London School of Business and Finance

Managing Information Critical evaluation of relevant issues

Managing Information
Report

Lev Voslinsky A4038824 MBA 7A

Managing Information Critical evaluation of relevant issues

Executive summery
This is a report that summarise the estimation of development and implementation of information system project for a newly established medium sized consultancy firm that is going to offer accountancy and management solutions in the UK market. Information system was defined and different components were described and evaluated. Environmental and industrial analysis was carried out using PESTEL framework and Porters five forces model. Information system for that given firm was recommendation, including evaluation of importance of organisational, technical and managerial aspects. Implementation suggestions were provided including security threats analysis and solutions propositions, as well as ethical concerns that may arise due to incorporation of information system in organisation activities were noted and possible solution suggested. With all points mentioned in this report taken into consideration there is no reason that should stop Information System from be successfully implemented and boost organisation performance.

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

Table of Contents
Executive summery .................................................................................... 2 Table of figures .......................................................................................... 5 Introduction .............................................................................................. 6 IS functional view.................................................................................... 7 IS constituency view ................................................................................ 7 Current situation analysis ............................................................................ 9 Environment ........................................................................................... 9 Conclusion ........................................................................................... 9 Industry ................................................................................................. 9 New entrants ..................................................................................... 10 Suppliers power ................................................................................. 10 Customer power ................................................................................. 10 Substitute threat ................................................................................ 10 Competitive rivalry ............................................................................. 10 Conclusion ......................................................................................... 10 IS recommendation .................................................................................. 11 Business processes ................................................................................ 11 External stakeholders influence ............................................................... 11 Implications and Conclusion ................................................................... 12 IS implementation ................................................................................... 12 Security threats ....................................................................................... 13 Security threats control recommendations ................................................ 13 Ethical concerns ....................................................................................... 14 Ethical issues recommendations .............................................................. 14 Conclusion .............................................................................................. 14 Bibliography ............................................................................................ 16 Appendix 1 PESTEL ................................................................................ 19 Political ............................................................................................. 19 Economic........................................................................................... 19 Social................................................................................................ 19 Technological ..................................................................................... 19 Environmental.................................................................................... 20 Legal ................................................................................................ 20

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

Table of figures
Figure 1 - Shaping IS (Laudon and Laudon , 2009: 13-15) .............................. 6 Figure 2 - Organisational IS types relations ................................................... 8 Figure 2. - Porter five forces model (Porter, 1985) ......................................... 9

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

Introduction
There is no exact definition of the term IS. While some define IS as a subdivision of Information technology discipline that bridges between business and computer science (Hoganson, 2001) others say that its the general study of information processing within organizations. (Avison and Fitzgerald, 1991) Information systems always exist, however today, due to high level of ICT (information and communication technologies) penetration to our day-to-day life we usually refer to IS as computer-based information systems. It is hard to imagine today what life before computers age was. Every aspect of our life was touched by new technology. The face of organisations and the way businesses are running have changed dramatically since the introduction of new information and communication technologies. IS developed as a response to the increasing organisations needs of storing, processing and managing high volumes of data. The initial approach to information systems was as to a data process tool, however with development of technology and deeper understanding of IS implementation, it is seen today as integrated solution of technology, management, organizational and social relationships that represent interaction between the technological and social aspects of an organisation. (Avison and Elliot, 2006) Organisations implement IS in order to improve the effectiveness and efficiency of operations, develop new products, business procedures, attain customer loyalty and reach and gain competitive advantage over competitors by acquiring a flexible and supportive system for storage and distribution of information and knowledge within the organisation and external stakeholders. Capabilities of the information system and characteristics of the organization, its structure, work systems, people, and development and implementation methodologies together determine the extent to which that purpose is achieved. (Silver, Markus and Beath, 1995) A complete understanding of all the factors that shape IS is needed in order to achieve its successful implementation and extraction of maximum benefits to the firm.

