Revision -01 December 2011

1. Revision -01 December 2011 Model answers

2. Question 1a) For EACH department suggest TWO information systems applications that you think are most relevant to the role and culture of the department. Explain and justify your choice in EACH case and critically discuss impacts on the organisations. Include in your discussion of EACH department and EACH application the potential benefits and their achievability, together with likely difficulties and barriers to success.(30 marks) To answer this question effectively, I would recommend a cheat code. You can use this for answering the questions in ISO. Listen carefully; There are 5 questions in total in this first question! Can you identity them? • Suggest two information systems applications that you think most relevant to the role and culture of the two departments. • Explain and justify your choice for each application systems. • Critically discuss impacts on the organisations. • Discuss about the potential benefits and how to achieve them. • Explain the difficulties or barriers to success.

3. Answer In the given case study, we are discussing about a multi-national engineering company. The company manufactures electromechanical parts of motor vehicles. We are concerned about two departments here such as;1.Worldwide marketing and sales 2. Engineering development I recommend the following systems or applications for the above mentioned departments. Worldwide marketing and sales CRM External Social Networking for Customers Knowledge Management Data Warehouse Intranet Engineering Design Engineering Design 1.CAE/CAD 2.ERP 3.Knowledge Management 4. Intranet

4. Worldwide marketing and sales This department is responsible for obtaining new customers and maintaining the relationship with them. So I have chosen the below applications . • CRM – intended to build and sustain long- term business with customers. It would help to select the customers, acquire customers, retain customers and finally to increase the loyalty of customers. • External Social Networking for Customers – this would help the department to be close with the customers. • Knowledge Management –helps to create, acquire, capture, store, share and use knowledge. • Data Warehouse – helps to store the data. • Intranet – helps in communication within the organisation.

5. Engineering Design This department is concerned with optimising costs of production of components, maintaining quality and incorporating innovative ideas. So, I recommend the following applications. • 1.CAE/CAD – computer aided designing will bring better quality, innovation, reduce cost of production. • 2.ERP – will facilitate organisation wide integration, increase quality, reduce costs, facilitate effective management and control. • 3.Knowledge Management – help to manage knowledge related products and services effectively. • 4. Intranet – facilitates effective internal communication and co-ordination. In order to understand the impact of systems or applications on the departments, we will have to understand the culture in the organisation.

6. Descriptions of Culture FLEXIBILITY Open systems Human relations Concerned with individuals and personal development. Learn and grow Concerned with the outside world Prospect and explore INTERNAL INTERNAL EXTERNAL Concerned with efficiency Conserve resources Concerned with goals The appliance of science Internal process Rational goal ORDER Adapted from Cooper (1994) and Quinn et al (2003)

7. The impact of these applications depend on the following factors:Influenced by TYPE and Culture of Organisation or part of organisatione.g. Human Relations, Open Systems, Internal Process or Rational Goal.Influenced by PERSPECTIVE/APPROACHe.g. Mechanist, Structuralist, Organicist or Contextualist Marketing and Sales According to the Cooper and Quinn model we find that Marketing and Sales falls in Open systems. Because, in this department people focus on the external environment. In order to understand the impact of applications on two departments we have to analyse different perspectives such as;

8. Organisation as machines Organisations as Structures (Structuralist or ‘Formist’)Organisations as Organisms (Organicist)Organisations as Contexts for human action Marketing and Sales Since marketing and sales fall into open systems, we can consider organist and Contexualist perspectives when considering the impact. There will be resistance in the department while implementing certain applications or systems. For example CRM, where new rules and policies will be in place, and which will may bring some resistance among the staff. The motivation for the staff depend on political and personal interests. For example if a system helps to increase the power of the employees, the system will easily be accepted. But, if it is decreasing the power, the employees may resist such a change. There should be proper policies and measures to implement the application successfully.

