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Seminar on Management Information Systems (MB 306)

Seminar on Management Information Systems Recommended Text Books

S.No. 1. Author Laudon & Laudon Title Management Information Systems: Organisation &Technology Management Information Systems: Managerial perspectives Edition 7th Publisher Pearson




Seminar on Management Information Systems Reference Books

S. No 1. Author Alter Title Information Systems: Management Perspective Edition 3rd Publisher Pearson


Murdick, Ross & Clagget Kanter

Information Systems for 3rd Modern Management

Prentice Hall, India

Managing with Information Management Information Systems


Prentice Hall, India Mcgraw Hill


Davis & Olson


Emergence of Digital Firm

Objectives of the Lesson

 After studying this topic, you will be able to:  Explain why information systems are important today for business & management  Evaluate role of information systems in today's competitive business environment  Assess impact of Internet & Internet technology on business & government  Identify major management challenges to building & using information systems

DaimlerChrysler's Agile Supply Chain

 DaimlerChrysler includes Chrysler Group, Mercedes & Smart Passenger Car Group & Commercial Vehicles unit  Operates 104 plants in 37 countries  Uses 14,000 different suppliers, &  Has13,000 sales outlets in 200 countries

 Auto industry known for

 tough competition & fickle customers.  survival depends on bringing new models rapidly to market as economically as possible

 After studying details of vehicle design & ending with service & repair, it built series of information systems to automate & streamline all transactions 6 with suppliers

DaimlerChrysler's Agile Supply Chain

 Integrated Volume Planning System- gathers sales data & forwards to
production planning systems, & from there to suppliers for adjustment in deliveries of parts & production to make right no. of vehicle models actually selling in dealer showrooms.

 Global Supplier Portal

common interface to handle every type of interaction between DaimlerChrysler & its suppliers. approx. 6,000 DaimlerChrysler suppliers interact with company's various business groups. enables DaimlerChrysler to share information among different divisions & business units.

DaimlerChrysler's Agile Supply Chain

Web-enabled system - Powerway:
 used by Chrysler & 3,400 suppliers to track parts through 9 quality control "gates" before being certified for use on production lines.  in past, quality specialists used to store 1000s of pieces of paper in 100s of binders to deal with quality issues to interface with 1000s of companies that designed Chrysler's parts.  replaces paper-based processes with digital links to supplier systems.  helps Chrysler identify potential design & engineering problems before actually manufacturing physical parts for rapid solution  system thus helps Chrysler design new cars faster & remain competitive

DaimlerChrysler's Agile Supply Chain

 DaimlerChrysler's information systems use both technology & knowledge of business to enable the company & its suppliers to respond instantly to changes in marketplace or other events.  Information systems give
 give DaimlerChrysler agility to monitor & react to data as events unfold, and  are intimately linked with systems of its suppliers & related companies  enable managers to "see into" these systems when necessary, make immediate adjustments to keep mfg & delivery processes aligned with customer needs. 9

DaimlerChrysler's Agile Supply Chain

 Agility exhibited by DaimlerChrysler is part of transformation of business firms throughout the world into fully digital firms.  Such digital firms use Internet & networking technology to make
data flow seamlessly among different parts of the organization; streamline flow of work; and create electronic links with customers, suppliers & other organizations

 We need to know how information systems can make business more competitive, efficient & profitable. 10

Few other Examples

 FedEx, Dell, CISCO, BP, HLL, AMUL, ICICI, M&M, BPCL, IRCTC, ITC e-Choupal  FedEx Largest transportation company in the world not known for size but for smart business network; has built up using state-of- art information systems  FedEx is family of companies that offers global network of specialized services-transportation, information, international trade support & supply chain services  President & CEO, Fred Smith said -information about a package is as important as the package itself  Today FedEx continues to support shipping services with state-of-art IT & IS, putting information customers need right at their fingertips 11

Few other Examples

 FedExs IS & networks were initially developed to improve internal operational efficiencies  Transportation logistics information system, called customer operations services master online system (COSMOS)
 was first centralised computer-based IS in the industry for tracking packages

