Good Case Study About Strategic Information Systems And Knowledge Management
Information Management and Organizational Performance
Changing times have made apparent that every company is a technology company today. It is essential that every business understands the value of the enormous amounts of information available in its surroundings, while also knowing that unless properly organized and analyzed such information is worthless to the organization. The organization’s IT infrastructure, thus, has the crucial role of converting such information into knowledge specific to the company as knowledge is rapidly becoming the most important factor of production, next to labor, land, and capital. Knowledge Management, thus, affects organizational performance by influencing the organization’s strategy, culture, and workflow (Rasula, Vuksic, & Stemberger, 147).
Information management is an operation undertaken to compile and manipulate information from each individual of the organization, and from the environment of the organization and is then transformed into convenient and easily accessible organizational knowledge. This knowledge is easily accessible by various departments within the organization to increase efficiency and independence of each. Information management systems have decreased the dependence of the company over its employees. Therefore, when an employee tends to leave the organization, the information is kept within and will not be lost (Rasula, Vuksic, & Stemberger, 149).
However, these requirements can only be met by a strong information system infrastructure which has the ability to change and adapt as the organization takes initiatives to keep pace with its environment. Such an infrastructure is based upon telecommunications networks, databases and data warehouses, software, hardware, and procedures managed by various specialists. These extensive investments dictate that the organization’s long-term strategic plan is kept under consideration when developing its IT infrastructure as this becomes the final link between the different siloes of the organization. Since each department plays a role in the achievement of the corporate objectives, departments should be aligned and connected through a single mainstream IT infrastructure (Abolhassan, 37).
This paper is a study of the significance of knowledge management in the improvement of organizational performance and an evaluation of the role of integrated IT infrastructures. Finally, the case of Tesco will be analyzed for knowledge management challenges and solutions.
The previous era dictated organization structures which did not encourage multi-departmental project teams or matrix structures with cross-department communications. This resulted in separate departments working as isolated units, each dedicated to achieving its own departmental objectives. The information age faces a great challenge here when departments tend to hold information in their isolated siloes and the knowledge generated remains within the department. This siloed information not only damages the efficiency of operations, but also affects the culture of the organization as undue competition and resentment develops amongst members of different departments (Gleeson, n.pag.).
As noted by Cox, many organizations have different physical locations – buildings or floors – dedicated to different departments. This creates a ‘we’ feeling between the team in a department and often results in the identification of those outside the group as different leading to departmental barriers being formed, hindering the effective flow of information (6).
On the other end of this continuum, Cox finds virtual organizations that are geographically dispersed and electronically linked. These organizations have such a strong information sharing culture that departments and business processes do not need to be located in the same place to work together (6).
An integrated, accessible by all information management system is crucial for organizations in order to devise quick reactions to an ever-changing environment. Therefore, organizational structure has been identified as the greatest hindrance to an information sharing culture. Cross-departmental interaction should be encouraged and emphasis on a common goal for all the departments should be made. These tools help to dull the departmental borders and allow for greater collaboration and information sharing. An interlinked IT infrastructure also plays a great role in ensuring that all information is collected, recorded, and analyzed by a common system that generates knowledge for the entire organization; therefore, organizational structure is an important contributor to the IT infrastructure of an organization (Gleeson, n.pg.).
IT Infrastructure – Impact on Organizational Performance
Information has now become an organizational resource that it collects, creates, transfers, and utilizes. An improved information management function has now become a guarantee of better performance, innovation, and improved decision making (Abrahamson & Goodman-Delahunty, 2). However, like any other resource, using and transferring knowledge to gain competitive advantage requires investment in appropriate, state-of-the-art infrastructure. Appropriate information sharing policies, strategies that motivate collaborative effort, systems which include structure and technology, and finally, information sharing values, norms, and behaviours that define culture – all come together to form the IT infrastructure of the organization. How facilitating is the infrastructure to sharing of information is dependent on each of the elements that compose it (Abrahamson & Goodman-Delahunty, 3).
As discussed in the previous section, organizational structures define lines of authority, define responsibility, and coordinate communications within an organization. Along with these, implicitly policies, strategies, procedures, and processes are also defined and applied in accordance with the organizational structure. These elements strongly influence the level of communication amongst organizational members thus, affecting the sharing of information, efficiency and effectiveness of decision making and innovation in the organization. Having open communication patterns, less rigid chains of command, and cross-departmental task teams can help to cultivate a more open information flow in the organization (Abrahamson & Goodman-Delahunty, 4).
