Does the Information system (IS) innovation improve the overall performance of

the company?

Introduction：
Information resources can be a competitive advantage for firms (Ashurst et al., 2012).
Information technology, as an information processing device, is likely to impact firm
performance significantly. Studying whether the achievement of firm performance is
closely related to Information system (IS) innovation can help companies deploy
further business strategies. Many theories have been used to support the idea that
innovative information systems, such as improved information systems, can change a
company's performance. This essay will argue the idea and formulate hypotheses
about the significant role played by IS innovation in firm performance through
theories from various relevant scientific journals. Also, this essay will illustrate the
advantages of IS innovation for firm performance using Wal-Mart as an example.
Then explain the limitations of IT technology. Finally, conclusions will be drawn.

Theories and hypothesis：

Information systems (IS) innovation in firms involves using new technologies to
improve information systems to create more efficient organizations and increase
organizational competitiveness. Tornatzky and Fleischer (1990) proposed a
technology-organization-environment (TOE) framework to understand the adoption of
technological innovation. Several factors may moderate the relationship between IS
innovation and company performance, including technological advantage,
organizational ability, and competitive environment (Figure 1).
Information systems (IS) are technology-based innovations, so an interest in
information technology (IT) lies at the heart of information systems research.
According to Okumus (2013), IS technologies can help collect, store, summarize, and
utilize information and data to help companies create and sustain technological
advantages. Meanwhile, information system innovation could be strategic. It may be
utilized to take advantage of how different businesses utilize their resources
structurally, including how they integrate, diversify, and produce their resources.
(Thrasher et al., 2010). Thus, IT innovation seeks to develop proprietary
organizational capabilities for increasing firm performance (Bharadwaj, 2000).
Additionally, IT can boost service efficiency and quality, boost client retention and
happiness, and ultimately provide businesses with a competitive edge by boosting
revenue and market share.
Therefore, the hypothesis will be specified: IS innovation can influence firm
performance by creating technological advantages and improving organizational
capabilities and competitiveness.

Figure 1 ： Adoption of High Impact Governmental

eServices: Seduce or Enforce?

Real-life example：
Wal-Mart Company, opened in 1962, which is among the largest retail stores in the
world, earned $15.2 billion on $443.9 billion in sales during the fiscal year that
concluded on January 31, 2012. (Bourgeois, 2014). Walmart has integrated a wide
range of information technology into its daily operations. Walmart is renowned
worldwide for its ongoing innovations and adoption of new information technologies
to stay at the top of the retail sector.

Walmart had a problem in the early 1990s: the corporation was losing money due to
its antiquated and ineffective inventory management system. So Walmart decided to
improve its information system, and the results were dramatic. Retail Link is a new
inventory management system that allows Walmart vendors to track their inventory
levels, sales data, and order information. Meantime, Retail Link provides suppliers
with real-time data to make informed decisions about their inventory. Retail Link
allows sellers to ask Walmart to enhance product inventories if they believe their
goods are selling too quickly. (Figure 2). By advancing inventory management
technology, Walmart can lower prices and react swiftly to market pressures,
enhancing the firm's financial performance.

Figure 2: your management information

systems (MIS) Referring Centre

In the early 2000s, Walmart invested in a new computer system called enterprise
resource planning, or ERP, and used it to achieve operational excellence through
information technology. ERP systems integrate all of the company's data into one
system to assist firms in managing their resources more efficiently. As a result,
Walmart no longer required pricey inventory-control systems to manage its inventory
more precisely (Figure 2). Additionally, by streamlining its delivery routes, Walmart
could reduce transportation expenses thanks to its ERP system. Through ERP,
Walmart can also enhance consumer relationships, improve partner alliances and
generate competence across its business processes. These can improve an
organization's performance's financial and non-financial aspects.

In 2003, Walmart required new technology to sustain its supply chain. As a result, it
equipped its distribution center with an RFID. It is a technology that enables
companies to identify products via radio waves (Wang et al.,2010). This resource's
hardware comprises a scanner, a transmitter, and an interrogator. By operating the
readers and operating as software, its firmware transforms tags into relevant data
about inventory and asset locations (Figure 3). Walmart was one of the stores that
provided companies with access to this technology. This tool enables this business to
estimate and track stock levels. It has also saved the company time physically by
allowing them to locate and count the products without looking for them. The
production and expiration dates of these products are also included on RFID tags
since they are more trustworthy than barcodes (Wang et al.,2010). As a result, this
technology has dramatically impacted the retailer's effectiveness and company’s
performance over time.

