The Role of Information Systems in Digital Firms

 Introduction:
Information systems have become indispensable tools for digital firms,
playing a pivotal role in their success and growth. In the digital age, where
technology is at the forefront of business operations, information systems
provide the foundation for efficient processes, data-driven decision-making,
enhanced collaboration, and innovation. These systems enable digital firms
to leverage technology to their advantage and stay competitive in a rapidly
evolving marketplace.
By streamlining operations, information systems help digital firms optimize
their supply chain, manage customer relationships, and handle financial
transactions with ease and accuracy. They automate routine tasks, reduce
costs, and improve operational efficiency. Moreover, information systems
empower decision-makers with real-time data and advanced analytics,
enabling them to make informed choices that drive business growth and
adapt to market changes.

 Digital firms
Digital firm definition
A digital firm is a company in which almost all significant business
relationships with customers, suppliers, and employees are digitally enabled
and automated.

This means that all the procedures relating to core business processes are
completed through the use of digital networks that cover the complete
organisation. These networks also link the organisation to other business
organisations and to the outside world.

A company is formally defined as a digital firm when it uses the internet to

drive every aspect of its business processes. Through this, the corporation
shifts how it actually does business and opens up for more productivity and
increased opportunities.

Today, more than ever, large and small companies are working towards
becoming defined as fully digital firms. The changes in the world of
information technology have accelerated this tendency forward.
This is being done through close integration of information systems with
how business is done. Information technology systems, if properly designed
to cater to the company’s needs can be the main driver towards establishing
the fully digital firm.

The fastest path to a digital firm

We believe that the fastest and most reliable path towards a digital firm
passes through the adoption of cloud technologies in a first place. And in a
second place, build on those platforms in order to digitise and automate the
business processes of an organisation.
Fortunately, most of the information services we use today implement open
API -or software connectors- that interconnects them with each other and
help automate tasks that were once done manually.

As a result, mechanical tasks become done by software, triggered by either

predefined time milestones or by the results of other tasks. Freeing precious
human time for more creativity and decision making.

The choice of these orchestrators of tasks and processes is quite varied, at

EXEO, we use Zapier in order to automate presales, sales and service tasks.
But we also develop lots of interconnection in order to stitch all elements
together.

The three steps approach to the digital enterprise

The Digital Firm
Our approach is quite simple and it consists of three major steps:

Establish a strong IT governance and lay the foundation for everything IT,
we position ourselves as a virtual CIO as take care of design, operations and
innovation with a clearly defined mission and scope of work;
Identify the most suitable technology ecosystem for the organisation and
initiate the migration and adoption of the new digital tools;
Build of this foundation and develop the digital enterprise by making sure
every single process is digitised and automated.
As a result, mechanical work is eliminated, processes are automated,
productivity is enhanced and the human capital of the organisation has been
unleashed to deliver innovation and performance.
 TPS
What Does Transaction Process System Mean?
A transaction process system (TPS) is an information processing system for
business transactions involving the collection, modification and retrieval of
all transaction data. Characteristics of a TPS include performance,
reliability and consistency.
Techopedia Explains Transaction Process System
A transaction process system and transaction processing are often
contrasted with a batch process system and batch processing, where many
requests are all executed at one time. The former requires the interaction of
a user, whereas batch processing does not require user involvement. In batch
processing the results of each transaction are not immediately available.
Additionally, there is a delay while the many requests are being organized,
stored and eventually executed. In transaction processing there is no delay
and the results of each transaction are immediately available. During the
delay time for batch processing, errors can occur. Although errors can occur
in transaction processing, they are infrequent and tolerated, but do not
warrant shutting down the entire system.
To achieve performance, reliability and consistency, data must be readily
accessible in a data warehouse, backup procedures must be in place and the
recovery process must be in place to deal with system failure, human failure,
computer viruses, software applications or natural disasters.

