INFORMATION TECHNOLOGY FOR ENTERPRISE COMPETITIVE
ADVANTAGE
ARIZONA STATE UNIVERSITY
CIS 235 - INTRODUCTION TO INFORMATION SYSTEMS
WEEK 1
PURPOSE OF DISCUSSION
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Discussed the importance of understanding the Corporate Environment
❖
Explaining the company's competitive advantage
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Discuss the role of communication networks in the company
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Explaining Information Technology as a key corporate asset
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Discussed Supply Chain Management and Integrated Corporate Information systems.
Environment Company:
In the business world, the existence of information systems is one of the components
that cannot be separated from the activities of the company itself. These two domains have a
fairly high level of dependence in shaping the characteristics of the business world.
Management in describing the relationship between the two aspects of the company as a
drive for business information systems, while the company's information system will be the
determinant (enabler) of the company's performance. In this case there is a perspective that
sees that companies and information systems are in the micro environment of the company,
as well as a macro part of the business world as a whole. Role society, government, scientific
and technological progress, community needs, globalization are some examples of macro
components whose behavior cannot be controlled by a company. The two perspectives above
must be studied and analyzed in order to provide an overview of the existence of the micro
and macro environment in which the company's information system operates, furthermore it
can help company policy makers in deciding what strategies are appropriate to implement in
controlling and monitoring business components. There is a framework that can see where
the actual position of information systems in the micro and macro framework of the company
(Cash, 2005).
A company has the components needed to run its business operations such as human
resources, infrastructure, organizational structure, processes, organizational costs and so on.
While the information system consists of components supporting the company to provide
information needed by decision makers when carrying out company operations.
Information systems are formed from components of hardware, software, and human
devices (brainware). In management theory to run a company, business strategy and
information system strategy must support each other, so as to create a competitive advantage
for the company concerned. When viewed from a macro perspective, outside the company
there are two domains, namely competing companies and their information systems which
have the same components. In addition, there are components of the government as a
formulator of company policies and regulations, society and so on. These external company
components directly or indirectly affect the internal company components. In terms of
information systems, the external factor is the development of technology, both hardware and
software.
Some things that need to be analyzed further are:
a)
A company can only control components of the internal domain, both those related to
company operations and information systems. The rest of the external environment is
completely out of the company's control. This means that the competition that occurs
between companies actually utilizes the resources owned so as to produce better company
products and services "affordable price, good quality, can be served on time" (Cheaper,
Better and faster) from competitors who are beyond the reach of the company. In this case it
is clear that the products and services offered are the link between the internal and external
components of the company. If the company is in a perfect competition environment, no
single company can influence the external components.
In fact, external components greatly affect the internal components of the
company such as government policies in setting the Corporate Budget which integrally affect
changes in corporate strategy. The public as users of products or services is strongly
influenced by trends that are easily changing from time to time. These changes can occur
quickly due to the opening of global communication and information flows from abroad.
Intense competition between companies that present excellent products or services supported
by adequate facilities and infrastructure tends to create an environment that changes rapidly
and dynamically. Therefore, every company is required to quickly adapt to its external
environment. Some management experts state that the key to future business success lies not
Technolo
gy
only in the competitive advantage of the products and services produced, but lies in the
ability to quickly adapt to dynamic environmental changes.
a) Of the four existing quadrants, the fastest changing is the "Information System in
the External Domain" quadrant. Because almost all information systems describe
the rapid progress of information technology with exponential graphs. This
situation will encourage external companies and internal information systems to
also change, although not exponentially. In this information age, directly or
indirectly, advances in information technology will have a significant impact on
entities in operating companies.
b) If the predictions of experts in the field of information technology for the future
are anything to go by, a massive revolution in human life will take place. The
information age followed by the biotechnology age will result in a macro
environment that is completely different from the one that exists today. And on a
micro level, the impact will affect the lives of each individual in socializing and
behaving.
