Question

Unit VI

How can organizations create value by implementing an advanced information system solution paired with the appropriate business model?

Your response should be at least 200 words in length.

Answer 1

When we talk about value creation, it is either process oriented or output oriented. This means the organizations can either create value by improving its process or the product to match the expectation of the market. When it comes to an information system, it can help create values from both the directions. A superior business process-oriented information system such as an ERP can be employed in order to re-engineer the business process and by doing so it is possible to reduce the wastages, duplications, and redundancy of the business process. This way, the process becomes more robust and streamlined. The efficiency of the business operations can improve and as a result, the total cost of a product rolled out in the market reduces. When the reduced cost advantage is shared with the customer, it becomes a value creation. Extending this concept, the robustness of the information system can be leveraged not only for the internal process but also throughout the value chain. This can result in significant reduction in in-process inventory, reduced lead time, and increased process transparency. For the entire supply chain, value creation happens in terms of advanced scheduling, accurate demand forecasting, smoother transportation logistics, efficient distribution planning, higher service level and so on.

When it comes to output-oriented value creation, an information system can also be leveraged from that perspective. For example, consider the case of an e-CRM which provides seamless integration of various area of business which comes in contact with the customer - namely, marketing, sales, customer service and field support. This is done through the integration of people, process, and technology, taking advantage of the revolutionary impact of the Internet. In this case, the value is created by using existing relationships to grow revenue, providing excellent service through integrated information management, introducing more repeatable sales processes and procedures, instilling loyalty, imbibing a more proactive solution strategy, and letting the organization change more efficiently based on the expectation of the customers which is everchanging.