 MIS
MIS Professionals Make Business Better
Businesses use information systems at all levels of operation to collect,
process, and store data. Management aggregates and disseminates this data
in the form of information needed to carry out the daily operations of
business. Everyone who works in business, from someone who pays the bills
to the person who makes employment decisions, uses information systems. A
car dealership could use a computer database to keep track of which
products sell best. A retail store might use a computer-based information
system to sell products over the Internet. In fact, many (if not most)
businesses concentrate on the alignment of MIS with business goals to
achieve competitive advantage over other businesses.
MIS professionals create information systems for data management (i.e.,
storing, searching, and analyzing data). In addition, they manage various
information systems to meet the needs of managers, staff and customers. By
working collaboratively with various members of their work group, as well
 as with their customers and clients, MIS professionals are able to play a key
role in areas such as information security, integration, and exchange. As an
MIS major, you will learn to design, implement, and use business
information systems in innovative ways to increase the effectiveness and
efficiency of your company.
More Than Coding
A common misconception is that MIS only concerns coding (or writing
computer code). While coding concepts represent some of the fundamental
principles of information systems development, implementation, and use,
many jobs in MIS do not utilize coding at all. A large portion of the MIS
degree focuses on data analysis, teamwork, leadership, project management,
customer service, and underlying business theories. These aspects of the
degree are what set the MIS professional apart from a computer science
specialist.
Do you enjoy working with people?
Would you enjoy the chance to work on global problems with people from
all over the world?
Do you enjoy analyzing and solving problems?
Do you want to create innovative, cutting-edge technology solutions?
Do you want to learn how to make businesses more efficient, effective and
competitive?
Then you should consider as your major the field that is experiencing a
critical shortage of professionally trained individuals. A field where demand
is skyrocketing with projected growth rates of 38 percent – the fastest of any
business discipline (U.S. Bureau of Labor Statistics).

 DSS
What is a Decision Support System (DSS)?
A decision support system (DSS) is an information system that aids a
business in decision-making activities that require judgment, determination,
and a sequence of actions. The information system assists the mid- and high-
level management of an organization by analyzing huge volumes of
unstructured data and accumulating information that can help to solve
problems and help in decision-making. A DSS is either human-powered,
automated, or a combination of both.

Purpose of a Decision Support System A decision support system produces

detailed information reports by gathering and analyzing data. Hence, a DSS
is different from a normal operations application, whose goal is to collect
data and not analyze it.
In an organization, a DSS is used by the planning departments – such as the
operations department – which collects data and creates a report that can be
used by managers for decision-making. Mainly, a DSS is used in sales
projection, for inventory and operations-related data, and to present
information to customers in an easy-to-understand manner.
Theoretically, a DSS can be employed in various knowledge domains from
an organization to forest management and the medical field. One of the
main applications of a DSS in an organization is real-time reporting. It can
be very helpful for organizations that take part in just-in-time
(JIT) inventory management.
In a JIT inventory system, the organization requires real-time data of their
inventory levels to place orders “just in time” to prevent delays in
production and cause a negative domino effect. Therefore, a DSS is more
tailored to the individual or organization making the decision than a
traditional system.
Components of a Decision Support System
The three main components of a DSS framework are:
1. Model Management System
The model management system S=stores models that managers can use in
their decision-making. The models are used in decision-making regarding
the financial health of the organization and forecasting demand for a good
or service.
2. User Interface
The user interface includes tools that help the end-user of a DSS to navigate
through the system.
3. Knowledge Base
The knowledge base includes information from internal sources
(information collected in a transaction process system) and external sources
(newspapers and online databases).

Types of Decision Support Systems

Communication-driven: Allows companies to support tasks that require
more than one person to work on the task. It includes integrated tools such
as Microsoft SharePoint Workspace and Google Docs.
Model-driven: Allows access to and the management of financial,
organizational, and statistical models. Data is collected, and parameters are
determined using the information provided by users. The information is
 created into a decision-making model to analyze situations. An example of a
model-driven DSS is Dicodess – an open-source model-driven DSS.
Knowledge-driven: Provides factual and specialized solutions to situations
using stored facts, procedures, rules, or interactive decision-making
structures like flowcharts.
Document-driven: Manages unstructured information in different electronic
formats.
Data-driven: Helps companies to store and analyze internal and external
data.
Advantages of a Decision Support System
A decision support system increases the speed and efficiency of decision-
making activities. It is possible, as a DSS can collect and analyze real-time
data.
It promotes training within the organization, as specific skills must be
developed to implement and run a DSS within an organization.
It automates monotonous managerial processes, which means more of the
manager’s time can be spent on decision-making.
It improves interpersonal communication within the organization.
Disadvantages of a Decision Support System
The cost to develop and implement a DSS is a huge capital investment,
which makes it less accessible to smaller organizations.
A company can develop a dependence on a DSS, as it is integrated into daily
decision-making processes to improve efficiency and speed. However,
managers tend to rely on the system too much, which takes away the
subjectivity aspect of decision-making.
A DSS may lead to information overload because an information system
tends to consider all aspects of a problem. It creates a dilemma for end-
users, as they are left with multiple choices.
Implementation of a DSS can cause fear and backlash from lower-level
employees. Many of them are not comfortable with new technology and are
afraid of losing their jobs to technology.

