Over the years businesses have become extra reliant on technology and moreover throughout the current economic climate as there is a huge importance for a business to keep up to date technology. Competition is driving companies to become more efficient and effective through the purchases of IT developments. Gaining competitive advantage over rivals can play a major part in the use of information technology.
Based on the business structure, I have looked at the IT systems that are currently in place to see if there can be any alterations to help increase productivity and also business strategies. The following report goes through this.
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The firm is a large sized business based on the fact that there are over twenty offices throughout the UK with 50 partners and also 350 support and administration staff. The firm provides business and financial information to clients, so it is vital to have a system that holds the relevant information and in one secure place. The current system consists of standard office software which includes basic word processing, access to spreadsheets and also a range of specialist software. Some IT provision has been inherited; therefore creating a wide range of systems between sites and has consequently meant communication has been limited to email.
A SWOT analysis of the competitive environment is used so that the business can identify its position in the market place and recognise potential future strategic options.
Figure 1 – SWOT Analysis
The strengths of the business include factors such as the firm expanding quickly as per the success in various consultancy projects. This has meant the need for work to be required overseas and is to become a huge benefit to the business. Other strengths are that the business holds many offices across the UK, which will also provide future prospects.
The main weakness are that the business is running on a wide range of IT software and systems, meaning that all data will be scattered around the various sites and almost everything will be in a different format. These issues cause problems in terms of wanting or needing files that are saved on a different computer in another office. This also interferes with the lack of communication between sites. Communication can be shown in all different ways by means of voicemails, meetings, emails, and reports. In terms of this business, the current system has only allowed communication between sites to be via email. In a business of this size, poor communication can result in a lack of planning and also mistakes by employees that later cause complication to the business. This is a major problem as the ability to communicate is one of the biggest factors in business success and an essential part of a smoothly running business, for example business partners need to discuss future goals and tactics.
Another concern is the lack of corporate IT policies and procedures throughout the business, therefore adding to the communication problem. Policies & procedures are required when there is a need for consistency in day-to-day working activities. These procedures allow employees to understand their roles and provide the ability to work to the same rules when dealing with activities that are of importance to the business, such as the acquisition of hardware and software. There are different IT policies that are needed within the business environment and would include IT Administration, IT Asset Management, IT Training and Support, IT Security and Disaster Recovery and Software Development. Despite the fact that these offer a firm background, they do not provide the employees with any formal training.
While the strength of the business is growing, the opportunity for working overseas has become available, therefore creating many opportunities for future business and in turn more projects.
Although the existing system has provided the ability to grow, it is hugely noticeable that due to the quick expansion, the IT system needs to be reliable and accessible in different offices, which the current system is not. Therefore, the current system is not providing the best resource, so is not allowing the business to give the best possible service. So the need for a decent system is an important part in the running of this business. Even though a new system is needed as a matter of urgency, there can be several threats that come about due to the transition from the old system to the new system. These problems can be anything from teething problems to the loss of important data, so planning is important. Another possible threat is the competitors, as they can use their IT systems to gain advantage.
A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
The most significant model for assessing the nature of competition in a business is Michael Porter’s Five Forces Model. It shows how a firm can use these forces to obtain a sustainable competitive advantage. According to Porter and the model below, there are five areas of the external environment that affect the profitability of the firm. These include supplier power, buyer power, threat of new entrants, threat of substitutes and also Industry rivalry. These are used as an action plan to exploit the information system by investigating how IT might spawn new businesses.
The business can use their IT systems to gain competitive advantage using Porter’s five forces to do this.
Figure 2 – Porter’s Five Forces
To gain advantage through the threat of new entrants, the business must raise the level of competition by means of providing a unique service that no new entrant can compete against, thereby reducing its appeal.
To gain advantage through the threat of substitutes
To gain advantage through bargaining power of suppliers,
To gain advantage through bargaining power of customers,
To gain advantage through Intensity of Rivalry
Porter suggests that any firm can be profitable in any industry, it all depends on the strategy that the firm adopts. There are two significant strategies that any firm can follow to improve their profitability. The firms that fail are those that do not follow any strategy, or try to follow both. These firms get ‘stuck in the middle’.
