Use of Information Technology and Information ...

Use of Information Technology and Information Systems for Organisational Agility in Malaysian Firms Prof Mohamed Zain Graduate School of Management University Putra Malaysia

Norizan Mohd Kassim Faculty of Management Multimedia University, Malaysia

Eliza Mokhtar Bank Kerjasama Rakyat Malaysia Bhd

Abstract This study examines the use information technology/computerised information systems (IT/lS) in providing information for management decisionmaking among Malaysian firms that would contribute towards making the firms more agile. The findings show that IT/IS has become critical to the success of organisations. For example, Malaysian firms were particularly effective at using IT/IS for mastering change, leveraging resources, and cooperating to compete but they were not yet fully able to use IT/IS effectively to enrich their customers, particularly to provide information about competitors, to reach their target customers, to fulfill customer needs and wants, and to enable information to be accessible to all employees. Therefore, Malaysian managers need to be more aware of these shortfalls and work toward remedying them to increase their firms' agility.

Introduction In today's borderless world, the rapid growth of information technology/computerised information systems (IT/IS) has facilitated communication and the exchange of information on an unprecedented scale. IT/IS has become a useful way to cope with today's volume and complexity of data. It helps in management decision-making in order to make sure that the strategy is well followed according to the firm's corporate mission and objectives plan. Previous researches by Zain (1995) and Zain and Rickards (1996) have found that more innovative Malaysian firms are more responsive to change and the implementation of technologies. However, as technology becomes more matured compared to when it was first introduced, management has changed its focus on controlling the business rather than the tech''°

70

SINGAPORE MANAGEMENT REVIEW, VOLUME 25 NO 1

nology. The focus here is to make sure that companies stay agile in their respective markets and whether this agility could be enhanced by using IT/ IS. The word "agile" is defined by Webster's New World Dictionary & Thesaurus (1997) as "quick and easy of movement" and "deft and active". Thus, we define firms that are agile as those that are able to manage change quickly and easily in order to survive, particularly in a turbulent environment. For example, firms need to be fast and lean and be responsive to change as it leads to growth in profitability. Historically, the agility of firms was

first identified by Goldman, Nagel, Preiss, and Dove (1991) in their 21sI Century Manufacturing Enterprise Strategy report. According to them, agility focuses on the use of IT/IS to provide strategic directions and capabilities to help organisations to be competitive to face change. It is about having strategic management to help a company to stay long and flexible in facing uncertain and unpredictable changes. As a result, the presence of IT/IS is to ensure that the company will improve its efficiency in getting jobs done with minimum waste, to be effective in selling its products or services, and to be able to build up a loyal and expanding customer base. Moreover, the traditional modes of business operations are being unshackled in favour of high-speed transmissions and interactive communications across the national boundaries and hence, firms are able to join global markets. The IT/IS revolution is upon us. However, to be agile, firms need to have strategic agility planning that will indirectly form a structure to fulfill customer needs by offering the right products and services at the right time with the right quantity. For example, airlines are among the first to use the technology. In the early days of the airline industry, travelling reservations and other transactions were done manually. But in the late 1950s, in the United States, American Airlines realised that the manual way could not keep up with fast growing customer-base. To overcome the problem, the company established a joint project with IBM to develop an automated on-line airline reservation system. This system has given the company a huge competitive advantage vis-a-vis other airline companies so much so that the computerised reservation system is widely used by other airlines as well (Neo, 1988; Niketic and Mules, 1993; Lucas, 1997). The success of the usage of an IT/IS system can be measured in terms of its success in generating information to achieve its stqltegic objectives, and therefore it is essential for the organisation to create an appropriate information management strategy and systems infrastructure to support it (Bentley, 1998). According to Wilson (1997), decisions are made in support