9. Engineering and Design According to Cooper and Quinn model, this department falls under internal process culture. Because, this department pay little attention to the external world. Their goal is to make the department efficient, stable, and controlled. When we analyse the impact of applications in this department, we consider mechanist and structuralist perspective. The aim of technology in this approach is more effective and efficient ways of doing things. But there will be resistance from the staff in accepting the technology. The staff will accept the technology according to the benefits they get. For example, if automation is complementing the work staff will accept, but if it is reducing or replacing the human work there will be resistance. To implement applications successfully, managers should consider economic factors and efficient work design measures, which will motivate the staff.

10. Potential benefits and achievability marketing and sales - this department consider the new applications and systems to select customers, acquire customers, retain customers, and to increase the loyalty of the customers. These applications will have the following benefits; • Help to have closer relationship with customers • Help to communicate quickly both internally and externally • Help to build knowledge about the customer • Help to keep records of activities and market information • Help to understand the customer needs and meet the same • Help to improve sales • Help to improve relationship internally in the department To achieve the above benefits the organisation should motivate the staff to accept the applications. Economic benefits, power, can be important forces in motivating factors.

11. Engineering Design This department is interested in optimising the cost of production, improving the quality and innovating ideas. So, this department has internal focus. The benefits of applications in this department will be as follows; • Reduced cost • High quality • Customer satisfaction • New products • Improved communication In order to achieve these benefits there should be improvements in processes that contribute to innovation, efficiency and quality. So the achievability depend on the following factors; • How willing people are to change the processes. • How willing people are to explore new methods of working • Effective communication with other departments.

12. Barriers to success While analysing the barriers, it is necessary to understand the Force-Field- Analysis as mentioned below.

13. Another problem is that the technology disturb the status Quo Please follow the next slide

14. IS Can Disturb the Status Quo Technology Capabilities Organisational Capabilities O T Culture Skills Systems Values Agendas Infrastructure Technology Functions Applications P Job Content Processes New Applications Organisational Relationships

15. Common barriers to success 1.Organisations – barriers to change • Existing working practice (processes) • Existing political structures and balances • People unwilling or unable to change • Limitations of Technology • Poor change process and/or poorly managed 2.Working Practices • Human tendency to ‘stick to what we know’... • Saves time and effort • Saves time learning something new 3. Personal Interests • A job • Position and Influence • Political Power • Economic Benefit

16. Marketing and Sales staff not willing to adopt formal procedures poor knowledge sharing between staffinsufficient focus on achieving benefits Engineering Design Difficulty adapting to new processes and procedures Lack of communication Focus on short term benefits and ignoring less tangible gains and long –term benefits

17. b) The two departments have different roles and responsibilities but both deal with customer requirements, and both must support the company strategy. Discuss how the company can develop a co-ordinated approach to I.T. strategy that is aligned with overall organisational goals. (20 marks) The I.T/I.S strategy of a company should be aligned with the organisational strategy. In the given case study there are two departments mentioned such as Marketing and Sales and Engineering Design, both have different roles and responsibilities, but should support the organisations strategy. So, here the important responsibility of IS managers is to develop an I.T or I.S strategy which is aligned with organisational strategy. Please draw the diagram in the text book – page 118, Fig. 4.11 While aligning the IS strategy to the organisational strategy managers must make sure; 1.Stretegy is based on the customer needs and expectations. 2. Processes selected for redesign by IS create vale for the customers. 3. IS supports those processes in a way the support the strategy.

18. In order to make sure business structure, IS strategy, and the IS itself aligned with the business strategy of the organisations can follow two approaches as follows; • The contingency approach • Interaction approach The Contingency Approach - according to this approach, the alignment or fit should reflect the situation in which the unit is operating. ( you can draw the diagram if it is difficult to explain) page 119 and fig. 4.2 According to this theory some characteristics of the organisations influence how they use information systems within their operations. The variables are; The primary tasks of the organisation: routine or non routine; The degree of interdependency between those doing these tasks: high or low; The environment of the organisation: stable or unstable

19. Interaction approach- this is according to the internal and external conditions, and how to interpret them. Now, we have to think about the situation where we have to align I.S in both the departments with organisational strategy. According to Michael Porter there are 2 basic business strategies which are: • Cost Leadership (having the most cost effective products and/or services) • Differentiation (having products/services that are unique or are perceived to be unique) • Further - these can be: • Broadly applied (across a whole market) • Narrowly applied - Focused (concentrating upon specific market niches) For example the use of ERP in the Engineering Design department is intended to support cost leadership, differentiation.

