The Challenge of Information Systems: Key Management

Issues
Although information technology is advancing at a blinding pace, there is nothing easy or
mechanical about building and using information systems. There are five key challenges
confronting managers:

1. The Strategic Business Challenge: Realizing the Digital Firm: How can businesses
use information technology to become competitive, effective, and digitally enabled?
Creating a digital firm and obtaining benefits is a long and difficult journey for most
organizations. Despite heavy information technology investments, many organizations
are not obtaining significant business benefits, nor are they becoming digitally enabled.
The power of computer hardware and software has grown much more rapidly than the
ability of organizations to apply and use this technology. To fully benefit from
information technology, realize genuine productivity, and take advantage of digital firm
capabilities, many organizations actually need to be redesigned. They will have to make
fundamental changes in organizational behavior, develop new business models, and
eliminate the inefficiencies of outmoded organizational structures. If organizations
merely automate what they are doing today, they are largely missing the potential of
information technology.

2. The Globalization Challenge: How can firms understand the business and system
requirements of a global economic environment? The rapid growth in international
trade and the emergence of a global economy call for information systems that can
support both producing and selling goods in many different countries. In the past, each
regional office of a multinational corporation focused on solving its own unique
information problems. Given language, cultural, and political differences among
countries, this focus frequently resulted in chaos and the failure of central management
controls. To develop integrated, multinational, information systems, businesses must
develop global hardware, software, and communications standards; create cross-cultural
accounting and reporting structures (Roche, 1992); and design transnational business
processes.

3. The Information Architecture and Infrastructure Challenge: How can organizations

develop an information architecture and information technology infrastructure that
can support their goals when business conditions and technologies are changing so
rapidly? Meeting the business and technology challenges of today's digital economy
requires redesigning the organization and building a new information architecture and
information technology (IT) infrastructure.

Information architecture is the particular form that information technology takes in an

organization to achieve selected goals or functions. It is a design for the business
application systems that serve each functional specialty and level of the organization and
the specific ways that they are used by each organization. As firms move toward digital
firm organizations and technologies, information architectures are increasingly being
designed around business processes and clusters of system applications spanning multiple
 functions and organizational levels (Kalakota and Robinson, 2001). Because managers
and employees directly interact with these systems, it is critical for organizational success
that the information architecture meet business requirements now and in the future.

Figure 1-12 illustrates the major elements of information architecture that managers will
need to develop now and in the future. The architecture shows the firm's business
application systems for each of the major functional areas of the organization, including
sales and marketing, manufacturing, finance, accounting, and human resources. It also
shows application systems supporting business processes spanning multiple
organizational levels and functions within the enterprise and extending outside the
enterprise to systems of suppliers, distributors, business partners, and customers. The
firm's IT infrastructure provides the technology platform for this architecture. Computer
hardware, software, data and storage technology, networks, and human resources
required to operate the equipment constitute the shared IT resources of the firm and are
available to all of its applications. Contemporary IT infrastructures are linked to public
infrastructures such as the Internet. Although this technology platform is typically
operated by technical personnel, general management must decide how to allocate the
resources it has assigned to hardware, software, data storage, and telecommunications
networks to make sound information technology investments (Weill and Broadbent, 1997
and 1998).

Information Architecture and Information Technology

Figure 1-12
Infrastructure
Today's managers must know how to arrange and coordinate the various computer
technolgies and business system applications to meet the information needs of each
level of the organization, and the needs of the organization as a whole.
Typical questions regarding information architecture and IT infrastructure facing today's
managers include the following: Should the corporate sales data and function be
 distributed to each corporate remote site, or should they be centralized at headquarters?
Should the organization build systems to connect the entire enterprise or separate islands
of applications? Should the organization extend its infrastructure outside its boundaries to
link to customers or suppliers? There is no one right answer to each of these questions
(see Allen and Boynton, 1991). Moreover, business needs are constantly changing, which
requires the IT architecture to be reassessed continually (Feeny and Willcocks, 1998).

Creating the information architecture and IT infrastructure for a digital firm is an

especially formidable task. Most companies are crippled by fragmented and incompatible
computer hardware, software, telecommunications networks, and information systems
that prevent information from flowing freely between different parts of the organization.
Although Internet standards are solving some of these connectivity problems, creating
data and computing platforms that span the enterprise—and, increasingly, link the
enterprise to external business partners—is rarely as seamless as promised. Many
organizations are still struggling to integrate their islands of information and technology
into a coherent architecture. Chapters 6 through 9 provide more detail on information
architecture and IT infrastructure issues.

4. The Information Systems Investment Challenge: How can organizations determine

the business value of information systems? A major problem raised by the
development of powerful, inexpensive computers involves not technology but
management and organizations. It's one thing to use information technology to design,
produce, deliver, and maintain new products. It's another thing to make money doing it.
How can organizations obtain a sizable payoff from their investment in information
systems?

Engineering massive organizational and system changes in the hope of positioning a firm
strategically is complicated and expensive. Senior management can be expected to ask
these questions: Are we receiving the kind of return on investment from our systems that
we should be? Do our competitors get more? Understanding the costs and benefits of
building a single system is difficult enough; it is daunting to consider whether the entire
systems effort is "worth it." Imagine, then, how a senior executive must think when
presented with a major transformation in information architecture and IT infrastructure—
a bold venture in organizational change costing tens of millions of dollars and taking
many years.

The Responsibility and Control Challenge: How can organizations ensure that their
information systems are used in an ethically and socially responsible manner? How can we
design information systems that people can control and understand? Although information
systems have provided enormous benefits and efficiencies, they have also created new
problems and challenges of which managers should be aware

The social implictions of information technology

Information Technology has already been blamed, among other things for:

 creating unemployment
 deskilling jobs
 reducing the ability of governments to control their economies
 invading privacy
 increasing delinquency in children
 manipulation of the 'truth'
 pornography

It is about to be blamed for, if it has not already:

 destroying cities
 threatening the countryside
 terrorism
 anarchy
 destroying culture
 destabilising the state and more.............

Other technologies in the past have been accused of similar impacts - the car and television in
particular - though perhaps not as early in their development. It may be the very experience of
the apparent disbenefits associated with these and other technologies that have alerted us to
the problems that any technology creates.

Some have even suggested that if we had known beforehand the problems that the car has
created we would not have developed it. But then we would have been without its obvious
benefits too.