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MANAGING INFORMATION SYSTEMS - Critically evaluation of using of the Management Information Systems at Amazon.com
 

MANAGING INFORMATION SYSTEMS - Critically evaluation of using of the Management Information Systems at Amazon.com

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In recent two decades retailing online has rapidly grown in the retail business. This growing, which is depended on the widespread improvements in the internet and information technology, caused the ...

In recent two decades retailing online has rapidly grown in the retail business. This growing, which is depended on the widespread improvements in the internet and information technology, caused the occurring of the term of electronic commerce, prefixed as e-commerce. E-commerce commonly includes the processes of selling and purchasing, delivering, marketing, servicing, developing and payment of the products and services via online. (Chaudhury and Kuilboer, 2001) It focuses on the internal and external activities of the commerce on the way of online with business partners and individuals by using the managing of the information systems. The company can benefit the advantages of being able to operate its business 7/24 all year, stepping the global market without border boundaries, reducing its operating costs and interacting with consumer to providing them convenient.
Since the first application of e-shopping of Tesco on 1984 and the first application of 24 hour e-shopping of Amazon.com on 1995 (Byers, 2006), e-commerce has been conducted with varies of types, such as Business to Business (B2B), Business to Consumer (B2C), Consumer to Consumer (C2C), Business to Individuals (B21) and so on. The burst of the dot.com bubble on 2000, which eliminates many internet based companies, has shown the importance of the improvement of the management information system to making decisions prudently and reasonably. (Cross and Miller, 2002)
Management information system (MIS) refers to providing data, collecting in a systematic way, processing, storing, widening and enhancing of the information to execute the managing activities in an effective way and profitably. It objectives to facilitating the decision making, providing the essential information from entire sections, emphasizing the critical points, making reasonable decisions. (Anderson and Post, 2006) The MIS, ultimately goals the optimization, has to have the characteristics of providing relevant information for all levels of management from top to down, directing actively by the management, covering all the functions of the organization, having the common data flow to avoid the overlapping and reiteration, being in a long term planning at least 3 to 5 years, flexible and user friendly. It must not be forgotten that the well quality of the inputting data, well designing of the process and the system, and well managing of the processing system directly affect the quality of the necessary information which enables the organization to become productive and profitable. (O`Brien, 1999; McLeod et al, 2007; Beynon-Davies, 2009)
This is assignment aims to understand, how MIS has been using at Amazon.com to collect data and deliver it as information, how reasonable decisions making has occurred and critically evaluate the managing of information system.

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    MANAGING INFORMATION SYSTEMS - Critically evaluation of using of the Management Information Systems at Amazon.com MANAGING INFORMATION SYSTEMS - Critically evaluation of using of the Management Information Systems at Amazon.com Document Transcript

    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMEN University of Wales (Kensington Collage of Business) MBAMODULE TITLE: MANAGING INFORMATION SYSTEMS ASSINGMENT TITLE:Critically evaluation of using of the Management Information Systems at Amazon.com LECTURER NAME: CILLIERS DIEDERICKS KCB ID: 14508 UoW ID: 1092227299339 DATE OF SUBMISSION: 02/06/2011 0
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENQuestion:“Amazon.com is a typical B2C company and it has been the USA`s largest online retailer.”With the development of information technology and electronic business, purchasing online hasbecome increasingly popular.The internal strategy focuses on how MIS helps the company itself to be more competitive in termsof functional management through enhancing efficiency by collecting customers` personalinformation more conveniently and controlling the logistics` system.You will be required to understand how to collect and deliver information, make decisions byanalyzing the data and information, and critically evaluate how more efficient management andcommunication of information is achieved.For this report you are required to draw on this knowledge and look at the application and uses ofMIS in other “service” based organisations and critically evaluate how this