Moderating Factors in Implementing Strategic Information System
In functioning on its role for enhancement of organizational efficiency and effectiveness, there are few factors which either directly related or in such cases indirectly related, helps to ease the difficulties.
Part of the moderating factors are from the government of certain countries and another part is on the system itself whether is related to system composition or services. The rest of the factors are on the availability of information and connectivity and also internal factors within the organizations.
Government Contribution towards Enhancing the Usage of Information System
In this era, most on government would like to promote the usage of information system. For an example, in Malaysia, government really encourages the usage of information system by implementing policies and also development of basic infrastructures. In strive to become a developed nation by 2020, Malaysia look into information system as one of key primary factors that can contribute to rapid growth of the country. Government starts researches institutes such as Standard and Industrial Research Institute (SIRIM) and Malaysian Industrial and Microelectronics Systems (MIMOS) somewhere in 1985. To further enhance the development, the government launched the Multimedia Super Corridor another ten years later. The implementation of these research institutes and ICT encouragement bodies not only give benefit in term of facilities and instrumentation only but able to be advanced to another policies which involves benefits from another related factors such as tax exemptions, research grants and others1.
Building information system infrastructure had been acknowledged as one of top priorities for today’s government. It can’t be denied that most government believes that ICT will help to enable a country to move from a level to a certain acceptable level. To be in top list of countries with highest Technology Achievement Index (TAI)2 became a target for developed and developing countries. TAI defines the countries ability to utilize technology and information and communication technology as a tool for development. TAI, among all, includes measurement of technology creation, innovation information, diffusion of previous innovation and also skills and knowledge. A sample of TAI list as per below figure
TAI Rank TAI value
1. Finland 0.744
2. United States 0.733
3. Sweden 0.703
4. Japan 0.698
5. Republic of Korea 0.666
6. Netherlands 0.630
7. United Kingdom 0.606
8. Canada 0.589
9. Australia 0.587
10. Singapore 0.585
11. Germany 0.583
12. Norway 0.579
13. Ireland 0.566
14. Belgium 0.553
15. New Zealand 0.548
16. Austria 0.544
17. France 0.535
18. Israel 0.514
Apart from developing infrastructure, government also plays an important role by setting up policies and requirements which include usage of information and communication technology and information system as a part of an organizational strive to achieve certain policies and recommendations. As in China, government implements a policy where every pharmaceutical manufacturing must achieve a GMP certification. Manufacturing organization who fails to achieve the certification may face the possibility of closing the business. Many of them believe that usage of information system can facilitate and also accelerate the effort towards GMP implementation and also to attain certification (Zhou, Chuah, Chen 2002). These types of certification and policies, indirectly promotes the implementation and utilization of information system in manufacturing organizations. Soft encouragements by government also contribute to wider utilization of information technology. The government of China had put a lot of effort in encouraging the organizations to adapt the learning concept and also improve enterprise knowledge (Zhou, Chuah & Chen 2002) by promoting the “informationalization” to support it’s industrialization.
Jimba and Atinmo (2000) also agreed that since information society basically operates from global perspective, there should be a certain basic infrastructural requirements in order for a nation to participate. Among all, it includes sufficient computing power, internet access, adequate teledensity and basic economic that able to support connection.
It can be agreed also that certain countries government’s vision also influence the factors of implementation of information system and information technology in that country, such as cases in Malaysia with Vision 2020, the e-Japan vision in Japan, Botswana’s “prosperity for all” Vision 2016 and also Canada’s vision to be the most connected nation in the world.3
System’s Contribution towards Enhancement of Information System Utilization
Looking onto system’s perception, the evolution of system itself enables more organization to have benefit from the system. As networking and information mailing system growing rapidly, organization may take advantage of new opportunities (Smith 1999). Composition of information system should not be prescribed as only for basic accounting and record keeping (Porter and Miller, 1985) but it should be a strategic tool to gain competitive advantage, improve productivity and performance, finding better way in managing the organization and also developing new opportunities (Gregus and Benova, 2006).
