Small Businesses & Information Systems

The article by Street and Meister (2004) titled “Small business growth and internal transparency: The role of information systems” describes an action research project that was undertaken by the authors working with a small manufacturing company (hereafter known as ‘manufacturer’) in Canada.  The project investigated the role of information systems in small business growth and how a small business management team can plan for and build an appropriate information system strategic plan to address current and future growth needs.

The authors were placed in contact with the manufacturer by a third-party governmental funding agency.  This introduction and source of funding helped the manufacturer tremendously as they didn’t feel as though they were paying a consultant to recommend a system…they were getting answers to the main issues they were facing. The authors also were able to gain from this introduction, as they were able to put their academic and research experience to good use in a real-world setting.

The main contribution of this paper is subtle but very important one: when a small business begins to move into a growth cycle, the internal communication within the organization must be maintained.  The authors describe this as ‘internal transparency’ and claim that by ensuring that internal transparency is maintained, an organization can navigate the dangerous perils found during growth periods.  Using internal transparency as a means of guidance, organizations can begin to consider the use of information systems as a way to increase (or at least hold steady) internal communications throughout the organization.

As mentioned, the authors conducted this research project as an action research project using three separate phases with different planned outcomes for each phase. The three phases were split into three separate activities: Baseline Analysis, Strategic Planning, Requirements Specification (Street & Meister, 2004).  Each phase is briefly discussed in the following paragraphs.

The Baseline Analysis phase was performed to determine the existing systems, policies and procedures within the manufacturer.  It was during this phase that the authors determined that the communications between the management team of the organization was breaking down due a lack of proper information systems.  Prior to the growth that they were experiencing, the management team had ample time to communicate with each other but while planning for the future growth, their ability to communicate clearly about operational activities was impeded due to the poor information systems in existence.  The authors realized during this phase that the organization didn’t have any strategic plan for growth nor was there a plan for information system growth.

Phase two of the project was the Strategic Planning phase.  During this phase the authors and manufacturer deviated from the original plan for developing a growth plan for information systems and instead built a strategic plan for the business, which included a plan and strategy for the IS of the organization. This phase also saw some investigation into what was causing the internal transparency issues found in phase 1.   The authors found that the lack of proper IS planning was to blame for the reduction in internal transparency within the organization.   Because the management team didn’t have the proper information systems in place, they had to spend more time finding and reviewing operational data in a format that was not easy to review or digest. The more time spent reviewing operational data in this manner, the less time the management team had to focus on internal communications, which caused a reduction the reduction in internal transparency.

Phase three of this project was the Requirements Specification phase where the authors and manufacturer developed a “Request for Quote” (RFQ) to send out to vendors to bid on developing and implementing three distinct information systems.   This final phase of the research project was a key factor for the project as it forced the authors and the manufacturer’s management team to specifically state what their needs were in an information system.  This forced both parties to realize that the biggest need at hand wasn’t a need for automated manufacturing or some other manufacturing related information system. Their biggest need was for an information system that would provide communication across the different functions of the organization to improve internal transparency.

This paper provides an excellent walk-through of using action research in a real world. More importantly though, this paper provides a significant contribution to the world of IS research by showing the connection between information systems, strategic planning and growth in business.

References

• Street, C. T., & Meister, D. B. (2004). Small Business Growth and Internal Transparency: The Role of Information Systems. MIS Quarterly, 28(3), 473-506.