Does Information Technology Contribute to Organizational Performance in Today Organizations?

Information technology (IT) has significantly affected many organizations. The dramatic growth of the Internet and telecommunications technologies offers various benefits to organizations. For instance it allows many supporting operations to be outsourced to countries like India, Singapore, Philippines and the like.

Some IT products such as the Internet, Intranet, voice mail, e-mail, voice and video conferencing, groupware, Web services, and knowledge management can help organizations to provide faster, more efficient, and more complete services to the customers.

Before discussing whether information technology contributes to organizational performance, let us define organizational performance. Although many researchers have tried to provide a clear definition of performance, there is still no universal definition t. In general, organizational performance refers to how well an organization is doing relative to a predetermined set of standards.

For example, let us say, the company “ABC Logistics Inc.” might define their performance in terms of quick response time, improve customer service, reduce error, improve data control, reduce paperwork, reduce manpower in terms of percentage as a goal for this year. If we want to see the role of IT in organizational performance for this company, we need to investigate how IT contributes to these performance indicators.

I should confess that I have not done any serious extensive research to explore how IT contributes to organizational performance. However I have looked at the IT enabled activities of 2010 Baldrige Winners to explore the role of IT in organizational performance. For those who are not familiar with Baldrige award, let me give a quick summary about the award. The U.S. government established the Baldrige Award in 1987 to promote awareness of quality excellence; to recognize quality achievements of U.S. companies, and to publicize successful quality strategies. The dual goals of the Baldrige criteria are to improve value to customers, which results in marketplace success, and to improve overall financial and company performance to meet the needs of shareholders, owners, and other stakeholders.

The National Institute of Standards and Technology(NIST) manages the award and it may be given each year in six categories such as manufacturing, service, small business, health care, education, and nonprofit organizations. The Award criteria classify performance into five major categories: customer evaluation of product and services, financial and market results, human resource results, supplier and partner performance, and organizational effectiveness results. Below shows the Information Technology enabled Activities of 2010 Baldrige Winners.

MEDRAD: This Company develops, markets, and services medical devices that diagnose and treat disease. In this company, Customer Relationship Management (CRM) databases being used to understand the voice of customers. They use extensive IT networks to understand the voice of processes. They use Systems Applications and Products in Data Processing (SAP)to manage their daily operations.  Also, MEDRAD utilizes SharePoint extranet capability to establish collaboration forums with key partners and outside organizations, including suppliers and OEMs. Databases and IT tools being used for collecting and transferring workforce knowledge.

Freese and Nichols Inc: It is a water and wastewater engineering firm from Texas, US. Their majority of work was done by CAD and 3-D software. They use web-based software for project management, accounting and payroll functions; they use customer surveys to identify customer needs. They use databases to store all type of data including clients, staffs and projects. Employees working in multiple locations have laptops. Web, audio, and video conferencing, as well as chat and desktop sharing being used to support collaboration across all locations. Electronic newsletters being used to communicate organizational updates. Microsoft Outlook is being used for day-to-day communications.

Studer Group: It is a healthcare consulting firm in the US. They use public websites and emails as one of the approaches to obtain information about customer. Also, they use Portal, VPN access, online expense reporting systems for Information Sharing.

Montgomery County Public Schools (MCPS): They use electronic grade book, online assessment applications, and Web-based application for completion of the state Individualized Education (IEP) form; online student surveys and onlineParent surveys to handle their day to day operations effectively. Similarly, a web-based system for human resource management and online access to MCPS curriculum guides being used help the students. Also, a Web-enabled solution being used for tracking and managing MCPS financial business functions

K & M Management: This company operates two fast-casual restaurant in Texas, US. Real-Time dashboard being used for decision making and process management. Likewise, Website, e-mail, and phone communication being used to gather guest comments.

Advocate Good Samaritan Hospital: This hospital uses various IT products including Network attached and wireless computers, Voice over Internet Protocol (VOIP) telecommunication devices Wi-Fi connections, a secure internet portal and secure hardware based business-to-business virtual private network computers. Microsoft Online Services being used for email communications. Also, Decision support tools/resources including electronic scorecards on the GSAM G2G intranet, the AHC data warehouse (CHIS), the Advocate Learning Exchange (AleX), Nursing Compass, Revenue Cycle Compass and AMS are being used for decision making and process management. Likewise, electronic medical record (EMR) system, e-ICU® technology, Centralized telemetry system and Electronic bed board information system being used to help patients. Also External GSAM website being used to provide patients, families, and the community the ability to find a doctor, research an illness, register for various health programs and screenings.

If we look at the previous year awards recipients, we can see the IT role in organizational performance. For example, few awards recipients have used Online computer databases to find customer growth opportunities; paperless technology (EDI and electronic funds transfer) for customer communication; data warehouse to measure the performance of processes; appropriate software for SPC charts, process control charts, design of experiments, and Intranet; and VPN and Lotus Notes and e-mails for information sharing. Likewise, few recipients have used Real-Time dashboard and customized software for decision making and process management, Internet as communication medium and installed various software including payroll software; accounting software; production software to handle the processes effectively. Also, few used Dashboard/balanced scorecard for strategic planning, Internet/intranet for  customer relations, and a centralized IT enterprise network (some of the components included EDI, paper, fax, intranet, e-mail, personal computer bedside workstations, and voice recognition) for better management and online training to employees.

By looking at the IT enabled activities of Baldrige Winners, I would say Information Technology contributes to Organizational Performance. An effective IT system and various IT-related products can provide the infrastructure to facilitate information flow between processes; between people inside and outside of an organization; help organizations to automate more processes; provide more flexibility and several other  benefits which can be closed to link to organizational performance. In summary IT can act as an enabler to improve organizational performance.