USE OF INFORMATION TECHNOLOGY AND INFORMATION SYSTEMS

71

of the organisation objectives and nowadays information is required to be handled more freely and openly. For example, IT/IS lets the management build systems and provide tools to extract information from online databases to support decision-making. Another previous study has reported that the implementation of IT/IS was solely done to get ahead of the competition (Thierauf,1993) Therefore, the primary objective of this preliminary study was to determine whether IT/IS contributes to management decision-making, which later could result in making the firm more agile. The research was conducted on firms from various types of businesses and industries operating in Malaysia. Agility, according to Mates, Gundry and Bradish (1998) is a widespread strategy set by firms to face unpredictable changes and to be competitive in their respective market. Thus, firms need to establish processes that will allow them to master change, and to face change any time and any where. Therefore, the issue is how IT/IS contributes to the efficiency and effectiveness of these processes. Generally, agility is the ability of firms to face and adapt to continuous change and unpredictable business environment proficiently. In other words, agility is not about how a firm responds to changes; it is about having the capabilities and processes to respond to the environment that will always change in unexpected ways. Thus, the framework for assessing a firm's agility used in this study is based on the four principal dimensions of agility suggested by Mates, Gundry and Bradish (1998), that is enriching customers, mastering change, leveraging resources, and cooperating to compete.

Research Methodology Primary data for this research were collected using a self-administered questionnaire designed to serve the purpose of the research objective. The mail survey included a cover letter specifying the objective and the rationale of the survey. A self-addressed envelope was also enclosed with the questionnaire. Secondary data for this study came mainly from newspapers, the Internet, journals, publications, magazines, books, and databases accessed via the Internet. The survey was carried out in approximately one month. The targeted respondents were those listed in the Malaysian International Chamber of Commerce & Industry Directory 2000. From the list of 425 members, 200 respondents (47 per cent) from all kinds of business activities were chosen using systematic random sampling. The questionnaires were distributed via the ordinary mail in early August 2000.

72


The questionnaire used in this study was designed by the authors and was basedon the researchobjectives discussedwhich aimed at determining the use of IT/IS in management decision-making. The questionnaire was divided into four main sections,each of which attempted to assesshow IT/ IS contributes to the four dimensions mentioned above. Nine statements, which require respondentsto state their opinions pertaining to the issue of enriching customers,sevenstatementspertaining to mastering change,eight statementspertaining to leveraging resources,andnine statementspertaining to the need to cooperate to compete were given in the questionnaire. The statementswere believedby theresearchersto capturethe essentialaspectsof agility asdefined by Mates, Gundry andBradish (1998). Furthermore, in this studyfor collection of most data,labeledfour-point Likert scaleswere adopted because a mid-point rating scale tends to make respondents guess what might be the socially acceptable answer (Garland 1991; Kassim 2001), that is, the mid-point "is not important" (Armstrong 1985, p 105; Kassim 2001) because it may not reflect the true opinion of the respondents. The final part of the questionnaire consisted of a series of respondents' demographic and socioeconomic characteristics. The respondents were given up to two weeks to complete and return the questionnaire, but only 10 (5 per cent) responded within the time limit thus necessitating us to extend the time limit for another week. After the second week of mailing the questionnaires, telephone contacts were made to the respondents who had not returned the questionnaire. The questionnaires were processed using the Statistical Package for Social Science (SPSS/PC) for Windows software. The analysis of data employed in this research was mostly qualitative rather than quantitative. However, wherever appropriate, statistical analyses of data were carried out to provide further support to the qualitative analysis. Many researchers (for example, Denzin, 1978;Fielding and Fielding, 1986; and Jick, 1979) advocate the use of mixed methods. The analysis of various statements under each of the four dimensions of agility was done by assigning the following rating based on the degree of agreement among the respondents with the statements as shown in Table 1.Thus, the rating of three pluses (+++ ) indicates that IT/ IS was able to contribute very strongly to the firms' agility; two pluses (++) indicates moderate contribution; and one plus (+) indicates weak contribution. A similar method of analysis was utilised by Zain (1995) in assessing pertinent factors in the process of innovation implementations carried by Malaysian firms.

USE OF INFORMATION TECHNOLOGY AND INFORMATION SYSTEMS

73

Table 1: Ratings Used to Assess IT/IS Support for Firms' Agility

Criteria

Assigned Rating

80 per cent or more of the respondents either strongly agreed or agreed with the statement

+++

61 to 79 per cent of the respondents either strongly agreed or agreed with the statement

++

50 to 60 per cent of the respondents either strongly agreed or agreed with the statement

