Chapter 2
Review of Related Literature
This part of the study shall be discussing the findings of related researches to this study. It shall provide a discussion on the significance of this study to the existing literature. The contents of this portion of the study is gathered and collated from its secondary data.
Related Literature
Information has become one of the main assets in information era. The efficient use of information technology is significant in determining the success of a certain organization. Thus, in Janssen (HK) Ltd., making awareness of information value and the ability to manage information organization-wide will have great impact on organization progress results. Since information is used in every feature of business and generated in every process, a centralized supervision function is needed to structure, combine and distribute it effectively and efficiently. Where the finance department monitors and manages the financial aspects of organization and the legal department handles all legal affairs, the Information Organization should manage this important business asset.
Apparently, one of the most important and difficult tasks is determining important information and the proper way of using it. Where legal concerns and financial matters tend to identify themselves automatically, although often too late, with information this is not always simple. Data is engendered in all processes in and outside the organization. Determining the possible information value of these processes and creating a system to effectively use it requires specialized skills. Meaning to say, we need to combine in-depth business knowledge with in-depth system/process knowledge. Eventually, when the information value is close to the procedure, e.g. obtaining direct process competence, this link can often be made by the organization. This can be very difficult when information value is business-logically separated from the information source. Maximizing supplier and customer relations inter-departmentally is a simple example. Recognizing strategic processing strengths in one department and using them commercially in another could be another issue.
Information is an asset that needs processing and care. Handling it wrong can render valuable information useless where money can be transformed and traced easily. On the other hand, information can be copied and used on different locations multiplying its value. Like money the optimal use of information requires strict procedures for handling it. As for money this depends on the specific organization.
Information Technology in Pharmaceutical Industries
Information technology is advancing at a rapid pace. The application of information technologies provides opportunity to improve productivity, quality, and cost control in education and research, security of health-related information, and reimbursement. While these advances in IT promise huge benefits such as higher quality medicine, enhanced workflow and increased efficiency, there is also the potential for precious resources to be squandered and the added pressure of patient welfare at stake. While Pharmaceutical Industries information systems were intended to steam line financial management and automate manual processes, Pharmaceutical Industries now require much greater functionality. The modern Pharmaceutical Industries is expected to link administrative, laboratory, financial and clinical data to provide faster diagnosis and better treatment.
The application of information technology to Pharmaceutical Industries would highlight the potential benefits of information technology in increasing access, improving quality, and reducing costs. While there is consensus that information technology will result in substantial cost savings, demonstration projects can quantify the magnitude of the savings in a way that is scaleable to nationwide implementation.
One major opportunity for improving quality relates to increasing the use of information technology, or IT. Pharmaceutical industries currently invest less in IT than in any other information-intensive industry, and not surprisingly current systems are relatively primitive, compared with industries such as banking or aviation. Nonetheless, a number of organizations have demonstrated that quality can be substantially improved in a variety of ways if IT use is increased in ways that improve care. Specifically, computerization of processes that are error-prone and computerized decision support may substantially improve both efficiency and quality, as well as dramatically facilitate quality measurement.
In this day and age, information is considered as wealth. The more an organization knows about a particular venture, the better it is equipped to embark on such a pursuit and almost certainly yield success. Information is an empowering advantage that enables an organization to optimize and maximize itself and at the same time move towards their goals and missions. Information is considered a thread “which provides the synergy between alliances and mergers”. It allows contact with other organizations whether in a competitive or alliance stance (Currie and Galliers 1999, p. 170). It provides the content that would allow analysis to take place. In this manner an organization may always be prepared in examining its internal as well as external environment, it’s own strengths and weaknesses as well as opportunities and threats.
Data and information are critical in helping the management of a company in analyzing their present status in order to cut costs, increase profits, spot market trends faster, and communicate more effectively with customers. However, in order to achieve these goals, the data and information need to be relevant, accurate, complete and timely. Information systems exist so they can effectively apply and use such data. Information Systems refer to the hardware, software, people, or data that provide the relevant information about all aspects of the operations of businesses (Simpson 1994). They may exist as customer inputs such as purchase information and geo-demographic data which can be filed in a database and used to match and tailor products and services to customer thereby resulting to customer satisfaction, loyalty and in turn, promising profits and increased growth and development.
Information systems in short enhance the value chain of an organization particularly in pharmaceutical industries. By gathering, organizing, selecting, synthesizing and distributing information, information systems can significantly create value with a product or a service (Currie and Galliers 1999. p 170). Information systems in pharmaceutical industries are known to involve the linkage of information to cater to the needs of the management, to establish system priorities and the actual implementation of such systems. These usually involve the computerization of data in order to be efficient in the passing of information. Information Systems are also known to have a “transformational effect” on an organization. The role is such that it can cause strategic change to usher in innovation, improvements and competitive advantage in the part of the organization utilizing IS (Cullie and Galliers 1999, pp. 381).
