Management information system (MIS) entails an automated and organized information system that concentrates in the process of storing, gathering, and transferring relevant data that supports the management of operations within a company (Laudon & Laudon, 2015). The data is available to all the departments within the organization. The processing of data is done through the use of diagrams, reports, and charts that generate accurate and vital information for the management (Chaffey & White, 2010). To get a holistic and realistic view of the Management information system, MIS of Amazon will be utilized as the case study. The study focused on the significance of the management information system with respect to the benefits and uses of management information systems in Amazon.
Amazon is among the world’s largest technology corporations that aim at streamlining digital, e-commerce, cloud computing, and artificial intelligence services. Amazon is well known for its disruptive modernization through increased innovation (Ellis, 2011). Amazon has relied on the management information systems to manage their operations and retain customers (Shanahan, 2011). The management information system has connected the organization of information within the company to the administrative goals by offering structured reports that govern the operation of the firm.
The applications and roles of information systems at Amazon have enhanced the value and success of the company. The utilization of Management information systems within Amazon has been done in an attempt to connect the information systems directly to the developments of the company through logical analysis (Ranisavljević, Spasić & Mladenović-Ranisavljević, 2012). Amazon has relied on MIS to produce structured reports for the different departments within the organization. MIS continuously implements the principles of unity and organization of information through the utilization of technical methods of storage, collection, and information transmission in conjunction with statistical and analytical methods.
Value Proposition is considered as the promise of value that is to acknowledged and communicated to the various stakeholders. Considerably, the value generated by the management information system is an essential element in the overall effectiveness of the MIS. Amazon’s corporate environment is exposed to a number of risks and uncertainties. The management information system offers essential information and data to the management by making informed decisions (Chen et al., 2010). The set of interrelated components has offered essential data that supports coordination, decision making, control as well as helping the management in analyzing the problems and visualizing complex subjects (Turban, 2008). Amazon is an organization under the E-commerce industry that has aimed at attaining core competence and sustaining unique business processes through a collection of information about the consumers and their buying trends. The case of Amazon has reflected the value of MIS through the strategic goals of Amazon which is achieved through the integration of information system. Therefore, MIS can be considered as an essential tool for streamlining management activities and for the companys’s development within the global context through ensuring that the consumers receive diversified services.
Figure 1: Value Chain Analysis. (Source: Shanahan, 2011)
The value chain of the company portrays the effectiveness of the management information system that they have implemented, thus generating more value to the consumers. The figure above shows how the MIS has enabled Amazon to create value through coordination of the primary activities and support activities (figure 1). The primary activities comprise of activities such as outbound and inbound logistics, operations as well as sales and marketing activities. While the support activities include human resource management, procurement as well as technological development. The management information system creates a competitive advantage through operational excellence through improved business operations (Nowduri, 2011). For instance, in figure 2 in the Amazon retail store, they rely on the information system to automatically place an order with the supplier when the inventory level has reached the reorder limit (Figure 2). Through this, they ensure that the customers always count on the store to find what they need. They have been able to develop effective business models that have benefited consumers. For instance, they have established an effective e-commerce web-based system and application through which the customers can access the items and purchase without having to visit the physical stores. The ordering system has been linked to the delivery system and the online payment system. On the other hand, historical data has been used to understand the consumer and supplier needs, thus establishing a long-term relationship between the business and the stakeholders. IT within Information systems exists to make the organization profit and increase value.
Figure 2: Business process at Amazon; source, (Ellis, 2011).
Business intelligence systems have evolved through decision support systems that have gained strength through management information systems (Samer and Rawan, 2018). Management information systems have offered a wide area of technologies and applications that have enabled Amazon to collect, analyze, store and offer information to improve their processes to model quality operations (Shollo and Galliers, 2016). For instance, the payment process at Amazon have offered the customers with different payment means such as credit and debit card. Another essential part of Amazon Customer Relationship management system is the integration of logistic systems through the customer contact information thus monitoring the progress and reducing fraud. This has increased confidence among the customers thus generating more value to the company through attracting and retaining more customers.