Evolution in information system, from the Material Resources Planning (MRP) which only supports single function towards the Enterprise Resources Planning (ERP) which integrate entire organization, make it simpler to the organization (Soon-Yu, 2005). Md. Hafiz, Mohd Adam and Husnayati (2006) extract the three era model of evolution by John Ward,et al. (1996) which defines the evolution from the era of Data Processing in the 60’s which includes remote hardware and user, mainly for cost reduction purposes, towards Management Information System’s era in 70’s and 80’s that is interconnected, user driven and functions to support the business and much later to the Strategic Information System’s era in 80’s and 90’s with networked and integrated system, closely related to business strategy and more business driven.
Son-Yu (2005) also conclude that since there are requirement of integration between ERP, Supply Chain Management and Business to Business (B2B), there will be a strong force to providers as SAP, JD Edward, Baan, Oracle and PeopleSoft to introduce newer version with more added values which in the other hand will make it more handy for organization to use it.
Supports from system providers also are fatal to organization. Supports are in two categories that are customization of information system to the organizational needs and also support in performance of the system either in maintaining the system, problem solving and also improvement of the system.
As an example, SAP provides after sale services such as end-to-end solutions operation, SAP Enterprise support, SAP Safeguarding and few other options4. Oracle also has their worldwide support for their users covering PeopleSoft and also JD Edwards.
Availability of Information and Accessibility Functions in Enhancing the Usage of Information System
Jimba and Atinmo (2000) compiled some finding about availability and accessibility as moderating factors in utilizing information system. It refers to Bonzi (1992), Hesse, et al. (1993) and Karminer and Braunstein (1998) who agree that accessibility and availability of information supports the enhancement of productivity of research and studies. As such, smooth access to database will enable organizations to get benefit from the information system.
The push and pull factor as explained by Nancarrow, Pallister and Brace (2001) talks about the speed, easiness, coat and amount of information available (pull factor) and for research suppliers to be the first with information and innovate to remain competitive (push factor) which will enable organization to source more information via the internet.
Wide access to networking and information permits an organization to attain necessary knowledge crucial to its specific business strategy. Internet growths are rather rapid. Organization could use the internet access in order to reach to information or, in the other hand communicate their information to others. In certain cases as Xerox, as cited by Bhatt (2000), the organization uses the facility to survey their customers and asses their satisfaction through an accessible database. This will enable the organization to interact with their customers, knowing their needs and to know the root cause for customer’s dissatisfaction.
Internal Factors that Enable the Organization to Implement Information System.
Within organization itself, there are also a lot of factors that ease the process of implementing the system. Prasad (2000) listed seven primary factors within the organization that contributes to the information system implementation which discussed as 7T agents that are:
1. Talent – Expertise, experience, knowledge and skills and competencies in handling the job, make decision, resolve conflicts and creating culture in the organization.
2. Task – Complexity of each activity, breakdown of task, structure of work and also probability of successful completion.
3. Teamwork – Group understanding, dynamics, balance of task, co-operation and commitment between members, job delegation and also satisfaction.
4. Techniques – tools being used, understanding about system, systematic approach about knowledge and system.
5. Technology – Affordable system for the organization, availability of system and technology, features and adequacy of system.
6. Time – Schedules, constraint, arrangement of task to meet the specific timeframe planned for an activity.
7. Tool – Communication tool, networking system, availability of required tools.
Involvement of management in setting up and implementation of information system are crucial to accelerate the process. Dhillon and Caldeira (2000) believe that the mindsets of the top management are a key determinant to the successful implementation of the system. Teaming up the strategic objective of an organization and information system requirements are vital to the success of implementation. Muscatello, Small and Chen (2003) concluded that effective executive management commitment plays a rather important role in the implementation process. Study shows that an organization that have focus on significant effort in planning, justification and installation, succeed in adopting the system.
According to Davenport, Harris and Cantrell (2004), there are three factors that drive the values that are:
1. Integrate which means unifying the system, with standardization of data and processes that can lead to faster communication and effective decision making.
2. Optimization the system which refers to shaping the processes to fit the unique of strategic need of the organization.
3. Informate by transforming work with means of information, transforming unprocessed data to become useful information that support the strategic organization needs and decision making.