 FedEx now enables customers to interact with FedExs extranet to


download software & shipping information track packages manage invoicing data, and integrate their accounts payable application programme 12 with FedEx shipping transaction reporting

Few other Examples

 Indian Railways Passenger Reservation System
 Worlds largest railways became a smart organisation by introducing Web-based passenger reservation system (PRS)  IR carry over 12m passengers all over the country by about 8000 trains, which connect more than 7,000 stations  Presently, over 750 locations all over the country are provided with PRS terminals & over 97% of reservations on IR done through this system  Web-enabled PRS ( is used for queries & information services  Recently Indian Railway Catering & Tourism Corp (IRCTC) introduced Web-based ticketing through its site which links to the PRS systems at backend for transactions  Has also introduced online payment through credit card 13

Few other Examples

ITC e- Choupal
 Unique Web- based initiative of ITCs international business division offers farmers of India all information, products & services they need to
enhance farm productivity, improve farm-gate price realization & cut transaction costs

 Farmers can access latest local & global information on weather, scientific farming practices and market prices at village itself through this Web portal- all in Hindi  Choupal also facilitates supply of Hi- Q farm inputs as well as purchase of commodities at their doorstep  Given the literacy & infrastructure constraints at village level, this model provides physical service support thr Choupal coordinator- himself a lead farmer- who acts as interface between computer terminal & farmers 14

Why Information Systems?

 Technology & business innovations transforming global business landscape  New Internet business culture emerging with
 Business people using high-speed Internet connections for e-mail & information gathering  portable computers connected to wireless networks, cell phones connected to Internet, and  hybrid handheld devices delivering phone, internet & computing power to increasingly mobile & global workforce.

 Internet culture is global - we expect

 online services for purchasing goods & services  our business colleagues to be available by e-mail & cell phone  to communicate with our vendors, customers & employees any time of day / night over internet, &  our business partners around the world to be "fully connected." 15

Why Information Systems Matter

 Investment in Information Systems?
 IT: largest component of capital investment for firms in US & many industrialized societies.  In 2005, U.S. firms spent nearly $1.8 trillion on IT & telecommunications equipment & software.  Investment in IT doubled as percentage of total business investment since 1980;  Now accounts for more than 1/3 of all capital invested in US & more than 50% of invested capital in informationintensive industries- finance, insurance & real estate

 Why so much of investment in IT?


Why Information Systems Matter

 Foundation of doing Business
 In US, over 23m managers & over 113m workers in labor force rely on information systems every day to conduct business  Survival without information systems inconceivable in many industries  All e-commerce impossible without substantial IT investments & firms such as Amazon, eBay, Google, E*Trade would not exist.  Today's service industries-finance, insurance, real estate & personal services - travel, medicine & education-cant operate without IT. 17

Why Information Systems Matter

 Foundation of doing Business contd
 Retail firms- Wal-Mart & Sears & manufacturing firms - GM & GEC require IT to survive and prosper.  Offices, telephones, filing cabinets & efficient tall buildings with elevators once foundations of business in 20th century, IT is a foundation for business in 21st century  Growing interdependence between firm's ability to use IT & its ability to implement corporate strategies & achieve corporate goals  What a business aims to do in 5 years depends on what its systems will be able to do 18

Why Information Systems Matter

 IT is one of important tools along with innovations in organization & management.  Investment in IT plays critical role in increasing productivity of firms & entire nations
EG: economists at US Federal Reserve estimate IT facilitated lowering of inflation by 0.5 to 1 % during 1995-2000

 IT: major factor in resurgence of productivity growth in US in late 90s at average rate of 2.7%, up from 1.4% from 1973 to 1995  Firms that invested in IT experienced continued growth in productivity & efficiency. 19

Why Information Systems Matter

 Strategic Opportunity & Advantage
 Substantial investments in IT needed to
take advantage of new market opportunities develop new products or create new services take strategic advantage over your rivals, and helps differentiate yourself from your competitors

 String of short-lived competitive advantages is foundation for long-term advantages in business


How much does IT matter

 In May 2003, Nicholas Carr, editor at HBR wrote an article "IT Doesn't Matter; stirred significant debate in business community.  Carr's argument every firm can purchase IT in marketplace,  any advantage obtained by one company can easily be copied by another company  IT is now commodity based on standards (such as Internet) that all companies can freely use,  no firm can use IT to achieve strategic edge over its competitors any more than it could with electricity, telephones, or other infrastructure.  is no longer differentiating factor in organizational performance.