 ESS

What Does Executive Support System Mean?

An Executive Support System (ESS) is software that allows users to

transform enterprise data into quickly accessible and executive-level
 reports, such as those used by billing, accounting and staffing departments.
An ESS enhances decision making for executives.

Techopedia Explains Executive Support System

An ESS facilitates access to organized enterprise and departmental data

while providing analysis utilities and performance assessment predictors. An
ESS provides potential outcomes and quick statistical data that are applied
to decision making processes.

Ultimately, ESS reporting tools and results are contingent on developer and
industry application. For example, Cambridge Systematics, Inc. built an
ESS that is integrated with the investment plan for the Ministry of
Transportation in Canada. This ESS version includes features that contrast
the version used by Medical Information Technology, Inc. (MEDITECH).

 Enterprise applications

What Does Enterprise Application Mean?

An enterprise application (EA) is a large software system platform designed

to operate in a corporate environment such as business or government. EAs
are complex, scalable, component-based, distributed and mission critical.
EA software consists of a group of programs with shared business
applications and organizational modeling utilities designed for unparalleled
functionalities. EAs are developed using enterprise architecture.

Techopedia Explains Enterprise Application

EA software services include online shopping and payment processing,

interactive product catalogs, computerized billing systems, security, content
management, IT service management, content switching modules, resource
planning, business intelligence, human resource management,
manufacturing, application integration, forms automation, sales force
 automation, enterprise resource planning and business process
management.

EA also includes news relevant to IT compliance, business intelligence, office

productivity suites, enterprise resource planning, call centers and software
as a service.

 ERP
ERP definition in detail
ERP stands for enterprise resource planning, but what does ERP mean? The
simplest way to define ERP is to think about all the core business processes
needed to run a company: finance, HR, manufacturing, supply chain,
services, procurement, and others. At its most basic level, ERP helps to
efficiently manage all these processes in an integrated system. It is often
referred to as the system of record of the organization.

Yet today’s ERP systems are anything but basic and have little resemblance
to the ERP of decades ago. They are now delivered via the cloud and use the
latest technologies – such as artificial intelligence (AI) and machine learning
– to provide intelligent automation, greater efficiency, and instant insight
across the business. Modern cloud ERP software also connects internal
operations with business partners and networks around the world, giving
companies the collaboration, agility, and speed they need to be competitive
today.
Why is ERP important?
Sometimes described as “the central nervous system of an enterprise,”
an ERP software system provides the automation, integration, and
intelligence that is essential to efficiently run all day-to-day business
operations. Most or all of an organization’s data should reside in the ERP
system to provide a single source of truth across the business.

Finance requires an ERP to quickly close the books. Sales needs ERP to
manage all customer orders. Logistics relies on well-running ERP software
to deliver the right products and services to customers on time. Accounts
payable needs ERP to pay suppliers correctly and on time. Management
needs instant visibility into the company’s performance to make timely
decisions. And banks and shareholders require accurate financial records, so
they count on reliable data and analysis made possible by the ERP system.

The importance of ERP software to businesses is illustrated by the growing

adoption rate. According to G2, “The global ERP software market is
projected to reach US$78.40 billion by 2026, growing at a CAGR of 10.2%
from 2019 to 2026.”
Six key benefits of ERP
A good ERP system offers many advantages — which can vary depending on
how the system is deployed. The benefits of cloud ERP, for example, are
different than on premise. That said, there are six major benefits that apply
to all modern ERP solutions:

Higher productivity: Streamline and automate your core business processes

to help everyone in your organization do more with fewer resources.