User participation and involvement also remarked as one of factors that stimulate the success of information system implementation. Participation means the user’s willingness to participate in the development and implementation of information system. Involvement stated the phsycological state of user and attitude towards the implementation of information system and to the information system itself (Kappelman and McLean, 1992) and the relation are as per shown in below figures.
Intervening Factors in Implementation of Strategic Information System.
Today’s operations are much depends on computer based information system. It includes the storage of data and information, processing of data and information, hardware and software, a social system as a result of integration and lastly the documents and procedures as guide to the users. It means that present information system not only technically viewed but it is rather a larger social dimension (Md. Hafiz, Mohd Adam, Husnayati, 2006). But, in implementing the system, there are a lot of obstacles that requires action and decisions. Barriers ranged from deciding on the system until full implementation of the system. It is necessary to look into intervening factor in each and every perspective they appear. Apart from looking into the barriers itself, it is also important to understand the nature of barrier in order to study and counter it through specific actions.
Barriers from the Organization Itself
Top Management’s Perception on Strategic Information System
Relationship between functions of information system and corporate strategy does not get much attention from the top management (Pant and Hsu, 1995). Smith (1999) stressed that even though there are some beliefs in the top management that information system is important to the business, but their belief is not visualized by their performance. Information system always been perceived as different from the organization strategic beliefs and treated as some additional operation to support daily tasks. Involvement of the top management is vital to the success of information system. Management should understand that the objective of information system is to generate information on the business activities that useful to support in making sensible decision regarding its operational and strategic tasks (Smith, 1999).
Furthering this, Smith (1999) also pointed out some factors on how importance for a business starter to have the strategic information system in mind at the early stage of set up. They should know about what type of information system available on the shelf and what type of information system that can strategically help the organization to be start up. Later, it is required to think on how the system can help the organization and how it should be incorporated to the planned business framework. The type of data to be selected, the way it going to be stored, how data can be transformed to become information and how these information can be communicated across the whole organization, including suppliers and customers in order to gain mutual understanding for the benefit of the organization. Zhou, Chuah and Chen (2005) also agreed that implementation process of information system will meet a lot of problem without support and participation from the top management.
Calhoun and Laderer (1990) stressed that failure to understand top management’s objectives are another factor contributing to barriers in implementation. It is either the top management did not really know their objectives or do not want to disclose it to the information system function. Misunderstanding the organizational objective in setting up phase of the information system implementation will lead to a major failure into the implementation itself.
Weak in Management and Organizational Structure
Organizations that have a weak management and organizational structure may face a lot of trouble in implementing the system. As stated by Zhou, Chuah and Chen (2005) that some of the failure in introducing the MRP system to Chinese herbal industries are due to the management and organizational structures are outdated and ineffective. Organization that able to utilize the information technology should find that they are able to gain their competitive advantages against their competitors who don’t (Smith, 1999). Pant and Hsu (1995) stressed on Barlow’s (1990) point that degree of success in integration of technology and business much depends on the organization structure.
Failure to Integrate Business Resources and Information System
Information system resources rarely act alone in creating and sustaining competitive advantages (Rajendran and Vivekanandan, 2008). It usually works in relation to other business resources to provide strategic benefits. Performance of an organization depends on how information system resources being integrated with organizational, technical and other resources (Benjamin and Levinson, 1993). Failure to integrate the information system resources with the other business resources will lead to the organizational failure in achieving their competitive advantages.
Barriers from the User’s Perspective
Lack in Computerization Skill and Knowledge in Information System Users.
In order to gain benefit from the system, it is utmost important for the organization to ensure that the users are well equipped with necessary knowledge and skills that required so that the information system can be implemented smoothly. As stated by Zhou, Chuah and Chen (2005) that one of the cause that make it difficult to introduce the information system in Chinese industries are due to low educational level of the user and the degree of computerization and automation are rather low, causing such an intensive system as MRPII and ERP become unsuitable to those industries.
Apart from inadequate knowledge, failure to adapt to rapid change in information system also becomes a large barrier in implementing the system. Evolution of information system from purely supporting orientation administrative has changed towards more strategic role within an organization. As such, organization must be flexible enough to adapt these changes and gain benefit from it.