The second and most important element of an IT infrastructure refers to the technical systems that are in place to determine how knowledge travels throughout the organization and how it is accessed by each member. The creation, storage, retrieval, transfers, and application of knowledge throughout the organization requires appropriate systems to be in place. These technological IT systems include data warehouses, internet, intranet, and knowledge directories, along with planning and organizing algorithms that can pull the right piece of information out of the immense piles of information an organization holds. Keeping the databases updated and ensuring that information is kept handy, help to improve policy, practice, and performance of the organization (Zaeid, Hussein, & Hassan, 28).
Cultural analysis reveals the beliefs, value systems, and philosophy that underpin the information generation, usage, and sharing within an organization. Not only is an information-sharing culture important, but it is all the more important to have an information based culture. The norms in the organization regarding accuracy and timeliness of information are important in defining the efficiency of the IT infrastructure in place. If the group norms are too relaxed about the accuracy of the information, there will not be appropriate monitoring and control mechanisms built into the infrastructure to ensure accuracy. The general skill level in the organisation and mental models of assessment play a great role in ensuring that the entire IT infrastructure is built around conveying and presenting information in a manner that is consistent with the general perceptions of information in the organization (Cox, 8).
A supportive organizational culture is that in which values and standards of performance are not just known but also put into action, in order to achieve performance goals that align all the units of the organization and are dependent on the knowledge management function of the organization. Therefore, aligning the culture with the goals of the organization is imperative in achieving the appropriate knowledge culture that respects the goals and follows the strategy (Abrahamson & Goodman-Delahunty, 5).
All three elements are required to establish and enhance an IT infrastructure that is closely accepted by the employees and that has the power to collect, store, and analyse information available from the environment.
The growing features and complexity of today’s IT infrastructure have resulted in a new IT plan in which most organizations are outsourcing their information management function. Such organizations provide complete information gathering, storage, organizing, and analyzing tools to ensure that the required information is strategically important for the organization. This recent trend towards outsourcing IM has been the result of IT infrastructure becoming an extensive affair. Small organizations incur higher costs in maintaining and upgrading hardware and software, employing in-house experts, and ensuring the right attitude towards information collected. Outsourced or not the information management infrastructure of an organization plays a crucial role in maintaining the right records and providing the organization with the right information at the right time. Therefore, a well-integrated IT infrastructure facilitates information-sharing at all levels and has a positive impact on the performance of the organization (Cho, 29).
Research has revealed that integrating IT into the managerial and operational processes can ensure the embedded use of IT through processes for sensing, gathering, organizing and disseminating information within the organization, as guided by information management behaviours and values such as pro-activeness, sharing, and integrity (Cho, 43).
The Chief Information Officer (CIO) has become a position more important than the CEO today. Challenges for the CIO, spring not just from accessing large volumes of information, but also from managing and structuring huge piles of data. This huge collection of information when left unattended and unorganized can result in excess collection and storage costs, but when the right software such as enterprise resource planning systems or supply chain optimization software are used, the same bulk can reveal trends and directions from the market, that can give the organization a competitive edge and improve organizational efficiency and performance. The worst impact that unorganized information can have on an organization is that of information degradation. The CIO should prevent his organization from reaching a point where people do not understand what collected data means and how it could be used to benefit the organization. Tackling this information challenge requires the use of intelligent information management systems and requires a complete change of IT infrastructure in the highly evolved organizations of today. IT infrastructure is not just a onetime development process; it requires complete governance with a proper check and balance system. With the rapid growth in technology and processes it needs upgrading and expansions with time. To overcome the issues of unmanaged information a proper, effective IT infrastructure and its effective governance section should be established for the better performance of the organization (Accenture, n.pag.).
The Case of Tesco
Established in the 1950s, Tesco was amongst the first self-service supermarkets of its era that provided immense choice and quality products. This value package was all that the shopper of those days could imagine. However, the growth of Tesco to today’s largest and most profitable supermarket chain in the UK, was not simply a result of extraordinary profit margins, rather it was the perfect case of information accumulation, analysis, and application to serve the customer in the cheapest possible manner in order to enhance profitability. The best ways of conducting this business were discovered by the employees, but were so well recorded that no information ever left the organization, while employees left. This was the beginning of information management at Tesco. The biggest step that was dependent on a strongly developed information management system was the establishment of Tesco.com – the online store. Tesco identified that sales through Tesco.com complemented physical sales and thus became an added source of revenue.
The initial ordering system used by Tesco was manual resulting in frequent errors, time consuming procedures, longer delivery times, and higher delivery costs. Very soon it was identified that an automated system that uses the Internet to book orders and convey them to the shop should be used. This was the time when the technology part of the IT infrastructure gained some acknowledgement from its users. To reduce delivery times, in-store picking of orders was chosen and delivery costs were minimized too. At the same time, in-shop physical customers could not be displeased through over-crowding of aisles or having too many items out-of-stock as the rate of in-store picking was higher than the stock replenishment rate. The timings when physical shoppers peaked were recorded and using this data in-store picking of Tesco.com orders was mismatched with the physical shoppers’ timings.