has helped them toimprove their performance, followed by future recommendations (1000 – 1500 words) that will bebeneficial to Amazon.IntroductionIn recent two decades retailing online has rapidly grown in the retail business. This growing, which isdepended on the widespread improvements in the internet and information technology, caused theoccurring of the term of electronic commerce, prefixed as e-commerce. E-commerce commonlyincludes the processes of selling and purchasing, delivering, marketing, servicing, developing andpayment of the products and services via online. (Chaudhury and Kuilboer, 2001) It focuses on theinternal and external activities of the commerce on the way of online with business partners andindividuals by using the managing of the information systems. The company can benefit theadvantages of being able to operate its business 7/24 all year, stepping the global market withoutborder boundaries, reducing its operating costs and interacting with consumer to providing themconvenient.Since the first application of e-shopping of Tesco on 1984 and the first application of 24 hour e-shopping of Amazon.com on 1995 (Byers, 2006), e-commerce has been conducted with varies oftypes, such as Business to Business (B2B), Business to Consumer (B2C), Consumer to Consumer(C2C), Business to Individuals (B21) and so on. The burst of the dot.com bubble on 2000, whicheliminates many internet based companies, has shown the importance of the improvement of themanagement information system to making decisions prudently and reasonably. (Cross and Miller,2002)Management information system (MIS) refers to providing data, collecting in a systematic way,processing, storing, widening and enhancing of the information to execute the managing activities inan effective way and profitably. It objectives to facilitating the decision making, providing theessential information from entire sections, emphasizing the critical points, making reasonabledecisions. (Anderson and Post, 2006) The MIS, ultimately goals the optimization, has to have thecharacteristics of providing relevant information for all levels of management from top to down,directing actively by the management, covering all the functions of the organization, having thecommon data flow to avoid the overlapping and reiteration, being in a long term planning at least 3to 5 years, flexible and user friendly. It must not be forgotten that the well quality of the inputtingdata, well designing of the process and the system, and well managing of the processing systemdirectly affect the quality of the necessary information which enables the organization to becomeproductive and profitable. (O`Brien, 1999; McLeod et al, 2007; Beynon-Davies, 2009) 1
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENThis is assignment aims to understand, how MIS has been using at Amazon.com to collect data anddeliver it as information, how reasonable decisions making has occurred and critically evaluate themanaging of information system.A glance of the Amazon.comAmazon.com, the Seattle-based multinational e-commerce company, is the largest retailing onlinecompany with over tens of millions active customers and approximately three times the revenueagainst the closer competitor in the Internet sales, as of 2010. “Earth’s biggest selection and tobe Earth’s most customer centric company” is the vision of the company. (Spector,2002)It has been founded by Jeff Bezos and has been gone online in 1995 by selling books. Jeff Bezos hadthought that the ease in searching and browsing of hundreds of thousands of book titles in a shorttime could have been offered by only the Internet. The company soon has widened its selling bymusic industry products, electronics and technology industry products, appliances, automotiveelectronics, movie industry products, jewellery, watches, health care items, beauty products,clothing, furniture, food, toys and so on. The company has expended its e-commerce platform byestablishing separate websites in UK, Canada, Italy, Japan, France, Germany, and China, which thecountries use internet widely. It has also provided international fulfilment to some countries forsome of products.The company has designed an e-business strategy such that the many technological innovationsprovide to offer hundreds of thousands of products at lower prices, in a single sitting shopping andin a short shipping time. The company`s e-business model has not only based on selling products butcollaborating with its business partners and servicing its customers. In 2000s, the company hasoffered its e-commerce platform to individuals and the other retailers by launching “Marketplace”and “Advantage” programs that enable its partners to promote and sell their products directly onAmazon.com. It has provided the company to widening its product range and leveraging its power byworld class retail brands. On the other hand, the company has improved its integrated system viainternet by