Apart from that, continuous training and education of user should be looked into. Implementations are not only about information and technology, but also involving the human resources in the integration. Skill and knowledge have to be improved. Sponsorship for employees to attend external training and competency program could act as an incentive to build strength in users that will benefit the organization.
Failure in having computerization knowledge and skill also lead to failure in User-Information System relationship which supposed to trigger the organization towards achieving its maturity level.
Low Education Level among Information System Users
Level of education also is one of the factors affecting the success of implementation. Low level of education highly related to low computerization skill and knowledge. This again refers to Zhou, Chuan and Chen’s (2005) findings that low level of education contribute to difficulties in implementation of information system. Low education level may become a result of underdevelopment of certain nation. Jimba and Atinmo (2000) quoted Hountondji (1995) that concludes that weak in knowledge and intellectual capability were a result from underdevelopment. Low level of education also closely related to low level of computerization skill and knowledge.
Language and Literacy Barriers
Among all, language also became one of the barriers that limited the implementation of information system. To give an example, most of the systems that available are in English. But in certain region, level of English understanding is so poor that user may fail to interpret the need of the system and also the information that resulted from the processes. As in Thailand, English literacy is so poor that less than five percent are able to understand English5. So implementing the system in this area will lead to a lot of hurdles along the way of implementation. To make it worst, there are some other nations that used other character than Romanized characters, such as Former Soviet Union and some Eastern Europe countries that used Cyrillic characters. For them, utilizing the systems which based on Romanized is rather difficult.
Agourram and Ingham (2007) state about Shing-Kao (1997) who stressed that since people see information with their own values, assumptions and expectations, different person may look at the same information differently.
Perception and Expectation
By implementing the information system, management are hoping that it can help to support decision making which will lead to better performance. But on the employee’s view, implementation are negatively perceive as a treat for them. They may feel worry about losing their job to technology. Information system actually helps to improvise the data processing tasks for better decision making. Management has to make the employees understand the aim of implementation.
Another problem is on the expectation. Users are expecting that computers may become a solution for problems in data processing. This over-expecting may sometime results in frustration.
Barriers From the System’s Perspective
Nature of the System that Make it Difficult
There are two major technological issues in implementing the system which are;
- Complexity where each technology have their own complexity. The organization need to learn and adapt to the requirement of the system.
- Compatibility which refers to suitability of computers to suit for one application to another.
The complicated methodologies also being understood as one of factor contributes to the difficulties. Pant and Hsu (1995) suggests that even though planning of strategic information system known to be important but, some organization still find it as difficult. One of the reasons why it happened is because there is no availability of comprehensive, easy-to-use and structured methodologies.
Fear of Wasting Money without Benefit in Return: Looking into failure’s experienced by Others
While information system brings a lot of advantages to the organization, there are some organizations that reluctant to implement it. This came from the experiences from other organizations which results in partial failure, even in certain cases, a total failure. Muscatello, Small and Chen (2003) quoted a research by Trunick (1999) which shows that close to 40 percent of organization that implement information system only be able to enjoy partial implementation, while another 20 percent totally abandon the system. Since the cost of implementation is not small, fearing the failure had become a bad dreams for organizations especially those with small in scale and with low financial resources.
Failure of information system’s implementation in small organizations greatly contributed by lack of resources and formalized systems. They often fail to justify the expenses and time to spend on selection of the system.
1 Richard Labelle – ICT Policy Formulation and E-Strategy Development – UNDP-APDID ICT4D Series 2005 (Page 14)
2 UNDP, Human Development Report 2001 : Making New Technologies Work For Human Development
3 Richard Labelle – ICT Policy Formulation and E-Strategy Development – UNDP-APDID ICT4D Series 2005 (Page 7)
4 SAP Services: Software Maintenance and Support. http://www.sap/com/services/bysubject/support/index/apx
5 Richard Labelle – ICT Policy Formulation and E-Strategy Development – UNDP-APDID ICT4D Series 2005 (Page 71)
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