IT support the organizational performance
A modern organization responds to continuous changes in the external environment, transforming its behavior, operational practices, and business processes. Business transformations cause changes in information systems (IS) supporting business processes, and changes in the corresponding IT infrastructure. In some cases, these changes may affect the corporate IS as a whole. The main feature of changes in a turbulent external environment, and, consequently, in corporate IS is their unpredictability. Thus, on the one hand, the corporate information system must ensure the effectiveness of the current business model, and on the other, possess the necessary level of flexibility to implement unpredictable changes in requirements.
A modern organization operates in a highly turbulent external environment, so it must have a high level of adaptability or agility. In such environment, the conceptual model of a flexible corporate IS is defined as a working system that must compensate for the largest number of gaps caused by external events by incremental changes in its components (Kaehler 4). Thus, to ensure its own effectiveness, the organization must continuously adapt to changing conditions. The external environment, the size of the organization and its strategy are considered as the main factors of uncertainty that form the organization. A similar concept can be proposed for corporate information systems (CIS).
This approach is called “bricolage” or improvisation; it involves the gradual improvement of existing systems, the involvement of operational level employees, first-hand training, trial and error (Onik and Erwin Fielt 6). All this forms unique operational practices that cannot be easily comprehended and reproduced by competitors. This approach contradicts the more traditional view of IT-based innovations ‑ the introduction of CIS as a radical means of changing existing competencies based on a preliminary analysis and plan.
Thus, the introduction of new CIS, aimed at improving the efficiency of existing business processes, should not impede the change of these processes in the future. Today’s organizations are increasingly relying on IT, which allows them to remain competitive in a fast-changing market, but there are still gaps in understanding how IT resources influence the flexibility of CIS (Furukawa, Hirobayashi, and Misawa 88-90). In practice, the evolutionary development of CIS increases its functionality, complexity, value for business, but, at the same time, reduces its flexibility (Kryvinska and Gregus 34).
Therefore, it is very important to have CIS, which allows changing business processes without significant costs. Ideally, this should be achieved by reconfiguring the CIS or, in extreme cases, by partially replacing some old modules with new ones. It is advisable to avoid a situation where a complete replacement of CIS is necessary due to its incompatibility with the new principles of operation, since this leads to significant costs.
Complementary relationships with other assets explain the reason for the constant changes in CIS. Changes in related assets cause changes in the information system, which, in turn, leads to changes in working methods, staff qualification requirements, etc. In fact, the ways to use the CIS functions are the product of a joint invention of all its users and other interested parties. This process never stops, and namely it is called “bricolage” (Furukawa 90). Thus, flexibility should be a mandatory feature of CIS.
At an early stage in the life cycle, CIS has a “transparent” design and demonstrates a high degree of flexibility. At the next stages, including during operation, users’ needs change unpredictably. Continuous changes to the system complicate its design and make it difficult to respond to new problems, as a result of which the adaptive properties of the system are reduced (Kryvinska and Gregus 29-30). Thus, despite the benefits provided by CIS, it can limit the capabilities of an organization that faces challenges requiring adaption. Close integration between various activities, which is the main advantage of CIS, increases the complexity of changing systems when a business needs it.
It is thus evident that flexibility must be ensured at all stages of the life cycle. The corresponding model assumes that the knowledge gained after the completion of each phase should be transferred to the next stage (Narayan 41-45). At the same time, the flexibility model can consider two main components: (1) the result of the current use of the existing information system and (2) future needs, the source of which is the external environment.
CIS as a whole can be considered as a set of problem-oriented subsystems (for example, ERP, CRM, etc.) that work together to form a coherent information space. Moreover, from the point of view of enterprise architecture, several layers common to all subsystems can be distinguished: business process architecture, data architecture, application architecture, and technical infrastructure. All subsystems interact through network connections. These connections lead to the complex architecture of a “system of systems,” and communication networks can be identified in all layers (Narayan 29-30).
Physical networks provide equipment connectivity and support data transfer between system platforms. Software networks ensure middleware layers and protocols which, in turn, transform the data transmitted between their processing systems. Social networks provide a means of interaction and communication in communities for people. Changes in any network caused by external causes must be accompanied by changes in other layers.
Thus, a more precise definition of a flexible system can be formulated: a flexible CIS should eliminate the maximum possible number of discrepancies between its components caused by the events in external environment through incremental changes. These properties are of structural nature and must be supported by system design. The most effective way to ensure the flexibility of CIS is its decomposition into low-coupled components that are associated with business services. To create such a system, a platform approach can be used in combination with flexible development methods.
Case Study: Wireless Café in Shanghai
Wireless Café in Shanghai represents the unique business model, combining the best practices of Chinese cuisine with high-speed wireless access to the Internet, supporting “every technological need.” The café offers digital business services such as printing, displaying, etc. and even high-level business presentation needs. The cafe offers visitors a sweet Cantonese cuisine, known for its delicate and crunchy dishes, as well as traditional aromatic, sweet and fresh, while maintaining the original tastes of dishes, and unusual cuisine from different regions of China.
