Management Information System At Starbucks Management Essay
This is the age of information where every day brings countless new innovations and changes. Daily lots of new data comes to managers, which needs to be converted into meaningful information in order to derive conclusions to support effective decision making to accomplish organizational objectives. Today due to its increasing importance information is considered as business asset as significant as human resource or machinery. It has become life blood for modern organizations.
Before the development of computer systems it was very difficult for the organizations to collect, conserve, organize and disseminate the large amount of important information and data. Today’s managers are in better position to acquire needed information at right time due to the developments and widespread of computer technologies. Due to rapid changes in surroundings the information needed for the business should be current and available to the right persons at right times. So the information provided to decision makers must be correct, on time, comprehensive, storable and in well presented in order to get optimum results from it. That’s why the dependence of organizations on information technologies is increasing day by day but information technologies cannot produce results itself it needs to be efficiently and effectively used to derive optimum results. So the mechanism used to ensure the availability of needed information to managers in right time and right form is called information system. It helps the decision making process by providing relevant information (Stephen B. Harsh, 2005).
Purpose of the Study:
This paper examines the application of integrated management information system and benefits derived by Starbucks on Bank Street near Jubilee Palace in London, UK. Particular objectives of this paper are to:
Document the information system used in Starbucks, Jubilee Palace.
Identify the uses of information system at all managerial levels of organization.
Identify the role of information system in providing the required information.
Identify the uses of information system as an effective tool to implement management policies efficiently.
Identify the benefits derived by the organization by effectively using information systems.
Understand the issues regarding the implementation of the information system.
Recommend what is needed to increase the efficiency of the system.
MIS and its Functions with critical evaluation of Starbucks, Jubilee Palace:
Before discussing the functions of management information system in Starbucks, Jubilee Palace, the understanding of management information system and its related concepts are significant to provide strong base for the study.
The term technology is used to refer the modern machines and tools developed by human beings to support their processes and increase their understanding and control of material environment. Its literal meaning is study of crafting.
The tools used to enhance the capabilities of human to collect, organize, preserve and disseminate the valuable information is called information technology. Information technology helps managers to effectively perform their managerial functions to control, administrate and to make effective decisions to achieve organizational objectives. Information technology is not a narrow term it covers all software and hardware used by organizations to collect, organize, preserve and disseminate the required information to needed persons.
The information technologies available at Starbucks, Jubilee Palace to support its smooth flow of information are; high speed internet facilities, the network connection of each store on main server located in company head office in United States, Network tools, hardware for storage of data and they have also developed multi-storage system to conserve their useful data.
Data Vs Information:
Most of the time information and data are considered same things, two words for same meaning, but in fact they are two different terms for two different things. Data are unanalyzed, raw facts and numbers regarding some event but in contrast information is obtained by analyzing and organizing the data in meaningful form.
The types of data available at Starbucks, Jubilee Palace, are customer responses, employees information, product information regarding its sales and development, accounting data and data related to operational matters of business.
Information strategy or information technology strategy of the organization determines its requirements for variety of information system applications and development of overall systems of organization. Information technology strategy ensures the fulfillment of organizational requirement for information systems (Barnatt, 1994).
The information strategy of Starbucks is linked with the overall organizational strategy for success. Starbucks recognizes the significance of information in modern era for the survival of organization so it has developed a strong information system to ensure its competitiveness in the rapidly changing and diverse era.
Management Information system:
First of all the concept of management information system was used by the U.S. Navy in their report to use computers to manage their resources. After that many researchers defined it according to its scope. Bee and Bee, 1999 defines it as system used to collet the data from external and internal sources and transforms it in to meaningful information and disseminates that in right form to managers working at all three levels of the organization to support the decision making process for better administration and control (Effy Oz, 2008).
Functions of management information system with critical evaluation of Starbucks, Jubilee Palace:
The goal of any well integrated management information system is to produce optimum results from information gathered by performing following basic functions in an organization:
Provide Information in various departments:
Management information system is a mechanism used to transform the data into meaningful information and make it available to all concerned people working in any department or at any level of the organization (Lucey, 1997).
