The Importance Of Information Systems

Boddy (2012) defines and an information system as “A set of people, procedures and technology that collects data which it transforms and disseminates” (p.381). Laudon and Laudon (2012) also state that information systems are used to help managers and workers to improve various tasks such as decision making, coordination and control which will help to analyze problems, operational excellence, visualize complex subjects, create new products and therefore achieving competitive advantage.

Gaining competitive advantage is critical for a business; According to Laudon and Laudon (2014) companies with a competitive advantage “either have access to special resources that others do not, or they are able to use commonly available resources more efficiently

These include; Low cost leadership, Product differentiation, focus on market niche, strengthening customer and supplier intimacy (Laudon & Laudon, 2014)

Managers can achieve a cost leadership strategy by reducing the cost of business processes, by applying an effective customer response system and enterprise resource planning system. Product differentiation can be achieved by initially using social media to understand what customers want and what is in trend. Products and services are being created customized and personalized to fit the exact specification of the customers a perfect example is Nike, who sells customized sports shoes at the specifications of the customer, be it colour, material and even logo, through its NIKEiD program on their website.

Organizations can use information systems to focus on a specific market to target it better than their competitors. Information systems can gather customer data from customer’s buying patterns, their favourite purchases, their budgets and so on. This data is analysed and companies can target customers based on their individual preference. Customer relationship management systems cater for such analytical

Each stage can be improved with the use of information systems. To do so a manager has to critically analyse how value-adding activities are performed at each stage and what improvements can be done to the business process. When all the stages in the value chain have been analysed, the manager can determine what applications of the information systems need to be used. As seen in Figure 2, Administration and management activities can apply an electronic scheduling and messaging systems, or perhaps a collaborative workforce intranet. For Human resources activities, a workforce planning system such as an employee benefits intranet or Employee Self-service system. For technological activities; computer- aided design systems or a product development extranet with partners. Procurement; e-commerce web portals for suppliers. Enterprise resources planning systems can be used. For the primary activities, enterprise resource planning systems can be used for operations and logistics as well as a transaction processes system, and customer relations management systems for marketing and sales and also