Organisation

People IS

Technology

Figure 1 - Shaping IS (Laudon and Laudon , 2009: 13-15)

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues However one must note that while all three shape IS, this is a two-way road. The organisation itself, its people, structure and strategy will be affected by technology available and implemented. The technology development path will be directed by businesses requirements and needs. People culture is shaped based on the new technology available internet and mobile communication penetration, computerization and high-tech gadgets are contributing to globalization and changing the face of the planet and make it flat again. (Freidman, 2005)

IS functional view
The functional perspective will describe different system by their functionality, i.e. sales, manufacturing, accounting etc. This is the most straight-forward look at IS systems and is very useful for understanding how the specific system helps the firm to achieve its goals.

IS constituency view
However in order to understand how this specific system helps managers at each level manage the organisation a consistent perspective will suit better. Four types of IS could be defined: Transaction Processing System (TPS) keeps track of the information as a result of basic organisation activities, i.e. manufacturing processes, money transfers, inventory management or HR records tracking. They process information at operational level and intercommunicate with other TPSs or higher hierarchy IS, both inside and outside the company. Management Information Systems (MIS) help middle-management with monitoring, controlling and other administrative activities. It usually will use TPS output information as inputs and summarise it as well as provide reports that will answer pre-defined routine question. Decision-Support Systems (DSS) support non-routine decision making middle-management activities. The sophisticated mathematical or model-driven algorithm in addition to internal information from TPS, MIS and external sources will help managers to solve unique and non-trivial problems and make the business decision making process easier and more scientific rather than intuitive. Executive Support System (ESS) will address strategic issues and long term trends while relying on internal; based on TPS, MIS and DSS outputs; and external information and support judgement and executive managerial decisions.

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

ESS

DSS

MIS

TPS
Figure 2 - Organisational IS types relations

In order to achieve best results all systems should be connected and supporting each other. While the top layer system will receive data as an input it will provide set of rules and requests to the bottom layer systems in return. An additional IS type called Office Information System (OIS) can be seen either as a support to all the named above or as a stand-alone system. Its main tasks are support and help coordinate knowledge work in an office environment. That will include e-mail and other communication systems, scheduling systems, word processing etc. Dealing with set of dispersed systems may be a challenge due to problems of maintenance and interconnection. Therefore a single global solution approach might be taken. The implementation on one Enterprise Resource Planning system (ERP) that will provide combined solution to all enterprise needs might be a good choice. It will allow easier maintenance and cross-functional communication while providing information flow through entire organisation. Supply chain management (SCM), Knowledge Management (KM) or Customer Relationship Management (CRM) systems are a few to name. Based on (Laudon and Laudon , 2009: 54-65) While some businesses use IS as set of tools to ease on their day-to-day operational and managerial tasks, i.e. personnel monitoring and control tools, accounting software and marketing customer access media, therefor using IS only for automation or rationalization of their processes, others, like TATA Consulting, E-bay, Toyota and Amazon, make IS their core business and a source of their competitive advantage completely adapting their structure, processes, organisational culture and strategy to comply with IS implemented.

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

Current situation analysis

Environment
The macro-environment is influencing company in the range of possible ways. A comprehensive evaluation is needed to cover all the aspects influencing. PESTEL framework provides such an approach. (Thomas, 2007) Key drivers for change, the factors that have the strongest influence on the current and future strategy, should be brought into account in order not to drown into too many details. Despite the fact there are several different frameworks to analyse the macroenvironment (e.g. PEST or STEEP) PESTEL framework provide a broader view of environment and more comprehensive list of influences on the organisation strategy. (Johnson, Scholes and Whittington, 2011: 50-51) See Appendix 1 PESTEL for detailed analysis.

Conclusion
As it can be seen Legal, Political and Economic aspects alongside with Social networking will be playing the key leverage factors to influence the industry trends and organisation strategy. That must be noted that despite providing a broad view on the environmental factors influencing the industry and organisation strategy, PESTEL analysis doesnt provide any quantitative measures and due to the large number of aspects leaves a high level of uncertainty.