The management information system has ensured that appropriate data has been collected from different departments within Amazon. It is expected that it fulfills the information needs of every individual or group of users such as the managers. For instance, it has enabled management control, strategic planning, transaction processing and operation controls. When a customer is ordering an item in the transaction processing, it records data pertaining that specific transaction and reference on different documents (Amuna, Al Shobaki and Naser, 2017). This provides the management personnel with operational data that is used in scheduling, planning and control that play a role in further decision making.
The internet has connected people and businesses by enabling business transactions such as e-commerce. The emergence of the Internet of things is about the connection of systems and machines through actuators and sensors to allow sharing and collection of information to enhance efficiency and productivity. The internet of things at Amazon has enabled the idea of the interrelation of devices that are embedded with sensors that operate under differing environments (Wu, Straub & Liang, 2015). The IoT has enabled human access to manage and control operations and data of objects that are operating under the various information systems.
Big data technology at Amazon entails software utility that has been developed to process, analyze, and extract information from large data sets that have been challenging to extract through traditional software data processing. The big data technology has included operational and analytic big data technologies (Talón-Ballestero, González-Serrano, Soguero-Ruiz, Muñoz-Romero, & Rojo-Álvarez, 2018). The big operational data analyzes and process the normal day to day operations data that is generated in the in Amazon from such sources as social media and online transactions such as shopping, while the big analytical data focuses on the actual performance when it comes to crucial real-time business decisions.
Cloud computing has changed the development of management information systems at Amazon. Cloud computing has offered services such as infrastructure, platform, and software where analysis of large information sets has become better, leading to better results (Rittinghouse & Ransome, 2016). The cloud has enabled Amazon users to analyze big data faster, contributing to insights that can improve business operations. Cloud computing has been an effective mechanism that remotely takes data and performs specific services on the data. The managers can easily process data and control the database management system through cloud computing.
Artificial intelligence (AI) is considered as the ability of machines to adapt to human intelligence processes and perform human-related activities (Jackson, 2019). Artificial intelligence has the capacity to enhance every component of the management information system. For instance, it can identify patterns in input data and categorize them. The utilization of AI in Amazon has also facilitated online transactions and translation of consumer data. For example, the AI has played a significant role in the generation of various models on a daily and weekly basis that enable the organizations to make effective decisions as compared to humans who have limited capacity to work. This has extended the company earnings and profitability from efficient operations.
Amazon management information system has many sub-systems that are integrated to achieve an effective management system. The sub-systems include the transaction processing system, decision support system, and executive information systems. The transaction processing systems are structured in such a way that allows gathering, processing, and storage of transactions that take place in daily operations (Zhu & Liu, 2018). The system can be utilized in modifying and canceling transactions that have been completed in the past when necessary. The essential property of this system is its ability to accurately record the various transactions that take place simultaneously. For instance, the ordering process system, the payroll systems, and the stock control systems that handle large sets of transactions.
The utilization of decision support system at Amazon, on the other hand, enables the decision-makers to generate essential information from the analyzed information (Gabriel & Obara, 2013). The system compiles data from various sources and analyzes it for the purpose of aiding in effective decision making. Examples of decision support systems at Amazon include the financial planning systems and logistics systems. The executive information system, on the other hand, offers information and reports about the entire enterprise to the top executives (Nayak, Sequeira & Senapati, 2012). The system offers information easily and fast through the use of reports that are presented in graphs and tables, which are easy to compare and easy to deduce analytical information. Therefore, the executive can make meaningful decisions from the information provided, thus improving the quality of decisions that are made.
The initial costs of installing a management information system include those associated with consultancy, hardware and software, licenses, installation, staff training, and necessary infrastructure such as network cabling. Additionally, there are maintenance costs that include software supports (license renewals and upgrades), maintenance and replacements, and hardware upgrades.