The firm adopts a position trying to minimise all its expenses. It should set prices below other firms in the market. Ordinarily this would seriously constrain profit margins, but the second aspect of this is that the costs of providing the product are pushed down even further so even though the firm sells at a lower price it still makes more profit than other firms in the industry.
If the firm’s competitors are trying to undercut the prices of its products, there are two choices. Fight them in a price war to keep matching or undercutting their prices, or make the products different so that it doesn’t matter how low their prices go, there will still be some customers that prefer the goods that the firm produces. The price war has a tendency to reduce profits almost completely, so obviously a different product is the slightly more desirable method. This is why there are so many subtly different products on the supermarket shelves.
Also by using the PEST framework we can investigate many different factors in a firm’s macro environment that may be affected by a change in the way the business will be run following an upgrade in an Information System.
Figure 3 – PEST Analysis
Advantages of a New IT System
As with any investment and also every business, many advantages and disadvantages need to be considered to establish the best way forward. The intention of a new system is to provide a structured framework and a practical approach, providing major increases in processing speed, cheaper memory and improved storage capacity.
Other advantages and benefits of updating a system include:
More efficient administration
Reduced labour requirements
Superior financial decision making
Superior control over operations
Superior managerial decision makingAdded value to products (goods and services)
Disadvantages of a New IT System
However, every business must consider start-up costs when implementing an IT system. In addition to the cost of hardware and software, some technology dealers require businesses to purchase user licenses for each employee that will be operating the system. There are also other costs that need to be anticipated when introducing new software into a business; these can include the cost of training employees and maintenance costs and could therefore get expensive. Although the initial costs would be high, the possibility of greater competition is of a greater advantage.
Other difficulties include business opportunities being missed, lack of integration of systems, and also priorities are not based on business needs. Some or all of these can occur when the firm does not have the means to plan and manage information systems strategically.
Whilst the business works with data, a key concern is the security of the data, as the input of a new information system would enable the business to process more and more personal data. For instance, as more data is set up and the more information is exchanged, there becomes a greater risk that the information will be lost, corrupted or misused.
Information technology systems are vulnerable to security breaches, mainly when they are accessible via the Internet. If the correct measures are not in place, this data could be lost or misused.
The Data Protection Act says that:
“Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.”
Data Protection Act 1998
The statement above is taken from the Data Protection Act and is the seventh data protection principle. It means that you must have appropriate security to prevent the personal data held being accidentally or deliberately compromised. If data is not properly safeguarded, this can seriously damage a business’s reputation. To protect the business, it must make sure it has the right security, backed up by policies and procedures and also the use of reliable staff.
There are 50 partners and 350 support staff that require office software and a range of specialist software that include customer and project management packages. The business would help from a WAN (A wide area network), this is a computer network that covers a broad area and are all connected together. Their software packages could be held in a centralised place and customers details held on the central server so each employee has access to them and be synchronised, which creates a more secure system and better data integrity. A WAN could allow for an intranet for better communication purposes, overseas and internationally. Another advantage of a WAN is the allowance of being able to have remote access from where ever in the world, and due to the firm now achieving business overseas, this is essential.
In addition to the WAN, the business would also benefit from the investment of up to date software in both word processing and spreadsheets, as these would help both the employees and also at managerial level. Offices these days try to keep up to date software as it helps the general running of day to day activities.
Short Term Goals
In terms of short term goals, I recommend that all computers are updated immediately with the latest version of office software as this can be done easily with the right planning. I also recommend that the IT policies and procedures are written and implemented to start bringing all the offices and staff together to create one whole business across the various sites.
Long Term Goals
It is imperative that the long term goal of the business is to look into updating and combining their systems. In order to do this, a strategic plan must be put in place which looks into all aspects of combining systems throughout the business. This may include the advantages and disadvantages, costs and also problems that may come about in the process. Once an agreed time limit and plan has been agreed, work can be started to merge the office systems into one.
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