Industry
An attractiveness of industry, according to Porter (1985), is the one that present high profits opportunities with low pressure from buyers, suppliers and low competition. Porters five forces framework helps analyse the industry as well as hints on the set of actions needed to be taken in order to improve current situation. (Porter, 1985) (Johnson, Scholes and Whittington, 2011: 54-65)

Potential new entrants

Supliers bargaining power

Copetitive rivalry

Customer bargaining power

Substitute threat
Figure 3. - Porter five forces model (Porter, 1985)

By Voslinsky Lev ID# A4038824

Managing Information Critical evaluation of relevant issues

New entrants
There are no limitations and no governmental legislation that increase the entry barriers. However most of firms will require certain accreditations in order to meet professional requirements for accounting and business management. No high capital investment, intellectual property or specific physical resources are needed to start a new consultancy firm. High perceived financial benefits and recent layoffs of accounting and management professionals increased number of self-employed or seeking for consultancy job. The networking factor is the one that will determine whether the firm will get the job or not. Therefore new unknown companies will need to prove their value and develop relationship with customers that will allow them to succeed. All that said above set the new entrants threat on a medium-high level.

Suppliers power
Suppliers have minimal effect on consulting firm. Vast variety of office, accounting and managerial aid supplies and high level of interconnectivity and low switching costs limit the suppliers bargaining power to low level.

Customer power
With high range of different firms seeking for consultancy services there is a low customer bargaining power.

Substitute threat
Due to a large number of different accounting and managerial aid packages available, high number of educated employees are able to self-serve the company. In an effort to control costs and knowledge more and more companies are establishing internal consulting teams and groups. A fierce competition from those substitution solutions will shape the consultancy industry in a near future.

Competitive rivalry
As a result of 2009 business shrinkage a legion of well educated, experienced and well-connected professionals were laid-off or took an early retirement opportunities and chose to turn to a consultancy jobs. Many small and medium sized firms emerged in 2010-2011. Many niche oriented consultancies emerge in last few years, while small companies grow and large players start to target medium-sized businesses as well. A level of rivalry among existing players is high.

Conclusion
While providing a good general framework to evaluate industry there are some limitations exist to the Porter's 5 forces model. Everything is constantly changing, but the 5 forces model provides a snapshot of the selected industry or sector at the given time, completely ignoring trends and developments or historical data. The accurate level of segmentation is hard to achieve and therefore provides too narrow view of the industry while exclude the factor of By Voslinsky Lev ID# A4038824

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Managing Information Critical evaluation of relevant issues complementary products or too wide of a view making it hard to focus on the key factors. This approach is totally ignoring the human and cultural factors as well as social and political development and industry life cycle position. Being a historically high financially rewarding industry, consultancy has suffered a heavy blow due to economic downturns in 2009 and mixed prediction for 2011-2012 business growth. (IMF World Economic Outlook Update, 2011) While the fee shrinkage will reduce profit margins and reduce financial attractiveness to weak and new players this may reduce risk for the rest. (Plunkett Research Ltd, Introduction to the Consulting Industry, 2011) As more clients will be focusing on specific goals and direct profits from consulting services acquired the shift from the problem highlighting to problem solution approach will bring a competitive advantage to consultancy firm. The industry is providing a vast range of opportunities to grow due to low level of initial investment needed, low suppliers and customers bargaining power and high returns. However strong competition and low new players entry barriers as well as high risk of substitute products reduce the attractiveness of the industry.

IS recommendation
An information system strategy needs to be formulated in order to specify how the organization will acquire, deploy and support it IS. This strategy will aim to balance business needs, current and new available information systems as well as organisation internal and external stakeholders IS intercommunication and support.

Business processes
The main focus of IS in consultancy firm is to support all aspects of its value chain i.e. accountancy and managerial aid software, knowledge management solutions, communication and office support as well as intercommunication between internal and external stakeholders (customers, suppliers etc.) systems. A unify interconnected backbone infrastructure from one or small number of reliable big names suppliers approach should be prioritized over several diverse solutions from different brands and makers. Modular approach should be taken to interconnect different parts of IS providing flexibility, maintainability and reliability of entire system. Planning group should be formed that will consist of IT personnel, business management and end user representatives, e.g. the most experienced accountant, consultant etc.

External stakeholders influence

External stakeholders, including customers, competitors and government offices needs and information systems evaluation should be performed in order to define interfaces and estimate the best front-end software in order to allow high level of automation and compatibility of core business and external IS components.

