Page 1 of 6

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 02

February 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 159

Firm Performance and Profitability Using a

Case-Study Approach of Information Systems

AKULA MALLAIAH

MBA

Abstract:

Beale and Cole is a company that was experiencing significant levels of growth in its business. However, its

existing operational practices and ICT infrastructure were incapable of efficiently sustaining their level of

growth. A thorough analysis of the operational systems was carried out covering both the manual systems

and those supported by its computerised accounting system. A number of beneficial changes were made,

including the implementation of a major new business system replacing the old accounting system. In all

these developments, the work of a teaching company associate, now known as knowledge transfer

partnerships associate supported the analysis, but the full participation and support of all key personnel

within the company was essential. Although there were problems during the implementation, these have

being resolved and Beale and Cole now has a fully supported and integrated IT system which will maintain

their competitive advantage and facilitate their continued growth and profitability.

Keywords: information, communication and technology (ICT),business systems integration, SMEs.

1. Introduction

A business information system is defined by

Hooper and Page (1997) as “the sum of all the

tools, techniques and procedures used by the

business to process data”. Fisher and Kenny

(2000) suggested that organisations infuse

information systems into their operations so as to

enhance competitiveness and facilitate business

growth and success. On the other hand, Laudon

and Laudon (2001) believed that information

systems are embedded in organisations and are

the result of standard operating procedures, work

flows, politics, organisational culture and

structure. Although organisations have different

information systems because they have varying

information needs, they all strive for competitive

advantage through continuous improvement; re- evaluation of the effectiveness and efficiency of

their business information system (Chaffey and

Wood 2005). The purpose of this paper is to

investigate the Information System of Beale and

Cole, to examine the course of action taken to

implement changes to the existing IS practises,

and to share experiences and lessons learnt from

the change process and the effect on the

organisation’s performance. Beale and Cole

Building Services was established in 1967. The

company started out in Exeter as a small family

business but today, it is one of the leading firms

of building services engineers in the South West

of England with branches in Exeter, Yeovil and

Plymouth. The company has witnessed a

significant level of growth over the years.

However, the existing operational practises,

processes and supporting Information,

Communication and Technology (ICT)

infrastructure were inadequate to efficiently

sustain this level of growth. Subsequently in the

summer of 2003, Beale and Cole in partnership

with the University of Plymouth embarked on a

Department of Trade and Industry (DTI) funded

initiative known as the Teaching Company

Scheme (TCS) now called Knowledge Transfer

Partnerships (KTP). The main objective of this

coalition was to implement new integrated

business and supporting IT systems which would

streamline operations, increase internal

efficiency, facilitate sustained growth and

increase profitability.

In order to achieve the objective of this

investigation, a Knowledge Transfer

Partnerships Associate with a background in

business information management systems was

recruited to conduct an in-depth analysis of the

business information system and to propose and

implement recommendations for improvement.

Therefore, this paper will reflect on the

experiences of this process by all parties

involved in the project including management

and staff of the organisation.

2. Initial review of Beale and Cole’s

information systems

This stage was conducted by the associate,

Matthew Simmons. The first step was to review

the internal processes and existing Information

systems in the organisation so as to highlight the

Page 2 of 6

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 02

February 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 160

major problem areas. The main problems were

found to be; duplication of effort, inefficiency in

some processes including e- commerce strategy

and problems with communication.. We

developed a simple model, shown below, to

explain all the main problems in detail and to

highlight the impact of the improved information

systems on operational performance and

profitability in the organisation.

Model 1: Proposed framework for the effect of

information systems on performance and

profitability

2.1 Efficiency

The unprecedented expansion and consequent

physical and commercial growth of the

organisation opened up crevices in the

organisation’s business processes.

Nicholls-Nixon (2005) found in his study that

rapid growth in business generates dramatic

changes in the scale and scope of a firm’s

activities. According to her, entrepreneurs in

rapidly growing business enterprises experience

more difficulties in comparison to small growth

companies when deciding or establishing the

type of changes or evolution required to support

their level of growth. This is because they face

greater managerial complexity than slow growth

firms. One of the solutions she recommended to

solve this complex issue was that high growth

organisations should develop new skills and

capabilities which will allow them to cope with

the complexity. This can be attained by

appointing new personnel or acquiring new

resources such as new information systems

targeted at improving organisational efficiency

andeffectiveness.

The main problem area highlighted by the

associate was the organisation’s accounting

system. The company’s business system had

been purchased from a software company many

years ago. Initially, the software was run on a

leased line which was very expensive. This was

later changed to a Virtual Private Network

(VPN) by the associate thereby greatly reducing

the operating cost.

