The impact of information system on the success of Small and medium enterprises
This project intends to investigate the impact of information system on the success of Small and medium enterprises. Almost all the successful big enterprises have embraced information system in their various businesses.
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It is generally believed, that information technology enables a firm to access information needed to make decisions, to make an efficient use of resources by reducing labour and manufacturing costs, to seize opportunities in its markets and to position itself effectively in relation to its contenders (Dirks, 1994).Unfortunately, it is the same environment both big and SME’s operate and there is a need for the small enterprises to survive in this environment.
We live in a very competitive world with the competition becoming fiercer. It has become so volatile that it takes more than success to stay alive. The threat posed to SME by the big enterprises is such that they can be swallowed at anytime. One of the ways by which SME’s can achieve a competitive advantage in the era of globalization is through the implementation of IS in their organizations.
Implementation and practice of IS comes at a cost and its increasing high cost is a concern to management, especially in SMEs sector. With lack of sufficient funds to acquire such skills smaller organizations often implement IS in a less than optimal way, thereby attaining fewer benefits than larger organizations (Delone, 1988). The decision to invest the few available funds on information technology need to be worth it as SME’s don’t have the luxury of fund big enterprises have.
Traditionally, the success of Information Systems (IS) has been studied in the context of large organisations, most businesses, however, are small and medium
Enterprises (SMEs) and they have increasingly adopted packaged application software to meet their information processing requirements. Small- and medium-sized enterprises exert a strong influence on the economies of all countries, particularly in the fast-changing and increasingly competitive global market (Anaroni 1994; Drilhon and Estime 1993). They have been a major engine of economic growth and technological progress (Mulhern, 1995; Thornburg 1993). Carrier (1994) said that SMEs are often more fertile than larger firms in terms of innovation. Most IS research focuses on large firms, yet the majority of firms in most economies are SMEs.
It is amazing how SME’s form the bedrock of every country’s economy yet they always find it hard to survive not to talk of competing in an environment where the big enterprises have enormous edge. Though these SME’s can’t match the financial investment of the big enterprises, they need to find a way of balancing their investment to keep abreast of what is happening in their environment. Some SME’s have decided to overlook the cost of investing in IS as they
Given the dominance of worldwide competition and high rate of technological change, there will be some challenges, which most SMEs are likely to have in common (Marri et al., 2000). Blili and Raymonds (1997) identified the need and usefulness of information systems strategies (ISS) in small and medium sized enterprises (SMEs). In the transformational role, IS helps to
Fundamentally redefine and alter the business processes and business relationships. These benefits could range from simple cost reduction to creation of new businesses or enhanced organizational capabilities (King and Teo, 1996; Feeny and Willcocks, 1998). Palvia and Palvia (1999) stressed on key areas of IT dissatisfactions that are: training and education, software maintenance, documentation and vendor support. According to them software
Vendors and consultants can appropriately address these deficiencies. These issues can be addressed well by having a proper IS management in place in an organization. Poon and Swatman (1999) reported on internet use in small business sector as a part of IS management and found that although use of e-mail was very popular for business communication and documents transfer, there was almost no integration between the Internet and internal applications.
2.1WHY DO WE NEED INFORMATION SYSTEMS
Information has become very important to the modern business organization that it is seen as its lifeblood. Information systems help an organization manage and make efficient use of its data to achieve utmost success. There has been more information produced in the last 30 years than during the previous 5,000. … The information supply available to us doubles every five years. Information system enables companies to react, respond, cater, store, retrieve, disseminate, and control their new valuable asset that is information. In the years to come, a good information system within a company will be no longer an option; it will become a compulsory in determining success.
The term IT is defined in broad sense as ‘‘technologies dedicated to information storage, processing and communication’’ (Ang and Koh, 1997). This notion of IT focuses on a combination of hardware, software, telecommunications and office equipments that transform raw data into useful information for speedy retrieval (Seyal et al., 2000). Blili and Raymonds (1997) identified the need and
Usefulness of information systems strategies (ISS) in small and medium sized enterprises
2.2 INFORMATION SYSTEMS IN SMALL AND MEDIUM ENTERPRISES
Many smaller firms now utilize computer-based information systems (IS). Top managers in these small firms have a crucial role to play in the development of IS, but the nature of this role differs sharply from that usually undertaken by the senior manager of the larger firm (Martin,J 1989) There is little doubt that advanced information and communication technologies (IT) are changing the way businesses operate and conduct commerce. As the advent of a more secure Internet and new transmission standards makes it easier and cheaper for businesses to conduct inter-organizational commerce.( Khazanchi,D 2005)
2.3 OUTCOME OF INFORMATION SYSTEMS IN BUSINESS ENTERPRISES
IT investments had a positive relation with the IS management practices.
Increasing investments in IT and strategic role played by information systems (IS) make IT
Implementation as an important research issue within the MIS discipline (Bostrom and
Heinen, 1977). Schein (1992) and Zuboff (1988) outlined three major roles that IS could play in an organization:
(2) Informate; and
The automate role refers to mere replacement of labour processes by technology. In the
Informaterole, IS provides data and information that empowers different levels of
Management andorganizational employees. In the transformational role, IS helps to
Fundamentally redefine and alter the business processes and business relationships. These
Benefits could range from simple cost reduction to creation of new businesses or enhanced
Organizational capabilities (King and Teo, 1996; Feeny and Willcocks, 1998). Palvia and
Palvia (1999) stressed on key areas of IT dissatisfactions that are: training and education,
Software maintenance, documentation and vendor support. According to them software
Vendors and consultants can appropriately address these deficiencies. These issues can be
Addressed well by having a proper IS management in place in an organization.
3. Research Objectives and Research Questions
The general objective of the study is to ascertain the need for information systems in modern day small and medium business enterprise. How much are they loosing out as a result of their unwillingness to invest in information system or is the price being paid for the competitive edge provided by information system too expensive?
It looks at the benefit accrued to the small and medium enterprises that have embraced information systems.I wish to create a relationship between the cost of investment in information systems and the gains accrue to small and medium organizations that have embraced it. I also intend to look at how small and medium entrepreneurs feel about the need for information systems in their business. It will also be interesting to know how much they are willing to invest in information systems even if they feel it is needed.
4. Research Design
Research methodology involves qualitative method due to the nature of the work. It will be ideal to get detailed information about the operations of the small and medium enterprises because they have different challenges; these challenges affect the running of the organizations in different ways. I intend to carry out a series of one on one interview with a number of small and medium entrepreneurs. There are two categories of entrepreneurs that I wish to interview, those that have embrace information systems and those that are yet to.
5. Data collection and analysis
Both primary and secondary data will be collected for this project. Primary data will be collected from SME’s especially through interview and It is intended to retrieve the required secondary data from available financial sources to measure the performance of enterprises that use IS and those that don’t use it, only data from regulated bodies will be processed
6. Time Scale
Working to meet the project submission deadline, there will be critical reading of relevant materials, regular meeting with the supervisor and also to conduct interviews with some SME business owners.
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