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Managing Information Critical evaluation of relevant issues

Implications and Conclusion

While planning and designing IS for organisation, its routines, formal and informal power structure must be brought into consideration. Automation of existing processes and routines is the least risky but bring smaller benefit among all the IS implementations. While no drastic cultural or structural changes are needed, IS will be used only as a set of tools to ease on current tasks, e.g. calculation software or automated reports. However introduction of complete information and communication solution, a drastic change in culture and structure of organisation might be required in order to extract maximum benefits and successfully embed IS into organisation activities. By implementing IS, the low and middle management layers may be decimated therefore flattening the organisational structure. Higher employee empowerment level should be adopted. In order to use IS, staff will need to obtain new technical skills and behaviour paradigm must be changed. Control mechanism over IT hardware and software as well as applications available should be planned and enforced.

IS implementation
According to RBS case study (Currie and Willcocks, 1996) major topics that should be addressed when implementing new technology are: Allocation of sufficient resources and that includes budgets and HR Set objectives and goals that will align with corporate strategy and measure performance Develop and set rewards and punishment system Obtain senior management commitment to the project in order to lead and facilitate the changes Provide education and training to all staff, top to bottom of organisation, and develop a learning culture Asses and manage technical complexity

Most of the times, the manner of implementation will cause staff unrest and dissatisfaction more than the intent itself. (Mullins, 2010: 13) As one can see change process need to be carefully planned and engaged in a certain manner to minimise the damaging impact that this change can cause to the organisation performance. The culture needs to be adjusted first and the whole process will include lot of talk to make it right. (Kotter, 1996: 157) A learning processes need to be planned and placed in order to provide staff with proper tools to cope with new working environment. In order to minimise problems of adaptation it is very important to create an environment of trust and shared commitment as well as involve employees in actions and decisions that affect them. Two way communication and strong and supportive leadership of senior management are playing key roles in creating and facilitating these conditions.

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Managing Information Critical evaluation of relevant issues Staff should be communicated both the reasons for new system (Ziegler, 2011) as well as the benefits each one of them would get from using these systems. According to some studies (IT Cortex, n.d.)most of IT project fail due to communication and human factor as well as due to lack of sufficient planning and not because of the technological aspects. Therefore, while not providing the panacea for IS implementation projects, the chances to finish the project of IS implementation are much higher when appropriate planning and communication are enforced and exist. User and management participation and full commitment are the key to successful implementation of IS in organisation. The whole organisation must be sold on benefits of the project therefore increasing their motivation. Adequate two-way communications, rewards and punishment systems and employees empowerment will add to the effort to get all members of staff on the board of organisation transformation ship.

Security threats
As any IS system is providing the opportunity to all related parties to communicate, share data, information and knowledge, the risk of unauthorised access exists both from outside and from inside the organisation. Computer communications through open networks impose threats of identity theft, unauthorised access or damage to electronically stored data, i.e. viruses and other malicious software. As the external parties can impose threats to organisation, internal factors affect the information security as well. Unauthorised access to certain information from inside the organisation, spreading malicious software by employees or accidental removal or change of information stored by organisation could happen.

Security threats control recommendations

In order to fight those threats the security policies must be developed and implemented. Protection of information resources, physical security, access control and security functions must be regulated. Firewalls, antiviruses, VIP networks are the few tools available in the market to prevent unauthorised access and viruses penetration from outside the organisation. Strong encryption will prevent interception of communication by unauthorised third parties. Password protection, smart cards, RFID or biometrics or combinations of some or all of these will provide the physical access control and monitoring.

Administration and safekeeping of information, Disaster Recovery Systems and Business Continuity Planning will ensure fast recovery and continuity of business activities at event of disruption.
However as one wise man said you cant solve discipline with technology. People know that they should use long, random password, but according to many testimonials they simply dont (Ruska, 2009). They carry laptops they are not supposed to (Knight, 2000 ), leave unprotected files (O'Neill, 2009 ) open to the world whether due to laziness or lack of knowledge, send classified information (Brennan, 2004) etc. By Voslinsky Lev ID# A4038824

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Managing Information Critical evaluation of relevant issues Unless the proper audit is performed and adequate rewards and punishment system, with emphasising on punishment (Sean, 2011), is applied there is no point of spending efforts on high-tech solutions. Its all starts and ends at the user hands. Risk assessment, technological solution, frequent audits and basic disciple are the basics for successful security policy.

