Global Information Systems for Strategic Advantage
A critical Evaluation of the Strategic Role of Global Information Systems for Organisations including a Discussion of the Management Issues associated with Planning, Designing and Leading such a Strategy
Essay 2012 11 Pages
Over the course of the past years, the information and communication technology has greatly changed in form. First and foremost, the internet has developed out of a pure source of information into a new mass-communication and data-sharing medium, which offers numerous possibilities for the user to create, share and transmit data-oriented content to other users. The steadily rising number of users and technological progress has pushed the internet to develop from its static form into today’s interactive Web 2.0. It has increasingly become an important component of everyday life for a lot of people as well in their private life as in their working life (Achenbach, 2012). This allows communication and exchange of data in a fast, easy and affordable way all around the world (Fisch and Gscheidle, 2008). Especially for enterprises, it has become easier with this new form of the internet as a data carrier to market their products and reinforce their business to gain a competitive advantage in the global business world. Nowadays, companies compete on a global level with each other. Inventing and perfecting new process technologies is now more important and necessary for a global operating company to reach a sustainable competitive advantage than only focusing on new product development like in the past (Thurow, 2003).
The German tradition-based global operating manufacturer Siemens AG is one good example of how global competition drives companies to develop new ways to increase productivity, save costs and improve customer service to survive in the global economy. The company is doing business all over the world and has with its distinct product lines (such as communication and information, medical equipment, lighting, etc) facilities in more than 50 countries. Due to the fact that the company is operating worldwide it has to deal with numerous competitors. Hence, the company had problems to gain competitive profit margins and to deal with its new fast-changing business environment. Especially the coordination of the company's internal units, the complex structure of its supply chain and the collaboration with many suppliers and customers caused difficulties. The main purpose for the company was to increase customer service and reduce costs. Therefore, the company decided in the late 1990s to manage and control all business functions electronically by introducing a web-based computer system with commerce application in all operations. Today, employees are all virtually included in the company's network and have direct access to the internet as well to corporate information which includes different kinds of workplaces, search engines, travel booking and electronic account reporting. Siemens' online sales and e-procurement increased notably (Turban et al., 2006). The implementation of information and communication technology into the business was highly expensive for Siemens, but CEO Heinrich von Pierer expects a long term benefit in cost reduction and efficiency in the future (Krause, 2001, p. 5).
The above mentioned example shows that by improving the information and communication technology, companies’ business processes become more efficient and effective. Data can be created, stored or disseminated by this kind of technology and finally enterprises use it to translate data into useful information for their decision making process (Elliot, 2004). Elliot (2004, p. 9) defines information as the ''life-blood of a business organisation" and therefore it is an important and a necessary resource which can help to gain a competitive advantage in the company's business environment. To generate profit, which is the main aim of an organisation, a company needs to manage not only information, but has also to deal with the successful management of human resources (in form of people) and structure (corporate organisation). These can be realized by integrating and combining all three kinds of resources (people, organisation and technology) into one business system, which can then coordinate, integrate and manage the various components (Elliot, 2004).
Out of the successful and structured integration of the above mentioned resources, the resulting business system is called "Information System" in literature. These type of systems collect, process, store, analyse and disseminate information to users to provide information for decision making or any other particular purpose (Turban et al., 2006, p. 20). An information system is related to three main components: Inputs, processing and outputs. Inputs in form of data, which can be alphanumeric, image- or voice based, are made by any specific user mainly using computers. Furthermore, data will be structured and processed into a useful output by the system and finally submitted to other users or systems via electronic networks (Elliot, 2004). According to their type of use, information systems can be formal or informal. Processing financial transactions by a company's accounting system would be a formal one. Informal information systems can occur for example in form of office group networks, by which members changing letters electronically (Turban et al., 2006).
In terms of industry globalisation and international competitive posture information systems need to connect companies in different countries all over the world and guarantee the information (data) exchange between two or more organisations (Turban et al., 2006). Those systems are called ''Global Information System''. Karimi and Konsynski (1991, p. 18) define a global information system as a distributed data-processing system that crosses national boundaries. The airline reservation system SABRE (sabre.com) is one example for a global information system. It is one of the largest electronic travel reservation systems serving 55,000 customers such as travel agencies and travel suppliers (sabrehospitality.com, 2010). Mostly multinational, international or global virtual operating companies include global information systems in their business processes and strategy. For example, multinational companies like IBM or Coca-Cola have sales offices or production facilities in different countries. However, international companies not necessarily have sales offices in other countries as they are in a business relationship with foreign companies. Finally, virtual global companies are joint ventures which have partners in other countries for a specific purpose like producing product, which can be temporary (Turban et al., 2006).
 A supply chain is the flow of materials from suppliers through manufacturing, distribution and sales (Turban et al, 2006, p. 2)