Figure 3: Walmart- Ứng dụng tiên phong công nghệ

RFID

Walmart started utilizing SAP in 2007 for its back-office operations (Figure 4).
Business intelligence is now handled by SAP HANA, which previously processed a
tenth of a trillion transactions. Within an organization, MISs organize information
control, analysis, and visualization for decision-making and analysis. Information
systems perform a variety of tasks, including data gathering, storage, organization,
and delivery. Many firms utilize information systems to manage resources and
simplify processes. The case study of Walmart's use of SAP HANA for business
analytics shows the potential of such a system. Walmart has used SAP technology in
its back-office operations since 2007, and the platform has helped the business run
more efficiently. To achieve success and emphasize cost-cutting, the organization has
enhanced its operational procedures, decreased degrees of customization, and boosted
volume. Wal-Mart has achieved these objectives by implementing SAP HANA, an
outstanding solution that aids businesses in enhancing their operational efficiency.

Figure 4: Tips for Planning in SAP BPC: How to

bring External Pricing Data into SAP BPC
Limitation：
Some researchers have found that from the 1970s to the early 1990s, as firms invested
heavily in IT, their productivity decreased rather than increased significantly, the IT
productivity paradox (Devaraj & Kohli, 2003). Since productivity is only one of the
relevant criteria for organizational performance, this study cannot suggest that IS
innovation will have a negative impact on firm performance. However, this also
reflects some of the limitations of IS innovation.

The real reason for some of the apparently contradictory numbers behind IT
performance is that IT investments can easily go wrong. Despite the enormous
positive impact of IS innovation on company performance, according to scientific
literature, many mistakes can still turn IT into an epic failure. IT systems are so
complex that it is hard to detect if they are working, and if files become corrupted, it
can happen without notice until a backup is called in an emergency. At the same time,
custom IT systems are difficult to measure real progress, so there is a high risk of
error when they are actually used. For example, the FBI's virtual case file system cost
millions of dollars to develop. However, poor project management, deceptive
contractor practices, and many other software process flaws led to a failed investment
in IS system innovation.

In addition, companies should consider the cost of investment in innovative

information systems, the cost of time to build, and the cost of employee training.
When new and complex things, especially generic technologies, are introduced into
the industry, immediate gains should not be expected. It is often the case that a
company's productivity drops significantly immediately after a technological
innovation. A survey conducted in the early 1990s found that executives could expect
to wait up to five years before reaping the rewards of their IT investments. As a result,
new systems can boost an organization's ability to compete in the market, but if the
organization is unable to accurately predict the costs associated with operating the
new systems, integrating new technology with existing systems, and other related
costs, they will not fully benefit from new systems.

Conclusion：
It is not IT that provides a company with a competitive advantage, but how it chooses
and uses IT and what IT can present in the future that will impact competitive
advantage (Nyheim & Connolly, 2012). Therefore, whether information systems can
improve a company's performance depends on how it applies them. It can be used to
create a competitive advantage and improve company performance by reducing costs,
improving customer satisfaction, and increasing efficiency. The benefits of new IS
systems must be weighed against their costs and potential downsides. One way to
guarantee that the new system delivers value is to align IT with business objectives.
Only by choosing the right technology and implementing the right strategy can the
benefits of IT to improve company performance be exploited. Based on the text's
various literature and the Wal-Mart example's elaboration, the hypothesis cannot be
rejected. Firms can gain technological advantage through IS innovation, which
improves organizational capabilities and competitiveness and thus has a positive
impact on organizational performance.
In conclusion, Innovation in information systems can improve company performance.
But companies should not invest in IT technology blindly, the correct use and
purposeful Innovation of IS systems is the key to improving performance. Although
this investment may cause short-term business losses, it will ultimately increase
global competitiveness (UK Essays, 2018).

References:
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Capability and Firm Performance: An Empirical Investigation. MIS Quarterly,
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Bourgeois, D. T. (2014). Information Systems for Business and Beyond. Open

Textbook Library.

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Actual Usage the Missing Link? Management Science, 49(3), 273–289.
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from https://www.ukessays.com/essays/essays/management/examining-wal-marts-
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