2.1
Competitive Advantage Company
Many opinions say that information technology is one of the weapons of competition,
this is no doubt because currently information technology has become one of the tools to
improve the efficiency of the company's operational activities. Almost every company has
seen a phenomenon where companies that are the criteria of choice of the public today are
companies that have very adequate information technology devices in various operational
activities of the company, because one element of public judgment about the quality of the
company today can be seen from the ability of a company to present products / services
including using information technology. For example, one travel agency company
collaborates with banks to use a credit card as a means of payment for services offered from
the travel agency company. At least information technology that is useful for the business
world can present its activities more quickly and has added value, so that the business world
will produce outputs that have high sellability.
To identify the competitiveness of marketable and sellable companies, there are several
strengths that must be a priority of attention for company policy makers because of the
existence of other company competitors who offensively and defensively use information
technology.
A company that already has a certain market segment is constantly improving the quality
of its services so that the products/services presented are more competitive. It is undeniable
that the rapid development of information technology has not only changed the way people
communicate and work, but furthermore has created a new competitive landscape Michael
Porter, 1995, in Strategic Management.
1.
Rivalry Among Existing Institutions; The first threat usually comes from old competitors,
namely a collection of companies (industries) that offer relatively the same
products/services in the eyes of consumers. In principle, the strategy carried out against
these same companies is how to create products/services that are affordable, of good
quality, and served on time, the threat here is if competitors have used information
technology to present products/services that are Cheaper, Better, and more affordable or
Faster. Companies that have utilized information technology will have two main activity
domains, namely: (a) front office where the use of information technology in relation to
the process of presentation and direct services, such as companies through Electronic
Commerce (e-commerce), Payment transactions via Internet Banking, requests for
product / service information through the Call Center, (b). Back Office, the use of
information technology to improve efficiency such as the use of intranets for
communication and collaboration, the development of paperless office systems, the use
of inter-company executive information systems, and decision support systems.
2.
Threat of New Entrant; The arrival of new competitors in the industry is the second type
of threat for every company. In the era of information globalization, new companies are
companies that physically come and are in the environment (local, regional, or national).
The company is located in another country and its information power can offer
products/services through the Internet communication channel, for example, a company
that offers products/services to potential consumers around the world with a multi-level
purchasing system via the internet with a Credit Card payment instrument. If it turns out
to be more affordable for a number of consumers, consumers in many geographic areas
will soon move.
3.
Threat of Substitute', this threat comes from the ability of information technology to
create substitute products/services. For example, an internet network provider service
from a post-paid telecommunications service company (paid after the customer uses the
service) through the telephone network owned by the customer, because many internet
service users with high mobility, and do not have a wired telephone network, then the
internet services needed can not only be accessed at home, then the telecommunications
service provider company provides a tool called an internet stick (in the form of a
flashdisk) flexibly carried everywhere and customers can access the internet anywhere
and anytime. Although the telecommunications service providers must provide a very
wide network to remote areas at the sub-district level, which is currently done by PT
Telkomsel and PT Indosat as the largest telecommunications service providers in
Indonesia.
4.
Bargaining Power of Suppliers; if the previous threat came directly from the competing
company in question, then the fourth threat comes from the partner component which is a
supplier, in this case the suppliers of raw materials, or human resources, to create quality
products and services of the company, if the supplier breaks the relationship or no longer
chooses the company as a partner, then the company in question will not survey and will
even experience a decrease in production and will eventually go bankrupt. Therefore, a
company that wants to maintain its existence must be oriented towards its suppliers to
products/services that are really needed by the community (Cheaper, Better and faster).
5.
Bargaining Power Of Buyer', the next threat component comes from (the community) or
potential customers of the company, potential customers have much greater power in
determining the type and quality of products/services offered. This power easily
increases, due to the following factors:
a)
The era of globalization has opened the geographical boundaries of the country so
that similar products/services and substitute products/services offered will flood the
local market, so that people as consumers will choose the best products/services
among the products/services offered.
b)
In principle, the products/services offered by multinational companies are usually
better than local products/services, thus directly raising the standard of
products/services expected by the community as consumers.
c)
The enactment of laws that effectively protect consumers (users of
products/services), from the behavior of companies that make mistakes in the
transaction process, such companies will face judicial institutions.
d)
The growing needs of product/service users are in line with new challenges in the
business world, especially the rapid development of information technology.