Ethical concerns
Ethical issues are raised with further penetration of IS in people life. With higher level of detailed information collected and higher ability of control and supervision where should we cross the line? With years passing and IT is introduced in every aspect of our life the legislation is gaining ground and less grey areas are left. Legal aspect provide some references however six points of consideration should provide a better referencing to what ethical and what is not. (Laudon and Laudon, 2007: 137)

Ethical issues recommendations

While it can be tempting to collect information about other members of staff and use it not only directly for business purposes but for sneaking and getting personal information it isnt ethical at all. A fine balance between privacy and monitoring productivity must be achieved. Extra care must be taken to collect and provide only business related information to all parties without violation of staff, clients of suppliers privacy. For instance when collecting statistics for employees activity the content of email wont be available for the line manager to check.

Conclusion
Introducing new IS into the company isnt an easy job however the benefits could be vast. Several underwater rocks should be avoided in order to set sail organisation ship to success. Careful internal needs and external stakeholder evaluation need to be carried out in order to achieve alignment between the needs of organisation and new IS. Workgroups of management, end users, customer reps and IT specialist should be all part of the solution. Assuming correct planning, two-way communication, education and coaching of the end user, proper structure and cultural adjustment and commitment of staff and management to the project the process of embedding IS into organisation could be smooth and relatively painless. Separating different IS modules implementation should simplify the scope of each project therefore increasing the chances for success. IS security policies should be developed and implemented with focus on end user discipline, alongside implementation of technical tools. By Voslinsky Lev ID# A4038824

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Managing Information Critical evaluation of relevant issues Ethical aspects of IS should be taken into consideration and respective solutions planned and embedded into systems abilities. With all these taken into consideration there is no real reason that should stop IS from be successfully implemented and boost organisation performance.

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Managing Information Critical evaluation of relevant issues

Bibliography
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Managing Information Critical evaluation of relevant issues ectronics%20Supplies%20RF%20Electronics%20Subsystem%20to%20TECOM [Aug 2011]. Johnson, G. (1988) 'Rethinking Incrementalism', Strategic Management Journal, vol. 9, January/February, pp. 75-91. Johnson, G., Scholes, K. and Whittington, R. (2005) Exploring Corporate Strategy, 7th edition, FT Prentice Hall. Johnson, G., Scholes, K. and Whittington, R. (2011) Exploring Strategy, text and cases, 9th edition, Harlow: FT Prentice Hall. Knight, W. (2000 ) MI5 laptop containing top secret data stolen, 24 March, [Online], Available: http://www.zdnet.co.uk/news/it-strategy/2000/03/24/mi5laptop-containing-top-secret-data-stolen-2077931/ [Sep 2011]. Kotter, J.P. (1996) Leading Change, Boston: Harvar Business School Press. Kotter, J.P. and Cohen, D.S. (2002) The Heart of Change, Harvard Business School. Kotter, J. and Schlesinger, L. (1979) 'Choosing strategies for change', Harvard Business Review, vol. 57, pp. 106-114. KPMG (2010) KPMG's Guide to International Business Location, Special Report: Focus on Tax, [Online], Available: http://www.competitivealternatives.com/highlights/taxfocus.aspx [Sep 2011]. Laudon, K.C. and Laudon, J.P. (2007) Management Information Systems Managing the Digital Firm, 10th edition, Upper Saddle River: Pearson - Prentice Hall. Laudon, J.P. and Laudon , C. (2009) Essentials of Management Information Systems, 8th edition, Upper Saddle River,NJ: Pearson Prentice Hall. Lewin, K. (1951) Field Theory in Social Scienc, New York: Harper and Row. McLean and Marshall, J. (1985) Exploring Organisation Culture as a Route to Organisational Change. Monaghan, (2011) OECD warns of double-dip threat in UK and cuts forecasts, Sep, [Online], Available: http://www.telegraph.co.uk/finance/financialcrisis/8749436/OECD-warns-ofdouble-dip-threat-in-UK-and-cuts-forecasts.html [Sep 2011]. Mullins, L.J. (2010) Management & Organisational Behaviour, 9th edition, Harlow: Pearson Education Limited. O'Neill, M. (2009 ) How To Find Unprotected Website Directories & Get Interesting Files, 13 April , [Online], Available: http://www.makeuseof.com/tag/how-to-find-unprotected-website-directoriesget-interesting-files/ [Sep 2011]. Plunkett Research Ltd, Introduction to the Consulting Industry (2011), [Online], Available: http://www.plunkettresearch.com/consulting%20market%20research/industry% 20overview [Sep 2011]. Porter, M.E. (1985) Competitive Advantage. Ceating and Sustaining Superior Performance, New York: Free Press. By Voslinsky Lev ID# A4038824