The MIS offers information that improves the level of efficiency in the company (Asemi, Safari & Zavareh, 2011). For instance, the employees are more productive since they spend less time gathering data required by the management while the administration can make quality decisions from reliable data. MIS has offered real-time data without risks of mistakes or delays. Amazon typically processes large data sets that require proper data flow and data structures. Therefore, MIS has presented data through actionable reports that can be used in formulating marketing and operational strategies. The business model of Amazon has heavily relied on the management information system. Ideally, the business model of Amazon entails browsing, accounts management, and shopping. The management information system has played a crucial role in each of the business models. For instance, it has enabled online shopping where customers are allowed to add products that they wish to purchase in their basket. The integration of the customer relationship management system has allowed a number of users to find the products that they want to purchase.
The MIS has boosted its sales strategy since they have moved to a multi-level sales approach. MIS has offered an effective development that has enhanced interactions between the business and consumers (Bocij, Greasley & Hickie, 2008). For instance, Amazon has been able to study the distribution of sales by product, region, and brand as well as develop estimate sales by region and brand. Relatively, the company has specialized systems that offer a report on the effectiveness of current and past campaigns to evaluate appropriate future campaigns.
The interrelationship of management information systems in Amazon is essential to the overall system approach. The various components of the management information system operate in a coordinated manner to facilitate the achievement of organizational goals. Considerably, by offering the required information, the management information system can facilitate the interrelation and coordination of varying sub-systems within an organization, thus linking the organizational processes (Zhu & Liu, 2018). The Management information system has been considered as a pyramidal structure comprising of the four levels of information resources (Figure 4). Considerably, the top-level facilitates strategic planning as well as policy-making within the organization, while the second level facilitates decision making and tactical planning while the third level supports daily operations. The MIS is considered as a support system that draws on the concept of organizational structure.
Figure 4: Hierarchy of management information systems; (Source: Zhu & Liu, 2018)
The TPS is used in recording the daily business dealings. At Amazon, they are used on a management level to make decisions that are related to the transactions. The TPS has enabled the collection of data and storage of incoming and outgoing business transactions (Laudon & Laudon, 2011). This has offered efficiency through improved business performance, availability, and integrity. The TPS at Amazon is a database structure that controls the transaction programs. For instance, when a problem occurs during the ordering process, the transaction is run through the TPS once again. The major significance of the TPS is that it manages and coordinates a number of orders and has made the online selling process easy for the company. Considerably, being a global business, they have benefited from the capacity of the TPS to record all transactions from different regions. The TPS has allowed the validation of different orders and tracing of orders through the management of inventories of customers as well as appropriate delivery (Mishra, Kendhe & Bhalerao, 2015). For instance, Amazon TPS has many shipping addresses, many customers, varying status inquiries, and shipment requirements. The TPS has facilitated the transaction process through the one-click ordering process through the use of personal details that have been secured in the transaction processing system.
The decision support systems (DSS) are collaborative software-based systems that have helped managers in making effective decisions by giving access to large sets of data that have been gathered from various related information systems (Oz, 2008). For Amazon, the decision support systems rely on data that is obtained from the transaction processing system. Amazon utilizes the marketing information systems, inventory management, and accounting systems that facilitate effective decision making. For instance, the decision support systems enable the management to control a demand that is on high demand (Reddy, Srinivasu, Rikkula & Rao, 2009). Through an accurate demand forecast from the marketing information systems, the supply of the right products is done, thus facilitating effective inventory management. Considerably, this influences the entire supply chain that facilitates effective response to consumer demand. The information system offers timely and accurate information about the inventory location, receipt of goods, profits, and the valuation of the products.
Amazon has relied on WebHRS, which has been used to process, store and manage employee data such as addresses, names, social security numbers, work permit information, national IDs, and other relevant information about the worker. Relatively, it has also enabled HR functions such as applicant tracking, recruiting, attendance management, benefits administration, and performance appraisal. Considerably, The HRIS has enabled the HR department to reduce the time spent on human resource tasks as well as ensuring the accuracy of employee data, which has enabled employees to play a greater role in managing their information. For instance, Amazon has rolled out daily Q&A feedback and connections, which have enhanced the usefulness and confidentiality of their HRIS since they can better understand their workforce. Every morning, the employees are required to start their day by answering several questions that pop up on their screens. These questions are considerably work related to various topics that range from their concerns about the management, positive feedbacks that they have received, and follow up questions. The Q&A program, which has been named Connections, has been used to improve the workplace culture and management functionalities.