Under these circumstances, every company that wants to maintain its existence must
really try to win the competition by reaching the number of consumers through various
strategies, such as increasing capabilities in mastering information technology according to
the terms "Cheaper, Better and Faster".
Every company has an operational plan that is prepared and revised regularly. The plan
is known as a work plan, which basically outlines the company's strategy and limited
resources, in the process of achieving the company's vision and mission. The strategy not
only includes a global description of the things to be achieved in the long term, but includes a
summary of planning and development of resources owned such as capital resources, human
resources, and so on.
According to Indrajit (2011: ) management information system strategy is a subset of a
company's work plan, because the role of information systems is considered very critical in
encouraging the survival of a company. There are three main pillars that must be considered
in developing the strategy, namely;
First, the information system strategy (IS Strategy), the main thing that must be
considered carefully is how to define the need for a company's management information
system in general, because every company is a company.
The company has unique information needs, which are not only limited to the types
and characteristics of information, but further concern the relevance of the information
produced, the speed of information flow from one part to another in a company, the quality of
information accuracy, the target economic value of company information obtained, the cost
limits that must be incurred in processing company information, and the structure of the
company as an information user. To ensure that information can flow properly, a company
needs to develop a company management information system that involves internal and
external components of the company to ensure effective and quality information flow. The
main component needed to produce an effective and quality corporate management
information system is the availability of information technology supported by human
resources capable of operating it.
Secondly, the need for an information technology strategy (IT strategy) in a company
is a certain risk that will be borne in connection with the selection of one particular
information technology. The risks to be faced include:
a)
The development of information technology grows and develops exponentially so that the age
of the technology used is very short.
b)
The large selection of information technology sellers with various advantages and
disadvantages of quality and service.
c)
This technological system consists of many components that are independent and at the same
time have dependencies with other components.
d)
Information Technology Infrastructure from various angles of approach, for example as a cost
center, profit center, or service center, which has different ways of handling.
e)
Information technology that is built must be able to significantly answer the information needs
defined in the information systems strategy while still considering the limitations of the
company (for example, investment costs for the procurement of company facilities and
infrastructure and human resources).
Third, the information system strategy (IS Strategy) and information technology
strategy (IT Strategy) in the company can be well organized, but the question will arise who
will implement it. In this case, it will require an information management strategy (IM
Strategy) to outline the target of establishing a reliable corporate management information
system by utilizing information technology that can be operationalized within the company,
both in the long term and in the short term in line with the company's future growth.
Information Systems Strategy (IS Strategy) emphasizes more on the demand side of
companies that require corporate management information systems to be able to ensure the
creation of effective and quality information flow. In addition, it must emphasize the
relationship between information and the company's overall operational needs. Information
technology strategy (IT Strategy) in this case is on the supply side that will provide
information technology that suits the needs of the company, and emphasizes technology that
can be owned and developed by each company. While the Information Management Strategy
(IM Strategy) in order to provide an overview of the ways that must be taken so that the
target development and implementation of the company's management information system is
not limited to discourse, but becomes a reality and is oriented towards management
techniques that will be used by each company.
2.2
The Role of Communication Networks in Corporate
One of the facilities offered by information technology in a company is the
establishment of a communication network between companies to improve efficiency and
effectiveness. The phenomenon of cooperation between companies is working together to
face a better company. There are three types of networks that can be formed in an
intercompany communication network, namely intranet, internet and extranet.
Inter-organizational system (IOS) will be formed, if two or more company organizations
cooperate in the use of information technology. The phenomenon that has emerged lately is
inseparable from advances in information technology that offer various types of electronic-
based services. Integrally there are three types of systems offered to companies to implement
IOS, namely:
a)
Intranet, an internal corporate network that connects geographically separated
headquarters and branch offices, both local and regional.
b)
Internet, a public computer network that has the potential to connect companies with
potential consumers or customers of the company.
c)
Extranet, a network built as a means of communication between supporting companies,
such as departments within the company, community, government, competitors and so
on.
Companies interested in IOS have popular underlying reasons, namely:
1.
New Program; The purpose of cooperation between companies is to produce
products/services that cannot be produced by the company if it stands alone (new line of
operation).
2.
