile users also use mobile for downloading audio content such as latest music tracks.
  4. Internet usage stands at 50% which means that half of mobile owners in UK use internet feature of their mobile devices.
  5. Usage of mobile for downloading and uploading video and pictorial content stands at 25%.
  6. GPS is gaining popularity but it currently used by 20% of mobile population.
  7. Video streaming is done by almost 18% of the population.
  8. The application of e-commerce through cellular technology is still low as only 9% of the mobile users use it to either make purchases or pay utility bills.

PESTEL Analysis of the Industry                                       

As we are more interested in the macro-environment of the industry, we will be making use of PESTEL analysis (Grant, 2005). PESTEL analysis allows clear and comprehensive understanding of macro-environment which regulates the telecom industry in United Kingdom. Following is the breakdown of PESTEL analysis.

Political factors

The current political conditions in the country promote the environment of deregulation. Resultantly, new competition has emerged in the market, which has increased the choices for buyers. Similarly, as a result of deregulation from EU front, UK mobile market is expected to face new competition in its market from the rest of the Europe (Bichta, 2001).

Economic factors

Global economic meltdown has put the UK economy into deep recession. Numerous jobs have been lost, which has decreased the purchasing power of the general population. Such economic scenario played its role in hampering growth of the mobile market in the country (G.Jayalakshmi, 2009).

Social factors

Socio-cultural factors have a deep influence on this sector. The emergence of social networking platforms such as Facebook and Twitter has provided especially the young population with another medium to interact. This has brought significant social and cultural change in not only United Kingdom but also in other developed economies. Such happening has brought a change in the lifestyle of young urban population. Such change has led to increase in demand of internet mobile devices as well as new technologies such as 3G especially in younger segment of the market (Ivy Thesis, 2011).

Technological factors

Telecommunication industry is technology dependent and technology intensive industry. Therefore, the emergence of new technologies has a profound effect on the overall outlook of the industry. Resultantly, cellular companies and service providers make use of new innovations to gain competitive advantage. One such example is of iPhone by Apple. IPhone revolutionized the landscape of mobile devices in the whole world as it introduced new android technology in the market. Similarly, 3G technology has been very popular among mobile users due to its advanced feature and high speed. 3K has the privilege of being the market leader in this market segment. It is essential for mobile companies to be proactive in anticipating technology changes in order to survive in the market. The decline of British Telecom can be attributed to their inability to anticipate and react to technology changes. It is anticipated that number of radical changes in technology will occur in this sector which will completely revolutionized this sector. These changes will be in form high internet speeds available on the internet and new technologies such as android, which will make mobile interface for user more friendly and convenient (Liao et al., 2009).

Environmental factors

Telecom is least affected by environmental factors unlike transportation or petroleum sector, as it does not directly or indirectly affect or alter environment.

Legal factors

Legal influence exists in the form of deregulation measures adopted by country’s legislative body or organization like European Union. Such measures directly affect governing rules of this sector. In addition to this, it also determines the level of competition in the industry. Telecom sector is expected to witness more deregulation in the coming years (Gallacci, 2006).

Porter 5 Forces Analysis

Another effective tool to conduct a marketing audit is Porter 5 forces model. This framework allows comprehension of different variables operating in the external environment of the industry (Porter, 1980).

The threat of the entry of new competitors

Threat of new entrants in UK telecom sector is significant. This is due to that fact that there is still potential of growth in this sector. However, following are some of the factors which reduce the level of this threat (Bichta, 2001).
  • Huge capital investment required to setup telecom operations.
  • Economies of scale enjoyed by companies currently present in the market.
  • Customer loyalty of present brands.

The threat of substitute products or services

The threat of substitution is very high due to the presence of similar products and service, low switching costs and ease of access to product’s information. However, companies make use of new and innovative technologies to gain competitive advantage over their competitors (Trauth & Pitt, 1992).