Deeper insights: Eliminate information silos, gain a single source of truth,

and get fast answers to mission-critical business questions.

Accelerated reporting: Fast-track business and financial reporting and

easily share results. Act on insights and improve performance in real time.

Lower risk: Maximize business visibility and control, ensure compliance

with regulatory requirements, and predict and prevent risk.

Simpler IT: By using integrated ERP applications that share a database, you
can simplify IT and give everyone an easier way to work.

Improved agility: With efficient operations and ready access to real-time

data, you can quickly identify and react to new opportunities.
ERP examples in different industries
Businesses in every industry – from automotive to wholesale distribution –
need accurate, real-time information and effective business processes to
compete and thrive. Different industries rely on their ERP software for quite
different reasons, however. Here are just a few examples:

Utilities need to constantly review their capital assets, not only to meet
demand for future services but also for the replacement of aging assets.
Without ERP, the effort to prioritize these major asset investments would be
difficult and error prone. ERP also helps solve another critical utility
company issue: forecasting of spare parts. Not having the right parts during
an outage can create a significant customer service issue. On the other hand,
having too many spare parts means excessive costs and out-of-date stock.

For wholesalers, importers, direct store delivery, and 3PL/4PL firms, on-
time delivery is key. All of these organizations want to reduce distribution
costs, increase inventory turns, and shorten order-to-cash time. To achieve
these goals, they need integration of inventory management, purchasing,
and logistics functionality, as well as automated processes that are
customized to their needs.

Discrete, batch, and continuous process manufacturers all rely on ERP

and supply chain systems to meet product quality goals, manage asset
utilization, control overtime costs, handle customer returns and more.
Manufacturers can also gain end-to-end inventory control by monitoring
stock movements, pinpointing top and underperforming products, and
managing procurement more efficiently.

Service companies – including accounting, tax, engineering, IT, legal, and

other professional services firms – require powerful, real-time mobile ERP
technology to balance service delivery commitments with financial health.
Key to professional service success is the ability to stay on schedule while
managing project profitability, resource utilization, revenue recognition,
recurring revenue objectives, and growth opportunities.

Retail has undergone a significant transformation now that e-commerce has

merged with other sales channels as well as brick-and-mortar operations.
The ability to provide self-service options for identifying, configuring,
purchasing, and shipping products is dependent on integrated data. A
modern ERP also helps retailers reduce cart abandonments, improve Web
site conversions, boost average order value, and increase customer lifetime
value.
How do ERP systems work?
An ERP system – also called an ERP suite – is made up of integrated
modules or business applications that talk to each other and share common
a database.

Each ERP module typically focuses on one business area, but they work
together using the same data to meet the company’s needs. Finance,
accounting, human resources, sales, procurement, logistics, and supply
chain are popular starting points. Companies can pick and choose the
module they want and can add on and scale as needed.

ERP systems also support industry-specific requirements, either as part of

the system’s core functionality or through application extensions that
seamlessly integrate with the suite.

ERP software can be bought using a cloud subscription model (software-as-

a-service) or a licensing model (on premise).
Common ERP modules
Enterprise resource planning systems include a variety of different modules.
Each ERP module supports specific business processes – like finance,
procurement, or manufacturing – and provides employees in that
department with the transactions and insight they need do their jobs. Every
module connects to the ERP system, which delivers a single source of truth
and accurate, shared data across departments.
The most widely used ERP modules include:

Finance: The finance and accounting module is the backbone of most ERP
systems. In addition to managing the general ledger and automating key
financial tasks, it helps businesses track accounts payable (AP) and
receivable (AR), close the books efficiently, generate financial reports,
comply with revenue recognition standards, mitigate financial risk, and
more.

Human resources management: Most ERP systems include an HR module

that provides core capabilities such as time and attendance and payroll.
Add-ons, or even entire human capital management (HCM) suites, can
connect to the ERP and deliver more robust HR functionality – everything
from workforce analytics to employee experience management.

Sourcing and procurement: The sourcing and procurement module helps

businesses procure the materials and services they need to manufacture
their goods – or the items they want to resell. The module centralizes and
automates purchasing, including requests for quotes, contract creation, and
approvals. It can minimize underbuying and overbuying, improve supplier
negotiations with AI-powered analytics, and even seamlessly connect with
buyer networks.
Sales: The sales module keeps track of communications with prospects and
customers – and helps reps use data-driven insights to increase sales and
target leads with the right promotions and upsell opportunities. It includes
functionality for the order-to-cash process, including order management,
contracts, billing, sales performance management, and sales force support.