New Service; In addition to the company's physical service facilities, new services may also
be offered by collaborating companies. For example, a travel agency company in
collaboration with a company insurance, banking, and airline companies that offer
products/services to prospective passengers with insurance facilities, ATM cards, and
discount cards from airline companies.
3.
Efficiency; The reason for holding cooperation between companies is for efficiency (the
implementation of cheaper and faster processes). efficiency is the relationship between input
and output, efficiency is a measure of whether the use of goods and services purchased and
used by government organizations to achieve the objectives of government organizations can
achieve certain benefits. Efficiency also contains several meanings, among others:
a)
Efficiency in the output sector is explained by the input-output concept.
b)
Efficiency in the community service sector is an activity carried out with the minimum
possible sacrifice; or in other words, an activity has been carried out efficiently if the
implementation of the work has achieved the target at the lowest cost or with minimal
costs obtained the desired results.
c)
The efficiency of local government administration can be achieved by paying attention
to aspects of relationships and work procedures between local government agencies by
utilizing the potential and diversity of a region.
The determinants of efficiency are:
a)
Work execution technology factors.
b)
The organizational structure factor is a stable arrangement of positions, both structural
and functional.
c)
Human resource factors such as labor, work ability, as well as physical resources such
as work equipment, workplace and financial funds.
d)
Support factors to the apparatus and its implementation, both leaders and the
community.
e)
The leadership factor in the sense of the ability to combine the four factors into an
efficient and effective effort to achieve the intended goals.
For example, airline companies, hotels, travel agencies and tourism services make
joint promotional programs abroad, because the program if provided individually by each
company costs more. If provided jointly, the cost will be cheaper and the results will be more
optimal. As an example of a tourism management information system for travel services,
both for local and foreign tourists, a number of website addresses are provided that are easily
accessible at public service places, such as hotels, travel agency companies, banks, which
provide information on tourist destinations, local, national and international, addresses of
hotels or inns, ATM facilities, restaurants or local traditional restaurants and so on. So as to
facilitate people who need tourism services quickly and accurately.
4.
Relationship between Company and Community. Another form of cooperation occurs
between the company and the community, either as a labor provider or user of the company's
products/services. Currently, what is being promoted by many companies is Corporate Social
Responsibility (CSR), here are some definitions of CSR; (1) According to Kotler and Lee
(2005: 3) "Corporate Social Responsibility (CSR) is a commitment to improve community
well being through discretionary business practices and contributions of corporate
resources". Corporate Social Responsibility (CSR) is the ability to improve community
welfare by making contributions and business practices that are determined from corporate
resources. (2) Kotler and Lee (2012: 4) "Corporate Social Responsibility (CSR) as business
commitment to contribute to sustainable economic development, working with employees,
their quality of life". Corporate Social Responsibility (CSR) is a business commitment to
contribute to economic development that the company gets and can work with employees by
providing quality of life for them. (3) Corporate Social Responsibility (CSR) is operating a
business in a manner that meets or exceeds the ethical, legal, commercial and public
expectations that society has of business". Corporate Social Responsibility (CSR) is the
operation of a business in an ethical manner, obeying regulations, and in accordance with the
expectations of the public and the community concerned. (4) According to Griffin and Ebert
(2013: 68) Corporate Social Responsibility (corporate social responsibility) is the effort of a
business to balance its commitment to groups and individuals with the environment which
includes consumers, other businesses, employees, investors and local communities. (4) Post,
Lawrence, Weber (business and society, 2006: 56)
Corporate Social Responsibility or corporate social responsibility is that businesses
must demonstrate their commitment to customers, suppliers, investors, employees and the
local communities where they do business. (5) According to The World Business Council For
Sustainable Development (WBCSD) in fox, et al quoted by Abdul Rasyid Idris (2005) on
fajar online, namely: "CSR or corporate social responsibility is a business commitment to
contribute to sustainable economic development, working with company employees,
employee families, and local communities (local) in order to improve the quality of life.
From the various definitions of corporate social responsibility (corporate social
responsibility) above, basically have the same purpose and perception and can be concluded
that corporate social responsibility (corporate social responsibility) is an obligation and
commitment of a company or organization business that is associated with ethical and legal
values to integrate and care for consumers, company employees, employees' families,
stakeholders and local communities and contribute to sustainable economic development to
improve the quality of life.