 Most MIS experts disagree.  Research demonstrates many highly adept firms continually obtain superior returns on their investment in 21 IT, whereas less adept firms dont

How much does IT matter

 Copying innovations of other firms can be devishly difficult, much being lost in translation  Only one Dell, one Wal-Mart, one Amazon & one eBay
 each of these firms achieved competitive advantage in industry based on unique ways of organizing work enabled by IT that has been difficult to copy.

 If copying were so easy, one could find much more powerful competition for these market leaders.  Far from end of innovation, commoditization often leads to explosion in innovation and new markets & products.
 EG: abundance & availability of materials - wood, glass & steel during last century made stream of architectural 22 innovations possible

How much does IT matter

 Development of standards & lowering costs of computer hardware made possible new products & services  Carr is surely correct in stating not all investments in IT work out to have strategic value.  A manager & potential entrepreneur can use IT & systems to create differentiation from ones competitors & strategic advantage in marketplace.  To achieve "success, investment in IT be accompanied by significant changes in business operations and processes & changes in management culture, attitudes & behavior.  Without these changes, investment in IT can23 be waste of precious investor resources.

Digital Convergence & Changing Business Environment

 Combination of IT innovations, changing domestic & global business environment makes role of IT in business even more important  Internet revolution- turned out to be ongoing, powerful source of new technologies with significant business implications for this century.  Five factors to be considered when assessing growing impact of IT in business firms both today & next 10 years:

Internet growth & technology convergence Transformation of the business enterprise Growth of a globally connected economy Growth of knowledge and information-based economies Emergence of the digital firm


Internet & Technology Convergence

 Networking & communications revolution driven by growth of Internet, Internet-based technologies, new business models & processes that leverage new technologies  Digital convergence" predicted decade ago  Four massive industries moving toward a common platform:
 $1 trillion computer hardware & software industry in US,  $250 billion consumer electronics industry  $1.6 trillion communications industry, and  $900 billion content industry (from Hollywood movies, to music, text & research industries) 25

Internet & Technology Convergence

 Outlines of future : world of near universal, online, ondemand & personalized information services from text messaging on cell phones, to games, education & entertainment.  Internet bringing about convergence of technologies, roiling markets, entire industries & firms  Breaking down of traditional boundaries & business relationships with new ones springing up.  Telephone networks merging into Internet & cellular phones becoming Internet access devices.  Internet-connected personal computer moving to play role of home entertainment control center. 26

Internet & Technology Convergence

 Traditional markets & distribution channels are weakening and new markets are being created  Today, networking & Internet are synonymous with doing business  Firms' relationships with customers, employees, suppliers & logistic partners becoming digital relationships  As a supplier, you cant do business with WalMart, or Sears, or most national retailers unless you adopt their well-defined digital technologies  As an employer, you'll be interacting more electronically with your employees and giving them new digital tools to accomplish their work 27

Internet & Technology Convergence

 Business now enabled by digital networks, terms e- business & e- commerce used frequently throughout  e-business
designates use of Internet & digital technology to execute all activities in the enterprise. includes activities for internal management of the firm & for coordination with suppliers & other business partners. also includes e-commerce.

Internet & Technology Convergence


deals with buying & selling of goods & services electronically with computerized business transactions using Internet, networks & other digital technologies. also encompasses activities supporting market transactions, - advertising, marketing, customer support, delivery & payment.


