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Communication Technology Better Improve Business Productivity Management Essay

This report analyzes the importance of productivity and efficiency to todays organization, it also covers the factors underpinning the growth of communication technology. It goes further by discussing the strategies used by organizations in general to improve productivity and efficiency through the use of information technology such as the internet. Later on, the report would explore Cisco systems contribution towards the development of communication technology for business productivity and efficiency would be discussed. In addition, explanation regarding the strategies and approaches used by Cisco system for the development of the various technologies would be touched. The report would also point out the benefits and limitations of these technologies to employees and businesses as a whole.

Only one principal research is used in the production of this report: secondary research. This research would be gathered using reports and journal articles from reliable sites such as business insight database, emerald and so on. It would also be using Cisco systems database and search engines to gather company materials and press releases published personally by them.

Productivity versus efficiency

In many cases, organizations fail to recognize the differences and interdependencies between productivity and efficiency. And this ignorance could reduce the rate at which organization can leverage their resources to reach a sustainable competitive advantage. Therefore, before an organization can determine if it is efficient and productive, they must clearly differentiate between the two terms (berchtold 2001). See term definition below:

Productivity

It is said that the success of organizations depends on many factors, such as cost efficiency, innovations, growth, and especially the value it can produce for its customers. Therefore, all these affects productivity improvement and thereby profitability, which are vital for any organization, However, from the managerial perspective, profitability is usually seen as the most important success factor, while productivity is seen as only one among many other important factors (Hannula and Lönnqvist 1999). Therefore, the question is what is productivity? According to Krugman (1994) "Productivity is the ratio between the output volume and the volume of inputs". In other words, it measures how efficiently production inputs, such as labor and capital, are being used in an organization to produce a given level of output. He continued saying "productivity can be considered a key source of economic growth and competitiveness". However, he also mentioned that "although, productivity isn't everything, but in the long run, productivity is almost everything". Therefore, to determine how productive an organization is, productivity measurements in terms of ratio can be used as tool to determine the productivity level. This however would be explored next.

Measuring productivity

According to Krugman (1994) "there are different measures of productivity and the choice between them depends either on the purpose of the productivity measure and data availability". Two frequently used productivity measures are: single factor productivity (SFP) measure (labor and capital productivity) and multi-factor productivity (MFP) measures (capital-labor with capital-labor-intermediate inputs (energy, materials, services and so on) also known as total factor productivity. The SFP and MFP are determined using two different output measures which are: gross output and values added output. However, Schreyer (2004) pointed out that "multi-factor implies that several factors are included as inputs, not necessarily all, while total factor productivity suggests that all possible factors are included which in practice, is seldom the case". For better understanding, see appendix 1 for reference.

Labor productivity: is the ratio of output to the input of labor and capital, an example is the hours worked used as a measure of labor rather than the number of employees (Schreyer 2004).

Multi-factor productivity: is the ratio of output to the combined input of both labor and capital. This however could be a better indicator of efficiency. For example, in the production context, MFP measures how efficiently the main production factors (labor and capital) combined generate output. (Schreyer 2004) Productivity growth: refers to having increased output through increased labor input. However, according to Brynjolfsson (1998) "having more capital or other production factors does not necessarily increase productivity" therefore "productivity growth comes from working smarter, which means adopting new technologies and techniques for production". He also stated that "historically, the greatest increase in productivity has been associated with particular class of technologies: general purpose technologies such as internet, search engines and so on". However, with the amazing stories about how IT has improved productivity, it was still rather unclear to most organizations and researchers if truly, technology is increasing productivity. This however leads to the next section of this report: productivity paradox.


Productivity Paradox

Refers to the phenomenon where investments in information technology have not resulted in increased productivity (McCune 1998; Lucas 1999; Holopainen et al. 1999). This was the case in the early stages of technological development and innovation. Therefore, during these early stages, there were uncertainties regarding implementing technology into business processes to improve productivity. Brynjolfsson (1996) also stated that "by the late 1980s, the conventional wisdom was that computers were not contributing significantly to productivity". Robert Solow also stated in the New York Times Book Review in 1987 that "we see the computer age everywhere except in the productivity statistics". Still, while there was little evidence of a relationship between IT and productivity, there was also little evidence that computers were unproductive. (Brynjolfsson, 1996). However, in today's business world, a lot of evidence which that technology if managed and utilized efficiently can improve productivity can be found. In addition, Hannula (1999) stated there are four causes of productivity paradox which include:

Measurement error: Brynjolfsson (1993) states that "productivity of white-collar work cannot be measured properly using traditional productivity measures". However, Hannula (1996) believe that this is not the only measurement problem there is, and he therefore listed the following recommendations:

Lags: a time lag between IT investment and productivity improvement which makes it difficult to perceive the improvement. The relationship could be determined using cross relation: using time series to show the delay between the cause and effect. Limitation to this method is its complexities. Time lag also occurs in statistical research, accounting and so on (Holopainen and Pulkkinen 1999, p. 237; Hannula and Lönnqvist 1999)

Redistribution: investment in IT may redistribute activities among firms. Hamel (2001) stated that "the internet could create productivity gains but profit margins will shrink" these assumptions are caused by two things which are:

However, using product bundling can make comparison hard for consumers. An example is when Gateway started bundling its Internet services and computers in response to plunging computer prices. Another option could be introduction of niche products which counteracts the threat of product substitutes, new entrants into the market, and competition among existing firms (Sinha 2000; Journal of Electronic Commerce Research 2001). Mismanagement: meaning the IT investment has not increased productivity as a result of underutilization and poor management.

To conclude, hamel and Lönnqvist (1999) believe that "there can be various other reason for productivity paradox. Therefore depending on the study and its research approach, any of the explanation discussed above may be the cause"

Efficiency

A term used to describe the amount of effort or energy that it takes to accomplish a certain task. In an organization like Cisco, communication technology is used to communicate with partners and as a result eliminate or reduces travel cost. With such communication technique, efficiency is achieved as it helps organization achieve constant and real-time information and feedback between partners. It also helps in achieving better customer responsiveness at reduced cost and time. Additionally, the term efficiency can be used in so many different scenarios and perspectives ranging from physics to economics and other sciences such as statistics, algorithm and so on. This was supported according to schenk (2007) that "efficiency is never absolute; it is always relative to some criterion". However, for this report, it would be mainly focusing on economic efficiency which is the use of resources in such a way that maximizes the production of goods and services without having to use more resources. In addition, economic efficiency was also defined by an Italian scientist called V.pareto as a "state when the need of the society members are satisfied as fully as possible, with given limited resources (Kuznetsova and Osadchaya 1993). He continued saying "this state is called pareto efficiency or optimality". Also, Farrell (1957) divided economic efficiency into technical and allocative efficiency. He therefore explained these two terms as the following below:

"Technical efficiency: reflects an ability to derive a maximal output from a given set of production factors (labor, capital and so on) Allocative efficiency: reflects the ability to use resources in optimal combination considering their relative cost and applied production technology".

Measuring efficiency

Interestingly, according to Goncharuk (2006), "the following measures of using particular factors of production (I. e. labor, capital) are often used for estimation of economic efficiency: labor productivity, capital productivity ratio, materials-output ratio etc" which is practically the same indicators used to measure productivity. He also stated further that "The other common indicator of the efficiency that measures the impact of more than one factor is the multifactor productivity (total output: total cost)". To conclude, measuring productivity and efficiency is not so different and complicated as far as the one calculating it is aware of the difference between the two. Reason behind assumption is because the result of each calculation is expected to be different.

