INFORMATION SYSTEM STRATEGY
INFORMATION SYSTEM STRATEGY (BB-4309)
GROUP 8
MD NUR ‘IFWAT @ MD HAFIZUDDIN BIN MAHMUD 14b408
PG MD ZUL EHSAN BIN PG HJ MD HUSSIN 15b8611
LECTURER: CHEN CHIN KANG
Table of Content
1.0) Abstract………………………………………………………………….
2.0) Introduction……………………………………………………………..
3.0) Literature Review……………………………………………………….
4.0)Result and Discussion…………………………………………………
5.0) Conclusion……………………………………………………………….
6.0) References……………………………………………………………….
1.0) ABSTRACT
Development and adoption in IT is vital in making the whole business/organisation efficient as a whole. The paper will critically discuss on the Innovation Diffusion Theory of ICT and finding reasons as to why businesses willing to adapt ICT in their organisation specifically the telecommunication industry.The paper will discuss on cloud computing that primarily focus on the telecommunication industry. The paper will also look into the literature review mainly on cloud computing, the definitions, possible advantages as well as the challenges or drawbacks faced by the organisation or business in the telecommunication industry. The paper will also look into the lists of the aspects of effectiveness that cloud services may bring in to the business in implementing or incorporating aspects of ICT in their organisation. This will followed by the results and discussion where the benefits and drawbacks of cloud computing is being critically analysed to come up with an insightful solution.
2.0) INTRODUCTION
Information Computer Technology is one of the most important aspect of modern daily lives. It can be said that in a globalized economy, ICT is one of the most important factor that contributes in economic development, ( Maryska, Doucek, Kunstova, 2012). This is because Information Communication Technology could break barriers of communication in long distances and can help make processes and information gathering and management relatively easier and more efficient than in the past due to availability of internet mediums such as cloud computing. The application of ICT in business organizations could also help in boosting their productivity if the usage of such technology is widely used, which is happening currently at an increasing rate, (Oliviera, Martins, 2011 ). As with many aspects in life, there are people who are readily to accept and to adapt ICT into their daily life while others are resisting these changes. The same could also be said for business organizations. This report is to find out the Innovation Diffusion Theory of ICT and the reasons for differing acceptances by organizations specifically the telecommunication industry sector.
3.0) LITERATURE REVIEW
Definitions of cloud computing
Mell, P. M., ; Grance, T. (2011) defines cloud computing as a customisable computing resources that able shared pool of network to access in a convenient , and on demand network that can be done in a minimal effort in terms of management and interaction of the service provider. This definition is also utilised by Zhang, Q., Cheng, L., ; Boutaba, R. (2010) to back up their paper as they see the definition given by NIST is engulfing the idea of all the important aspects of what defines a cloud computing.
On the other hand, Armbrust, M. et el (2010) defines cloud computing as any services that are delivered over the internet using applications and providing those services are the hardware and systems software in the data centres.
Zhang, Q., Cheng, L., ; Boutaba, R. (2010) also elaborated on how the characteristic of cloud computing is based on the fact that it is on-demand, where the resources (physical resources includes storage or CPU) are given as general utilities where users can lease or release through the internet if its only being requested.
It is obvious that there are not one definite definition of cloud computing. This matter is explained by Zhang, Q., Cheng, L., ; Boutaba, R. (2010) where they stated that different organisation or individual have different opinions , grasp and understanding as it is not a new technology but merely the concept just bringing in a set of existing technologies that resulted in a new operations model to run the business in an alternative manner. He also mentioned that the main idea behind cloud computing dated back in 1960’s by John McCarthy (Zhang, Q., Cheng, L., & Boutaba, R. ,2010) where he pictured computing facilities will be readily available to the general public.
Mell, P., & Grance, T. (2011) has characterise cloud computing as ” the network must be broad” , “service that are on-demand” , “Resource pooling” , “Rapid Elasticity” and “Measured Service” According to Roche, J. (2014) there are three types of service under cloud computing, namely : Software as a service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).