The executive information system is used in assisting senior executives in the decision-making process. This is done by having easy access to essential data that is required to achieve the strategic goals within the organization (Nayak, Sequeira & Senapati, 2012). The senior management is able to access information from both external and internal environments through graphical displays and user interfaces. The top management can eassily monitor the trends, performance, opportunities, and challenges within the organization. The executive information systems play a very vital role in acquiring data from various sources that facilitate aggregation and analysis of the data. After performing the steps, the data is displayed in a way that is very easy to understand. The data obtained contain insights that range from financial analysis, investment performance, and analysis of trends that foster effective decision making (Satyanarayana, Rallabandi, Srikanth & Vuda, 2009). These have been crucial in improving productivity, performance, and profitability of Amazon. The management reporting system is part of the control system, which maintains a high level of consistency in terms of reporting business performance.
Amazon is relying on Agile management information system infrastructure. The Agile MIS infrastructure is effective in supporting change. The agile MIS infrastructure components include maintainability, accessibility, portability, availability, and usability, which facilitate change in the working environment to flexible systems that meet the demands of the organization (O’brien & Marakas, 2011). Agile MIS has optimized operations of Amazon business processes, thus increasing productivity and profitability. The features of agile MIS infrastructure have been implemented at Amazon since they are offering accurate information to the users and changing over time. For instance, through accessibility, it has defined the accessing capacity and performance ability whereby, in a sample instance, the application is only accessible by the administrator.
Amazon relies on vertical integration, where three levels of management are used in performing different functions. Information flows from the operating personnel to the middle management and then to the top-level management. For effective management, the information flows between the different levels of management to perform varying functions of control, operations, direction, and organization. For instance, the transaction processing system records the daily business transactions from the customers, which are then used at the management level to prepare reports on business performance. The top-level management then conduct an analysis on the information offered at the middle-level management.
Poor planning and implementation are considered as the main causes of information system failures. Considerably, the MIS plays a significant role in the management, relying heavily on technology in the operations. Data breaches in information systems have been the main cause of information system failure due to a diminished reputation and loss of trust (Majchrzak & Markus, 2012). Considerably, customers share personal details and sensitive information that requires strong security measures. Additionally, lack of effective updates has led to data breaches due to the exposure to cybercriminals who exploit the vulnerabilities of the system (Soomro, Shah & Ahmed, 2016). For instance, out of date software can generate loopholes in the system that allow attackers to sneak malware and steal sensitive information.
The internet of things has improved the quality of information systems. The idea of activities being connected to the internet has increased efficiency. Advancement in wireless technology has defined the future of information systems. Considerably, sensors and wireless technologies have allowed the physical objects to receive and send data within the information system infrastructure (Haag & Cummings, 2009). For instance, when products are entrenched with sensors, organizations have been able to track the movements of products as well as monitor interaction between the customers and data. There is also sensor-driven analysis, which has supported longer ranges of decision making and planning within organizations. The advanced software systems have been linked to tremendous computing resources and incredible storage (Laudon, 2007). These have been used to generate a number of graphical displays that are essential in analyzing data. Optimization of business processes has increased efficiency whereby the sensors can feed data through the computers that are, in turn, analyzed and then transmit signals that adjust the processes.
Quick AI-powered chatbots are gradually developing prevalence in the e-commerce sector by being utilized in conversations and requests by clients on easy queries regarding requests and matters that are straightforward to resolve. As developments in artificial intelligence and regular semantic dispensation technology progress, chatbots develop into cleverer and craftier in the management of difficult client exchanges. Deployment of chatbots by amazon will enable the engagement of clients in continuous live sessions and ensure the provision of services on a 24hour basis (Cui et al., 2017). Amazon will also deploy the chatbots on websites in order to engage the visitors to impact and improve, thus enhancing the shopping experience by answering queries regarding the organization. Moreover, Amazon will utilize chatbots to manage inbound calls for customer support, redirecting intricate matters to competent human managers (Brandtzaeg & Følstad, 2017). By employing chatbots, there is acceleration and streamlining of customer interactions. This will assist the company in accomplishing great profit margins. As chatbots are installed to solve simple disquiets and respond to rudimentary queries, Amazon will avert wastage on manpower, resources, and time.