According to Robert Thierauf (2001), Information systems play an integral role in an organization’s Business Intelligence systems. Information systems are utilized so organizations or pharmaceutical industries can make the best decisions. They “provide the capability to assist decision makers at the highest level to get a better grasp of their operations” Systems arrange and manage information in such a way that a pattern or a model can be established “allowing decision makers to extract patterns, trends, and correlations that underlie the interworkings of a company currently and over time” In short, information systems allow an organization to have an in-depth and “a thorough understanding of a company’s operations” (Thierauf 2001 p. xi)
Yet success in Information Systems is difficult to meet. If not done correctly, Information systems may be “cumbersome, time-consuming, costly to implement” according to Michael Friesen and James Johnson (1995). Another reason for Information Systems failure is how precisely useless it would be in the part of the management who should be using Information systems as a way to optimize decision-making. The systems may be effective and adequate for several functions but if they are not suited to meet the needs of the management, they would not meet their very purpose and inevitably fail. As elaborated above, Information systems are supposed to allow a organization to have a proper clutch of a company’s operation. Reversing the situation, one may say that a company could meet Information System success if it is able to integrate such systems to the managerial function needs. The Information Systems need to be flexible enough to allow a smooth flow of knowledge transfer allowing “information to support key decisions, at low cost” (1995, p. 58). Information Systems Success may be attained if it is efficient, if it can be conducive of such an analysis of information. The keyword is linkage and integration of Information Systems to an organization’s Business Intelligence Systems as also mentioned above.
One of the companies that should have successful Information Systems is the Janssen Ltd. (HK), a pharmaceutical industry. Janssen Ltd. (HK) is able to distribute its products all over in world. It is a challenge to maintain IS success when the company of origin is half the world away.
They were able to maintain successful Information Systems by constant communications. The head company is always informed of the “new product on the shelves” of the world market. Effective Information Systems knows what to look for and how to use the information. In Janssen Ltd (HK) case, it knew that it must analyze each new product on the worlds market’s shelves. Such information will be stored in a database and be used to find updates on “content, innovation (and) packaging”. Successful Information Systems have comprehensive consumer needs and buying habits databases containing data not only on its international rivals but also local rivals. This also involves the trends in prices (Backman 2003, p. 10).
The following data indicates the sales report of pharmaceutical companies in 2004 and summary of sales (i.e. 2004 and 2005) of Janssen Ltd. (HK) in order to see the trends of their prices and profits.
Table 1
Table 2
Table 3
Janssens’ Business Performance
Over the years, the effective measurement of business performance has become a necessity to any firm to the point that such action is imperative for the firm’s competitiveness. Logically, this can be attributed to the fact that to be able to monitor performance effectively, firms will have the opportunity to draft better plans and to find areas on which improvements are needed. Performance measurement is basically intertwined with the firm’s efficiency and effectiveness (Neely, Gregory and Platts, 1995). The relationship between the variables can be seen on the meaning of performance measurement – that performance measurement is “…the process of quantifying the efficiency and effectiveness of action” (Neely, Gregory and Platts, 1995, p.80). By knowing the efficiency and effectiveness of the organization in both internal and external context, the firm’s strengths and weaknesses will be identified, thus making the firm more flexible and agile.
Because of the need for an effective business performance measurement, there has been a general initiative among the business community to replace traditional measurement systems (Neely, Gregory and Platts, 1995). Interests turned into how organizations can replace their traditionally cost-based measurement systems with ones that reflects their current objectives and environments (Kennerly and Neely, 2002). Reasons for this trend includes: the increase rapid changes in the business environment; and the increasing dissatisfaction in traditional business performance measurement (McAdam and Bailie, 2002). This led to the development of a range of business improvement models to help companies in their performance measurement tasks. Through the sales report presented previously, the researcher conducted a SWOT analysis.
SWOT Analysis
The type of and number of interfaces (whether IT internal or third party) for the modified function can greatly impact the completion of the task or process. Consideration also needs to be given to what the impact is to the task that remain internal and are not modified. Where possible the sharing of responsibility for network management processes, functions and instruments should be avoided. A single point of responsibility in network management is extremely important to avoid finger pointing when network faults need to be detected, determined and eliminated. Responsibilities should not be shared between individual persons or work groups (Terplan 1995:321). Great care needs to be given to the interdependencies of IT functions that make up the completion of one process.
The following chart provides a snapshot ‘Strengths, Weakness, Opportunities, Threats’ (SWOT) analysis, analyzing the possible performance of Janssen (HK) Ltd. in terms of sales productivity by modification of the Information System.
Strengths and Opportunities of IS Modification in Janssen (HK) Ltd.
- Access to skills
- Improved quality of service, achieve guaranteed service levels
- Defined service levels
- Focus on core business
- Additional Flexibility Access to skills
- Access to technology Additional Flexibility Access to skills
- Improved performance parameters
- Cost savings
- Change fixed asset base
- Improved balance sheet by removal of fixed assets
- Increasing range of supply
- Changing emphasis of IT activities to integration rather than creation.
