Information System For Caterpillar Information Technology Essay

Information is a vital to running a business today, hence the needs to control and utilise information has been developed rapidly in order to gain a competitive advantage. Information system is a useful general term which used to describe about the way of organisation manage their information successfully.

Today is twenty first century and computers and computer-based system are very essential to run and setup the organisation. A comprehensive and integrated information system provides a space to consolidating fragmented pieces or sub systems, improving country decision-making capabilities, implementing evidence-based decision making and providing easy access to reliable and valid data and subsequently to good quality information for better decision-making.

Caterpillar is one of the world’s foremost manufacturers of earthmoving machinery and mining equipment, diesel and natural gas engines, industrial gas turbines, and electrical power generation systems. Caterpillar has declared that the Caterpillar Inc. Company was officially established in 1925.Since it was founded in 1925, Caterpillar has a proud history in product development, technological innovations and globalizations with presence around the world in Europe, South-North America, Russia, China, Japan, and Africa, the company provides products and services in a multinational market, Caterpillar employs about 200.00 people around the world between dealers, employees, and suppliers. In 2006, Caterpillar reported Sales and Revenues of $ 41.517 billion and profit of $ 3.537 billion, up 28 percent compared with the previous year.

(General Motors Annual Report 2005)

Introduction:

To ensure the success, organization always depended on information system. For their continued survival all the medium to large organizations depend on their information technology. All kind of business like small to co-operation enterprise everyone use their own information system. In daily Telegraph they published a recent article; IT supplement advises that many large organizations could not survive longer than 24 hours without IT support! Day by day, year by year organizations have changed their information systems from dealing purely with data processing to strategic and decision support. Without the valid information is impossible to find success in the short, medium and long term plan. At present situation it is also recognized that in an organization information is very common required at all levels and that information can have find from many source. To gaining competitive advantage the valid information is very Importance to needs to be stressed.

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INFORMATION SYSTEM FOR CATERPILLAR:

The different kind of Information System depends on different needs of the company. Today the market offers a range of software; accounting programs, management programs. The company depending on its budget have to identify the most effective system which will bring about more benefits.

Despite using the information systems in each level, an alternative system called “Enterprise Resource Planning (ERP)” may be used to replace all the other systems mentioned above for each level within the organization. The information systems mentioned before address different functional areas usually in fragmented and incoherent fashion. The systems are created to meet the particular needs of the organization.

On the other hand, the ERP system leads to more effective sharing of information and eventually to the production of more precise forecasts and plans. It is a package of programs that allow the company to integrate and share information by linking the subsidiaries, suppliers, employees, sales analysis, human resources, inventories, and financial issues simultaneously with managers and customers. It is an all-in-one package.

The adoption of a single system has advantages such as dealing with only one software vendor, reduced maintenance and other repair costs, comparability between systems within the organization; and a more unifying strategy for the organization.

However, it may be an expensive system to purchase and operate; and may lack flexibility to adapt to changing business need.

ERP has been an effective system to adopt and Caterpillar will definitely gain competitive advantage over its rivals.

INFORMATION SYSTEMS AND LEVELS OF ORGANIZATION:

These systems are focused on determining what information must be provided in order to achieve the objectives of the business strategy. Caterpillar being the world’s leading producer of earth moving equipment, industrial gas turbine engines and a global leader supplier of diesel engines, selling over 300 products with a service life of fifty or more years to support distributors in over 120 countries, needs to plan and establish accurate designs of Information system for each level within the organization. These systems will help the organization to make reliable decisions within each level of the organization as mentioned below.

a) STRATEGIC LEVEL

The strategic level is the top most level in an organization and through the use of Executive Support System (ESS) which is the highest level of information systems used within the senior management, it establishes medium to long term strategies which assist in strategic decision making.

Caterpillar’s strategic decisions will have a major impact on the organization and will be based on future assumptions rather than the current. It is analysed from external sources (market surveys, trade publications, demographic studies, government reports and commissioned research from specialist suppliers). The information will tend to be highly uncertain and more of a general nature or summary.

The organization needs to make decisions which will help them gain a competitive edge within the market by maximising its share, attaining huge profits, develop quality and right products, control the costs and provision of satisfaction for customers.

Information Requirements at this level would therefore include:

Profit forecasts

Patterns of expenditure

Sales analyses

Demographic Survey

Development of market forces

General economy

Information Technology:

The organization needs to understand and forecast customer demands so as to keep up with the future trends. Customer Relationship Management (CRM) is a system which provides information about customers such as categories of customers and predicts their behaviours. This system would update Caterpillar to be able to fulfil customers’ demands (by innovating new products) and prevent wastage of customers to competitors.

b) TACTICAL LEVEL

This is associated with the middle management and involves medium term decisions. The information required will normally be in aggregate form and it is subject to less uncertainty compare to information required in the strategic level.

