Effectiveness is often referred to as “doing the right thing.” In this chapter, we define effectiveness as the ability of an organization to achieve its stated goals and objectives. Typically, a more effective firm is one that makes better decisions and is able to carry them out successfully.
Responding better to the needs of different customers An organization can create or refine its products and services based on data collected from customers as well as information accumulated from its operations. In other words, information systems help organizations to understand their customers better, and provide products and services customers desire. Doing so even helps organizations to provide personalized service if the organization collects customer data at the individual level.
We can once again use the grocery store as an example. The grocery store can accumulate information about what customers have been purchasing in the past and analyze this information to find out what items tend to sell well and at what time. The manager can also ask customers what kind of products and services they would like to purchase in the future, thereby attempting to anticipate their needs. With this information in hand the grocery store management can order products that will attract customers, and stop ordering unpopular products.
Information systems can help organizations to improve product or service quality, or maintain the consistency of quality. To be able to improve product or service quality or to ensure consistency, organizations need information from the past as a source of error correction and as a reference point of improvement or consistency.
With the information system, which keeps track of the inventory in a grocery store, the manager can identify which items are popular and which are not. As a result, the manager can reduce the quantity ordered, or stop ordering these slow-selling products.
In the same manner, a manufacturing company can collect information from quality control tests so as to analyze the most recurrent problems during the manufacturing process. The company can then find a solution to reduce these recurring problems. For example, a furniture manufacturer may find that the majority of the chairs produced do not pass quality control tests. The manager then reviews the results of these quality control tests and finds out that most of them fail because they are unstable. The manager can then look at the machine which produces the chairs and change the specification to rectify the problem. As a result, the quality of the chairs improves.
The company can also collect customer feedback on its products and services, and make improvements based on that feedback. For example, a telephone company collects customer feedback on their phone calls and then adds services such as call waiting according to customer suggestions. As a result, the telephone company can deliver products and services that fit their customers’ needs.
Responding better to the needs of different employees An opportunity to improve effectiveness that is often overlooked involves better catering to the needs of the firm’s employees. This can be achieved by providing useful information to employees or faster access to information that helps them to perform their job. An information system can respond to the needs of employees by collecting data from various sources, processing the data in order to make it useful, and finally distributing it according to the needs of employees.
Another often overlooked opportunity to use information systems to fulfill the needs of employees is through empowerment. Empowerment represents the notion that the organization’s employees can be trusted to take on more responsibility and make more independent decisions when they are given the information necessary to do so. Consider, for example, the employees of a large grocery store who typically receive and stock goods to be inventoried. If they have access to the appropriate information, such as original order forms and the invoices, they could be given responsibility to check, accept and even pay for the goods.
Better communication and coordination Coordination is rooted in the ability to share information so that different individuals, different departments within an organization, or different organizations are brought together to pursue a common goal. Information systems support communication and coordination by better managing the distribution of information.
Communication consists in the exchange of information between two points, with the goal of having the recipients understand the sender’s message. Communication is essential to every organization, as communication among employees ensures that they work together to carry out internal activities; communication between an organization and its suppliers ensures the suppliers provide correct materials for the organization to generate products and services to sell; and communication between an organization and its customers ensures that customers understand the products and services they are buying, receive confirmation when transactions occur, and are able to resolve problems that may occur encounter purchasing – the after-sale service.
Information systems can enhance communication by providing for more, and at times superior, channels. For example, the invention of electronic mail (e-mail) has reduced the use of memos and written correspondence within an organization. As a consequence, the speed at which communication takes place improves. Multimedia communication elements, including images, sound and video files that employ a combination of presentation formats (text, graphics, animation, audio, and video) have also improved the richness of communication. These multimedia elements can be attached to an e-mail and the e-mail can be sent to suppliers or clients to better present or describe the parts wanted or the products and services provided.
For example, a salesperson from a hotel can attach a video clip with an advertising e-mail to better illustrate the quality of its guest room. Such attachments can not be done by handwritten correspondence. Thereby, the quality of communication is improved. The invention of e-mail has also reduced the use of the telephone. Now employees can read messages at their convenience without being interrupted by telephone calls while working.
Information systems not only improve point-to-point communication, but also within networks, which involves more than two parties. A computer network is a group of hardware (nodes in the network) with links to each other so that information can travel among them. A network helps organizations to collect information from and distribute information to different parties (such as suppliers, customers, and partners) in order to receive a more complete set of information of business activities, which then enhances coordination within the organization. For example, the operation department in an manufacturing company can collect information from the sales and marketing department to find out how many products need to be produced, information from the purchasing department to find out the costs of the parts, information from the executives to find out special product changes, and information from quality control to find out how to improve product design and minimize defects.
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