Manufacturing: The manufacturing module is a key planning and execution

component of ERP software. It helps companies simplify complex
manufacturing processes and ensure production is in line with demand. This
module typically includes functionality for material requirements planning
(MRP), production scheduling, manufacturing execution, quality
management, and more.

Logistics and supply chain management: Another key component of ERP

systems, the supply chain module tracks the movement of goods and
supplies throughout an organization’s supply chain. The module provides
tools for real-time inventory management, warehousing operations,
transportation, and logistics – and can help increase supply chain visibility
and resilience.

Service: In an ERP, the service module helps companies deliver the reliable,
personalized service customers have come to expect. The module can include
tools for in-house repairs, spare parts, field service management, and
service-based revenue streams. It also provides analytics to help service reps
and technicians rapidly solve customer issues and improve loyalty.

R&D and engineering: Feature-rich ERP systems include an R&D and

engineering module. This module provides tools for product design and
development, product lifecycle management (PLM), product compliance,
and more – so companies can quickly and cost-effectively create new
innovations.

Enterprise asset management: Robust ERP systems can include an EAM

module – which helps asset-intensive businesses minimize downtime and
keep their machines and equipment running at peak efficiency. This module
includes functionality for predictive maintenance, scheduling, asset
operations and planning, environment, health and safety (EHS), and more.
Types of ERP deployment
Modern ERP systems can be deployed in a number of ways: in a public or
private cloud, on premise, or in various hybrid scenarios that combine
 environments. Here are some of the high-level benefits of each to help you
identify the ERP deployment option that makes the most sense for your
business.

 SCM
What is SCM (Supply Chain Management)?
At the most fundamental level, supply chain management (SCM) is
management of the flow of goods, data, and finances related to a product or
service, from the procurement of raw materials to the delivery of the
product at its final destination.
Although many people equate the supply chain with logistics, logistics is
actually just one component of the supply chain. Today’s digitally based
SCM systems include material handling and software for all parties involved
in product or service creation, order fulfillment, and information
tracking―such as suppliers, manufacturers, wholesalers, transportation
and logistics providers, and retailers.
Supply chain activities span procurement, product lifecycle
management, supply chain planning (including inventory planning and the
maintenance of enterprise assets and production lines), logistics (including
transportation and fleet management), and order management. SCM can
also extend to the activities around global trade, such as the management of
global suppliers and multinational production processes.

The history of SCM

Supply chains have existed since ancient times, beginning with the very first
product or service created and sold. With the advent of industrialization,
SCM became more sophisticated, allowing companies to do a more efficient
job of producing and delivering goods and services. For example, Henry
Ford’s standardization of automobile parts was a game-changer that
allowed for the mass production of goods to meet the demands of a growing
customer base. Over time, incremental changes (such as the invention of
computers) have brought additional levels of sophistication to SCM systems.
However, for generations, SCM essentially remained a linear, siloed function
that was managed by supply chain specialists.
The internet, technology innovation, and the explosion of the demand-
driven global economy has changed all that. Today’s supply chain is no
longer a linear entity. Rather, it’s a complex collection of disparate networks
that can be accessed 24 hours a day. At the center of these networks are
 consumers expecting their orders to be fulfilled―when they want them, the
way they want them.

 CRM
This is a simple definition of CRM.
Customer relationship management (CRM) is a technology for managing all
your company’s relationships and interactions with customers and potential
customers. The goal is simple: Improve business relationships to grow your
business. A CRM system helps companies stay connected to customers,
streamline processes, and improve profitability.
When people talk about CRM, they are usually referring to a CRM system, a
tool that helps with contact management, sales management, agent
productivity, and more. CRM tools can now be used to manage customer
relationships across the entire customer lifecycle,
spanning marketing, sales, digital commerce, and customer
service interactions.
A CRM solution helps you focus on your organization’s relationships with
individual people — including customers, service users, colleagues, or
suppliers — throughout your lifecycle with them, including finding new
customers, winning their business, and providing support and additional
services throughout the relationship.
Who is CRM for?
A CRM system gives everyone — from sales, customer service, business
development, recruiting, marketing, or any other line of business — a better
way to manage the external interactions and relationships that drive success.
A CRM tool lets you store customer and prospect contact information,
identify sales opportunities, record service issues, and manage marketing
campaigns, all in one central location — and make information about every
customer interaction available to anyone at your company who might need it.
With visibility and easy access to data, it's easier to collaborate and increase
productivity. Everyone in your company can see how customers have been
communicated with, what they’ve bought, when they last purchased, what
they paid, and so much more. CRM can help companies of all sizes drive
business growth, and it can be especially beneficial to a small business, where
teams often need to find ways to do more with less.
 KMS
What is a knowledge management system?