The organization actively participates in the life of the local community, sponsoring events for children and youth, adult education courses, as well as events to improve community life. Supporting local manufacturers, the company buys food products from them. Also, the environmental awareness of Wireless Café should be noted ‑ the company uses environmentally friendly technologies and promotes the popularization of ancient Chinese cooking traditions.
The Wireless Café business model is quite innovative, although it is hardly unique. Nevertheless, the company successfully combines the best practices of Internet cafes business with the best traditions of restaurant service and business services, which can potentially give the effect of synergy. Moreover, the environmental component in the company’s activities is a huge advantage in today’s conditions, when customer loyalty is largely determined by the degree of environmental responsibility of the company.
The owners of Jade Leung and Jimmy Kwok created the organizational structure of the company, which gravitates to the matrix type, which is also an advantage, as matrix control structures belong to complex adaptive control structures ‑ this means that they differ in the following (Ghez 73):
- Flexibility, the ability to change its shape quite easily, organical nature, the ability to adapt to changing conditions.
- The lack of bureaucratic regulation.
- The flexibility of the management structure.
The company is currently recruiting wireless technician, assistant chef, and events manager ‑ that is, core positions should be filled. However, describing the necessary skills of candidates, the company does not mention soft skills which is strange taking into account its business model and size. In the conditions of the necessity of close interaction and support between the units, and declared “closeness” to every customer, namely soft skills can appear to be crucial for employees to work effectively at Wireless Café.
Speaking about the competitors of Wireless Café, both Internet cafes and restaurant establishments should be noted. One of the most common ways to play video games in China is to visit the Internet cafes known in the country as iCafe or Net Cafe. On most computers, popular shooters, games in the genre of MMO, and others are preinstalled. The largest company in the market of Internet institutions in China is Shunwang Technology. It provides software to about 100,000 game points, which is more than 70% of all iCafe in the country (Zhou, Lazonick, and Sun 28-34). The company is working to equip each cafe with VR zones.
However, such Internet cafes do not provide business services or provide them at a very low level. At the same time, Chinese restaurants are primarily focused on their main business ‑ restaurant servicing ‑ and pay very little attention to related services. At the same time, Chinese restaurants have recently slowed down a bit in the race for the number of customers ‑ now they are more focused on quality and often use a differentiation strategy (Zhou, Lazonick, and Sun 44-46).
In one of the restaurants in the Chinese city of Shenyang, visitors are served by robots, and drones will soon be serving dishes in Singapore, but in this case the “authenticity” is lost, which is positioned as the basis in Wireless Café, while high technologies in the restaurant business are focused on a specific group of consumers. Hotels could compete with the Wireless Café, but the range of services is more fragmented than in the Wireless Café. Moreover, many hotels in China still offer wired rather than wireless Internet.
Thus, the main competitors of Wireless Café are focused on certain categories of customers, while Wireless Café integrates these categories. Wireless Café services can be of interest to both young people and businessmen, as well as lovers of the best culinary traditions. Moreover, thanks to the concept of CSR and its implementation, the competitive potential of Wireless Café can be called unique. While the basis of the competitive advantage of the company under consideration is its business model, the information system is also an important component of it.
The company uses innovative technologies for interaction between divisions, as well as interaction with suppliers ‑ they are carried out through a single integrated web portal. The company claims that it is made to reduce operating and management costs. However, “stationary” systems do provide flexibility and easy scalability. As noted above, with changing environmental conditions and appearance of the corresponding need for quick changes, the “flexibility resource” of CIS may not be enough to carry out the modification without high costs and the implementation of large-scale change projects.
The country has a very dynamic business environment, and this inevitably entails a high degree of competition. Local businessmen have to be resourceful, ambitious and willing to take risks – otherwise, they simply will not survive. China is constantly creating new approaches to doing business (Paulet and Rowley 8). Particularly noteworthy are strategies that are used not only by large companies, but small and medium-sized businesses, such as those used in Wireless Café. High competition and rapid “moral aging” of business models is a serious challenge to small and medium-sized businesses.
Moreover, China is experiencing high rates of digital transformation (Paulet and Rowley 19). The competition in digitalization between traditional enterprises is a rivalry in the speed and efficiency of transformation. The higher these indicators of the transition to new digital technologies, the better the company can adapt to the digital age and retain its advantages in the competition of talents, capital, and brands.
The Wireless Café can be recommended to switch to cloud technology in order to achieve the necessary flexibility and maintain sustainable competitive advantages. The IT technology industry is actively developing and the restaurant business offers to abandon own servers, as the cloud has many advantages (Faynberg, Hui-Lan, and Skuler 18-21):
- Access to data and analytics from anywhere in the world where there is Internet access;
- Cost factor: instead of significant costs at a time, a monthly comfortable monthly fee;
- Professional technical support;
- Access from an unlimited number of different devices.