managing information system and has maintained technical and application system. Bygiving the opportunity to customers of less prices, widely selection and ease in, the company hashad the success of gaining its popularity and becoming the world`s largest online retailer. (Saunders,2002; McBrewster et al, 2009)It can be said that the secret of the company`s success lies under the operation of gathering andkeeping the customers` information, and making the right decisions by analyzing these data andinformation. The company has developed an information system to collect and keep vast amounts ofintimate information which has been voluntarily disclosed by its millions of customers. Thesevoluntarily shared data allows Amazon.com the larger detailed profile of customers than any otherretailers.Business and Information Systems at Amazon.comAmazon.com uses two main systems which have been developed for its e-business strategy tomanage vast number of products and tens of millions of active customers. They have been mainlyused for renting space on its e-platform to others.AWS (Amazon Web Service), announced on http://aws.amazon.com andS3 (Simple Storage Service), announced on http://aws.amazon.com/s3Amazon Web Service has allowed the partner retailers, the individual sellers and the developers toadvertise their products through the Amazon.com web site by building their web based applicationsin a reliable, scalable, and low cost way and gathering their data. At the same time, Amazon.com haswidened its data and robust infrastructure cheaply and easily by releasing a variety of integrated 2
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENweb services. In addition, these services have provided Amazon.com to monitor all activities toanalysing and making right decisions for its global e-business.The other system, Simple Storage Service has been designed to make web-scale computing easierfor the business partners and the developers by web service interface to keep and receive any data,any time, from anywhere. S3 has also given Amazon.com the opportunity of accessing the same datastorage for running its global e-business. It has known the world`s largest retailing data storage. Ofcourse, this kind of vast storage bubbles the appetite of fraudsters.Amazon.com has also built a system, known as SAS (Smart Analytic Search), to allow detecting anddecreasing the examples of fraud in Amazon web site by analyzing the behavioural patterns offraudsters and designing the predictive scores. (IBM Redbooks, 2010) The SAS has also beendesigned for measuring the personalization of customers and analysing the effectiveness of how wellAmazon.com serves its customers. (Kantardzic, 2003)The main features of, well-designed systems, S3 and SAS is as follows:  It can be written, read and deleted that objects from 1 byte to 5 Gbyte.  It can be stored that unlimited objects.  It can be stored and received that objects through an assigned key.  It can be ensured that information is kept secure from unauthorized access by providing authentication mechanisms.  It can be easily added functional layers and protocols such as Torrent because of the flexibility.  Amazon.com has been using thousands of open source software (Linux) based computers located in huge data centers in different locations all around the world to reduce pay licensing fees to MS.Amazon.com`s strength has been come from managing its information systems such as data,information, transaction and logistics process in a valuable way. It is believed that increasingprofitability and creating value can only be performed by right investments on information systemsand right management solutions to radical competitive business era.The mainframe of the company`s information system is focused on Service Oriented Architecture(SOA). SOA allows Amazon.com`s information system the opportunity to be ultra scalable, highperformance, sustainable growth availability and enhancing wide range of software componentsindependently and fastly. The system has focused on performing the end-data to keep more items,more consumers and more orders to reinforce the online sites. The attractiveness of this system isthat it has been built to reuse of the information in multi-contexts and partial work instead of abigger process. SOA is so comprehensive, and fully distributed and decentralized service platformthat serves multi applications. So Amazon.com can vary its business models easily. (Krafzig et al,2004; Erl, 2005)The Transaction Processing System is based on creating convenience for users. Customers have apersonal account to directly log in the Amazon.com web site. They have their own personalizedfeatures such as “Shopping Basket”, “Shopping Cart”, “Wish List” and so on. “One Click” offerscustomer to avoid some steps in the check out process by submitting despatch / billing address andcredit / debit card details. It provides customers shortcut with just one click to use despatch addressand card information which are already in the system. In addition, The Honor system, Amazon.com`sonline payment system, allows customers to pay via their Amazon account by controlled access. Thebasic of the transaction method is that Amazon.com customers have been asked to submit theirdespatch / billing address and credit / debit card details to be confirmed but pay later. The amount 3