Another form of technology is blockchain. The technology was primarily designed for online currency trades such as bitcoin and Litecoin, amongst other cryptocurrency-related resolves, precisely as a public business record (Crosby et al., 2016). Nonetheless, its abilities and efficacy have established a leeway in the e-commerce sector. Blockchain technology is a delightful invention that will enable Amazon clients to record time-stamped dealings into an absolute digital record, which is part of a massive digital grid handled by sets of devices (Beck, 2018). With Blockchain, Amazon will be able to concentrate on the development of supply chains that may be compatible with both retailers and suppliers. In the conventional distribution channels, tracing items may be difficult, therefore leading to loss of goods, theft, and counterfeit products.
Amazon may use AI to develop an individualized shopping experience for the clients. This can be achieved when an individual regularly visits the store, and the bot views the profiles to locate relevant insights that may assist in shaping an individual’s shopping journey. With possession of the AI technology, Amazon will be able to assess past transactions, browsing history along with location to determine the relevant products. The AI then develops and sends suggestions of the product through widgets, pop-ups, and entrenched adverts (Pappas Giannakos, & Chrissikopoulos, 2012). The entire activity is concluded within a short period of time and guarantees that the clients are offered an individualized feel from the point of accessing the website.
E-commerce has changed the way business is being conducted in business to business, globally and locally (Haegele, 2011). The global e-commerce market is expected to grow since consumers have switched to electronic commerce transactions through the internet (Wang & Ng, 2018). The industry players are offering similar products and services, leading to an increased competition and fight for market share and consumers. Some of the e-retail giants that Amazon has been fighting with include Microsoft and Cisco, who often provide consumers with similar products and services. Thus, it has become difficult to evaluate the e-commerce corporation that will remain successful and lead consistent profit streams. The industry has low barriers to entry, which allows new corporations to offer similar or more quality products. Amazon has focused on improving its information technology capabilities, which has boosted the company profits and existence on the internet (Chang, Wang & Yang, 2009). Relatively, the retail agents have been aggressive and contribute to strong competitive forces within the industry.
Amazon has relied on information systems strategies to deal with its competitors. A low-cost leadership strategy has been a generic strategy for the company’s competitive advantage. Amazon uses advanced networking and computing technologies that have minimized the operational cost. Considering the e-commerce nature, the company has profited from the automation of processes that have generally been used in operational processes such as purchasing, therefore, minimizing the cost of physical stores.
Differentiation has been the main process through which Amazon has successfully offered differentiated products and services to the consumers. Information systems have offered Amazon additional services such as free shipping and a website that offers more items to the customers. They have been able to keep track of consumer preferences through personal information that is offered in a transaction processing system. They have differentiated themselves through innovation, such as one-click ordering, payment systems, and personalized recommendations. Additionally, they have virtual store experience for consumers with highly customized software applications that have supported the business model.
The rapid dissemination and rapid development of new information, as well as the telecommunication technology in the current world, has led to the global information revolution. One of the essential tasks in an organization has been the improvement of the management processes, which include the utilization of modern information technology. The management information systems at Amazon has changed the nature of work within the firm through increased productivity and efficiency. The management information system has been designed to coordinate business processes and functions. Through this, Amazon has benefited from improved coordination, better decision making, and efficiency. For instance, the customer relationship management system has coordinated all the interactions between the firm and the customers to optimize customer satisfaction and firm revenue. Management information systems offer timely, accurate, and complete information that is essential in facilitating decision making. For Amazon, it has helped in controlling, planning as well as operational functions which have generated value to the company.