Most organizations specifically transfer not only the information system, but also other additional software products to the cloud storage to free not only the amount of memory, load on each unit of physical equipment, but also for the unified management of the information system, which greatly simplifies working with it (Ghez 62). Thus, if an organization wants to rid itself of various kinds of obligations, free up the physical power of computers, and organize access to applications, projects, or simply corporate files, then the solution is to order a cloud service from a third-party company or install own corporate cloud.
Business applications that are available only on the corporate network ‑ ERP, CRM, knowledge bases, billing systems ‑ or sites accessible to all, large portals with a large number of visitors will be in the cloud under unified control and personalized access. Also, the important factor is that the corporate cloud has a scaling effect.
Moreover, an important point is the safety of IS data, not only from attackers, but also in a working, accessible, and explicit form. Almost every user works with data, and the likelihood of changes, damage, or distortion is high. Also, on the part of technical measures, corruption or loss of a large amount of data that is often stored in databases in the IS is possible. In order to improve the situation, a special model is used in a private cloud for storing and backing up databases that contain information of any type.
CIS in a public cloud, the physical location of which is not always known to the client, is optimal for companies in the field of small and medium-sized businesses. A private cloud is intended for use by one organization under the control of the organization itself or a third party. The combination of private and public cloud infrastructures, interconnected by data and application technologies, allows creating a hybrid cloud (Faynberg, Hui-Lan, and Skuler 38-40). Cloud-based CISs reduce operating costs for hardware and software, which significantly reduces IT costs and the complexity of the company’s infrastructure, while increasing its scalability and flexibility.
The advantages of cloud services include not only increasing the mobility of employees in the sales department, the ability to improve corporate communications and increase the efficiency of interaction between employees and customers as part of the implementation of the CRM concept. If we consider the capabilities of the cloud services offered by the world leaders in the IT industry, then an important difference is not only a wider selection of services, but also their organization into a single ‘ecosystem” focused on satisfying all the information needs of the company.
Moreover, the issue of ensuring the adaptability of the corporate information system, which is defined as the ability to detect changes in the environment (for example, changes in functional requirements) and to effectively respond to these changes, can be solved using the aforementioned bricolage principle. As the main way to ensure adaptability, the separation of the system into relatively loosely coupled modules is possible, that can be developed independently, in particular, using the shearing layers concept (Narayan 34).
Today, it is not enough to use the past portfolio of knowledge to build adaptive business models of activities and management and to obtain reliable forecasts of the strategic behavior of the enterprise and tools for the development of adaptive competencies with their help. Therefore, in the conditions of the innovative development of business and entrepreneurship of the service and hospitality sector, namely precisely adaptive management is advisable, which is regarded as a type of modern management and should be based on the integration of diversification and a systematic approach, innovation programs.
Adaptive management, in our opinion, is the management of a socio-economic system (organization, entrepreneurial structure), which relies on human resources as the foundation of the organization, and orients business processes to consumer demands. Such management promptly reacts and carries out modern organizational changes in the organization that meet the challenge of the turbulent business environment factors and allow achieving the implementation of strategic behavior, competitive advantages. Together, this enables the organization to survive in the long term, creating a dominant culture and adaptive competencies of readiness for changes. In adaptive management, the flexibility of CIS is one of the crucial factors, as it is the linchpin in all business processes and departments. At the same time, IT resources affect the flexibility of CIS.
Works Cited
Faynberg, Igor, Lu Hui-Lan, and Dor Skuler. Cloud Computing: Business Trends and Technologies. Wiley, 2016.
Furukawa, Masaru, Shigeki Hirobayashi, and Tadanobu Misawa. “A Study on the “Flexibility” of Information Systems (Part 3): MIS Flexibility Planning Scheme for IT/Business Strategy Alignment.” International Journal of Business and Management, vol. 9, no. 6, 2014, pp. 88-96.
Ghez, Jeremy. Architects of Change: Designing Strategies for a Turbulent Business Environment. Palgrave Macmillan, 2019.
Kaehler, Cristiano et al. “Relationship between Adaptive Capability and Strategic Orientation: An Empirical Study in a Brazilian Company.” iBusiness, vol. 6, 2014, pp. 1-9.
Kryvinska Natalia and Michal Gregus. Agile Information Business: Exploring Managerial Implications. Springer, 2017.
Narayan, Sriram. Agile IT Organization Design: For Digital Transformation and Continuous Delivery. Addison-Wesley Professional, 2015.
Onik, Mohammad and Erwin Fielt. “Complex Adaptive Systems Theory in Information Systems Research: A Systematic Literature Review.” PACIS 2017 Proceedings, 2017, pp. 1-14.
Paulet, Elisabeth and Chris Rowley. The China Business Model: Originality and Limits. Chandos Publishing, 2017.
Zhou, Yu, William Lazonick, and Yifei Sun. China as an Innovation Nation. Oxford University Press, 2016.