Advantages of cloud computing
Cloud computing are able to bring several benefits to the organisation as a whole. One of which is the ability to reduce cost in the long run. This was mentioned by D. A. Menasce and P . Ngo (2009) where they stated that implementing cloud computing is beneficial as it uses ‘pay-as-you-go’ model where the companies only utilise cloud resources based only when the company have the need to do so. This is also backed up by Sajid M. & Raza Z (2013) where he stated that cloud computing provides services that are adaptable and flexible as it is on-demand which is using pay-as-you go model and in return reducing the cost of the organisation.
Avram, M. G. (2014) further elaborated on how cloud computing can reduce the cost where he mentioned that the cost in terms of entry can be significantly lowered and making it readily available to the smaller firms and benefit from application that are computer bound or any application that demands a lot of computation with the implementation of cloud computing. Cloud computing can also make large computational jobs faster and make it more efficient for the business. He also stated that cloud computing are able to yield instant accessibility to hardware resources without having to invest a lot which in return leading to a faster time to market. Cloud computing are able to drastically reduce the cost in corporate computing, which can become an infrastructure that are adaptable to any environment and shared by a variety of users with different purposes. Roche, J. (2014) also mentioned on that cloud computing has been adopted by not only large companies but also small enterprises because of its ability to save cost to its customer as they can eliminate cost in investing in expensive hardware, coming up with application and also because of the nature of demand .
IBM Global Service (2009) mentioned applying cloud computing can increase the efficiency of the organisation as a whole as it ease in IT management and respond quicker in meeting the business requirement. The article also explain of how if cloud computing is implemented correctly can improve the performance of the business and reduce the costs of utilising IT resources to the organisation. Another advantages is on the stability of cloud computing , according to D. A. Menasce and P . Ngo (2009) , cloud computing can ease the burden if user having to worry on maintenance and having to address unlikely scenarios and heavy workload as it can deliver a steady performance in doing its tasks.
Kim W (2009) stated that businesses can avoid making a huge initial investment in buying computing resources which can be costly as there are 3rd party provider owns and able to manage all the resources needed to perform the business functions. He also elaborated on the fact that businesses can save cost in terms of space, overhead expenses (electricity) and also the maintenance. In addition , with cloud computing the organisation has the full control to adjust the level of usage of the resources needed to operate the computing services easily which make them flexible. Kim W (2009) also mentioned about the accessibility of cloud computing where it can be access anytime from anywhere.
Zhang, Q., Cheng, L., & Boutaba, R. (2010) listed highly scalable as one of the advantages, the easy accessibility of resources from data centres that pool from infrastructure providers can easily expand its service to cater significant increase in demands. They also mentioned that it is accessible and can be reached easily with internet connections as the services are generally web based.
Disadvantages of Cloud Computing
Despite the benefits of implementing cloud computing, there are also several disadvantages or challenges faced by the business in the telecommunication industry that can affect in terms of their business, security and legal.
Business Aspect
There are several disadvantages discussed by journals and findings specifically in terms of business and marketing. According to Helft. M (2009), he stated the fact that cloud computing can affect on the running of the business and the availability of the service provided by the business. He raised the issue of the readiness of the organisation in having the utility to operate cloud computing which is one of the factors to lookout in implementing cloud computing. In addition to the technical issue being raised, business that provide cloud may suffer interruption of services for non-technical reasons such as regulatory action being taken or business shut down (Armbrust, M. et al, 2010)
Furthermore, cloud computing can also affect the business in terms of cost. According to Martucci,L.A et el (2012) he stressed on the pressure of the cost factor of implementing cloud computing in the telecommunication industry as cloud computing services promises reduce in cost and gaining a new revenue stream in the long run. He also stated that the business main concern is to come up with ways on reducing the cost without sacrificing the main purpose of the business. Martucci,L.A et el (2012) also stated that the telecommunication faces challenges in terms of meeting the customers expectation in protecting their data as typically the telecommunication industry is obliged in protecting the customers communication.