Internet & Technology Convergence

 Govts are using Internet technology to deliver information & services to citizens, employees & businesses with which they work  E-government:
is application of Internet & related technologies to digitally enable govt & public sector agencies' relationships with citizens, businesses & other arms of govt makes govt operations more efficient & also empower citizens by giving them easier access to information & ability to network electronically with other citizens
EG: citizens in some states can renew their driver's licenses or apply for unemployment benefits online

Transformation of Business Enterprise

 Rapid changes in markets & competitive advantage are accompanied by changes in firms themselves  Internet & new markets are changing cost & revenue structure of traditional firms; demise of traditional business models
 EG: in US
40 % of travel sales are online & experts believe that 60 80 % of travel sales will be online within a decade. Realtors have had to reduce commissions on home sales because of competition from Internet real estate sites. Value of copper-based networks of traditional local telephone companies is rapidly declining as millions of consumers switch to cellular & Internet telephones 31

Transformation of Business Enterprise

 Internet & related technologies enable conducting business across firm boundaries as it conducts business within the firm  Firms no longer limited by traditional organizational boundaries in how they design, develop & produce goods & services  Possible to maintain close relationships with suppliers & other business partners at great distances & outsource work that firms formerly did themselves to other companies.
 EG: Cisco Systems does not manufacture networking products it sells; uses other companies- Flextronics for this purpose. uses Internet to transmit orders to Flextronics & monitor 32 status of orders shipped

Transformation of Business Enterprise

 GKN Aerospace North America  fabricates engine parts for aircraft & aerospace vehicles  uses system called Sentinel with Web interface to monitor key indicators of production systems of Boeing Corporation, its main customer.  Sentinel responds automatically to Boeing's need for parts by increasing, decreasing, or shutting down GKN's systems according to parts usage

Transformation of Business Enterprise

 Transformation in management of enterprise Traditional business firm -a hierarchical, centralized, structured arrangement of specialists; relied on fixed set of SOPs to deliver mass-produced product/ service  New style of business firm - flattened, decentralized, flexible arrangement of generalists
relies on instant information to deliver masscustomized products/ services suited to specific markets or customers.

Transformation of Business Enterprise

 Traditional Management Group
 relies-on formal plans, a rigid division of labor and formal rules

 New Manager
 relies on informal commitments & networks to establish goals (rather than formal planning) flexible arrangement of teams & individuals working in task forces, and customer orientation to achieve coordination among employees  appeals to knowledge, learning & decision making of individual employees to ensure proper operation of the firm 35  IT makes this style of management possible

Growth of a Globally connected Economy

Success of firms today & in future depends on their ability to operate globally Companies are distributing core business functions in
 product design, manufacturing, finance & customer support to locations in other countries where work can be performed more cost effectively.

Today, information systems provide

 communication & analytic power that firms need to conduct trade, and  manage businesses on global scale 36

Growth of a Globally connected Economy

 Controlling far-flung global corporation means Communicating with distributors & suppliers, operating 24X7 in different national environments  coordinating global work teams, &  servicing local & international reporting needs
is a major business challenge that requires powerful information system responses.

 Globalization & IT bring new threats to domestic business firms:

 Global communication & management systems are enabling customers to
shop in worldwide marketplace, obtain price & quality information reliably 24 hours a day

 To become competitive participants in international markets, firms need powerful information and communication systems.


Rise of Information Economy

 Transformation of US, Japan, Germany & other major industrial powers from industrial economies to knowledge & information-based service economies  Manufacturing moving to lower-wage countries  In knowledge & information-based economy, knowledge & information are key ingredients in creating wealth  By 1976, no. of white-collar workers employed in offices surpassed no. of farm workers, service workers & blue-collar workers employed in manufacturing  Today, most people no longer work on farms or in factories but instead are found in sales, education, health care, banks, insurance firms & law firms38

Rise of Information Economy

 These jobs primarily involve working with distributing or creating new knowledge & information  In fact, knowledge & information work now account for significant 60% of U.S. GNP & nearly 55% of labor force  In knowledge & information-based economies, market value of many firms based largely on intangible assets   

proprietary knowledge information unique business methods, brands & other "intellectual capital."