The software was supposed to be an extensible

accounting system capable of managing all

financial aspects of the organisation and though

it appeared to be a tool that can be fully

integrated with MS excel or access so as to

facilitate data analysis and report creation; it

would have required a database translation to

function effectively. However, as the structure of

the database was weak, translating it would have

been very difficult, time consuming and

cumbersome. Moreover, the system was generic,

had limited documentation which was very

difficult to understand and as it was out-dated,

the system would have failed to meet legislative

regulations by2007.

Furthermore, the software company had since

changed ownership. Presently, their have been

no new developments but extensions and

upgrades to their existing software. Although the

supplier offered these more up to date upgrades

(which was not free), it still appeared to use

some of the features that proved unsatisfactory in

the original system. Another drawback to using

this system was the maintenance agreement.

Although it had been properly structured, it was

however inconvenient as the software company

had a third party agreement with another

company which managed the maintenance of the

software. Invariably, turnaround time for

maintenance could sometimes be very high,

prolonged and time consuming.

Another operational concern was that the

company had not altered its recording

procedures despite its rapid growth. The method

used for monitoring labour needed to be

improved as it was not centralised and

wasdeficient in forward planning. The job

costing system that was used did not take into

Page 3 of 6

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 02

February 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 161

account the availability of labour while there

was a lack of consistent structure in the

recording of unstructured information about

projects. Although a manual index of documents

was stored online, it had become ineffective

since the organisation had expanded to a second

location.

A manual procedure of operation that needed

much improvement was the time sheet recording.

This involved engineers completing a complex

time sheet which would then be faxed to the

office for the contracts manager to check and

calculate the necessary payment agreements.

Once this stage had been completed, the time

sheet would be passed on to the administration

department where the time would be checked

again before inputting it onto the system. Finally,

the information would be printed out so that the

details can be used to generate the engineers’

wages. This procedure would normally take

about 6 office hours and would involve about 60-

70 engineers, all the contracts managers (7), 2

administrative assistants and a payroll officer.

2.2 Lack of uniformity andintegration

The major concern was that there were many

bespoke systems and undocumented manual

system, and very little uniformity in operational

procedures. This followed from the recent

merging of a part of the company specialising in

plumbing with the original business which

specialised in electrical services. Crist (2002)

observed a similar situation in his study

suggesting that “traditional document control

processes were usually a combination of manual

and electronic systems which may result in

duplication of effort and further expenditure of

time”. Winch and Carr (2001) recommended that

an appropriate remedy was to use process

mapping which focuses on actual flows of

information within the organisation. They

maintain that this method is less demanding with

regards to resources and engenders a process

whereby there are standardised protocols for

business operations. Furthermore, Fisher and

Kenny (2002) pointed out that there were two

mandatory steps required to implement an

organisation-wide information system and these

are; well-designed set of business processes or

value chain and secondly, a cautious exercise in

strategic thinking, operational planning and

consultation with all end users of the system to

facilitate user satisfaction and in turn better use

of systems and improve performance.

Researchers like Weill and Baroudi, (1990) cited

in Caldeira and Ward (2002) and Delone and

Mclean (1992) established that user satisfaction

was the most widely used variable for measuring

IS success because there exists a strong

correlation between this variable and firms’

performance. However, other studies by Kim

(1989) and Melone (1990) have disputed these

findings as inconclusive because user

satisfaction failed to consider the diverse roles,

needs and interests of the users. In this study, a

thorough analysis of the alternative systems was

carried out by the associate and involving all the

main users of the system to enhance user

satisfaction. However, some users were initially

opposed or averse to the change, while others

had mixed feelings. The observation and

interviews showed that with gradual induction of

changes and good training, this might lead to

improvement ofperformance.

2.3 E-Commercestrategy

Although Beale and Cole had a website, it did

not give a clear and up to date picture of who

they are and what they had achieved. The

deficiencies apparent on the website meant it

could not be effectively utilised as a strategic e- commerce tool for marketing the company’s

services. Taylor and Murphy (2004) highlighted

that E-commerce strategies can be adopted by

Small and Medium Enterprises (SMEs) for

customer base expansion. Other researchers

suggested that e-commerce strategy enhances

performance in general and time-based delivery

performance in particular (Jeffcoate, J., et al.

2002; Iyer, Karthik N.S., et al. 2004).

2.4 Communication

Information in the organisation was stored at a

very high cost rather than being shared. The

main modes of communication within branches

were through phone and fax, face to face and

limited use of e-mail, while for customer and

suppliers, telephone and fax were used. There

were also the lack of network capabilities for file

sharing and organised postal system and no

internal communications link for the offices.

This translated to increased expenditure on

telephones.

This existing communication arrangement

promoted data duplication, loss of information,

elongated processes and increased time frames

for decision making. A lot of studies showed that