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Introduction
Information Management
Objectives
Understand the role of Information Technology and Electronic Commerce in business
Be able to specify an information technology product for your company
Be literate in the fundamental vocabulary of technology infrastructure
Acquire basic personal IT skills
What Is Information?
DataRaw facts. Computers store data.
InformationData in the correct form. Output of an
information system.
KnowledgeSolutions to problems. Information and rules
needed to solve specific problems.
WisdomQuestions that should be asked.
Role of Information in Organizations
ASSET
COMMODITYRESOURCE
What is Information?
Business resources are:Land, Labor, Capital. ….Information
Replacement for traditional resources
Medium of exchangeProduct
Information
Adds to knowledgeHas surprise valueReduces uncertaintyLeads to actionChanges a decisionRelevantVaries by function and level of
management
Why Study Information Technology?
Moore’s Law:
Chip capacity doubles every 18 Months.
Next Generation
72% have aPC at home
72% useda computerbefore theywere 10
59% expectto get theirnews from theInternet by 2000
66% call themselvesIntermediate, Expert or Powerusers
The Value of Technology
Electric Power Growth Trends
The Value of Technology
IT Growth Trends
Information Systems Concepts 2
IS Productivity ParadoxRealizing benefits from IS
Integrated Information Systems Interorganizational Information Systems
Strategic Information Systems Transformational Information Systems
Why the Benefits of IT are Not Achieved
Lack of knowledge about IT and IT management
Incompatible hardware and softwareInefficiencies in work processesIncompatible organizational cultures
and climates
IT Productivity Paradox
IS Productivity Paradox
$1 trillion dollars spent on computer and communication technologies since 1980
Systematic relationship to financial performance?
People make the differenceFour pathways for realizing benefits
Definition: Information System
a computerized system that processes data and produces information (SSC)
a collection of components that collects, processes, stores, retrieves and disseminates information for a specific purpose
a computer system designed to accomplish business objectives (IS Primer, Part I)
IS Categories
Types of Information Systems
Cost displacement … Automation systems
Improved management … Transaction Processing and Information Reporting
Strategic support … Decision Support, Executive Information Systems
and Expert SystemsBasis of competition …
Data Warehousing, e-Business, Strategic Information Systems
Components of IS and Definition of SystemSystem: A group of parts or components
working together to accomplish a goal
Components of IS:DataHardwareSoftwareTrained personnelProcedures
Managing Information with Information Systems
TECHNOLOGY + DATA + PROCEDURES + PEOPLE= INFORMATION SYSTEM
Benefits of IS
Types Distribution Efficiency Automation
Arise from changes in work tasks, procedures and arrangements not just from technology
Potential vs. Actual
Information Management in the 21st Century
Succeeding in a Global EnvironmentThe Focus on Quality and
PerformanceBusiness Process RedesignBuilding Individual Capabilities and
ProductivityTime to Market
Challenges for Effective Information Management
Using Technology Appropriately to Meet Information Needs
Dealing with Too Little, Too Much, or Conflicting Information
Responding in a Timely Fashion
1
Types of Information Systems
Transaction Processing Systems (TPS)
Information Reporting Systems (IRS)Decision Support Systems (DSS)Executive Information (Support)
Systems (EIS) Expert Systems (ES)
Transaction Processing SystemsTransaction - Basic business event, act or
processTPS
backbone of an org’s information systems capture data on “business events” store these data in databases use data to efficiently handle day-to-day
business operations provide information needed by law may be complex
Transaction Processing Terms
Batch processing - transactions are collected as they occur and placed in groups or batches to be processed periodically
On-line processing - data are processed as soon as transaction occurs
Transaction Processing: Question
Which business events?What data should be captured?When should it be captured?
Transaction Processing: Guidelines
Capture sufficient dataKeep accurateMinimize redundancyKeep current
Information ReportingRetrieving data stored in databases to
produce predefined information reports for managers and other employees
Routine reportsStructured problemsTypes of Reporting
Periodic Exception
Information Reporting: Questions
How many reports should be produced?
When should reports be received?
Who should control the distribution of reports?
Information Reporting: Guidelines
Keep evaluating the reportHighlight important dataInclude positives and negatives
Decision Support
Retrieving data stored in databases and then combining these data with analytical rules to create on-demand (often ad hoc, normally interactive) reports to help employees make the decisions they face.
Semi-structured problemsSensitivity and goal seeking analysis
Decision Support: Functionality
Decision structuresAccess to data (Special
database)Analytical tools (Model base)User-friendly interface
Decision Support: Questions
When should such support be restrictive rather than flexible?
Who should define and design these support tools?