The bargaining power of customers

Customers are the king of UK telecom sector as they enjoy significant bargaining power. Due to regulated nature of the industry, there is cut-threat competition between rival firms. Such competition only benefits customers who are offered different products and services at relative prices (Porter, 1980).

The bargaining power of suppliers

The suppliers mostly consist in the form of companies which provide mobile operators with technology infrastructure needed to setup mobile operations in the country. In addition to this, mobile manufacturers are also the suppliers for this industry. Due to the presence of a large number of suppliers, the bargaining power of suppliers is only moderate.

The intensity of competitive rivalry

The intensity of competition is very high in this industry. Rival firms make use of both price and non-price strategies to gain competitive advantage over their rival firms. Another indicator of intense competition is the level of budgetary allocation for marketing and advertisement purposes. Another indicator is the expenditure on research and development in order to develop new technologies, which could allow companies to gain advantage over their rivals (Gallacci, 2006).

 An Information System That Will Help Meet the Firm’s Sales and Marketing Function

The most appropriate information system for the organization in discussion will be CRM system. Using CRM system, organization can effectively perform its sales and marketing functions and achieve its desired objectives. Customer Relationship Management is basically an enterprise-level system intended to conduct customers’ interactions with the organization in most efficient manner (Ein-Dor & Segev, 1978) (Ofcom, 2010). Therefore, it is essential for any organization to make use of CRM systems to improve their relationship with customers.  For telecom sector, which is entirely dependent on IT infrastructure, CRM holds a central position. As a result, companies like O2 and T-Mobile are increasingly cognizant of its significance and are making use of it to develop long-term relationship with consumers (G.Jayalakshmi, 2009).
CRM enables organization to take a complete and holistic view of customer decision making process. It provides it with real-time information which enables it to react to customer needs in most appropriate and timely manner.CRM allows telecom companies to interact with their customers in order to entertain their queries, orders, suggestions and complaints. CRM also assist companies’ sales force in identifying and prospecting new leads. It identifies problem areas as well as performance gaps in the provision of goods and services. Telecom companies can use CRM in following ways to improve their services and hence build long-term relationship with their customers (Fendelman, 2010).
  1. To provide their sales force with real-time and relevant information which could allow them to respond to customer needs and demands in face-to-face contact.
  2. CRM system can be integrated with call centre operations in order to collect customer data relating to consumer needs and wants. Later, this information can be used to extract trends through application of tools such as data mining.
  3. CRM can be used to identify information which is mostly enquired by customers. This information can then be provided on internet for the convenience and ease of customers.
In addition to this, CRM system can allow any telecom company to determine buying pattern of their customers. For instance, T-Mobile can use CRM system to determine the demographics of their users which mostly conduct international calls. Such data will allow them to respond to this market segment in most personalized manner. Customization of service allows firms to build a sustainable completive advantage (Kotler, 1988).

Implementation of Information System

The implementation of a CRM system could be a tricky affair for any organization. However, by following certain guidelines, organization can not only implement CRM successfully but also can reap benefits from its operations. Nevertheless, following are certain recommendations, which should be taken, when installing CRM system in an organization.

Customer Should Be the Focus of the System

CRM is intended to provide organization with the information, which could help in providing services to the customer. The only way, it can be done is through development of a system and processes, where customer holds an integral status. Moreover, it is also important that all function within organization collaborate with each other in order to make the installation successful. In order to successfully implement CRM, it is also important that organization develop a culture, where customer is considered a centre-point of all operations. Such culture will facilitate smooth implementation of CRM within organization and remove any sources of resistances (Bull, 2003).

Use of Practical Objectives

It is also very important that organization set goals, which are realistically possible to achieve. Using of impractical goals will increase the expectations from the new system, which will eventually results in failure. Organization should know its strengths and weaknesses and use only those objectives, which are in accordance with its strengths and weaknesses. This recommendation also entails that the entire team from the software developers to implementers should be on same page during the implementation. It is also necessary that CRM implementation is done in rollout manner. Some organizations implement CRM according to location. Others use departments and functions as the platform for CRM implementation (Bohling et al., 2006).

