Unit 2 Digital Economy - 2.1 Information in Modern Organisiations - Types of Organsation and their Use of ICT

Nowadays, it is possible to divide an organisation by type or by sector. During the current recession and economic climate, it has become clear that companies without a clear strategy to use ICT and the internet will fail.




                                                                                                                              

Task 2: Read these articles and explain why these companies failed:

I think Blockbuster failed because it did not use the internet to rent out movies and such alike. The company "struggled because of  an increase in cheap online DVD sales together with the rise of film streaming services such as Netflix and Lovefilm". Blockbuster failed because, "five years ago", they had a chance to "buy a streaming service and continue to build on a strong brand", but they chose not to.
                                                                                                                                                          

I think HMV failed because it was "guilty of failing to react to the emerging demand for music online". HMV's problem is that "most people buy their music online" and the company has "failed to respond to attacks from all sides" - e.g. "supermarkets and Amazon undercut its CD and DVD sales", and Apple is also "cornering the music downloads market". Luke Lewis - the editor of NME.com - said that "it's definitely the internet that killed HMV" because people are "buying everything from Amazon".
Although music fans in Britain "streamed audio tracks more than 3.7bn times last year", "music sales are still largely made up of CD purchases". However, most of them are purchased "on Amazon and other online retailers, not HMV".
                                                                                                                                                           

Information in modern organisations:

An organisation can be defined as an entity comprising one or more individuals working towards a specific set of goals. The term "organisation" implies that they work in an "organised" or structured manner to achieve these goals. The definition covers not just a whole range of businesses, but also schools, hospitals, charities and government institutions; it embraces sole traders, multi-national businesses and governments. Naturally the information needs of these different organisations and the way they use ICT differs widely.

Types of organisation and the use of ICT:
Organisations can be categorised in a number of ways. One of the most common methods is to differentiate between them by the related factors of "ownership" and "objective". On this basis there are three main types of organisation that can be readily identified:

• commercial organisations
• public organisations
• non-profit or charitable organisations

Commercial organisations are what we would normally refer to as "businesses". They trade in a competitive market with the aim of making profits and growing the business. The smallest of these are single-person businesses (sole traders) such as window cleaners or a stall on your local market; the largest are giant multi-national companies such as the Ford Motor Company, Esso or Coca Cola.
Maximising profit will not be the only objective of business, but it will be the major one. Businesses survive and grow by selling products or services to their customers as profit.
Public organisations are those that are funded primarily through taxation and are controlled directly or indirectly by the government. These include: direct government bodies such as government departments and the civil service; local government; public educational bodies such as schools, colleges and universities; the health service; the armed forces and the emergency services.
The primary objective of these organisations is to provide some form of public service rather than making a profit. State schools are charged with providing education, state hospitals with healing the sick, the armed forces with defending the state and so on. They will still be measured by how well they keep to financial budgets but they will not usually be expected to make a profit from trading.
The distinction regarding profitability is not absolute. There is some crossover in the public sector from time to time. The utility companies (producing and distributing power and water).
British Steel, British Airways and the railways were once in the public sector in the UK, but have since been privatised and are now businesses that are expected to make profits. British Telecom used to be a public sector organisation but is now a massive private sector business.
The Post Office is still a public sector organisation, but it is expected in time to make a profit. The Post Office is owned and is in part funded by taxation, but it also has customers who buy stamps and pay for many other business services it provides.
This is in contrast to the NHS whose services are "free at the point of delivery". That is, ill people do not have to pay for their treatment directly.
Non-profit and charitable organisations raise their finance from donations or grant funding and use the funds raised to finance a particular case of issue. They also provide employment and incomes for the administrators or the organisation. They are regulated by the government commissions to ensure that funds are used properly. They are in many ways privately owned organisations with a form of public service objective. This can be seen clearly in the private education and health-care fields, many of whose organisations are set up as charities.

Activity 1 - Identify different types of organisations:

Company	Category
Tesco	Commercial organisation
Ministry of Defence	Public organisation
West Mercia police force	Public organisation
Hemel Hempstead library	Public organisation
Amazon.co.uk	Commercial organisation
Echoes Under-11 youth football team	Non-profit or charitable organisation
Boots The Chemist	Commercial organisation
Football Association	Non-profit or charitable organisation
British Broadcasting Corporation (BBC)	Public organisation
TVR (British manufacturer of sports cars)	Commercial organisation
London Ambulance Service	Public organisation
Patel’s Newsagents	Commercial organisation
NTL Incorporated	Commercial organisation
Sir John Lawes School	Public organisation
British Heart Foundation	Non-profit or charitable organisation
Withington Hospital	Public organisation
Newcastle United FC	Non-profit or charitable organisation

                                                                                                                                                                 

Objectives and ICT:

The different objectives of the three categories of organisation lead to quite different information needs and different methods of using ICT.
A large commercial organisation such as Tesco will market goods and services, present information, exchange information, conduct transactions, capture and process customer and stock data, distribute goods, manage customer relations and optimise stock control - only using ICT. All aspects of Tesco's business are integrated using ICT, and its business encompasses all aspects of ICT.
The London Ambulance service is not a business and does not have to market itself as such. It does not have to keep records of customers, sales and stock of product. However, it relies heavily on ICT for presenting information and exchanging information, just like Tesco. It also uses ICT for public relations, but most critically, within its ambulance fleet-management operation - deploying many ambulances and staff as efficiently and effectively as possible, in dealing with over 1 million calls annually.
The British Heart Foundation is a non-profit organisation. However, in fighting heart disease, it clearly needs to raise as much money as possible from a range of donors to fund research and education. Once it has raised money, it needs to manage and invest it. It also needs to capture donor information. The British Heart Foundation uses ICT partly like a commercial organisation, such as Tesco, and partly more like the Ambulance service.
The primary objective of an organisation does not in itself determine the organisation's information needs. We are still at an early stage of the Information Age and organisations are still working out how ICT can help. In particular, the UK Government is in the middle of a large change to e-enabled services.
The emphasis of government interaction with the public is still mainly about presenting and exchanging information. This is in itself should not be underestimated, since it can bring significant efficiencies. For example, it is clearly much more economical and efficient to allow consumers to download brochures and information packs from the internet, rather than print copies and send them out. Similarly, it is much more economical to provide answers to frequently asked questions (FAQs) online rather than to provide more staff to answer them over the telephone or face to face. However, it is increasingly possible to conduct transactions with the public sector over the internet. For example, it is now possible to book driving tests, file tax returns, start companies and file company returns online. The information needed for these different activities is "vast and far-reaching", and the public sector is clearly a massive and growing consumer of ICT services.
                                                                                                                                      

Activity 2 - Explore ICT and the health information:

On the NHS website:

What are the different forms of information that are presented?

• The NHS website offers information relating to checking your symptoms, about NHS Direct, for members, services & solutions, news and decision aids.
• What are the different methods that can be used to find information?
• Information can be found by putting in keywords, searching, links in text, menus, advertisements, etc.
• Who are the different audiences for the information and how does the presentation for these audiences vary?
• People who are ill, their relatives, practitioners and, essentially, stakeholders.

On the Best Treatments website:

• What are the different forms of information that are presented?
• There is a wide range of information offered on the website such as:
• conditions and treatments
• operations
• decision support
• latest news
• What are the different methods that can be used to find information?
• Information can be found by putting in keywords, searching, links in text, menus, advertisements, etc.
• Who are the different audiences for the information and how does the presentation for these audiences vary?
• People who are ill, their relatives, practitioners and, essentially, stakeholders.

This service encourages people to look things up online, instead of necessarily going to their GPs and hospitals. Although there are benefits to online services such as this, it has to be used carefully; e.g. if an ill person looked up their symptoms and guessed what was wrong with them, they might not realise that they had something more serious which could worsen.
                                                                                                                                      

Economic scale and ICT:

The balance of the different uses of ICT will vary not simply by objective, but also be scale. Mr Smith's small newsagent may require little or no ICT; Echoes youth football club may only use it form informing members and parents, and the gardens department of a small local council may only use it for payroll purposes.
On the other hand, large businesses such as Ford, charities such as the British Heart Foundation and Oxfam, and large government departments such as the Inland Revenue, have ICR at the heart of all their systems and have vast information needs.
                                                                                                                                      

Activity 3 - Look for uses of ICT in a charity website:

The British Heart Foundation website:

• captures and processes data:

In this screenshot, you can see that the BHF captured a range of data on European Cardiovascular Disease statistics from 2010 and processed the data into a pie chart.

• presents and exchanges information:

In this screenshot, the BHF present and exchange information by asking the internet user to enter information about "BHF services near you" in exchange for information about how to "support a local appeal, volunteer at your local BHF Shop or take part in a local event".

• conducts transactions:

 
In this screenshot, the BHF shows that they use their website to make transactions on the "Make a donation" page which involves monetary transactions.

• markets goods and services:

In this screenshot, the BHF shows that they market goods and services in the British Heart Foundation online gift shop.

• distributes goods:

In this screenshot, the BHF show that they distribute goods, since goods could include "news and event information", and this is sent to the internet user if they sign up.

• manages customer relations:

 
In this screenshot, the BHF show that they effectively manage customer relations with their "Heart Helpline", which helps callers with "anything heart-related".

• optimises just-in-time purchasing of stock and components:

This screenshot shows that the BHF can optimise just-in-time purchasing of stock and components, using their online gift shop and their eBay Store.

