Business Information

Executive Summary

Business information management requires the use of information systems, which make possible the conversion of data into useful information to be used by decision makers in organisations (Chaffey, 2004) The acquisition and further deployment of such systems requires organisations to make expensive investments prior to know whether they are going to produce the desired business improvements. Therefore, delivering value for money from information systems investments has become a very serious issue for many organisations. There are several examples in both the private and public sector of expensive failures, but there are fewer published cases of success (Ward, 2006)

Related Articles The Importance of Project Management in Organizations Project Management Maturity Model - And The Case For Using A Culture Maturity Model Project management and General safety consultancy What a HR Manager Needs to Know and Do About Business Strategy Therefore, the case study will illustrate how different information systems have enabled Amazon to achieve a solid competitive advantage by improving its marketing techniques and the efficiency of its distribution channels in a time in which the fast development of technologies have come to redefine the commerce model within the retail industry. Indeed, the use of Internet has changed the way in which people acquire goods and services, and nowadays there is a strong shift towards online shopping that is forcing retailers to go onto the Net if they want to remain competitive. In this regards, Amazon has been a pioneer in using information systems to anticipate changes in the retail industry environment, and in addition, it provides the perfect example of how a company can obtain value for money from information system investments.

The Business Value of Information Systems

Introduction

Business information management is essential to organisations in order to support strategic decisions. Information adds value to organisations as it allows improving products and services, reducing business costs and developing new innovations. Information systems are used in order to manage business information in such a way that allows organisations to increase profitability, to improve productivity and to gain other intangible benefits with the objective of achieving sustainable competitive advantage and company success. In addition, the use of information systems allow organisations to adapt to external changes in the business environment, otherwise they could not remain competitive.

Business Value of Information

Information management is essential to businesses in order to support operational processes, organisational performance, and strategic decisions affecting their position in the market place. According to Marchand (2000) information can create value for organisations by:

*Adding value to products and services through a better understanding of customer characteristics and needs, as customer activities are monitored to develop competitive strategies.

*Reducing costs and making business processes and operations more efficient, as information enables organisations to use fewer resources and to improve communication.

*Supporting organisational strategic decisions and helping with risk management assessment

*Enabling innovations and new product and service developments (Chaffey, 2004; Oestreich, 2010)

Business Information Management through Information Systems

Business information management involves the use of information systems (IS) which, according to the UK Academy for IS, are "the means by which organisations and people, using information technologies resources, gather, process, store, use and disseminate information". (www.ukais.org; Chaffey, 2004) Therefore, IS are computer based systems that collect, process and stores data, making possible its conversion into useful management information -data mining process- to be used by decision makers within organisations. (Davis & Olson, 1985; Lucas, 1990; McLeod, 1995 cited by Ramesh, 1997).

The Value of Information Systems

During the 1990s, there was a great argument about the real value delivered by expensive organisational investments on IT and IS, as studies found out that there was weak correlation between IS investments and increased business performance (Solow, 1987; Brynjolfsoon, 1993; Strassman, 1997 cited by Dans, 2003; Chaffey, 2004) However, studies by Delone and McLean (1992, 2003) and by Jacks (2009) demonstrated the importance of IS to the creation of business value and competitive advantage. (Jacks, 2011) According to Jacks (2011) IS make organisations successful by either:

*Increasing profitability: sales growth, profits, ROI, reduced costs, market share increase.

*Increasing productivity: business process outcomes, operational efficiency, service performance

*Intangible benefits: customer satisfaction and loyalty, industry performance, quality improvement.

Customer Relationship Management (CRM) Systems

CRM systems are intended to build and sustain long-term business relationships with customers of an organisation. Organisations may increase their profitability if they can retain customers and sell additional products to them. Research by Reicheld and Schefter (2000) showed that by retaining 5% more customers, online companies can increase their profits by 25% to 95%. (Chaffey, 2004)

Consequently, CRM systems focus on the activities aimed to market products and services to customers in a more efficient way. By understanding customer characteristics and needs, organisations can elaborate tailored marketing campaigns to acquire, retain, extend and select potential customers, which ultimately will translate into increased sales and organisational profitability (Steinberg, 2006; Chaffey, 2004; Lee-Kelly, 2003)

Table 4: Marketing activities of CRM

CRM marketing activities

Objective

Information based marketing techniques

Customer acquisition

Gain new customers

Tailored marketing communication

Customer retention