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENof payment has been automatically paid from the card, after the stuffs received by the customers.(Harris, 2006; Laudon and Laudon, 2009)Amazon.com has designed the “Recommender System” to give the relevant and useful informationto the customers. It is based on customer`s past shopping and browsing behaviours, behaviors ofother customers` who have behaved in a similar way, the item being purchased, customer similarity,and the combinations all of these. If it is glanced how the recommender system works basically, forinstance, a fiction book has recommended other fiction books from the same author, and similarsubjects from any authors of similar background and genre. Basically the “Recommender System” isbased on “Linking” and “Data Mining”. There are a vast number of links which have been maintainedamong items and customers. These track what’s been searched, what`s been browsed, what`s beenviewed, what’s been bought, etc. Complex computing programs process all the links in the systemand designs tables that can be rapidly accessed and displayed. (Kantardzic, 2003) Thisrecommendation system is very attractive for customers who really use it because of having a hugerand more reliable pool than the smaller pool of reviewers. It is built to enhance the browsingexperience of online shoppers and can rely on capturing a huge amount of data about customers,their shopping and browsing behaviors. This well designed complex recommendation system is agreat thing that gives Amazon.com an opportunity being over its rivals.If it`s compared the traditional retailing and the online retailing which uses the information systemseffectively:  The shoppers are able to use the web site from anywhere at any time to buy a reliable product by less price.  The shoppers have more convenience to get more reliable information about products.  The shoppers have the opportunity to search online catalogues without leaving their homes or offices.  It can be enhanced better communications between suppliers, sellers and shoppers.  The sellers and retailers can collect and delivered more information about shoppers.  The retailer have the opportunity to minimize costs regarding to staff, cleaning, building maintenance, rent, printing catalogues and so on.It can be said that Amazon.com successfully uses the main characteristics of managing InformationSystems such as management oriented, management directed, integrated, common data flows,heavy planning element, flexibility and ease of use. It is management oriented because it is designedfor using from the top to down. It is management directed because the developments are activelydirected and encouraged by management. It is integrated because the system covers all functionalareas of the business. It has common data flows concept because the designed system avoidsoverlapping and repetition. It is heavy planning element because there is a long term planning fordeveloping the management of information systems. It is flexible and ease of use because the SOAhas been designed to be flexible and ease of use. (Cummings and Haag, 2006)It can also be said that the success of the Amazon.com`s information system comes from thefollowing reasons:  All the data is processed and checked as it is occurred.  All the accessed data is secured via authorization scheme.  All back up data is taken to safeguard corruption and loss of data.  The audition is make time to time to ensure that the system is not violated.  The system is developed via a standardisation of designing and development.  The system is controlled via programme control, process control and access control as it is processing.  The information system is confirmed the consistency to business goals and processes. 4
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENThe management information system has also been used for gathering its Customer RelationshipManagement (CRM) by Amazon.com. The customers` information is collected, integrated,consolidated, analysed from all over the world, and then the results are distributed to customertouch points. The features, which are easily accessed by customers, allow Amazon.com to enhanceits customers` satisfaction. (Chen and Popovich, 2003) More personalisation for customers`preference gets more success to Amazon.com. The company has also established call centres nearthe markets. For instance, there is a call centre in Ireland to serve UK and France web sites users.The call centres are used for handling orders, emails and phone calls. Amazon.com enhances