                                                                                                                                       

Activity 4 - Look for uses of ICT in a public-sector website:

On the British Army website:

• What is the main purpose of this website?
•  The main purpose is to recruit people to join the British Army.
•  Which of the following uses of ICT do they engage in through their websites?
• capturing and processing data? 
• YES - Data involving how many men were fighting in certain places and who achieved medals, etc, is displayed on various pages of the website.
• presenting and exchanging information?
•  YES - a wide variety of information is presented on the website, ranging from education which allows soldiers to assist their "career both within the Army and in Civilian life", to the British army structure.
• conducting transactions?
•  YES - There is an option on the website that allows you to donate money to charities such as Gift Aid - this is a monetary transaction.
• marketing goods and services?
•  NO - any services involve providing the internet user with information which is free. Furthermore, the Army Newsletter is free so any prizes won in the competitions will not cost the applicant.
• distributing goods?
• YES - the Army Newsletter hosts competitions which allow the applicant to win prizes - these must be distributed.
• managing customer relations?
•  YES - the website has a "Welfare and Support" page which shows that support is available in the form of the Army Welfare Service - its three main tasks being "Community Support, Personal Support and HIVE information services" - and Chaplaincy Support - this "is available for all family members of service personnel and those dealing with casualties".
• optimising just-in-time purchasing of stock and components?
• NO - there is no stock available for purchase on the website.

On the Metropolitan Police website:

• What is the main purpose of this website?
• The main purpose is to keep people updates with policing in their local areas, and the country as a whole.
• Which of the following uses of ICT do they engage in through their websites?
• capturing and processing data? 
• YES - the website tells you crime levels in a certain area and which police stations are situated wht.
• presenting and exchanging information?
• YES - information can be exchanged when a member of the general public wants to:
• report a crime
• seek victim support
• report suspected act(s) of terrorism
• licensing - asking for permission to:
• collect money for charity
• organise a protest
• apply to own a firearm
• wish to undertake a media project in London
• report a road traffic collision
• provide feedback - e.g. your views on the police service
• conducting transactions?
• NO - it is not possible to make any transactions, monetary or otherwise, on the website.
• marketing goods and services?
• NO - there is no option to purchase any goods on the website.
• distributing goods?
• YES - the "Total Policing" newsletter is provided on the website, discussing how the police "are tackling the issues that matter to you by working with partner agencies to find lasting solutions" since the last issue was published.
• managing customer relations?
• YES - the Victim Support line, etc, is there to help people deal with problems which could have occurred due to crime.
• optimising just-in-time purchasing of stock and components?
• NO - there is no stock available for purchase on the website.

                                                                                                                                       

Industrial sectors and ICT:

Organisations are often categorised by the industrial sector within which they operate. There are generally agreed to be three sectors within modern economies:

• Primary - This sector comprises activities relating to natural resources, such as agriculture, forestry and fishing, and extraction industries such as mining, quarrying and oil.
• Secondary - This sector comprises activities related to manufacturing and production, including the production of energy and goods.
• Tertiary -  This is the service sector, and includes retail, banking and finance, insurance, ICT services and training.

Data logging and analysis, monitoring and control are among the main applications of ICT in the primary sector. In the secondary sector, ICT is also used extensively in design and manufacture, in numerical control and robotics, and in picking and packing. It is used to schedule and optimise production mixes within factories. Manufacturing companies use ICT to automate production, and buying processes and control stock levels so that the minimum stock can be kept on site.
For example, motor manufacturer such as Ford do not keep huge inventories of parts "just in case they are needed". Instead, they have direct automated delivery systems linked to suppliers which trigger requests for additional parts as and when existing ones are used in the production process. This process is called just-in-time (JIT) stock control.
However, the real boom in ICT use has taken place in the tertiary sectors of the economy. Banking is now an ICT-driven industry;  insurance and finance are just as ICT dependent. Retail, or the selling of products and services to private customers, is also increasingly ICT dependent, especially with the invention of the virtual online store.
Many organisations cross the boundaries between industry sectors, and make extensive use of IT in all the sectors in which they operate. A primary industry company such as BP will extract oil from the ground, process it and then sell it through its own retail outlets - the service stations. At every stage of the process, IT comes into play in some form or another.
                                                                                                                                       

Activity 5 - Look for uses of ICT in a manufacturing sector website:

The Vauxhall website:

• captures and processes data:

• presents and exchanges information:

• conducts transactions:

• markets goods and services:

• distributes goods:

• manages customer relations:

•  optimises just-in-time purchasing of stock and components: 

** There does not seem to be a set page on the website but Vauxhall optimises just-in-time purchasing of stock and components as it is a large company which deals with a wide range of stock and components, etc.
                                                                                                                                      

Conclusion

The remainder of my blog posts on the digital economy will focus on e-commerce and the use of transactional websites. Not all of the websites will be from the retail part of the private sector, because as we have seen, there are transactional websites, and indeed pockets of fully fledged e-commerce, within the public and non-profit sectors too.
We have already seen how much of British industry is vertically integrated; that is where a manufacturer such as Vauxhall will manufacture cars and sell them directly to the public using its own public-facing website.
However, the vast majority of websites you will examine and analyse in the remainder of my blog posts will be those of organisations within the trail part of the private sector. There is a vast array of these with different purposes, diverse products, different payment methods, various fulfilment mechanisms and a variety of data needs.