The Information technology industry, where nothing is predictable and constant change has become a usual trend, is now on its new phase of its evolution stages. According to Richard L. Nolan, MBA Class of 1942 Professor of Business Administration: “Information Technology is no longer being used as just a tactical resource, it’s now fundamentally influencing business strategy and competition” (http://www.alumni.hbs.edu/bulletin/1997/april/text/theory_text.html 04.02.06). This paper will examine and analyze the issues and challenges like the one that has been raised by Professor Richard L. Nolan. The essay will be based on the case study of the company called Canon, which automated all its documentation and information flow procedures by introducing new Information System Management. It has become one of the major solution companies, which serves Information Management issues for other firms and organizations. There have been dozens of profit and non-profit organizations who have invested tens of millions of pounds in introducing new technologies and systems, in order to operate more effectively and efficiently, and in order to adapt to any kind of change more rapidly than their rivals and competitors. The essay will be continued by discussing the necessities and aspects that made the organizations to spend so much capital on new technologies and so much effort to redesign the way they operated and ran the business.
It would be wise to start by defining what the Information System is in general, and than examining the forces and factors that play such a big role in organizational redesigning in nowadays environment. “An Information System can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization” (Laudon C. K. & Laudon P. J. 2005). Moreover, information systems can facilitate in analysis of problems, visualize complex subjects, and the most important it broadens the way of innovation. There are four basic worldwide changes that forced the Canon and many more companies to alter their processes and operations. The first change is the globalization: the growing percentage of the majority countries’ economy depends on their export and import trading. This means that foreign trade, both exports and imports exceed the percentage of manufacturing domestically in such countries. Companies are outsourcing and distributing their core business functions in countries it can be performed more cost effectively. Businesses need to act and operate globally, on 24 hour basis. They have to communicate with their stakeholders constantly in order to have the up-to-date information, and be ahead of their rivals. On the other hand globalization and improved communication systems may bring some kind of threats from the customers, as they have the access to the worldwide market and can get all the information on prices, quality and etc. therefore it increases the switching cost. Rise of the Information Economy is the second issue which implies that, all the major industrial powers are transformed from industrial economies to information-based service economies, and the manufacturing has been moved to lower-wage countries. In this new economy the key to success has changed from tangible resources such as capital and machinery, to intangible ingredients such as knowledge and information. Here, market values of many firms are based on these intangible assets, which contribute to greater innovation and effectiveness. “Physical assets, such as buildings, machinery, tools, and inventory, now account for less than 20 percent of the market value of many public firms in the United States” (Laudon C. K. & Laudon P. J. 2005). The third change that influenced new information technology emergences is the way the organizations have to organize their work. In past – minority now – the most of the organizations were very...
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