itseffectiveness in Customer Relationship management by using the management information systemfor coordinating the whole process. It occurs by relying on software and hardware systems inprocessing, gathering, and using data in a basic web remedy.In addition, the company periodically redevelops its web site, content and usability by digitaltouching with its partners, customers, and staffs. It`s obviously clear that this digital touch preventAmazon.com from high direct marketing cost. Defining the more profitable product segments andcustomers make the company more profitable.The successful role of information system at Amazon.com`s e-commerce in B2C and B2B is based onhow the company copes with the rapid changes of competitive global market by producing wellmatched product segments for its customers. The survival and the enhancement lay under how thecompany effectively realizes its strategic planning with the management information system toincrease its revenue and effectiveness. The flat and lean structure of the company allows inflexibleinfrastructure by getting rid of branch offices and / or zone offices as if Amazon.com. Allowingemployees to work from anywhere as customers and business partners are connecting from anywhere, provides Amazon.com to automate processes after redesigning and developing theinformation system.On the other hand, Amazon.com has tried to cope with international laws and processes challengesby regulating its e-business according to the different international systems, communicationstandards, region-based practises and security laws. For instance, the official web site ofAmazon.com in China is Joyo.com which has totally different regulations based on the country. (Itshouldn`t be forgotten that Google.com has still major problems in its China process). The culturalchanges of the regions insist that the organisation has to act the different actions on differentlocations. The organisation will be effectively successful how the organisation collects and analysesthe regional data. It means that Amazon.com does “Think globally, act locally.”ConclusionHowever, Amazon.com is the world`s leading B2C online company, it has been threatened by thebrick-and-click companies, existing companies which has added web sites for e-retailing, such asWall Mart, Tesco and Barnes & Noble, or other pure-click companies which increasing theirgeographical and product scope, such as e.bay.com, alibaba.com etc.Like all companies facing with the tough competitive and rapidly changing business world,Amazon.com requires sustainable and predictable improvements on its e-business and especially inits MIS. The sustainable improvement of its MIS for Amazon.com occur some necessities. Long term -such as 3 to 5 years- well planning, predictable changing on the current situations, upfront costs,coping with tough difficulties at the competitive e-business world, coping with the suffers ofintegration of the widening millions of information which is needed by different levels of theorganisation`s functions, quick decision making, requiring of well educated IT and non-IT staffs andso on. 5
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENIt can be easily said that Amazon.com has the world`s largest customer and product rangeinformation, which is given voluntarily by the consumers and its partners in the USA and the Europe.In the tough competitive and rapidly changing business world, Amazon.com must enhance its e-business through the emerging e-markets, such as China, India, Turkey, South American countriesetc., the growing countries on the top 20 for using internet and internet based applications.However the consumer behaviours are a bit similar in USA and Europe, they can be differentiated inthese emerging e-markets. For instance, Amazon.com has been facing some problems in Chinabased on the different regulations and the lack of the knowledge about culture. The best way toentering these e-markets can be designing information gathering – processing systems to have thebehaviours of these e-markets` consumers.After gathering and processing the information, the e-business company must deliver the reasonableinformation to its users by Web based Information systems (WIS) to gain its revenue. The Web basedinformation systems (WIS), allows users the reasonable information wherever and whenever theyaccess the site, must be differentiated at least from region to region. Even if all the read books,articles and journals, which are related MIS, indicates that Amazon.com is one of the most successfulMIS implementer, there could be some emerging improvements at Web based Information Systemsto be more user friendly. The improvements to organizing and delivering the information in such amanner that the consumer received them on web site reasonably, rapidly and easily.The writer of this assignment, as an active user of Amazon.com web site, recommends Amazon.comthat there should be some improvements on the shopping basket