Factors Contributing to the Successful IT-Management Control System Integration in Oil and Petrochemical Industry

Part 1

Factors contributing to the successful IT-Management Control System integration in Oil and Petrochemical Industry in Saudi Arabia

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Part 2

In every business organization, there is always a goal to work towards by the entire team of the organization. This then requires that achieving the goals requires that all business processes to work in tandem with each other even though an element of diversity may exist. However, in its entirety, the management control system depicts an information processes system which can verify and validate the organizational, physical processes. This management control system can either be closed end or open end defending on how often the information in coordinated throughout the entire system. A closed end-MCS allows the information to flow through the results, the activities, standard preset marching, and taking any necessary measure that can mitigate the mistake. Differently, in an opened end-MCS, every step of activity has the mechanism of feedback which is continuous. This kind of system is controlled by a matrix system that allows the interaction between the receptors and correctors. The concept of management control system and its application in the business organization is not new; it is the information technology (IT) that is new. Thus, in the absence of information technology, MCS has been existing and applied in the business environment. Though, the question is whether the system is effective and efficient without IT integration.

In a situation where the organization has set the goals and wants to propel towards such goals, MCS is fundamental in providing the direction and steering the organization. Thus the system allows the desired state of activity to be maintained in the system. This then requires that there are effective and timely provisions and comparison of the information about the action with the desired state. This allows any corrective measure to be taken in case of any variation. With the application of the information technology (IT), the entire process is enhanced allowing the control system to carry out the expected functions smoothly. The IT system allows the information collected from both the internal and external sources and processing such information such that the decision-making process is enhanced in the business. The application of IT does not just supply needed information to the managers to control the operations of the company, it does improve the effectiveness of the entire process. This involves increasing of the speed, accuracy, and the increased volume of data allowing broad alternatives to be considered in the decision-making process. This further enhances the MCS since the management will be in full access to accurate information that is large enough at the right time.

Success integration of the information technology in the business organization employs many strategies which can enhance the entire function of the MCS. The functions of MCS include; planning, coordinating, communicating, evaluating, making the decision, and influencing people. As a result of the initiative, there will be an improvement in all the business activities which will enhance the performance as shown in figure 1 below. The information technology ensures that the work of each part of the activity is in harmony with others to avoid conflicts to allow all functions to work towards the same goal (Otley, 1999). Thus, the IT application enables the unity of purpose among the various parts of the organization. This is enhanced by the right strategies that are supported by information technology. The IT enables the organization to implement its short term and long term strategies effectively. Management control systems significantly rely so much on the information provided and it is up to the IT systems to allow the coordination of all the activities across a diverse organization (Arboleda Jaramillo, & Alvarez Agudelo, 2010). It is therefore, of utmost importance that the activities of managers, which are controlled by MCS are in line with the business strategy or whichever the strategy that has been intended for use by the organization. With the accurate, speedy, and large data volume the business gain from the IT, the entire business operation process will be enhanced from the planning stage to the final stage of decision making. More accurate predictions of the business will be achieved allowing higher profit realization.

Part 3

The fact that the three companies to be involved in the study are considered to be among the largest oil and petroleum companies in Saudi Arabia; it was an assumption that all the three companies have the MCS. The assumption follows the aim of the study which is not investigating the MCS but how successful the IT adoption in the MCS has been achieved. This will go beyond looking into the surrounding factors about the IT-MCS integration. Thus, the assumption is valid in the sense that before the concept IT comes in for this particular study, then MCS must be existing in the participating companies. The other assumption was that was that all the participants who include the supervisors, top and middle-level managers, and the workers who will participate in the research have information about IT. Probably, it is because the participants are the people who work in the IT department and have interacted with the IT structure for their respective companies. The assumption came following the current improvement and abundant use of technology in almost all the business organizations. Therefore, for the three companies in Saudi Arabia who are among the best-performing companies, workers within the relevant departments must have knowledge and skills in technology. This includes the use of computers and applications software among other technological devices.

It was also an assumption that while some managers made use of informal communication channels and focused on non-financial measures, some of the managers concentrated on formal communication channels and focused on financial measures to weigh performance. These systems use internet-based, satellite or wireless mobile and stationary tools in a network that helps our case study oil companies in the management of increasingly complex processes. Therefore, some employees across the different managerial positions will be asked similar questions which acted as a cross-check on the diversified responses or views on the adoption of IT-based MCS.

References

Arboleda Jaramillo, N. A., & Alvarez Agudelo, (2010). Framework proposal for management control systems and its application in the contexts of innovation, networks and innovation networks.

Otley, D. (1999). Performance management: a framework for management control systems research. Management accounting research, 10(4), 363-382.