Privacy and Security Aspect
In terms of privacy and security, Sajid M. & Raza Z (2013) stated that there is still an unsatisfactory level of secureness in cloud computing as the application as well as the data on a cloud that is open to public might not be very secure. This is also backed up by D. A. Menasce and P . Ngo (2009) where they mentioned that businesses or organisation raised their concerns on having to share their sensitive data in the same place as their competitors as they are afraid the risk of being exposed by the cloud computing provider.
S. Ramgovind, M. M. Eloff, E. Smith (2010) also elaborated on security issues where he mentioned that security reasons has been one of the factors that prevent organisation from implementing cloud computing as the thought of placing the organisations data on someone else’s hardware (hard disk, CPU) can be unsettling. Common issues may also arise such as loss of data and even phasing which can be detrimental to the organisations as a whole. Furthermore, Sajid M. ; Raza Z (2013) mentioned that in the event of inevitable situation of catastrophic situation , data recovery may be impossible to perform and this may affect not only the user but also the service provider. D. A. Menasce and P . Ngo (2009) also elaborated in this matter where they stated that there is a need of guarantee that the cloud computing provider has enough backup and recovery plans to avoid an interruption of a users activities in times of disasters.
Legal and Regulation Aspect:
Cloud computing may also bring in disadvantages in terms of legal and regulatory. According to Armbrust, M. et el (2010) there are four aspects of legal and regulatory that the organisation should look into : Data Protection Legislation, Data Retention Legislation , Lawful Interception and Protection of the National Infrastructure.
i) Data Protection Legislation : Under the Data protection legislation, he explained how this can be seen as a challenge to the cloud computing service in terms of having the ability to deliver any information needed by the agreements of data processing especially in the EU as under the EU legislation, they have to know the of who process and the purpose of obtaining the data (Armbrust, M. et el ,2010)
ii) Data Retention Legislation :Armbrust, M. et el (2010) also elaborated on the other challenge faced by organisation is on the data retention legislation, which means traffic data must be given to law enforcement agencies. This can be a challenge in ensuring that the cloud provider have the ability to address the authorised parties in terms of collecting and providing information when needed.
iii) Lawful Interception : Armbrust, M. et el (2010) also mentioned that the problem may arise if the location of the cloud service differ from where the telecommunication system are, problems such as the law enforcement having different jurisdiction may arise. The challenges are the fact that they have to deliver the data needed when requested and problems may occur as having to follow which different rules (due to locations difference between telecommunication provider and cloud service) to follow as to what extent the data must be provided.
iv) Protection of the National Infrastructure
Armbrust, M. et el (2010) mentioned that Telecommunication is a strategic asset to many countries and the services must have the ability to produce inside the country and this will inhibit the range of cloud computing services and another challenge that can occur is to protect the country’s telecommunication data against other nations that may operating in another country cloud service which follow different jurisdictions.
This is further elaborated by Roche, J. (2014) where he talked about the governing law and jurisdiction of how the service provide will highlight the fact that they are responsible within its own country , and the jurisdiction of the courts is according to the services providers country in the event of any disputes happened.
4.0) RESULT AND DISCUSSION
Information Computer Technology is one of the most important aspect of modern daily lives. It can be said that in a globalized economy, ICT is one of the most important factor that contributes in economic development, ( Maryska, Doucek, Kunstova, 2012). This is because Information Communication Technology could break barriers of communication in long distances and can help make processes and information gathering and management relatively easier and more efficient than in the past due to availability of internet mediums such as cloud computing. The application of ICT in business organizations could also help in boosting their productivity if the usage of such technology is widely used, which is happening currently at an increasing rate, (Oliviera, Martins, 2011 ). As with many aspects in life, there are people who are readily to accept and to adapt ICT into their daily life while others are resisting these changes. The same could also be said for business organizations. This report is to find out the Innovation Diffusion Theory of ICT and the reasons for differing acceptances by organizations specifically the telecommunication industry sector.