+

Descriptive analysis was used to describe the demographic and socioeconomic characteristics. The reliability of the questionnaire was tested using Cronbach alpha. The result shows that the questionnaire was more than adequate in terms of its reliability, that is, a = 0.82 (Kline 1998).In addition to the above descriptive analysis, a one sample t-test was performed to determine whether differences exist between the sample mean and the population mean (that is, 2.5). Results From the 200 respondents to whom the questionnaires were mailed, 45 (22.5 per cent) responded by returning the completed questionnaire. Reasons of busy, outstation, and confidentiality were given by 16 respondents who did not wish to participate in the survey. From the telephone calls made, 19 respondents said that they did not receive the questionnaire due to wrong mailing addresses or change of office location. The demo graphics of the respondent organisations are summarised in Table 2. From this table, we can see that approximately 69 per cent of the organisations were Malaysian firms while about 31 per cent were multinational companies (MNC). The respondents from the organisations held a variety of positions ranging from top management (CEO, managing directors, directors, etc) to middle level management (information systems director, functional head, etc). The company size was based on the number of employees. Respondent organisations that employed less than 50 employees contributed to 26.7 per cent, whereas those with 250-499 employees contributed to 20 per cent and those with 150-249 employees contributed to 17:8 per cent. Companies that employed between 500-999 and 1,000-2,499 employees, both contributed to 13.3 per cent of the respondents. Only 8.9

74


per cent of the firms had 50-149 employees.Therefore, most (more than 85 per c;ent)of therespondentswere small to medium-sized firms with lessthan 1,000 employees. The respondents manufacturing industries (including food and beverages, engineering, chemical, agriculture, construction, rubber and plastics, and vehicle) (53 per cent) and service industries (including hotels and catering, advertising, financial, travel and transportation, professional services, retailing, wholesaling, legal, and broadcasting) (47 per cent). The firms mostly used centralised or a combination of both centralised and decentralised mode of IT operations (47 per cent each).

Table 2: Demographics of the Respondents' Organisations Variables

N

Per cent

Company Ownership Malaysian Company MNC Total:

31 14 45

69.9 31.1 100

Company Employees Size Under 50 50-149 150-249 250-499 500-999 1,000-2,499 Total:

12 4 8 9 6 6 45

26.7' 8.9 17.8 20.0 13.3 13.3 100

24 5 3 3 2 1 1 1 8

53.3 11.1 6.7 6.7 4.4 2.2 2.2 2.2 17.8

Major Activity Manufacturing: Food and Beverages Engineering Chemicals Agriculture/F orestry /Fishing Building/Cons tructi on Rubber and Plastics Vehicles Other Manufacturing

USE OF INFORMATION

TECHNOLOGY

AND INFORMATION

SYSTEMS

75

Table 2: Demographics of the Respondents Organisations (cont' d) Variables

N

Per cent

Services:

21 5 3 3 2 2 1 1 1 1 1 1

46.7 ILl 6.7 6.7 4.4 4.4 2.2 2.2 2.2 2.2 2.2 2.2

Hotels/Catering Advertising/Marketing Financial Services Travel & Transportation ProfessIOnalServices Retailing Wh 01esale/Im port/Ex port

Insurance Legal Computing Broadcasting

Based on the high percentage (93 per cent) of the firms that have access to the Internet we can conclude that the Internet has become a necessity for Malaysian firms in operating their businesses. The majority (69 per cent) of the firms also had Intranet services in their organisation. However, most of the firms have yet to provide extranet services as part of their business operations. From the results, it can be concluded that the use of IT/IS for telecommunication among the employees was very encouraging. However, very few firms had taken advantage of the extranet technology to collaborate with their business partners. Therefore, this is one area of the technology management that requires more awareness among the Malaysian firms in order to compete more efficiently in the market place.

Enriching Customers The results obtained were mixed (see Table 3). There were some evidence (agreed by the majority of the respondents) that IT/IS contributed to enriching customers in the sense that out of the total nine statements posed to the respondents only one received very strong agreement (+++ rating, that is, strongly agreed/agreed by 80 per cent or more respondents), while two statementsreceived strong agreement (++ rating, that is, strongly agreed/ agreed by 61-79 per cent of the respondents) and another two statements received average rating (+ rating, that is, strongly agreed/agreed by 50-60 per cent of the respondents) as follows:

76


a) Statements receiving +++ratings: . ITIIS helps in fulfilling the information need for decision-making. . IT lIS enables org m s:: m z --I :IJ m :::;

-

+

m

-~ < 0r C s:: m f\) 01 Z 0

a = significant at p