IMPACT OF INFORMATION TECHNOLOGY ON ORGANIZATIONAL PERFORMANCE: CASE OF POPULATION SERVICES KENYA
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Since the early years of the 20th century, the world has been experiencing a revolution known as information technology. Some consider it to be the most fascinating development since the industrial revolution around the mid-18th Century (Tom, 1991). This revolution is changing our daily lives at home and at work, in shops and banks, in schools, colleges and universities. It is changing the way people think, communicate and behave. Today, the world has become a global village with the internet, mobile phones and satellite networks shrinking time and space, bringing together computers and communications; resulting in new ways of communication, processing, storing and distributing enormous amounts of information (UNDP, 2001). Advancement in chip, satellite, radio, and optical fiber technology have enabled millions of people around the world to connect electronically regardless of national or international boundaries. This explosion in connectivity is the latest and the most important wave in the information revolution (Evans & Wurster, 1997). Information Technology (IT) is clearly considered as a key growth area in this century, specifically, in a dynamic and highly competitive business environment which requires utilizing advanced IT tools to improve efficiency, cost effectiveness, and deliver high quality products and services to customers (Allen & Morton, 2004). IT is also considered as a tool of marketing, contacting customers and looking for possible customers, as well as presenting IT services as distinguished potential services for customers (UNDP, 2001; Werthner & Klein, 2005).
Organisations are increasingly using information technology to develop solutions to business problems, to improve both the efficiency and effectiveness of the decision-making process, to enhance productivity and service quality, to achieve dynamic stability, and compete for new markets (Attewell & Rule, 1984; Molloy & Schwenk, 1995; Boynton, 1993). According to Cerere (1993) organizations have always sought and adopted technologies that enhance efforts of their manpower in production and management. Indeed he noted that although it has evolved over a considerable period of time, information technology has emerged as an important tool in management of organizational operations.
2 1.1.1 Information Technology
Information technology refers to anything related to computing technology, such as networking, hardware, software, the Internet, or the people that work with these technologies.
According to Daft (1997) IT can be defined as the hardware, software, telecommunications, database management, and other information-processing technologies used to store, process, and deliver information. Information technology is commonly used to assist managers with direct control over business functions, personnel and other resources.
As managers oversee resource coordination and allocation, it can be difficult to coordinate business functions across various projects. Information technology is one of the key innovations that is frequently implemented to assist in this process (Hobday, 2000).
Peansupap and Walker (2005) maintain that IT is often implemented as it is believed to facilitate communication, improve integration, enhance productivity and service delivery (Bjork, 1999).
As organisations grow and change, they depend more and more on information technology for their survival (Feeny & Willcocks, 1998). Companies today implement and use information technology to find solutions to business problems, to improve management decision-making, enhance productivity and quality, and compete for new markets in our global and aggressive business environment (Porter & Millar, 1985). Moreover, IT can be seen as a powerful force that opens exciting opportunities for organisations to achieve their missions and goals in an effective way. Therefore, leaders in organisations must obtain an overall appreciation of the potential of IT and link the acquisition and utilization of IT to the organizational mission (Hacker & Saxton, 2007).
1.1.2 Organisation Performance
Information technology is at the core of many business functions, operations, products and services. Today, organisations worldwide spend over 50% of their new investment funds on IT and related
communications. How organisations manage these large investments is of critical importance to organisational efficiency and effectiveness. Further, IT is often the link between the business model and the critical drivers of success. Many organisations have been unsuccessful with their IT-based investments because of poor alignment of IT with the business. Take for example Toyota; a Japanese automotive manufacturer, which has flourished in a highly competitive environment because it has created a set of finely-tuned business processes and information systems that simultaneously promote agility, efficiency, and quality. It can respond instantly to customers and changes in the marketplace as events unfold, while working closely with suppliers and retailers. As part of its ongoing effort to monitor quality, efficiency and costs, Toyota management saw there was an opportunity to use information systems to improve business performance. Even though technology alone would not have provided the solution, Toyota carefully revised its business processes to support a build-to-order production model that based vehicle production on actual customer orders rather than “best guesses” of customer demand.
Once
that was accomplished, Oracle e-business software was useful for coordinating the flow of
information among disparate internal production, ordering, and invoicing systems within the
company and with systems of retailers and suppliers.
This resulted in Toyota building only the cars customers have ordered, its vehicle order
management system reduces inventory costs, because the company and its dealers do not have to
pay for making and storing vehicles customers did not want. The system also increases customer
satisfaction by making it easier for customers to buy exactly the model, make and option they
desire. Information provided by the system helps management monitor trends and forecast demand
and production requirements more accurately.
The system creates value for Toyota by making its
ordering and production processes more efficient and effective. Electronically integrating key
business processes in vehicle ordering and inventory management has made this company much
more agile and adaptive to customer demands and changes in its supplier and dealer network.
The impact of Information Technology on organizations’ services and performance has been
examined by many studies (Beckey, Elliot, & Procket, 1996; McNutt, & Boland, 1999). Although
most of these studies have suggested that IT plays a vital role in improving the quality and quantity
of information, its potential for adoption and innovation is often uncertain (Mano, 2009). Different
firms allocate their resources differently in a way that maximizes their objectives and those firms
that allocate more resources on IT perform better than those firms that allocate less resources
(McAfee & Brynjolfsson, 2008). Achieving high performance also requires good IT infrastructure
supported by good IT management practice (Mwania & Muganda, 2012).
1.1.3 Population Services
Kenya
Population Services International (PSI) is a non-governmental organization (NGO) that was
founded in 1970 to improve reproductive health services using commercial marketing strategies.