The role of information here was to reveal issues such as crowding of aisles and loading docks, and to identify physical customers’ peak shopping hours. The open implementation of information management encouraged employees at all levels to contribute to information management and to access readily available performance information. Recording and analysing information regarding over-crowding of loading decks resulted in the decision to build Tesco Extra stores that provided open spaces of operation to picking staff and delivery fleet. Later, these time and space constraints were handled by the establishment of exclusive Tesco.com stores, although Tesco store managers were willing to run physical shopping and online shopping stores side-by-side due to the additional and growing sales figures of Tesco.com. These decisions were taken on the basis of a soundly developing IT infrastructure at Tesco. For example, Tesco Direct – non-food products – integrated every step in the value chain to ensure that information was used to create valuable knowledge and to increase efficiency. Steps such as catalogue printing and stock procurement, and every function of multi-channel retailing was in-house generating a huge database that was constantly developing the information base of the organization.
However, despite such progress and a continually developing Information system, Tesco realized that delivery models had to be very distinct for perishable food items and high cost, low volume non-food products. Different databases had to be used, new algorithms for picking and delivering had to be established, and thus, a major addition was made to the knowledge base of the organization. Therefore, Tesco’s example demonstrates that Information management systems are not a one-time affair, rather these have to be constantly updated and developed accordingly.
The most sophisticated use that Tesco made of its knowledge management function was that of offering customer loyalty cards and all customers who registered entered the Tesco database with not just identification details, but also with shopping preferences. Marketing efforts from then on became highly customized as promotions of preferred products were made via direct mail, and invites to exclusive product events were sent to the cardholders.
Tesco has made great progress in establishing a strong IT infrastructure which is well-integrated. It has come a long way in establishing an open culture of knowledge management and knowledge sharing. However, the eternal question of invasion of privacy in analysing customer preferences was also raised in the case of Tesco; whereby, the retailer quickly dismissed such concerns by revealing that consumer information was not being used for any purpose other than making tailored offers and direct marketing efforts.
Tesco.com has opened a whole world of possibilities for the retailer, as expanding current business and exploring new business ideas that branch from Tesco’s core idea, reveal a bright future for the organization.
It has been well understood that departmental divisions and the holding of information within different siloes of the organization was never a healthy part of the information management culture. Adopting newer technologies, encouraging cross-departmental communication and business efforts, along with a focus on fostering a culture that encourages information sharing, result in the development of an infrastructure that supports knowledge management. The case of Tesco is in itself an example of how over time the importance and significance of knowledge management becomes apparent.
Organizations have Knowledge management systems developing simultaneously with their day-to-day business activities and the ever-changing environment that our businesses operate in have revealed that knowledge is the key to competitive advantage, and information has become a resource just as important as labour, land, and capital.
Abolhassan, Ferri. The Road to a Modern IT Factory: Industrialization – Automation – Optimization. London: Springer-Verlag. 2014. Print.
Abrahamson, Douglas & Goodman-Delahunty, Jane. Impediments to Information and Knowledge Sharing Within Policing: A Study of Three Canadian Policing Organizations. SAGE Open, 1-17, 2014, Web.
Accenture. Information Management: An Imperative for High Performance. Accenture 2015. Web.
Cho, Taejun. KNOWLEDGE MANAGEMENT CAPABILITIES AND ORGANIZATIONAL PERFORMANCE: AN INVESTIGATION INTO THE EFFECTS OF KNOWLEDGE INFRASTRUCTURE AND PROCESSES ON ORGANIZATIONAL PERFORMANCE. University of Illinois at Urbana-Champaign, 2011. Print.
Cox, Sharon. Managing Information in Organizations: A Practical Guide to Implementing an Information Management Strategy. New York: Palgrave MacMillan. 2014. Print.
Gleeson, Brent. The Silo Mentality: How To Break Down The Barriers. Forbes. 2013. Web.
Rasula, Jelena, Vuksic, Vesna, & Stemberger, Mojca. THE IMPACT OF KNOWLEDGE MANAGEMENT ON ORGANISATIONAL PERFORMANCE. ECONOMIC AND BUSINESS REVIEW, VOL. 14, No. 2, 147–168, 2012. Print.
Zaied, Abdel, Hussein, Gawaher, & Hassan, Mohamed. The Role of Knowledge Management in Enhancing Organizational Performance. I.J. Information Engineering and Electronic Business, 27-35, 2012. Print.
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