In many industries and sectors each organization have different rate of fully integrating Information Communication Technology in their systems. This is due to the culture of the organization, the level of acceptance in their social system and the capacity of the organization itself. Business organizations who are not quick on the intake or not efficiently integrating and utilizing technology to the fullest will be left behind and may end up liquidating or go bankrupt due to better competitors chosen by the customers. Differing companies have different technological levels integrated in their systems. This may not solely due to lack of finances. It may be caused by technological acceptance, fear of perceived risks or incompatibility of the technology in the current situation of the company. The reasons for the difference in technology integration in any organization is understood under the Innovation Diffusion Theory. This is to measure how fast can technology be spread within an organization or company, (Wani, Ali, 2015). The causes of such differences are grouped into four which are: Innovations, which is the perceived unique idea relatively new in the current industry, communications system, which is the effectiveness of the means of communicating with each other, time, duration of the new idea being innovative until other companies follow suit and social systems, whether the current society accepts the innovation or not( Wani, Ali, 2015). In theory good innovation could make organization more effective, efficient and more competitive in the market as customers want the process of their business to be smooth and time saving.
The same can also be said for the telecommunications sector. Organizations in this sector have also adapted themselves to the newer technology for them to keep on track and stay competitive in the market. The advantages of securing proper and effective innovations in the industry could provide tremendous benefits, especially innovation that includes the ICT area. Improved performance could be reached by integrating proper technology to a business organization, (Moghavvemi, Hakimian, Feissal, 2012). Proper and effective ICT integrated business systems could also help maintain competitive advantage against business rival through proper information gathering, storage, management and utilization (Moghavvemi, Hakimian, Feissal, 2012). This is because present and newer ICT systems could do these function more efficiently and effectively than by using older less efficient models. Another benefit of newer ICT integration for an organization is that not only could it help cut the cost of certain processes within the organization, but also improve the effectiveness and efficiency that could make the organization produce more profits. ICT could also help an organization employees’ to co-ordinate and communicate with each other and customers, especially important since it is the telecommunication industry. Although these newer technology integration may cost the organization but it could help maintain or gain a competitive edge in the market. Therefore, an organization should heavily consider integrating the latest technology whose benefits far outweigh the cost to ensure maximum benefits rather than a hindrance to the company. Even still, since in modern times many other organizations are integrating the usage of newer ICT in their systems at an astonishing rate due to rapid changes in technology. Which is why ICT integration should be more of a strategic requirement rather than an extra resource to maintain oneself in the current market, (Moghavvemi, Hakimian, Feissal, 2012). To ensure ICT competitiveness in the telecommunication market, cost effectiveness is important as it could affect pricing of the services provided to consumers. One of the ways to reduce costs is to adapt to cloud computing
Innovations in the ICT area may able to give business organizations many benefits such as cost cutting and uniqueness that can improve business processes, supply chain and attract customers. However, it does have its own share of drawbacks and risks. Hence, innovators are usually the first users of newer technology or risk takers. Strategies should be implemented to tackle these risks involving innovation, ( Wani, Ali, 2015). These risks may include problems such as incompatibility of the adopted technology that would lead to financial losses instead of a return in investment or unacceptability by the employees which would lead to loss of performances. Therefore, business organizations should make proper business strategy to ensure that the cost of integrating the new ICT would give sustainable benefits in both the short and long run if possible to tackle the drawbacks behind innovating.
The existence of cloud computing have changed how information technology are being created and utilized,(Marston, Li, Bandyopadhyay, Ghalsasi, 2011). It can help reduce costs due to hardware, software and even manpower. It can help make business organization run and communicate with each other more efficiently. This is because cloud computing is a platform for sharing and communicating computer resources efficiently, (Chang, Walters, Willis, 2013) . This is the type of ICT that could help the telecommunication industries to stay competitive in the market in present day. This is because technology is rapidly changing nowadays and many other business sectors are implementing new ICT in their systems to stay in the market. As stated in the literature review cloud computing have its own share of drawbacks when implementing it into the organizations systems. Other reasons why business in the telecommunication sector should integrate cloud computing include, (Marston, Li, Bandyopadhyay, Ghalsasi, 2011) :
1) Cloud computing infrastructure is relatively flexible as the organization itself need not to buy required hardware to maintain and utilize the system as it is already provided by the cloud services and fixed cost per people usage of renting the service would decrease as more people using it increases. Therefore, the more customers utilizing the organization’s cloud service the more cost effective the system is.
