Business Strategy

The Benefits and Challenges of using Information Systems in Business



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Information systems have revolutionized the way business is conducted. You'd be hard pressed nowadays to find too many companies that do not rely on computers in some shape or form.

Management information systems provide many tangible and significant benefits to businesses which can increase productivity, efficiency and, ultimately, profitability.

While the benefits are vast, it is important companies also understand the challenges and responsibility that come with using information systems. While technology enhances and increases capabilities of business, there are other factors to consider as well.

Here is a brief overview of the benefits and challenges of using information systems in business:

• Benefits of using information systems in business

Reducing the level of redundancy equates to cost-savings. When redundancy is reduced and/or eliminated, this saves on man hours worked and frees up employees to take on other tasks. In addition, processes can be streamlined through information systems which further reduce redundancy.

Efficiency is another tangible benefit of assimilating information systems. When computers can take over some of the tedious, detailed and mundane tasks, this makes processes move more quickly with a higher degree of accuracy. While it's true employees still play an importance role in ensuring data is entered correctly, once entered in the program, the management information system can effectively increase efficiency and data integrity.

With proper planning a company can maximize profit while decreasing overhead costs. Implementing a new system typically comes with a large price tag, but if business requirements and processes are properly and accurately identified, the payoffs can be big.

Investing in information systems keeps a business competitive and helps an organization carry the ability to maintain visible status in the global economy. Without IS, a business will more than likely fall rapidly behind.

The benefits of integrating technology within an organization can truly be limitless depending on the level of creativity, strategic planning and innovation in the decision making processes.

• Challenges of using information systems in business

While the benefits typically outweigh the drawbacks, it is important that organizations recognize the challenges and responsibility that do come with integrating information systems.

Organizational change is typically one of the largest hurdles a business has to contend with when updating their business environment to include new technology. Change is hard and management may find that many employees do not welcome this change.

Development and cost is another challenge. A project such as this can be extremely costly, so it is critical to do proper analysis, design and testing prior to adding new systems. A business will want to be sure the technology will provide long term benefits and the costs do not outweigh the return on the investment.

While the benefits are numerous and payoff can be excellent, the initial costs of incorporating information systems are very pricey. Many businesses find themselves either delaying or avoiding new technology because of the initial investment involved.

Additionally, the company will need to determine reliability and accuracy so that the maximum benefits will be derived. This means time will need to be invested in careful system analysis before development to insure that the information system will meet the requirements of the business processes.

Privacy and security is another huge challenge for organizations that use technology. Information is a valuable commodity and there is a large responsibility that comes with maintaining data. A lot of sensitive information is collected through the course of business and this responsibility is one that should be taken seriously.

When making decisions, privacy should be considered and any laws adhered to. In addition, ongoing security is essential, and this is an expensive maintenance that bears no incoming revenue.

Unfortunately many organizations put security on the backburner in favor of other processes such as marketing, accounting or sales because these are what impact incoming revenue; however even one data breach can destroy a business, so these days security is just as important as other business processes. Security cannot and should not be ignored, and is a significant challenge in using information systems. 

The global environment that businesses are a part of really has changed the traditional business model and modern businesses understand that in order to evolve, newer models may either need to be developed or the old updated to include information systems. When taking on this project, however, an organization's decision makers should and do need to be aware of both the benefits and challenges of using information systems in business.

 

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