5.
Outsourcing (using other services to help carry out company activities). Companies in
carrying out their activities are inseparable from various limitations, both limitations of
human resources, capital, and infrastructure. If the company does not have experts to repair /
maintain office equipment, it can use service companies in the field of maintenance of office
equipment such as computers and other equipment. Outsourcing is the process of
subcontracting to a third party or company. Many people and companies in the world have
been brought to outsourcing as a natural process. There are many benefits of outsourcing, for
example, it can minimize expenses, because there is no need to pay regular wages and
benefits, have access to specialized expertise and outsourced services for people who are
experts in the field, and can concentrate on business so there is no need to worry about other
things. In addition, it can save time, effort, money and infrastructure when using outsourced
services. The advantages of outsourcing consist of: (1) there is an increase in profits,
productivity, quality levels, business performance; (2) save on infrastructure and investment;
(3) can start working from anywhere if you have a good team (4) can deliver
products/services faster to customers with outsourcing partners who can deliver faster,
therefore there will be customer satisfaction when delivery is on time and of high quality, so
it will have a better relationship with customers. When using outsourced services, the work
of regular employees can be utilized better because they can take on more important work.
6.
Building the Company's Image (Image Building); there are still many reasons for deciding
to hold cooperation with both the same company and other companies that can support the
smooth running of the company's activities. One of them is how to improve the company's
image, especially in this era of globalization. People are very interested in becoming
customers of a company because it has implemented better information technology.
Understanding this paradigm, companies that want to build a better corporate image must
form a network of cooperation with other parties such as cooperating with e-commerce
companies to open E-mail or Web sites, so that with this network of cooperation the
company's image is getting better and always growing according to the demands of its
customers, in line with improving company performance in accordance with its competence.
7.
Joint Operation, operations carried out jointly between companies, which are basically
formed to improve the quality of service to consumers, for example a travel agency company
in collaboration with transportation and hotel or accommodation companies others to provide
tour packages, or other travel packages by providing various facilities, both means of
transportation, and accommodation in the country or abroad, this is done jointly between
travel agency companies, transportation provider companies (airlines, trains, tourism bus
providers) and accommodation provider companies (star hotels or other types of lodging).
8.
Strategic Alliances; this is a form of cooperation between several companies for general and
long-term goals. For example, an alliance between the Ministry of Manpower and several
overseas employment companies, to make cooperation in preparing workers who will be
employed abroad, through skills and language training.
2.3
Information Technology as a Key Asset Company
The speed of development of information technology is so high that it is very difficult for
companies to strategize in maintaining their existence in the long term. In this case, there are
three main keys that support information technology that can be used as a company asset in
the long term, namely:
1.
Human Resources; what is meant by Human Resources is the staff responsible for planning
and developing information technology in a company, so that these staff really have
responsibility for the operation of information technology, besides having to; have the
competence to solve the problems faced by the company on a daily basis, and always look for
opportunities in the use of information technology for the progress of the company. Through
a combination of activities such as training, work experience, managerial ability and quality
leadership, the information technology staff will have the required knowledge and
competence. The HR factors that staff the development of information technology in the
company must have three main dimensions, namely: (a). Technical expertise; the need for
human resources who have technical expertise in the company is needed, given the rapid
development of information technology that occurs. Technical expertise possessed by an
information technology staff, especially to always learn new things (b) knowledge of the
business world, usually obtained from the results of interactions between human resources
involved in the business world, and know the company's operational processes that use
information technology assistance and the possibility to increase added value for the
company (c) orientation to problem solving. This is not limited to traditional HR
characteristics that are only fixated on routine tasks. But more likely the HR needed is a
collection of people who always think critically and creatively in solving problems that occur
in the company.
2.