2) Since cloud computing is an online software service platform, it can help provide accurate information at a relatively faster rate compared with internal systems. This is because it can be easily accessible online anywhere as long as the persons are authorized to access it. This could also lead to problems due to increased rate of modern cyber crimes such as hacking.
3) As stated above cloud computing is relatively mobile and easily accessible due to it being an online service. Cloud services are also provided privately to organizations to be used inclusively for employees rather than the whole public. Cloud services also provide ease to both employees and other users of the services.
Proper and effective integration and utilization of cloud computing technologies could provide a telecommunication organization a cost effective, competitive edge in the market against competitors that are either utilizing cloud computing or otherwise. Unlike other ICT, cloud computing does not require too much usage of financial resources as stated above due to being a software as a service. Customers may also like the idea of a public cloud services especially in the telecommunication industry as they can involve and contribute in the company that they are buying from. This can be seen as giving them relative control in the organization thus may attract customers. Cloud services could also provide ease for customers as they could just access the cloud service online when either purchasing or inquiring information from the organization rather than go to the counter. This is important in the telecommunication industry as the number of customers is relatively large since modern times telecommunication is essential in both daily life and business to connect with one another overseas or otherwise. Customers would opt to pick the one with the latest technology and more efficient communication services, which is why telecommunication companies should stay with the latest technologies as long as it is beneficial.
Even though advancement in ICT through cloud computing is beneficial, the perceived risks it carries may inhibit business organizations to readily accept and integrate it into their system. Such as were stated in the literature review there are many risks in the involvement of cloud integration in businesses. For instance, the requirement for accepting cloud computing in their systems would be due to the expected benefits and the ease of use of the service that could help them improve performance and time saving by doing otherwise, (Li, Chang, 2012). For these reasons the businesses in the telecommunication industry should implement careful and proper strategies to ensure that the ICT implementation would not cost too much that adversely affect their finances or if the newer technology would decrease performances and unaccepted by society rather than helping.
The telecommunication industry could benefit from the advancement in cloud computing within their supply chain management. These includes benefits such as eliminating unnecessary hardware and processes in the business and improve the ones that are still being used.
First, cloud computing can help provide real time regular quality checks of the latest shipments of resources of the organization. Cloud based systems could help the organization ensure this process and help reduce costs due to lack of quality resources or processes by tracking the process from beginning to end while reporting the analyzed resources within the supply chain management, ( Columbus, 2018). This can ensure that the organization have the best quality resources readily available to provide their customers satisfactory services such as better bandwidth or efficient telecommunication services provided. Doing this would opt customers to choose them over competitors that are not using such systems.
Second, analysis from cloud based services could help the organization improve the manufacturing process by reducing the required time of completing a customer order through real time feedback of the process, ( Columbus, 2018). This will help reduce the cost of failed delivery and customer dissatisfaction thus help to maintain customers.
Overall Equipment Effectiveness within a cloud based service could help business organizations by analyzing and reporting the performance of the equipment and employees within the organization to ensure optimal performance. This system also provides insights whether an equipment or a process is efficient to be used or changed, ( Columbus, 2018). This can help improve product efficiency which in turn can help the organization cater to its customer needs more effectively to satisfy and maintain them.
Cloud based information systems could save time in a business process by eliminating manual reporting for government required processes such as taxing and auditing. This is possible as cloud services usually provide automated recordings of the organizations stocks, processes and sales that can be easily filed and audited, ( Columbus, 2018). This helps ensure that efficiency is not lost when dealing with this situation.