Literature Review

Strategies used to better improve productivity and efficiency

Strategic use of internet

According to Gantz (2001) "There are many paths businesses can take to integrate the Internet into their core business functions and use it strategically to increase revenue, improve customer satisfaction and increase efficiency". Businesses must understand that to remain competitive, improve the efficiency of their communications and workflow and also increase the return from their investment in technology, they must embrace the Internet in their business processes. Therefore, with this urgency and trend towards the internet, Cisco was motivated to develop a program called Cisco internet business roadmap which includes a comprehensive planning tool that helps businesses generate a customized internet solutions adoption strategy. The program also includes a 3 to 36 month rollout plan which can help businesses gain a competitive edge and increase their profit margins. According to JOSE (2001) that "by completing a business and technology assessment questionnaire, businesses can identify internet e-business solutions designed to increase the efficiency of their business, improve employee productivity and maximize the overall competitiveness of their business". In other words, Cisco's internet business roadmap tool can help an organization to quickly and easily identify the combined network hardware, applications software and service solutions that best meet and fit their needs. Furthermore, there are two main uses for the internet in organizations and they are: E-commerce and E-business E-commerce: refers to the buying and selling of goods through the internet (Teollisuus and Tyonantajat 2000.p.3). It could also be referred to as the exchange of goods and services over computer networks (internet) through which transactions or terms are performed electronically. This mean allowing client to access ones website, view catalogue and then make online transaction when necessary. Example is Cisco e-commerce solutions help businesses manage their businesses online and increase productivity. Therefore, for partners who process transactions with Cisco, Cisco's e-commerce applications give them immediate access to real time Cisco's database information, including updated product availability and pricing. Various Cisco e-commerce tools include real time order, pricing and invoice tool, lead time tools and so on. With Cisco e-commerce tools, a client or partner can manage their business on web which enables quick, easy processing of all transactions, allowing them to process request anytime from anywhere around the world (Cisco Internet Commerce Benefits 2010)

E-business: is synonymous and interchangeable with e-commerce as they both are used for the same purpose, however, e-business goes way beyond just the transaction of goods and services. E-Business relates to any commercial activity that is conducted in an electronic format. This includes commercial transactions conducted using the Internet, telephone and fax, electronic purchasing and restocking and so on. E-business can also be used in various processes such as communication (e-mail) and creating new business model (sharing resources with partners). It also allows for more efficient and effective linking between departments, develop a closer relationship with suppliers and partners and also improve business responsive to clients needs. This however leads to overall business performance (zeidan consulting 2009). Cisco e-business tools include: Net Governance, value Matrix and the Project Prioritization Matrix and so on. Benefit of Cisco e-business tools is in the diagram below:

Strategic use 1: To create new business process and model

Organizations look for more internet characteristics that can help them create new and efficient business processes and model without increasing cost. They also look for ways in which information can be communicated through more effective and efficient means (internet) and thereby increase productivity. The strategic use of the internet to creating new business model and process would now be discussed. Business processes: is a set of coordinated tasks and activities conducted by both people and equipment which leads to accomplishing specific organizational goals and objectives. Sales sector is an example where internet technology can help create new process. According to Cisco solution (2008) "Gone are the days when a salesperson's product sheets and inventory data could be stored in a three-ring binder and prospects tracked on index cards. Today, effective salespeople need instant access to up-to-date customer/prospect databases, product feature specs, stock availability, pricing, and delivery timing" this however led Cisco to develop 'sales automation applications - which allow salespeople to quickly identify promising leads, then coordinate team effort to move deals to closure. This tool however helps companies lower costs extend customer outreach effort and share information across entire organizations. It was stated by researchers that this tools supports key aspects: see diagram below

With this technology, companies can streamline sales processes, boost salesperson knowledge, enhance collaborative selling, improve customer relationship, increase sales force morale and integrate sales with other company data (Cisco solution 2008). This technology leads to improved sales productivity and efficiency which then leads to improved business performances.

Business Model: according to International Journal of Electronic Commerce (2004) that "the growing interest in business models was mainly a result of the internet, market convergence and e-commerce". The journal continued saying "the impact from the internet on established markets, industry structures and value chains made it necessary to rethink traditional ways of doing business and at the same time, the internet opened opportunities to develop new and different business models". However, the journal also pointed out that "a few authors have analyzed the concept of business model itself, but there was still no commonly accepted theoretical definition" it explained further saying "this misconception of what business model is was as a result of the dot com boom e.g. porter who believed the internet does not help organization productivity improve". The journal also mentioned that "currently, the new definition used to describe business model end up close to firm strategy and business plan". However, trimmer (1998) defines business model as "the architecture for the product, services and information flow". He also continued saying "a business model should describe the business actors, their roles, their potential benefits from the business model and the revenue stream involved". Porter had a different perspective on what business model entails, therefore according to porter (2001), "a business model is far from a strategy and that a new business venture without a clear strategy would most likely fail-no matter how attractive the business model is". However, chesbrough and rosenbloom (2002) disagrees with porter when they stated that "the business model for a firm is closely related to firm strategy" therefore "the only difference are that, the business model focus more on consumers and how to deliver value for them, while strategy put more emphasis on macro-level issues such as gaining shareholder wealth and how to handle rivalry with competing firms".