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Managing Information Critical evaluation of relevant issues Ruska, J. (2009) Most common passwords list from 3 databases, 28 February , [Online], Available: http://www.whatsmypass.com/the-top-500-worstpasswords-of-all-time [Sep 2011]. Sean, S. (2011) Sticks Work Better Than Carrots in Promoting Ethical Behavior, 1 March, [Online], Available: http://www.bnet.com/blog/harvard/sticks-workbetter-than-carrots-in-promoting-ethical-behavior/10436 [Sep 2011]. Silver, M.S., Markus, M.L. and Beath, C.M. (1995) 'The Informatio Technology Interaction Model: A Foundation for the MBA Core Course', MIS Quaterly, vol. 13, no. 3, Sep, pp. 361-390. Thomas, H. (2007) 'An analysis of the environment and competitive dynamics of management education', Jornal of Management Development, vol. 26, pp. 9-21. Ziegler, (2011) Nokia CEO Stephen Elop rallies troops in brutally honest 'burning platform' memo?, 8 Feb , [Online], Available: http://www.engadget.com/2011/02/08/nokia-ceo-stephen-elop-rallies-troopsin-brutally-honest-burnin/ [Aug 2011].

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Managing Information Critical evaluation of relevant issues

Appendix 1 PESTEL
Political
The degree of government intervention in the economy will define the political factors of influence on organisation. Improving UK positions on TTI rank from sixth position in 2008 to number five in 2010 KPMG report showing a positive trend towards enhancing UK attractiveness as tax friendly environment therefor providing a factor for growing number of businesses and current firms expansion. (KPMG, 2010)

Economic
According to OECD prediction the UK economy would come to a virtual halt in the second half of 2011. (Monaghan, 2011) U.S. and much of Europe government budgets were under tremendous pressure in 2011, revealing large deficits and reduced tax revenues. This has been particularly hard on some consulting sectors, since governmental agencies are prime clients for consultancies. (Plunkett Research Ltd, Introduction to the Consulting Industry, 2011) (Giles and Jones, 2011) An economy recession and banking crisis will reduce the capital available to businesses to invest in new technologies and hiring of consultant firms, however it will increase the trend to look for more efficient and cost saving managerial solution therefore providing the boost to consultancy business.

Social
Larger numbers of young managers at high managerial positions and their exposure to theories and understanding the benefits of outsourcing accountancy and managerial consultancy jobs to external partner should benefit the consultancy market. However this factor wont play a key role in influencing the industry and the company. Developing a social networking is essential in this type of business due to high dependency of the The growing globalization of businesses leads to a high level of globalization and social diversification in consulting companies. Having multi-ethnic, multilingual employees is an essence to successful customer relations.

Technological
New IT technologies present opportunities for wider customer reach and reduced costs of operations but also reduce entrance barriers to new players entering the industry due to high level of imitability of processes. Further development of e-communications that include VoIP and video conferencing are broadening business horizons as well as reduce operations costs. However new technology imply certain limitation on recruitment and training programs in order to gain staff that will be able to work with these tools.

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Managing Information Critical evaluation of relevant issues

Environmental
Environmental factors wont play key influence roles on this industry.

Legal
Rapidly changing governmental regulations will create a blue ocean for consultancy firms that can show companies, particularly in financial services, how to navigate in these constantly changing waters.

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