Within this level, the organization can use two types of systems; Decision Support System (DSS) and Management Information System (MIS).

MIS facilitates routine summarizing and reporting while DSS allows ad hoc queries and analytical reporting.

Caterpillar will have to effectively manage and control its finances (prepare budgets), labour, inventories, machinery and other resources.

Information Requirements at this level would be:

Variance Reports

Sales analysis

Cash flow forecasts

Personnel Records

Management Reports

Information Technology:

The organization needs to maintain good relationships with its suppliers since they provide the necessary inputs and components for its production. One way of doing so is by creating Electronic Data Interchange (EDI) which establishes an electronic connection between the business and its suppliers and automatically sends messaged to the supplier when orders are to be made.

c) KNOWLEDGE LEVEL

This level is often present in some organizations and helps to keep up to date with the technology and makes use of the Knowledge Work Systems (KWS). For Caterpillar, this level would help to create designs and graphics of its machinery and other forms of design specification.

Information Requirements:

Design Specifications

Drafts

Previous or existing models

Information Technology:

Through the use of expensive Computer Aided Design/ Computer Aided Manufacturing equipment, Caterpillar has a chance to produce differentiated products which would act as a barrier to entry for other firms and to gain competitive advantage over other firms within the industry.

d) OPERATIONAL LEVEL

This level is concerned with the decisions made in the normal day – to – day operations within a business. Decisions in this area are designed to ensure the effective and efficient use of existing resources to realise budget objectives. This level makes use of the Transaction Processing System (TPS) which includes systems such as payroll, order tracking, machine control and employee records.

Information Requirements:

Personnel information

Inventory and production levels

Pricing decisions

Credit control over customers

Cash controls and other forms of accounting

Cloud computing:

Cloud computing is a term that normally using for anything that involves delivering hosted through the internet. Generally these services are divided in to three categories: Infrastructure-as-a-service (laas) Platform-as-a-service (paas) and Software-as-a-Service (saas).The name of cloud computing is stirred from the cloud symbol that usually symbolized the internet in flowchart and diagram. In the simplest, “cocktail-hour terms, cloud computing is managed, shared applications, development platforms or computing infrastructure accessible via a network such as the internet.” Above the clouds: Managing Risk in the World of Cloud Computing By Kevin T McDonalds. Cloud computing technology boasts all the benefits of multitenant, including built-in security, reliability, upgradeability and ease of use. Normally cloud computing platforms are growing in popularity, its exceptional advantages does a cloud computing architecture offer to companies in today’s economic climate.

Suitability of cloud computing:

Proven Web-services integration:

Cloud computing technology is most easier and quicker to compare with other enterprise applications by their unique nature. Such as McDonald’s company using their web site logo “I am loving it” this is proven that all over the world for McDonald’s recognition.

World-class service delivery:

Cloud computing infrastructures offer much greater scalability, complete disaster recovery and impressive uptime numbers. McDonald’s offer their same service to the customer all over the world and they maintain their service in the same label.

No hardware or software to install:

The main beauty of cloud computing technology is its simplicity. This doesn’t require any software to install and it requires significantly fewer capital to get up and running.

Faster and lower risk development:

No more waiting moths or years and spending millions of dollars before anyone gets to log into new solution. Cloud computing technology applications are live in a matter of weeks or months, even with extensive customization or combination.

Support for deep customizations:

Several IT professionals mistakenly think that cloud computing is difficult to customize as a result it is not a good choice for complex enterprises. This infrastructure not only allows deep customization and application configuration, it preserves all those customization even during upgrades. This is also ideal for application development tosiness support organization’s evolving needs.

Empowered business users:

cloud computing technology allow on the fly, point and click customization and report generation for business users, so IT doesn’t spend half its time making minor changes and running reports.

Automatic upgrades that don’t impact IT resources:

These infrastructures put an end to a huge IT dilemma; if we upgrade to the latest and greatest version of the application, we’ll be forced to spend time and resources to rebuild our customizations and combinations. Cloud computing doesn’t force to decide between upgrading and preserving all hard work. Because all the customization and integrations are automatically preserved during an upgrade.

Conclusion:

According to research literature and Caterpillar information system it is evident that well establish system running by the company. From particular store to head office and also around the world the whole company running by one network. Every store is monitored by head office and how they operate business operation, tracking stock, ordering system, distribution channel, internal communication going through one IT network. Caterpillar has very strong relationship with cloud computing technology that gives great security and data storage facilities without investing additional amounts. Around the world data transfer and hassle free communication with secure system made Caterpillar in driving position in construction and mining equipment industry. Quality development strongly controlled and improved through latest technology and that made customer satisfaction and also keep customer loyal for future business.

References:

Above the Clouds: Managing Rusisk in the World of Cloud Computing By Kevin T. McDonald