 Physical assets- buildings, machinery, tools & inventory, now account for less than 20 % of market value of many public firms in US

Rise of Information Economy

 Knowledge & information  provide foundation for valuable new products & services- credit cards, overnight package delivery or worldwide reservation systems.  other products- computer games require great deal of knowledge to produce &  used more intensively in production of traditional products as well. EG: in automobile industry both design & production now rely heavily on knowledge & IT

Emergence of Digital Firm

 All changes as described coupled with organizational redesign led to emergence of fully digital firm.  What is a digital firm?  is one in which organization's all significant business relationships with customers, suppliers & employees are digitally enabled & mediated.  Core business processes are accomplished through digital networks spanning entire organization or linking multiple organizations.

Emergence of Digital Firm

 Core Business Processes:
 set of logically related tasks & behaviors that organizations develop over time to produce specific business results; and  unique manner in which these activities are organized & coordinated. EG:
developing a new product generating & fulfilling an order creating a marketing plan, and hiring an employee

 Ways organizations accomplish their business processes can be source of competitive strength.

Emergence of Digital Firm

 Key corporate assets-intellectual property, core competencies & financial and human assets-managed through digital means.  Digital firm
 any piece of information required to support key business decisions is available at any time & anywhere in the firm.  sense & respond to their environments far more rapidly than traditional firms, giving them more flexibility to survive in turbulent times.  offers extraordinary opportunities for more global organization & management.

 DaimlerChrysler illustrates some of these qualities.

 Electronically integrating key business processes with suppliers enabled the co to be adaptive to customer demands & changes in its supplier network.  Figure I-1 illustrates a digital firm making intensive use of Internet & digital technology for electronic business. 43

Fig I- 1: Toward the Digital Firm


Electronic Commerce

Factories Just-in-time production Continuous inventory replenishment Production planning

Customers On-line marketing On-line sales Built-to-order products Customer service Sales force automation

Remote offices and work groups Communicate plans and policies Group collaboration Electronic communication Scheduling

Suppliers Procurement Supply chain management Business partners Joint design Outsourcing


Emergence of Digital Firm

 Information can flow seamlessly among different parts of the company and between the company & external entities -its customers, suppliers & business partners.  More & more organizations are moving toward this digital firm vision.  Few firms- Cisco Systems or Dell Computers, close to becoming fully digital firms, using Internet to drive every aspect of their business.  Firms continue to invest heavily in information systems to integrate internal business processes 45 & build closer links with suppliers & customers.

Difference between Information & Data

 Example: Supermarket checkout counters ring up millions of pieces of data - product identification nos. or cost of each item sold.  Such pieces of data totaled & analyzed to provide meaningful information at particular store or sales territory or sales region
 total quantity of sugar sold  brands of sugar selling most rapidly, or  total amount spent on that brand of sugar (see Fig I- 2)

 Three activities in information system produce information that organizations need to make decisions
 control operations,  analyze problems, &  create new products or services


FIG I - 2: Data & Information

331 Shagun Sugar 2kg 173 Orange Squash 3 Bot 444 Pear Soap 4cakes 331 Shagun Sugar 4kg 564 Mustard Oil 4 litres 331 Shagun Sugar 3kg 624 Tide powder 3p

Sales Region Sector 18 Store: RLCR Item Description Qty Sold No. 331 Shagun Sugar 101 kg Sales: Rs 3232




Difference between Information & Data

 These activities are input, processing & output (see Figure I- 3).
 Input- captures or collects raw data from within the organization or from its external environment  Processing- converts raw input into more meaningful form  Output- transfers processed information to people who use it or to activities for which it will be used.  Information systems also require feedback, which is output returned to appropriate members of organization to help them evaluate or correct input stage