Technology. The entire information technology infrastructure, including hardware and
software, is used together in the company's operational processes, because it is the backbone
of the creation of an integrated system, at a relatively affordable cost, for operational costs,
development and maintenance costs. In the short, medium and long term the company must
develop its infrastructure, for example, the hardware is replaced from time to time (upgrade),
the application is installed / repeated for the latest version, the information system is adjusted
to the needs of the network available at the company concerned. This must be clearly defined
so that investment in the infrastructure of the company's development strategy will not be in
vain, and in the end the resulting information system will have the potential to be reliable,
accurate and consistent. A well-organized tool in the form of a blueprint will guide the
development of information technology that is built in line with the company's development
strategy.
3.
Relationship; what is meant in this case is the relationship between information technology
and company management as a decision maker. Establishing a relationship means sharing
risks and responsibilities. In realizing this relationship must be supported by the highest
leadership of the company so that it will be responsible for process-oriented information
technology applications not based on organizational functions. In addition, the highest
leadership of the company is expected to be able to decide on the priority scale of
development and implementation of information technology based on the scale of the
company's interests, and must be outlined in the blueprint of the company's management
information system planning and development guidelines.
In the article (Eko Indrajit, 2008) once Bill Gates said that in the future, various
resources related to business will become a common commodity, so that what will
distinguish one company from another is how management manages its information system.
In other words, he wanted to emphasize that the way a company manages its information will
be the key to the success and failure of a business in the modern era. The reasons underlying
this thought are as follows:
1. A customer-oriented business means that they (the customers) will take control of the
company's needs, where from their point of view they will always look for products and
services that are getting cheaper, better, and faster;
2. A company will be able to create and sell its products cheaper- better-faster if the
process of creating products or services within the company from day to day can be done
cheaper-better-faster;
3. The process of creating products or services can be done cheaper-better-faster if the
management of all resources needed in the company's production process meets the
cheaper-better-faster criteria;
4. Because these resources are essentially scattered in various places, both internal and
external to the company, and require time to procure (space and time constraints),
precise, detailed, and accurate information is needed to create a series of processes to
create the most optimal goods and services to meet the requirements of cheaper-better-
faster;
5. Assuming that all physical resources have the same quality, the competition between
companies lies in how management can penetrate the boundaries of space and time in
order to obtain data and information that will support the process of creating cheaper-
better-faster products so that information systems become the key to the company's
victory in competition.
2.4
Supply Chain Management and Corporate Information Systems Integrated
A.
Integrated Information System
The concept of Supply Chain Management shows the process of dependence between various
companies involved in a business system. The more companies involved in the chain, the
more complex the management strategy that needs to be built. If you look closely, in a
company there are three entity flows that must be managed properly, namely:
a)
The Flow of Products and Services;
b)
The Flow of Money; and
c)
The Flow of Documents.
It is interesting to note here that the essence of managing the three physical entities is
basically to manage the data and information attached to each of these entities and changes in
line with the flow of the three existing entities. Since the three flows of entities come from
the "upstream" to the "downstream" position of the supply chain, which may both be outside
of the relevant company, the management of existing data and information must be
interrelated and well integrated. In other words, the various companies in the process chain
must collaborate with each other in connecting the information systems owned by each
company so as to create a unified and well-integrated corporate information system.
What is meant by an integrated information system here is a system consisting of various
components of data, applications, and technology that are interrelated to support the
information needs of the company. There are two main tasks of the integrated information
system, respectively:
1)
Collecting, creating, and processing raw data derived from business transactions or
activities so that it becomes useful information and knowledge for stakeholders; and
2)
Store and disseminate the data, information, and knowledge to anyone who needs it,
especially internal management and staff, business partners, customers, and other
stakeholders outside the company.
Of the various components contained in an information system, the one that plays the
most role is application software. Various applications with various functionalities and
features have been offered in the market and have proven to be able to significantly boost the
company's performance. Major application brands such as SAP, Baan, Oracle, PeopleSoft,
and others have successfully elevated multi-national companies to the ranks of the world's
leading companies commonly displayed in Fortune 500 publications. Based on their
experience, the challenge of developing and implementing integrated corporate applications
that are classified as very expensive is how to create customer value that distinguishes them
from other business competitors. In this regard, the questions that often arise are as follows:
a)
Where will the trend of developing integrated corporate application systems go in the
future, especially in answering the challenges of the virtual business phenomenon (e-
business)?
b)
What is the role of an integrated application system in the future e-business architecture
system, especially related to the combination of physical value chain and virtual value
chain?
c)
How does the development of information technology affect decision makers in
allocating some of their financial resources to purchase, develop, and utilize the
technology for the company?
d)
What kind of corporate application system architecture is ideal for companies, especially
those that rely heavily on their supply chain management performance?
e)
How to integrate various different application systems both owned by the company
(internal) and between existing partner companies (external) and so on.