20. The second approach to align IT strategy is Value Discipline according to this theory, competing organisations usually aim to excel in 1 or 2 of them, • Customer Intimacy • Product Leadership • Operational Excellence For example the CRM application in the Marketing and Sales is intended to support the strategy of Customer Intimacy. Another approach is to define the CSFs

21. Objectives 1. Where do we want our organisation to go? Strategy 2. How are we going to get there? 3. What must be right? Critical Success Factors 4. How will we know if we have achieved it? Key Performance Indicators Critical Information Set Strategy and CSFs • J Rockart – 1970’s How are we going to measure if we are getting there? 5. So what information is critical to our success? What information do we need?

22. The third approach is Balanced Scorecard approach According to this idea (Kaplan and Norton) strategy is about incorporating internal, external and stakeholder perspectives.

23. Financial Perspective Financial Perspective Goals Goals Measures Measures Internal Business Perspective Customer Perspective Financial Perspective Financial Perspective Goals Goals Measures Measures Goals Goals Measures Measures Innovation and Learning Perspective Financial Perspective Goals Goals Measures Measures Balanced Scorecard How do we look to Shareholders ? How do Customers see us ? What must we excel at ? How can we continually improve and create value ?

24. Finally we should think about the way an organisations strategy being formed. A strategy for an organisation means the way it uses the resources. Here an organisation strategy may either planned or emrgent. Planned strategy means, the managers develop strategy consciously, and follow them. Emergent strategy means, organisations plan a strategy, but change the same according to the situations.

25. Question 2 a) Critically examine the mechanisms through which benefits can be achieved in the case of applications selected for EACH department. (15 marks) ( look closely this question, it is the same as how to achieve the benefits by using different applications)

26. Potential benefits and achievability marketing and sales - this department consider the new applications and systems to select customers, acquire customers, retain customers, and to increase the loyalty of the customers. These applications will have the following benefits; • Help to have closer relationship with customers • Help to communicate quickly both internally and externally • Help to build knowledge about the customer • Help to keep records of activities and market information • Help to understand the customer needs and meet the same • Help to improve sales • Help to improve relationship internally in the department To achieve the above benefits the organisation should motivate the staff to accept the applications. Economic benefits, power, can be important forces in motivating factors.

27. In order to achieve maximum benefits organisation has to consider the following principles; CRM – focus on the strategy than the technology There should be considerations on job descriptions, performance measures, compensation systems e.t.c Again, there should be proper change management to achieve maximum benefits. There should be proper co-ordination between different departments.

28. Engineering Design This department is interested in optimising the cost of production, improving the quality and innovating ideas. So, this department has internal focus. The benefits of applications in this department will be as follows; • Reduced cost • High quality • Customer satisfaction • New products • Improved communication In order to achieve these benefits there should be improvements in processes that contribute to innovation, efficiency and quality. So the achievability depend on the following factors; • How willing people are to change the processes. • How willing people are to explore new methods of working • Effective communication with other departments.

29. To achieve maximum benefits from the Engineering Design department through IS, we have to follow the principles below; • Some IS systems for example ERP, should be customised according to needs of the organisation to bring maximum benefits. • Organisations should provide sufficient training to the staff. • The structure of the organisation should be considered, while changing the business process. For example ERP systems are centralised, so when you implement ERP in a decentralised organisation care must be taken.