Therefore, investing in the application of internet technology using either e-commerce model or e-business model( a description of the roles and relationships among a firm's consumers, customers, allies and suppliers that identifies the major flows of product, information, money and the major benefits to the participant) can help an organization not only provide more values to their clients( i.e. manufacturer, suppliers, partners), but can also help them communicate or work with each other more efficiently and productively.

Strategic use 2: competitive advantage enabler According to Hannula and Lönnqvist (1999) that "new technology can lead to new business models and provide better value for the customers in addition to cost reduction but it does not guarantee competitive advantage because any competitor can achieve it" they continued saying "New technology like the internet or any other communication technology - must be seen as an enabler which can be applied to implement new business processes and models which give true competitive advantage". Therefore, such competitive advantage developed from using the internet technology give faster productivity than what any competitor can achieve (Hannula and Lönnqvist 1999). The internet technology however, does not only improve productivity but it also improves customer responsiveness and profitability. That is however, if the investment is successful. Also, the adoption of internet technology is no longer optional as major competitors and even large number if not all companies in every industry believes in its capacity to make their work system and methods more productive and efficient. To conclude, Cisco has leveraged the internet to develop customized advanced tools which fit with individual organization strategic needs which thereby gives those organizations who adopts this tools a competitive edge one way or the other.

Strategic use 3: enable integration of technologies to help consumers, suppliers, and manufacturers to access real time information for strategic use, consumer buying and feedback and research purposes. Simply, the internet can create a portal where communication is easily passed between the stakeholders conveniently and efficiently. And an example of these technologies is the unified communication which is developed by Cisco to integrate content, communication, collaboration and processes into their workforce experience. With the internet as information provider and feedback from partners or supplier through various technologies, organizations are able to develop more ways to keep up with market competition, needs and trends. It can also help them develop more innovative ways to become productive and efficient. An example include dell computers sell-direct strategy in which through this strategy they achieved what they call virtual integration- a stitching together of Dell's business with its suppliers and customers in real time such that all three appeared to be part of the same organizational team (McGraw-Hill Companies, 1999). All this however is made possible through the use of the internet technology and information systems. In other words, using the internet does not necessarily serve as a competitive advantage, but how it is innovatively utilized to fit into the organizational structure and strategic goals is what make it a competitive advantage for organizations. Despite the opportunities the internet technology renders, there are some drawbacks and issues related to using the internet technology and they are as follows:

Security issue: security is one of the most prominent negative effects which emerge with the use of technology, therefore, the criminal element in society has found many ways to exploit and harm others by using computers and the internet as a weapon instead of the tool it was designed to be (goessl 2010). Also, there are other several security issues involved when it comes to the use of internet for organizations such as spamming, viruses and so on. It is however believed that if any of this security issues attacks the network, it would have an adverse and costly effect on the organization's productivity and efficiency, at least on a daily basis if not solved immediately. However, there are way in which this could be prevented and they include employing server-based traffic filtering technologies such as those offered by WSI's hosting environment- which provide and help organizations to assess which method will suit a particular company best and then deploy the solutions to protect their clients (Arab German Consulting 2004)

Complacency issues: this is to say while computer and internet have enhanced quality of life, sometimes the question begs asking of whether or not the society has become too dependent on computers instead of thinking for one's self. Many believe that the assumption that the computer is always right and this can be a dangerous notion (goessl 2010). For an organization to be considered productivity, it has to provide real value to the customer. Therefore, it is necessary not to depend completely on technology which could unpredictably malfunction. This is most serious especially in areas such as medicine and so on. Social purpose overlaps cooperate/organizational purpose for use of internet: with the internet enabled communication technologies, employees are liable of spending time on non-related work such as playing internet games, streaming, chatting with friends and so on which thereby reduces labor productivity. This way, they spend little time doing work related activities. Therefore, the internet communication although might be able to achieve the goals and objectives of an organization, but because of time usually wasted doing non-work related activities, the internet technology achieves productivity and efficiency at a slow pace or even not at all. Therefore social purpose overlap cooperate goals.

