Management in the 21st century
In a family business, the owner has to manage everything, from making products to selling to customers; from advertising to managing revenues and costs. As the family business grows to a “small company” the amounts of work increases and becomes too much for one person or a small family to deal with. The owner often has to hire additional workers to help. This often involves assigning certain roles and responsibilities to others and make sure they execute them properly. Since the owner knows the business well, there is no problem with managing a “small company”.
As the small company grows to a larger company, it becomes more complex. The owner must organize the company into several functions, each with its own managers. The job of the owner is to coordinate all these functions together to deliver the desired results. For example, production managers develop products; sales managers are responsible of making sale; procurement managers purchase materials for the company etc. The job of managers is to make sure that workers are properly trained and carry out the works properly. As the company is getting larger and more complex, the owner often has to hire professional managers to manage the entire business. The Chief Executive Officer (CEO) is the person who is hired to lead the managerial hierarchy with several levels of managers below. As the size of the company continue to grow bigger, managers have to share information, make decisions and it often turns into a “bureaucracy” system with managers often busy in meetings instead of managing and the company is becoming inefficient with a lot of wasteful activities and lower profits.
With the advancement of information technology, software is created to automate the sharing of information and reduce wastes. Software applications collect business data, analyze them, and develop reports to each level of management so they can make decision quickly and efficiently. There are thousands of business applications ranging from simple accounting spreadsheets such as Excel to sophisticated applications such as Online Analytical processing (OLAP) and Digital Dashboards to help management review data and make decisions. As the amount of data increases, database systems are developed to store, update, and retrieve data quickly. There are applications to manage customer relationships as well as manage supplies to ensure maximum efficiency and profits. With the automation of business processes, companies can grow quickly, faster and more efficiency. However it also requires managers to have knowledge and skills in using such software tools to better manage the company. The trainings of managers are shifting more to develop knowledge of information system instead of just business management. Instead of spending hours in calculation numbers, managers can use accounting software to get the results they need in minutes. Instead of tracking data from sales and costs to calculate profits, managers can use finance software to automatically update business operation and give exactly the profits whenever they want. The software can collect market data, supplier’s data, and customer’s data to give managers a forecast of pricing and set the best prices possible to maximize profits. As software tools are getting more sophisticated and robust, managers must learn to use them to their advantage and adjust quickly to the pace of the business.
As large company continue to expands and become a global company, it can operate from many locations and countries. The global company’s structure becomes much more complex with more functioning units and managers. The manager roles also vary depending on whether it is an executive manager responsible for making decisions in a particular country, or a functional manager focusing on a specific function such as marketing, production, manufacturing or human resources. Software tools that support the global business are also growing more sophisticated to support all of these functions. Business intelligent software are used to collect data in real time, analyze quickly, send reports to all levels of management on hourly basis instead of daily or weekly. In global company, subject expertise becomes more important to succeed and managers must have good knowledge of these supporting tools. Managers must use these tools to ensure that actual performance is in line with the company plans. To do this, they must set goals and milestones for everything. They must measure performance and then checked against the goals and milestones using business enterprise software for management control. Measurements and metrics are automatically set and data are collected at all levels from factory to sales to the achievement of company’s goals. The more information systems are used, the faster, better and higher profits they could achieved which give them more advantages than other competitors.
Global businesses are operating in a highly dynamic environment. Competition requires many changes and adjustments all the time so managing changes is becoming the key skills of global managers. Business plans have to cope with changes in market conditions, in customer preferences and in supply capabilities. Sales volume can change fast, either up or down, and production and purchasing managers have to revise their original plans to be in line with these changes. The only way to do it quickly and efficiently is using software tools to update and forecast. Since global managers have to cope with all these changes and many uncertainties they need more software tools to support them in making the right decision. The unpredictable nature of managerial work requires a high level of time-management skills as well as better software tools to handle the situation. Keeping goals in sight in the midst of all the pressures and confusions is the critical managerial task.
That is why in the past few years, Information System Management (ISM) has become the new “MBA” of the 21st century as every company, large and small, needs to have more business managers with information technology knowledge and skills.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