Decision Support: Guidelines
Interface should be consistent with user’s cognitive view of problem
A DSS database is established separate from operational databases
It may be desirable to restrict user’s actions
Executive InformationAlso called Executive Support Systems
(ESS)Geared toward top level managersProvide drill downHave excellent GUIOffer status accessOffer access to external databasesMay include DSS
Executive Information: Questions
How can use of the system be promoted?
Who should use the system?
Executive Information: Guidelines
Timeliness of information is critical.The system must provide broad,
aggregated data with the ability to expand to the detail level.
The system must be tailored to the needs of the managers within the specific company.
Expert Systems- Characteristics
Artificial Intelligence (AI) applicationActs like expertProvides explanationsMay be rule- or case-basedMay provide consistent, reproducible
second opinion
Expert Systems: Components
Knowledge rule databaseDomain databaseDatabase management systemKnowledge Acquisition/Explanation
subsystemGUIInference engine
Expert Systems: Questions
How accurate is the information provided by the system?
How should the system be used?How can the system be designed to
respond to unusual situations?How can the system be updated?How can you give the system
common sense?
Expert System: Guidelines
The key to a good expert system is successful knowledge acquisition from the expert.
The information must be timely and complete.
Strategic Information Systems
Tactics becoming a low-cost producer improving products/services introducing new products/services creating barriers to entry discourage customers from
switching to competitors gaining power position over
suppliers or customers providing management with
higher quality informationtimelyaccuracycompleteness
Such strategic benefits often are not realized. Why not?
When they are realized, they are usually short-lived. Why are they so difficult to sustain?
What is the basis by which an organization can realize a sustained competitive advantage through its information systems?
Strategic Information Systems
IS that help gain strategic advantageSignificantly change manner in which
business supported by the system is done
Outwardly aimed at direct competition
Inwardly focus on enhancing the competitive position
Create strategic alliances
Firm Infrastructure(general management, accounting, finance, strategic planning)
Human Resource Management(recruiting, training, development)
Technology Development(R&D< product and process improvement)
Procurement(purchasing of raw materials, machines, supplies)
Su
pp
ort
Act
ivit
ies
Pri
mar
y A
ctiv
itie
s
InboundLogistics(rawmaterialshandlingandwarehous-ing)
Operations
(machineassembling,testing)
OutboundLogistics(warehous-ing anddistributionof finishedproduct)
Service
(installation,repair,parts)
Marketingand Sales(advertising,promotion,pricing,channelrelations)
Value Chain Model
Chain of basic activities that add to firm’s products or services
Primary activitiesSecondary activities
Value Chain Primary Activities
InboundOutboundOperationsMarketing and SalesAfter-Sale Services
Value Chain Support Activities
Technology developmentProcurementHuman Resources ManagementManagement Control
accounting/finance coordination general management central planning
Competitive Forces
Threat of entry of new competition
Bargaining power of suppliersBargaining power of buyersThreat of substitute products
or servicesRivalry among existing firms
Strategies for Competitive Forces
Note - strength of force is determined by factors in industry
Gain a competitive edgeBuild defenses against forcesFormulate actions to
influence forces
Three Generic Strategies
Cost leadership (lowest cost in industry)
Differentiation of products/services
Focus (finding a specialized niche)
Be Low Cost Producer - IT strategic if it can:
Help reduce production costs & clerical work
Reduce inventory, accounts receivable, etc.
Use facilities and materials better
Offer interorganizational efficiencies
Produce Unique Product - IT strategic if it can:
Offer significant component of product
Offer key aspect of value chainPermit product customization to
meet customer’s unique needsProvide higher/unique level of
customer service/satisfaction
Fill Market Niche - IT strategic if it can:
Permit identification of special needs of unique target market
Spot and respond to unusual trends
Strategic Questions
Can IT create barriers to entry? (new entrants)
Can IT build in switching costs? (buyers)
Can IT strengthen customer relationships? (buyers)
Strategic Questions (cont)Can IT change the balance of
power in supplier relationships? (suppliers)
Can IT change the basis of competition? (competitors)
Can IT generate new products?(competitors, substitutes)
Risks of IS SuccessChange the Basis of CompetitionLower Entry BarriersPromote Litigation or
RegulationAwake Sleeping GiantReflect Bad TimingAre Too Advanced
Transformational Information Systems
Radical changes in an organization’s business processes
Radical changes in an organization’s structure
Radical changes in an industry’s value streams
Business Process Reengineering (BPR)Completely changes manner in
which business is doneFewer steps, shorter cycle timesComplete, more expert handling of
eventsNot incremental improvement Typically uses IT as an enablerInvolves discontinuous thinking
Characteristics of BPRCombining jobsEmpowering employeesJobs done simultaneouslyCustomizing product/serviceWork performed where most
logicalSingle point of customer contact
Transformational Information Systems
Radical changes in an organization’s structure reduce layers of management empower front-line workers loosely couple work units
Radical changes in an industry’s value streams disintermediation creating new markets