WHY CISCO SYSTEMS

Cisco is the worldwide leader in networking for the internet and was founded in 1984 by a small group of computer scientist. Their inception has been in the forefront of developing internet protocol (IP)-based networking technologies and through partnering strategies, they were able to create a platform that empowers people to work, live, play and learn in new ways; thereby helping businesses solve short-term business challenges while still being flexible enough to adapt to new opportunities in the rapidly changing online world (chambers 2010).


Mission statements

Vision statements

The combination of Cisco's vision, mission, and cultural statement explains Cisco's Corporate Quality Policy. Therefore Cisco systems quality vision and mission is best explained by promoting customer focused, prevention based continual improvement that supports unconstrained growth. This is accomplished through: Integration, easy access and deployment (Cisco 2010)

Strategic approaches towards development of communication technology

One of Cisco systems strengths is their ability to identify pressing organizational needs and be able to introduce innovative solutions to meet these needs. Example includes the unified communication to meet employee's need for flexibility and mobility. This however would be discussed in more detail in the remaining part of the essay.

What Cisco intend to achieve for communication technology development

communication and collaboration expansion: Cisco strategy for expanding collaboration is the development of what they call 'Cisco workforce experience'- connects people to the right resources, that is, enable employee or business to find a specific person or content without having to spend minutes or even hours searching. Normally, the internet already can be used to achieve this activity, but Cisco has taken this technology to a totally new level whereby the technology promises to unify collaboration silos and simplify usage to deliver a consistent experience for highly mobile, empowered users on any devices they use (Cisco 2008). With Cisco communication and collaboration tools, partners and colleagues are able to share information and communicate anywhere and at anytime faster than using the normal internet applications such as e-mails and so on. The internet however has made this possible to do.

Advanced communication effectiveness and efficiency: enabling employees to access the right information. Normally, organizations are having a hard time towards which information should be accessed or sent to which employee, and also how to make sure that they do have access to information that is only relevant to them. Therefore, Cisco aim is to help organization achieve this effectively and efficiently through their technology. Internal and external collaboration support: extending the reach of employees across their organization as well as suppliers, customers, and partners (Cisco solution overview 2008). That is, Cisco aim is to achieve improved collaboration between employees and their partners. It was also stated that the improved collaboration would help them (Cisco) to achieve continuous improvement and innovation, as well as improve business processes and user experience (Cisco solution overview 2008). Mobility: with the ranges of communication technology available, organizations still complain around the fact that there are still delays and communication breakdown especially with mobile employees. Cisco white paper(2007) supports this argument through Forrester report that "the frustration of delayed communications; of playing the back-and-forth game of "phone tag";or of waiting for responses to email messages and the inability to reach co-workers or partner not only result in real time transcends and personal frustration, but also result in real delays in completing projects, providing information to clients, or providing approvals in the normal course of business that can have a negative business consequences". Cisco white paper (2007) also continued saying "the inability can negatively affect an organization's ability to be responsive to customer needs and can result in reduced revenue both today and in future". In my opinion, it leads to companies becoming unproductive and inefficient also. Therefore, Cisco aims to help organization develop technologies that can reduce these inabilities. Such technology would be discussed later.

Approach used to achieve the strategies

Cisco recognizes that implementing a communication and collaboration strategy requires a fluid, try-it-as you-go-along approach (Cisco solution overview 2008). The report continued saying "Cisco is beginning its efforts to deliver an integrated workspace experience by innovating with current tools and improving their value as quickly as possible. This is practically saying that Cisco system develop innovations that can adapt or integrate itself with current tools within any organization or industry. Also, they believe in making sure that their innovation arrives into the market first and also meet customer's needs. Two approaches Cisco uses would be discussed below:

The first step: architectural approach

According to Cisco solution overview (2008) that "various communication tools are already being used with Cisco" therefore "Cisco IT aims not to deliver more avenues of communication or more desktop tool but instead aims to take an architectural approach to improve communication and expand collaboration so that innovation can occur across the company with the proper security and compliance measures established" Cisco aim to construct their communication tool to help employees and business achieve the following presented in the diagram below:

The second step: indentifying critical capabilities

Cisco second approaches revolve around evaluating its communication and collaboration needs from a big picture perspective and then begin looking for solution that fit (Cisco solution overview 2008). The report also gives steps in which Cisco accomplishes this task by identifying:

So far, from the technologies developed by Cisco, it can be said that this approaches have worked well for them.