Cloud based services could help communicate with suppliers more efficiently thus could benefit from real time updates on the processes regarding supplies of resources and reduce problems of sudden product recalls, ( Columbus, 2018). This ensures that the organization runs at relative peak efficiency and can cater customer requests while able to react more effectively to sudden problems due to resource failure.
Cloud services could improve an organization performance by providing online based Warehouse Management Systems that helps by improving inventory management by setting data collected from records in the system due to patterns of inventory going in and out due to processes involving customer and sales , ( Columbus, 2018). This helps companies by reducing the time and cost of manually counting inventory bought and utilized in the business and the cost of sudden shifts in demand.
Cloud services provides an integrated automated product quality check systems that helps set prices, purchases and customer orders to reduce errors in the production and sales process and help reduce time due to these erorrs, ( Columbus, 2018). This will help business organizations eliminate or reduce the risk of downtime due to production error. This in turn will help cut the cost of manually checking for the problems each time production is ensued.
Cloud services that have global integrated systems could help an organization ensure that the quality of the product and services provided by them are successful and happily accepted by the customers worldwide. Organizations in turn can use these feedback to improve their products based on the culture or society of that area or country, ( Columbus, 2018). The organization could also utilize the feedback from other branches of their company in the world to improve their processes on what is missing in another branch. This can be made possible as cloud is an online platform that enables managers to communicate faster and easily overseas.
Cloud based system services that provide online ERP system integration helps a business organization in globally tracking performance of ordering and selling product and services to customers, ( Columbus, 2018). This system measure the efficiency and effectiveness rate of the accuracy, timeliness and completeness of the deliverance of the product or services. This will vastly help an organization’s supply chain management as it helps build insight for improving the processes and showing which is the best way to do the processes.
These benefits of cloud computer service integration would tremendously help a business organization’s supply management chain effectiveness and efficiency. But perceived risks of integrating the new technology would mean that people and organizations would not readily accept them into their systems and daily life. These perceived risks may mean the new integrated ICT would not be fully utilized by the company as employees may either not have complete knowledge of its usage or are too negative of change to use them thinking that their previous way is more efficient. Organizations should weigh the benefits over the risks to know the implications of integrating these new Information Computer Technology as well as the cost of applying it. In the instance of telecommunication industry, they should further investigate on the benefits such as cloud integration to enable easy online accessibility for customers to inquire and purchase their services. Therefore, managers should create strategies based on the importance and necessity of the ICT they want to integrate into their system as too much ICT or too fast of changes in the organization would create financial losses, performance drops and rejection of employees. Another aspect to think about is being an early innovative or adopter of ICT. It may cost more but give early competitive edge but can be copied by other businesses in the long run if it is successful. While being too late may miss the opportunity of the benefits of being an early adopter. For these reasons, careful strategies should be created before adopting new technologies to ensure that the new integrated ICT would be fully utilized and maximum efficiency of processes would be achieved after receiving the upgrades.
5.0) CONCLUSION
Telecommunications companies should consider on taking in the newer technologies into their systems as most competitors in the market would do so to gain an advantage in the long run. Managers should consider the reasons why they need the IS in the first place and gauge the necessity of the IS and group them into certain levels of importance. Since people have certain resistance to change in adopting IS into their system due to possible change in their work life or organization standing, the changes of the adopted IS should be gradual for people to get used to it slowly to reduce risk of rejection and arguments in the organization. Telecommunications companies should also hire managers who have talent and knowledge in IS to ensure proper leadership is established that could help run the IS smoothly. Doing these could help reduce the risks of the disadvantages of the newer IS adoption such as cloud computing into their systems while taking full utilization of its advantages and benefits. Although certain drawbacks such as legal obligation costs and security costs could not be fully eliminated, the benefits of utilizing such ICT could mean the competitiveness or survival of the company in the market as other rivals that integrate IS or ICT into their systems usually have the competitive edge. In the end, the decision of integrating ICT depends on situation of the company, market and competitors.
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