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Regulatory compliance

7 September, 2015 - 12:26

At times an organization will introduce information systems that may not improve the organization’s efficiency, effectiveness, or enable it to communicate and coordinate better. This happens when regulations and laws require the organization to perform certain tasks – for example, recurrent maintenance on the machinery they use – or produce some information – for example, tax reports. Regulatory compliance typically requires the organization to be able to create, manage, store or produce information – for example, maintenance logs or financial reports to compute taxes. In theses situations the firm will introduce an information system. Measuring the impact of an information system The measurement of efficiency and effectiveness gives managers guidelines to assess the value of information systems. Without these measures, managers may be misled and make wrong decisions when investing in new technology and designing information systems. On the one hand, if the value of the system is underestimated, managers may cut back the allocated resources, which will result in foregoing the benefits of the new system. If the value of the system is overestimated, managers are wasting resources which could be used in other projects with higher returns. In this section, we introduce several established methods to measure efficiency and effectiveness improvements (or lack thereof) deriving from the use of information system.