Communication technologies developed by Cisco and how they help enhance business productivity and efficiency (benefits to employees and organizations)

This section would be focusing solely on the various unified communication solutions developed by Cisco so far and their effect on business productivity and efficiency. Unified communication solution: Cisco unified communication technology include IP telephony, unified messaging, customer contact, WebEx and video conferencing and presence technology. this communication technologies not only can serve as a competitive advantage, but it can help organization become more efficient and productive while reducing cost, an example is that Cisco system's employees do a lot of travelling as collaboration is one of their strategies to developing product, however, with the help of this communication technologies such as the new TelePresence and various other unified communication technologies mentioned, Cisco has been able to cut down their travelling expenses by more than 40%, which according to research is a very big achievement. Therefore, with the cut in expenses, it enables them to focus the travel budget in some other aspect of the company goals and objective which therefore allows the company to achieve more productivity. Additionally, these technologies have enabled them to manage emails, voice messages efficiently by saving up to 20 minutes daily. The communication technologies developed by Cisco also help improve productivity across geographies by 76% (bailey, 2008). More data on how the unified communication has increased productivity and efficiency can be found in appendix 2. According to Cisco white paper (2007) "Cisco unified communications provides powerful new ways to build productivity by enabling organization to:

Accelerate decision making: advanced communication capabilities ensure that the right information reaches the right person right away.

Boost innovation: that is, organizations can transform business processes by integrating unified communication capabilities into business applications

Access a new world of value added applications: the solutions' open architecture enables deep integration with third-party solutions". From these benefits, it can be concluded that unified communication is not just a technology that help organizations communicate and collaborate, but it is a technology which can transform the business processes into more efficient and productive one. It could also become an integral part of an organizations business model.

Motivation behind the development and use of unified communication

In a typical workday, people use mobile phones, PCs, pagers, personal digital assistants (PDAs), and laptops to communicate through voice, voicemail, email and text messages. However with these communications methods, people still spend too much time sorting through the mails and messages. However, with a workforce that is increasingly distributed, mobile, vital and global, this complexity and inefficiency make it almost impossible to keep up with pace of the business and become productive (Cisco white paper 2007). Cisco white paper (2007) also stated that "companies experience project delays on a weekly basis due to these communication pitfalls"

This doesn't however only affect project, but it can also affect day to day operational activities. Therefore, this inconsistencies and complexity are what drive IT companies such as Cisco system to develop these technologies and they are also reason why organizations no matter what sector or industry they are, adopt unified communication technology as they believe its benefits from investments is worth it. Unified communication benefit to employees and the business as a whole are described below:

Employee benefits

Organizational benefits

Data gathered by sage research (2005) on specific productivity improvement can be found in appendix 3 of the report.

Unified communication technology versus organizational changes

With such reduced complexity and easy transition, it could enable organizations to adapt to changes faster than when using the normal communication tools. With organizational changes, there usually need to be technology that can adapt to any changes being made. Unified communication has however made it easy for organizations to adapt to changes.

Conclusion

Using technology to achieve improved productivity and efficiency is no longer an optional strategy for most organization. Reason for such assumption is that with the frequently changing and intense competitive business environment, organizations must find way to keep up with it. According to analysts, it takes approximately 6 months for organizations to come up with new innovation before their competitors beat them to the market. Cisco as an organization has identified this trend in the business world and therefore, utilized their capabilities and creativity to develop innovative technology such as the unified communication to help businesses cope. They have also being able to give business opportunities to personalized and customize this technology to fit with their own need. This however is one of the many advantages Cisco has offered the business world. According to research, Cisco still find more ways to make sure that they continue giving the best to the business world by constantly upgrading and developing new innovations.


Appendix

 

Types of input measure

Types of output measure

Labor

capital

capital &Labor

capital, Labor &intermediate inputs(energy, material, services

gross output

Labor productivity (based on gross output)

capital productivity (based on gross output

Capital - labor MFP (based on gross output)

KLEMS multi-factor productivity

value added

Labor productivity (based on value-added)

Capital productivity (based on value-added)

Capital - labor MFP (based on value-added)

 
 

Single factor productivity measures

Multi-factor productivity (MFP) measures


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