At Starbucks different types of information are needed for different departments to take effective decisions for organizational success. To make the information available to any department or any level Starbucks has developed a corporate web portal. It is divided into two ways of access. One is Store portal that is used by employees working in retail stores to enter and obtain information and the other is partner portal that is used by employees working in fields and corporate locations. In 2003 this system was implemented and now it has become a primary tool to disseminate information at different organizational level. The paper based correspondence has been replaced by this modern mean. This system has helped a lot to employees to access latest updates and news about the company, creates and access different analysis reports about the business, made available the training materials and made the research results more comprehensive.
Company has developed a well organized Transaction processing system that collects the data and stores it in the multilevel data storage facility of the organization. In following figure TPS shows how data transfer from different layers and store in database.
Source: (Imran Ali, 2008).
The first layer is graphical interface and has client’s computers. At this point staff responsible to collect the information enters the data into the dynamic information management system of Starbucks. Then in application layer application server’s work on the data and in last layer it is stored in central database of the company. The uses of that system made it easy for the company to utilize its capabilities. Its working is ensured by three components in first application programs that limit the boundaries of the transactions and make that information available to the concerned department by controlling operation performed on that data. Then resource manager gives the access to the information to use in different departments and transaction manager is liable to complete the transactions (Imran Ali, 2008).
Facilitate decision making at all levels of organization:
Management information system enables the management to perform effectively its functions to organize, co-ordinate and control. It ensures the timely availability of information not only for strategic planning but also to run the day to day operations of the business. Different levels of management need different types of information in different formats. Three levels of organization’s management operational, tactical and strategic need different information for their decisions that can be.
Operational Information: Detailed information on weekly or day to day basis, more internal, historical in nature, quantitative, high accuracy and having narrow scope.
Tactical information: This is level information is gathered from external and internal both types of sources concerning future and current performance of the organization. It requires information in summarized form like information on sales, products, profits and investments.
Strategic information: Most of the information required at this level is from external sources like information about the current economic conditions, working of competitors and technological developments. Mostly it is qualitative in nature, for future planning, incomplete, covers wide range, exactness is not important as for other levels and it is very important for the organization.
Effective decision making is very much important for the survival of an organization but it is not possible in the absence of right kind of information. The effectiveness of decisions is depends upon the quality of information on which they based. The needs of information at different levels of management should be catered when designing the management information system of the organization.
SharePoint Server by Microsoft Office has increased the capabilities of Starbucks greatly by ensuring the availability of required information at all levels of organization (Dux Raymond Sy, 2008). It has two types of interface one is partner portal is accessible by management working at top levels and middle level of the organization it provides more the general, qualitative nature of information to support the strategic planning and tactic level decisions. It works on Decision support system for middle level management and top management and takes information from transaction process system. The other tool used is Executive support system used by top level management to take strategic level decisions that have great significance for the organization.
Efficient Mean for managing business processes:
In order to run the business processes efficiently the primary need is to have quick and correct information, because by only having quick information the more effective decision making can be possible for the business. The information system plays key role in the controlling function of management and by having effective control the efficiency of processes will increase. Timely information can result in right investments and right investments will result in increased profitability for business. Timely accounts can be prepared by efficient management information system. By using Executive support system top level management can have strict control over all levels of organization.
SharePoint Server by Microsoft Office has increased the functional capabilities of Starbucks. Workflow functionality of business documents has enabled the Starbucks to adopt the application of event cycle and request due to that Store employees have obtained a centralized access to the company’s key information, web links of different vendors of the company (Dux Raymond Sy, 2008). Through this the efficiency is also increased in management of Sales process and inventory control system. Privacy control of the system is also very well as it helps a lot to the company to properly manage and secure the information gathered from employees as well as customers of the company. Advance search options have enabled the organization’s employees to search different documents from different libraries at a same time by area of interest, document type and its contents. This increased the efficiency of the system as well. The total information management system has raised the capabilities of Starbucks and moreover effective communication between management and employees has increased the efficiencies of the company processes.
Major benefits derived by Starbucks, Jubilee Palace, from information management system.
Starbucks is the leading Coffee providing company in the world. They have implemented Microsoft SharePoint Server system to manage their information effectively. It has provided them so many benefits by implementing information management system.