in such a way that being more userfriendly and not wasting users time.When the user search a topic and select a product from the topic related list to add it to shoppingbasket, he/she can add it easily to his/her shopping basket. But the user can select and add only oneproduct from a topic related list which he/she searched once. If the user wants to select and addmore than one product from the topic related list, he/she must search the same topic again or facingthe boundedness of recommendation of Amazon.com at the shopping basket web page. It seemslike that a shopper which wants to buy more than one products from grocery section in a Tescobranch, picks up a bunch of banana, leaves it to till, then goes back again the grocery section to pickup one pack of cherry and repeats all the activities to buy numbers of items to finalize his/hershopping. It is clearly understandable that Amazon.com has designed its shopping basket in such away that delivering more details about the chosen product. But this wasting time can be preventedby adding a “click opportunity” for all products which are listed at the topic searched web page. Theuser can click all the products which he/she wants to select, then can go to chosen product detailedweb page to see the details of the products in one glance and then can add them in his/her shoppingbasket. After all this user friendly process the shopper can finalize its shopping by using the checkout process.It can be recommended Amazon.com to enhance especially its Web based Information system (WIS),which is the visible face of its, for being more user friendly and preventing to waste their time. It isbelieved that this improvement will return to Amazon.com as being a step forward against its rivalsand more revenue generating.Total word count excluding Cover Page, Question and References: 3336 6
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENReferencesAnderson, D.L. and Post, G.V., 2006. Management Information Systems: Solving Business Problemswith Information Technology: Irwin McGraw-Hill.Bernal et al, 2002. Competitor networks: international competitiveness through collaboration: Thecase of small freight forwardness in the High-Tech Forwarder Network. International Journal ofEntrepreneurial Behaviour & Research. Vol 8, Issue 5, pp 239-253Beynon-Davies, P., 2009. Business Information Systems: MacMillanByers, A., 2006. Jeff Bezos: the founder of Amazon.com: The Rosen Publishing GroupChaudhury, A. and Kuilboer, J.P., 2001. E-business and E-Commerce Infrastructure: Irwin McGraw-Hill.Chen, I.J. and Popovich, K., 2003. Understanding customer relationship management (CRM): People,process and technology. Business Process Management Journal. Vol. 9 Iss: 5, pp.672 – 688Cross, F. and Miller, R., 2007. The Legal and E-Commerce Environment Today: Thomson Learning.Cummings, M. and Haag, S., 2006. Management Information Systems: For the Information Age 4thed.: Irwin McGraw-Hill.Davenport et al, 2004. Enterprise systems and ongoing process change. Business ProcessManagement Journal. Vol 10, Issue 1, pp 16-26Erl, T., 2005. Service-Oriented Architecture: Concepts, Technology, and Design: Prentice HallGao et al, 2008. Knowledge, management, and knowledge management in business operations.Journal of Knowledge Management. Vol 12, Issue 2, pp 3 – 17Harris, C., 2006. Amazon database would put shoppers intimate details on the line. The SeattlePost‐Intelligencer. Available at:<URL:http://www.seattlepi.com/default/article/Amazon-database-would-put-shoppers-intimate-1211419.php>[Accessed: 21st May 2011]IBM Redbooks, 2010. Smart Analytic Cloud: IBM RedbooksKantardzic, M., 2003. Data Mining: Concepts, Models, Methods, and Algorithms.: John Wiley & Sons.Kotler at al, 2006. Marketing Management 12th ed.: Pearson Education.Krafzig, D., Banke, K. and Slama, D., 2004. Enterprise SOA: Service Oriented Architecture BestPractises: The CoadLaudon, J. and Laudon, K., 2009. Management Information Systems: Pearson EducationMcBrewster, J., Miller, F.P. and Vandome A.F., 2009. Amazon.com: VDM Publishing House Ltd. 7
    • KCB ID: 14508, UoW ID: 1092227299339 – TOLGA KOYMENMcDermott, R., Snyder, W.M. and Wenger, E., 2002. Cultivating communities of practice: A guide tomanaging knowledge: Harvard Business School Press.McLeod, R. and Schell, G.P., 2007. Management Information Systems 10th ed.: Pearson EducationO`Brien, J.A., 1999. Management Information Systems – Managing Information Technology in theInternetworked Enterprise: Irwin McGraw-Hill.Saunders, R., 2002. Business the Amazon.com way: secrets of the world`s most astonishing WebBusiness: John Wiley & Sons.Sinclair, J.T., 2004. E-bay The Smart Way 3rd ed.: AmacomSpector, R., 2002. Amazon.com: Get big fast: Harper BusinessOfficial Web SitesAMAZON WEB SERVICES [online]. Available at:<URL: http://aws.amazon.com >[Accessed: 21 May 2011]AMAZON SIMPLE STORAGE SERVICE [online]. Available at:<URL: http://aws.amazon.com/s3>[Accessed: 21 May 2011] 8