30. b) For EACH department, illustrate and justify how you would expect the manager’s roles and the staff contributions to be affected under ONE of the applications you have selected. (10 marks) Both Marketing and Sales, and the Engineering Design will have changes in the role’s of managers and the staff contributions while implementing the proposed applications. For example when we implement CRM in Marketing and Sales, we will see drastic changes in the role of the manager and the job description of the staff. ( draw the diagram) page 225 fig.8.5

31. Managers role Managers can use IS either to promote commitment or control. For example, in the case of CRM the managers will be able to monitor the performance of the staff. When considering ERP systems in Engineering Design department, we find the line managers will get the power reduced. So, IS affects the role of managers. The role of managers will vary from controlling to increase commitment. Some IS increase the control of managers over the staff, but care must be taken to manage such change to avoid the resistance from the staff. Another situation is that some organisation structure may become flat with the implementation of the IS. In this case the power or even the position of managers will be in trouble with automated technology.

32. Staff contribution There are two types of IS, when we discuss about the staff contribution; • Systems that complement human skills • Systems that replace human skills For example when we implement CRM in the Marketing and Sales the staff will have better information and it would compliment the human skills. Again, when we utilise the ERP systems, we find the automation and replacement of human skills in some areas. People welcome the systems that compliment human skills and oppose the one that replace the human skills. Another area of change in human contribution is the distribution of work. Some technologies, will enable some new methods of working. For example teleworking or remote working.

33. Both departments will anticipate tangible benefits from their investments in new IT. Compare and contrast both tangible and wider evaluation considerations that may be relevant to Marketing and Sales and Engineering Design. (10 marks) For IS projects there are both benefits and costs. For the given engineering company, there will be costs for implementing the I.S and there will be benefits too. There are two types of benefits such as; Tangible benefits and intangible benefits. Tangible benefits Marketing and Sales Department • Increased sales – • Increased quality of marketing • Increased efficiency • Reduced cost. • Reduced overhead or staff cost • Avoid cost increases • Increased revenue • Staying in business through modern I.T

34. For example the proposed CRM system will reduce cost in the following way; • By automating the documentation process, customer details it would save administration costs. • By automating process, it would save staff cost. • It would save cost by directly dealing with customers. Intangible benefits for Marketing and Sales • Improved communications • Staff morale • Reputation (branding benefits) • Increased customer satisfaction (branding..) • Flexibility and agility • Organisational learning....

35. The sales and marketing department will have some intangible benefits and we can justify the same as below; • By using intranet, extranet, knowledge management the department will improve communications within and outside the organisation. • New technology for example Data warehousing and CRM will provide more information to the staff, and it would improve their work and increase the morale. • These new I.T will increase the reputation of the organisation.

36. Tangible benefits for the Engineering Design department • Increased efficiency • Increased production • Reduced cost • Reduced waste • Reduced error For example the use of ERP systems will help the department to improve the efficiency, by connecting the whole organisation. Even, the integration to suppliers and customer will increase efficiency. Automation will increase the production, and reduce the staff costs. Integrated operation will reduce the waste. Automated processes will reduce the chances for human-error.

37. Intangible benefits for Engineering and Design department • Better communication • Increased staff morale by using new I.T • Efficient value chain management by connecting to suppliers and customers • Increased reputation by better quality and efficiency. • Differentiation as part of I.T, which will differentiate the organisation from the competitor. But, there is cost involved in every I.S project. There are two types of costs as mentioned below; • Tangible costs • Intangible costs

38. Tangible costs in sales and marketing and Engineering Design • Costs of the technology: • Capital cost of development or purchase • Cost of implementation (project costs) • Costs of the resources to run it: • Hardware • Network • Software • Service and support

39. Intangible costs • Opportunity costs • Should we be doing something else? • Overhead of running IS/IT • Management • Management time and attention • Governance • Risk • Obsolescence not predictable • ‘Game changing’ innovations

40. For the engineering company it is a must to evaluate the benefits and costs of different I.T applications. So, the Marketing and sales and the Engineering design will evaluate the costs and benefits for the following reasons; • To measure tangible costs and benefits • To endorse success • To investigate failure • To identify good practice • To improve implementation process There are different method to evaluating the I.T proposals as follows; • Formal – rational methods • Creating a balanced portfolio or project types • Wider – criteria

41. 1. Formal – rational method According to this method, the success is evaluated by cost and benefit factors. We evaluate the proposals by calculating; Payback period – how long to get the investment back ROI – by calculating the return on investments Discounted cash flow – calculating the proposals by considering whole life of the project. 2. Creating a Balanced portfolio of project types According to this method, evaluation of a project is done based on both short – term and long – term benefits. Enabling factors considered to be important as they are working as infrastructure of other benefits. So this method is taking intangible benefits also into consideration.