- Increased control through contract for results
➥ To provide single point of contact and responsibility for all communication management. Specific to network functions (Muller 1996:450)
➥ To improve the management of communications problems and reduce their incidence
➥ To simplify operations through standardization of facilities, network architectures and procedures.
➥ To reduce the number of personnel involved in day-to-day operations & redeploy these resources to core business concerns.
➥ To effectively manage equipment inventories, vendor warranties, license agreements and maintenance schedules.
➥ To do all of the above more efficiently and more economically, while providing higher quality services to end-users.
- Eliminates delays caused by vendor and carrier etc. (e.g. finger pointing)
- Expedites ordering processing
- Reduces times spent on invoice reconciliation
- The company is buffered from the effects of technical staff turnover.
Weaknesses and Threats of IS Modification in Janssen (HK) Ltd.
- Inadequate human resources
- Inadequate change management
- An inability to take advantage of new and emerging technologies and lower than expected cost savings
- Lost money either directly as a result of not achieving anticipated cost savings or indirectly through having to resume expenditure on IT
· Reduced customer service level or increased inefficiency
- Additional management time to balance different units, need to allow different management and organizational cultures if the businesses are vastly different.
- Damage to staff morale
- Cultural mismatch
- Service provider dependency
- Lack of flexibility
- Requirement for long term commitment
- Possible breaches of privacy
- Lack of control of information.
- Deficient performance during transition period.
- (Re) internalizing an outsourced operation can be extremely difficult. Deficient performance during transition period. Inadequate human resources
- High risk involved in hidden costs, potential cost escalation. Charging of excessive fees for services that the company assumes the contract covers
- The threat of opportunism where vendors take control of the client’s IT function and may take advantage of the clients.
- The investment of the organization in equipment infrastructure, as well as the skills, expertise and knowledge of their staff regarding that equipment infrastructure and the data itself is all lost when the IT function is modified (Hirschheim, R. and Lacity, M.C. 1993)
Synthesis
Based on the discussions above, it is found out that information is a key resource of Janssen (HK) Ltd., together with people, finances and material assets. Thus, it is accepted to state that information is a business issue. The discussion above revealed that through effective information management of the organization’s resources and systems, organization administrators can add value to the services delivered to customers, reduce risks in the organization’s business, reduce the costs of business development and service delivery and encourage improvement in internal business processes and external service implementation. On the other had, it is recommended that when developing an information system just commence to make sure it produces important information and not data. It is better to build a report that is ideal for a specific need then to make a report based on a predefined concession between several users. The shaped information will have value and increases insight into information needs and the way the business is looked at. Adding more and more information to the system and solving the problems as they occur will eventually lead to a system as mentioned. In fact, that is the way any functional Information System is developed. Having an experienced team helping you take the first steps and educating your staff in the first period can make all the difference.
To completely evaluate the information management of the organization, it is advisable to adopt the devised decision making model. The model consists of the following steps:
v identify and define the problem;
v identify the desired goal or condition;
v consider obstacles to the goal or condition;
v identify alternatives;
v examine alternatives;
v rank alternatives;
v choose the best alternative ;
v evaluate the actions.
Finally, the use of the quantities in decision-making model helps us to minimize mistakes. Aside from the steps above, it is also recognized to list all the alternatives, identify future events that may occur, and construct a pay-off table in making effective decisions.
References:
Backman, M. and Butler, C. 2003. Big in Asia: 25 Strategies for Business Success. New York: Palgrave, Macmillan
Currie, W. and Galliers, W. 1999. Rethinking Management Information Systems: An Interdisciplinary Perspective. Oxford: Oxford University Press.
Friesen, M.E. and Johnson, J.A. 1995. The Success Paradigm: Creating Organizational Effectiveness through Quality and Strategy Conncticut: Quorum Books
Hirschheim, R. and Lacity, M.C. 1993. “Information System Outsourcing – Myths, Metaphors and Realities”, John Willey & Sons Ltd England.
Kennerly, M. and Neely, K. 2002. A framework of the factors affecting the evolution of performance measurement systems. International Journals of Operations and Production Management, Vol.22, No.11; pp.1222-1245.
McAdam, R. and Bailie, B. 2002. Business Performance Measures and Alignment Impact on Strategies. International Journal of Operations and Production Management, Vol.22, No.9; pp.972-996.
Muller N.J. 1996. “Network Planning, Procurement and Management”. McGraw- Hill Companies Inc USA.
Neely, A., Gregory, M. and Platts, K. 1995. Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, Vol. 15 No. 4; pp. 80-116.
Simpson, N. 1994. What’s News in the Information Revolution?, Educom Review, Vol. 29, No. 5, pp. 64-66.
Terplan K. 1995. “Benchmarking for Effective Network Management”. McGraw- Hill Companies Inc. USA.
Thierauf, R.J. 2001. Effective Business Intelligence Systems Connecticut: Quorum Books.
Credit:ivythesis.typepad.com
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