Every company that leads on its competitors has some core competencies that give them advantage over their competitors. The information system used by Starbucks has provided it a clear advantage on its competitors and no other coffee retailer has such a dynamic information management system. It has enabled the company to have better and deep understanding of the market by regularly maintaining the customer data and also the understanding of the organization itself.
Enhanced supply chain management system:
The reporting system of the company is improved by this information system that has improved the production process. Better information about production process has enhanced the supply chain management capability of the company from sourcing the raw materials to production process and then distribution process at each level improvement are brought by information.
Multilevel Storage system:
In order to save and ensure the maximum security of data Starbucks has outsourced the storage facility of data to data warehouse. This has not only saved the costs of Starbucks for preservation of data but also ensures the protection of it in all circumstances.
Now with highly efficient system of information, Starbucks is in position to react more quickly towards the market changes. It has enabled the company to have more efficient system more reactive to environment. It has also increased its competitiveness.
A very modern technology that is used by Starbucks to help the strategic level decision making process is digital dashboard. In this Key performance Indicator (KPI) application is used by the top management that provides it information about the key performance of the organization. It shows the performance by showing it on a digital dashboard that shows progress of the organization towards organizational goals (Dux Raymond Sy, 2008).
It has increased the capacity and store growth by providing effective tools for reporting and monitoring the system by ensuring stability of functions.
Efficiency of employees is increased greatly due to the availability of easy to use portal and easy access to the required information for the operations.
Enhanced tools of privacy and document management has increased the data security and raised the functionality.
By using this system the employees are in position to align the store objectives with overall organizational objectives and can generate more quick reports and do analysis.
Challenges to the system
Although information technology developments have brought many improvements in the functioning of organization but just implementation of new technologies do not improve the organizational performance many other factors also contribute towards the overall organizational performance. Starbucks although has implemented a very dynamic information management system but on other hands a kind of insecurity prevails in employees of the store. They have kind of fear to adopt new technologies and modern information management system.
At one side if modern system of information management has made the access to information easy on other hand the employment has also been affected by this sophisticated system as it requires more skilled and trained staff. The significance of skilled and motivated workers has increased greatly and increased the costs to train the manpower.
In order to effectively implement this modern information technology system Starbucks not only needs more investments in physical assets and technologies but it will also have to make investments on managing close relationships with all stakeholders.
After having a brief analysis of Starbucks, Jubilee Palace system of information management now we are in position to recommend many improvements to the system that can raise its efficiency:
The current management information system is very rigid and don’t offer facility to add extra features with rapidly changing environment and technological developments. It should be flexible enough to add more evaluation and data analysis tools in future.
It should be supportive to employees’ knowledge and skills. More training and learning facilities should be provided to employees to become familiar with the modern system.
New system is raising a sense of insecurity and a king of fear in employees. It should be taken seriously and motivational workshops should be conducted to reduce these non friendly elements. They should be provided opportunities to communicate with other employees in the organization.
The switching process from one application to other applications takes a lot of time in current system of Starbucks it should be reduced and also managers should not be overloaded with work.
Another big issue with the information system of Starbucks is that it is totally based on web based technologies. If a company claims to have a competent website, it does not mean it actually does have. So the proper physical record system should be there mean in case of inefficiency or breakdown of this system its substitute should be available.
Funding should be provided to the project without any disturbance because implementation of information system for such a huge organization needs a lot of resources. Although the profits of Starbucks have been decreased in last two years since 2008 but when it will successfully upgrade the management information system it will reduce its cost greatly as in simple its need to have central servers will reduce to half from 52 to 20. This will enable the company to not only save the infrastructural costs but also to reduce many other complimentary costs. Like requirement of system managers and system care staff will reduce to half.
The information system used by the Starbucks is one of its important resources that provide it a clear advantage on its competitors. Starbucks is spending huge amounts of money on the development of this system and now it is one of its core capabilities. The effective use of information technologies is considered as major determinant of future success of organizations. The effective use of management information system has greatly improved the functional capabilities of the Starbucks and raised the decision making capabilities of organization as well.
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