42. DeLone McLean Model System Quality Intention to Use Use Information Quality Net Benefits User satisfaction Service Quality

43. 3.wider-criteria According to the wider-criteria we have different methods to evaluate the I.T proposals such as; • Four-Dimensional model ( draw the diagram page 282, fig.10.2) • Write the 5 points in the table 10.3 in page 282 • Balanced scorecard approach – draw diagram 10.3 on page 283. • b) Assume that BOTH departments are told that they must make use of the company intranet to facilitate communications between them. Critically discuss the possibilities for such communications, including difficulties that make be encountered and barriers that need to be overcome to achieve success. (15 marks)

44. In the given case of the Engineering company use of Intranet can have both advantages and disadvantages. Intranet is a network where by different departments in an organisation can communicate each other. The main issue here is about the type of information available for the staff. The success of intranet will depend on the quality of information available, and the importance of information. Again, the accessibility of information also an important factor. There are different forms of intranets such as ‘workflow systems’, virtual teams, groupware e.t.c The proposed intranet communication systems are beneficial because; It will help different departments to work from the same information. It will avoid duplication of information. This will increase the efficiency of the staff. This will provide guidance to the staff while taking decisions. The intranet communication will enhance the information quality by providing historical evidence, instructions e.t.c. It will certainly complement the staff skills. For example, the information about the product such as features, quality e.t.c will help the marketing and Sales staff to improve the job.

45. For example the K.M or Knowledge Management systems works to the purpose of intranet in certain situations. It is about creating, acquiring, capturing, storing, sharing and using the knowledge. Intranet based communications will enhance the quality of information, however there will be some barriers while implementing this change as follows; Staff must be trained to use the systems. There should be proper policies as what information to share and who can access it. Information available should be relevant and up to date. For example while sharing information about pricing, the currency information should relevant to the market. Another potential barrier will be the resistance from the staff to change the traditional working practices. Staff culture, politics and personal agendas will also influence the success of such communications.

46. How to overcome the barrier? • There should be proper training for the staff. • Staff should be motivated to change the existing practices. Which could be economic or skill related. • Clear instructions should provided as what information to share, how to access, use, and how to respond. • Human factor also to be taken into consideration while implementing such technologies. ( the below diagram can be used to explain the benefits of communications between different departments) This communication channel between different departments will reduce human error and enhance the quality of the job. For example Marketing and Sales department communicating the customer needs and requirements to the Engineering Design will help the department to focus on customer needs and finally acquire customer satisfaction.

47. Applications Monthly Sales Weekly/Monthly Tactical Credit Control Knowledge Daily/Hourly Financial transactions Operational Departments Finance HR Operations Sales ... e.t.c. Customer Accounts Financial Accounts Personnel Records Stock Control Sales Records Sales Ledger Purchase Ledger MRP Forecasting

48. Question 4 a) Implementation of new IT in an organisation involves people, technology and organisation. With reference to the Engineering Company, demonstrate how TWO approaches to change can be applied to help achieve successful outcomes for the company and ease adoption of new technology. (15 marks) Implementation of I.T involves people, technology and organisation. The following diagram is self explanatory. ( draw the diagram)

49. Interacting Components – P O T People Organisation Technology with acknowledgements to Laudon and Laudon

50. Technology Capabilities Organisational Capabilities O T Culture Skills Systems Values Agendas Infrastructure Technology Functions Applications P Job Content Processes New Applications Organisational Relationships