B.
Integrated Corporate Information System Architecture
Building a good integrated corporate information system architecture can start by looking at
who needs the technology. There are at least four people who need it:
1)
Consumers or customers (end-consumers), because it is actually because of them that a
business exists, so they definitely need various types of information related to the
products or services they buy and consume;
2)
Management, because they are the main drivers of the management of a company where
they need an information system that can be relied on to help them decide policies and
make quality strategic and tactical decisions;
3)
Staff, because at the operational level, they are the ones who daily deal directly with
product and service creation activities which of course require a lot of information as the
main resource; and
4)
Business partners, they are the suppliers of materials and other resources that the
company needs to operate to produce various products and services.
Each of the above stakeholders faces directly (front office) with one or more application
sub-systems that they need to fulfill their daily needs. Behind the application sub-systems are
various other types of applications that support (back office) the front office system so that
there is an integration of data, processes, and technology that are interrelated. Ravi Kalakota
and Marcia Robinson describe the interrelationship between the various sub-systems very
well in a large architectural framework of integrated corporate information systems. There
are 8 (eight) main components in an integrated corporate information system architecture:
1.
Selling Chain Management Information System - a sub-system that directly interacts with
customers so that they can easily access the products and services offered by the
company, especially those related to business transaction activities.
2.
Customer Relationship Management Information System - a sub-system that serves as a
means of effective communication between customers and the company, especially with
regard to the need for information and other forms of service in connection with the
products or services offered.
3.
Enterprise Resource Planning Information System - a sub-system that directly serves to
integrate the processes of creating products or services from the company, from the
ordering of raw materials and production facilities to the creation of finished products
ready to be offered to customers.
4.
Management Control Information System - a sub-system responsible for providing data
and information for decision-making purposes of company management and other
stakeholders, both strategic and tactical day-to-day decisions.
5.
Administrative Control Information System - a sub-system that has the main function of
supporting the implementation of the company's administrative processes (back office)
which is the backbone of communication between staff within the company.
6.
Supply Chain Management Information System - a sub-system that connects the
company's internal information system with the information systems owned by business
partners, especially suppliers of materials needed for the production process.
7.
Enterprise Applications Integration Information System - a sub-system that has the main
responsibility of integrating various sub-systems spread across various divisions or
functions in the company.
8.
Knowledge-Tone Applications Information System - a sub-system that focuses on
providing intelligence functions for companies that are the result of processing various
data and information spread across various database systems.
C.
Strategies for Building an Integrated Corporate Information System
Building an integrated corporate information system based on the existing architecture is
more of a journey than a destination, especially for management that is not accustomed to the
existence of technology infrastructure in the company. Even those who have long been
accustomed to utilizing information technology must always be prepared for the dynamic
changes that often occur in the business world, which of course will greatly affect the
development of existing integrated corporate information systems. In general, usually a
company will go through five stages of evolution in developing its information system:
1.
The Cross-Functional Business Unit which is the development of application modules
for certain business functions only, such as for the purposes of purchasing transactions,
preparing financial reports, printing employee pay slips, and so on.
2.
The Strategic Business Unit is the result of bringing together several management
functions within a particular division or business unit to assist management and staff in
achieving the objectives targeted at that division or business unit.
3.
The Integrated Enterprise is an integrated information system that integrates various
application modules owned by all divisions or business units within the company, which
is the embryo of an integrated corporate information system.
4.
The Extended Enterprise, which is a combination of an integrated corporate information
system that has been owned by an internal company with one or more sub-systems from
other companies or entities that are partners of the company.
5.
The Inter-Enterprise Community which is the result of various integrated relationships of
information systems between companies in the business community to form a very large
and wide network of information systems (internetworking).