Support of Top Management

Top management should lead the process of implementation. Their active participation allows elimination of pockets of resistance within organization. It is also very important that top management accurately communicate the costs and benefits of the system to the whole organization. Otherwise, false expectations will be developed within organization. Top management should be the biggest supporters of change within organization. This will allow implementation team to smooth out the process of change management and implementation (Nguyen et al., 2007).

Analysis of Business Processes

CRM system will be based on the organization’s process. Therefore, it is necessary that a clear understanding of different business processes is made by implementation team. This will also allow them to pinpoint those processes, which are source of additional costs and inefficiency for the organization. So, during implementation, the system implementers can bring remedial changes within the business system (Bohling et al., 2006).

Use of Correct Software Solution

Any information system, including CRM, will depend on IT infrastructure for operation. One component of IT infrastructure is the software suite. It is of utmost importance that correct software solution is selected, otherwise, the whole effort will be in vain. There are many software suites available in the market, which provide packaged solutions to the organization. On the other hand, certain software vendors provide customizable solutions. Selection of software solution is determined on the basis of organization’s needs. The difference of selection of software solution can be substantiated from difference from the solution required by a service organization and the solution required by a product-focused organization. It also depends on organization’s financial strength. Small and medium organizations do not have the required resources to afford enterprise-level system. In contrast, large organization can use any system of its liking. ROI of software solution should also be taken into account in order to make the correct decision. It should also be noted that a CRM system is as good as the implementation methodology used to implement the system in coherence with business processes. Organization should also take into account the experience of vendor in implementing software solution (Chen & Popovich, 2003).

Ethical Concerns Related To Information System

The selection and implementation of CRM system within an organization can raise number of ethical concerns. Therefore, it is important that organization takes into consideration ethical dimension of the information system and devise proper solution if necessary. Otherwise, organization can get into serious legal troubles. Following are some ethical issues related to CRM.

Ethics in Collecting Consumer Data

Infiltration of privacy for collecting data is clear violation of laws and moral ethics. It is necessary that organization take customers’ permission before collecting information related to them. It is also important that information collected is verified in order to remove any discrepancies. It is also the responsibility of the organization that sensitive information such as credit card history is stored in secure environment. Otherwise, such information can be used for fraudulent practices and the whole onus of the blame will be on the organization (Anderson & Kerr, 2002).

Ethics in Storage of CRM Data

Organization should develop a system, which ensures that data stored in organization’s databases is done in agreement with the customers. If the customers want to change certain details, organization should respect that request. Similarly, if customers withdraws from acquiring organization’ services, customer’s information should be deleted from the database. The principle behind this logic is that the data belongs to customer and customer should be the one, who controls it (Anderson & Kerr, 2002). 

Ethics Related To the Usage of Data

It is also the responsibility of the government that data of the customer is kept for maximum private level. The data should only be used in the provision of service. The data should be stored in a location, which can be accessed to only certain employees. This will prevent any leakage of data from the organization. Similarly, only those employees should be allowed to access data, which need the data in the fulfilment of their duties (Peel & Gancarz, 2002).

Ethics Related To the Deletion of Data

It is the duty of the organization that the data is deleted, when customer stops to acquire products or services from the organization. The data should be deleted in a manner, which will ensure that it cannot be used again by anybody else (Peel & Gancarz, 2002).

Conclusion

Information management within organization is vital for succeeding in today’s competitive world. Organization should leverage its operation on an information system in order to make them more competitive over rival firms. Those organizations, which fail to take into account the importance of an information system, fall short of achieving its objectives. However, the implementation of CRM system in an organization is not without problem. Therefore, it is important that entire organization, especially the top management, participate in the implementation process. This will allow organization to remove any problems and to fully benefit from the system.

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