A knowledge management system (KMS) is a tool used by companies to help

organize documentation, frequently asked questions, and other information
into easily accessible formats for both internal and external customers.
Using knowledge management software can help keep documentation up to
date, assist customers in finding their own answers, and manage knowledge
access and permissions across user groups. It’s a tool that’s valuable to both
small businesses that are just starting out and global enterprises that need to
distribute knowledge to a wide variety of audiences.
If you need more insights on knowledge management systems, you're in the
right place. Here’s an overview of what you will be looking at:

What is knowledge management?

Knowledge management is the process of identifying, gathering, storing,
evaluating, and sharing all of the valuable information organizations create in
their day-to-day operations. It involves capturing answers to frequently (and
not so frequently) asked questions and documenting them in an easy-to-
understand format across multiple file types, like step-by-step written articles,
videos, or images. A KMS makes knowledge sharing a whole lot easier by
having an answer ready and easily accessible to share.
But if you just store all of that knowledge in a chaotic word document, no one
will be able to find it or update it. Knowledge management acts like the
catalog system at the library, which helps you find exactly the right shelf and
the right book to answer your question (and even keeps a record of when it
was last checked out!).
In customer service, managing knowledge effectively means that accurate
answers to common questions are easily accessible to both customer support
agents and customers.

What are the types of knowledge to include in knowledge management?

There are three different types of knowledge to gather:
Explicit knowledge
This is the knowledge that needs to be documented and is usually easy to turn
into an article. It is a description about, or a set of steps towards, achieving
something. Examples include clothing measurements and fabric information
or where to change your login information on a software application. Gather
explicit knowledge through fact-finding with your subject matter experts.

Implicit knowledge
This is information customers need to infer from explicit knowledge. It
requires customers to interpret existing pieces of explicit knowledge as
described above, or general knowledge to create desired outcomes. For
example, how to combine software features to achieve a business need or
knowing a certain material is waterproof. Gather implicit knowledge by
documenting your customers' use cases and then explain how to combine
other knowledge to achieve them.

Tacit knowledge
This is knowledge coming from experience and typically requires a lot of
context and practice to acquire. It could be something like knowing
immediately what to do during an emergency or that a specific shoe brand
doesn't give you enough arch support. Tacit knowledge is hard to gather
because it is often specific and requires individual testing. Start by getting
specialists or senior members of your team together to disseminate complex
ideas and use that to build larger training content.
Bringing these all together: Explicit knowledge is knowing what apples,
cinnamon, flour, and sugar are. Implicit knowledge is knowing they can be
combined to make a pie. Tacit knowledge is knowing the exact combination of
the ingredients that makes the most delicious pie.

Benefits of a knowledge management system

Whether you’re a SaaS company supporting business customers, a consumer
product shipping out retail items, or a helpdesk manager dealing with internal
customers, a knowledge management portal will help you effectively deliver
information to the people who need it. Not only is a knowledge management
system great for business, but it’s also great for your customers. Providing a
thorough knowledge management system is key to helping customers help
themselves and improving the overall customer experience.
In conclusion, the study of Information Systems (IS) is crucial in
understanding how organizations utilize technology to achieve their goals
and gain a competitive advantage. This research paper has explored various
aspects of IS, including its components, functions, and impacts on
organizations.

Through the examination of different types of IS, such as transaction

processing systems, decision support systems, and enterprise resource
planning systems, it becomes evident that IS plays a pivotal role in
facilitating efficient data management, supporting decision-making
processes, and improving overall organizational performance.

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