Fig I- 3:Functions of Information System


Activities in Information System

 DaimlerChrysler's Integrated Volume Planning system
 Input- consists of dealer identification no., model, color & optional features of cars ordered from dealers  Processing- Co's computers store & process these data to anticipate no. of new vehicles to be manufactured for each model, color & option package  Output- consists of orders to suppliers specifying quantity & date of each part/ component to be delivered to Co's production facilities to produce vehicles customers have ordered  System provides meaningful information - what models, colors & options are selling in which locations; most popular models & colors; and which dealers sell most 50 cars & trucks

Activities in Information System

 DaimlerChrysler's Integrated Volume Planning System
 Focus- formal, organizational computer-based information systems, rest on accepted & fixed definitions of data & procedures for collecting, storing, processing, disseminating & using these data

 Formal systems: structured; operate in conformity with predefined rules that are relatively fixed & not easily changed
 EG: The system requires unique nos. / codes for identifying each vehicle part or component & each supplier

 Informal information systems (such as office gossip networks):

 rely on unstated rules of behavior  no agreement on what is information or how it will be stored & processed; such systems are essential for life of an 51 organization

Activities in Information System

 Formal information systems: either computer based or manual.
 Manual systems: use paper-&-pencil technology  Computer-based information systems (CBIS)rely on computer hardware & software technology to process & disseminate information  Managers & business firms invest in IT & systems; provide real economic value to business  Decision to build/ maintain information system assumes returns on this investment will be superior to investments in buildings, machines, or 52 other assets

Business Perspective on Information Systems

 Superior returns expressed as  increases in productivity  increases in revenues (increase firm's stock market value), or  superior long-term strategic positioning of firm in certain markets (which produce superior revenues in future)  Information systems enable a firm  to increase its revenue or  to decrease its costs
by providing information to help managers make better decisions or to improve execution of business processes.

Business Perspective on Information Systems

EG: information system for analyzing supermarket checkout data illustrated in Fig I- 2 can increase firm profitability
 by helping managers make better decisions;  which products to stock & promote in retail supermarkets & increase business value

Every business has information value chain illustrated in Fig I- 4. Raw information is systematically acquired & then transformed through various stages that 54 add value to that information

Fig I- 4:Business Information Value Chain

Business Processes

Supply Enterprise Customer Knowledge Chain Management Management Management Management

Firm Profitability & Strategic Position

Data Dissemination Collection Transformation &Storage into Business Systems

Planning Coordinating Controlling Modeling & Decision making

Information Processing Activities

Management Activities

Business Value


Business Perspective on Information Systems

Primary purpose of systems: to contribute to corporate value. Value of information system to business & decision to invest in any new information system, determined by extent to which system will lead to
 better management decisions,  more efficient business processes, &  higher firm profitability

Information system represents an organizational & management solution, based 56 on IT, to a challenge posed by environment.

Business Perspective on Information Systems

 To fully understand information systems, manager must understand broader organization, mgmt & IT dimensions of systems (see Figure I- 5)  Understanding of information systems covering understanding of
management & organizational dimensions of systems, & technical dimensions of systems is

 referred as information systems literacy.

 Information systems literacy- includes behavioral & technical approach to studying information systems.  Computer literacy, in contrast, focuses primarily on knowledge of IT. 57

Fig I- 5: Information Systems are more than computers





Figure 1-5


Dimensions of Information Systems

 Organizations  Information systems are integral part of organizations.  For some companies- credit reporting firms, no business without information system  Key elements of organization are: its people, structure, business processes, politics & culture.  Organizations are composed of different levels & specialties.  Their structures reveal a clear-cut division of 59 labor.

Dimensions of Information Systems

 Organizations  Major business functions, or specialized tasks performed by business organizations given in Table I- 1  An organization coordinates work through structured hierarchy & its business processes
Hierarchy arranges people in pyramid structure of rising authority & responsibility Upper levels of hierarchy consist of managerial, professional & technical employees; lower levels consist of operational personnel

Table I- 1:Major Business Functions

Sales & marketing


Selling organization's products & services Manufacturing & production Producing products & services Finance & accounting Managing organization's financial assets & maintaining organization's financial records Human resources Attracting, developing & maintaining the organization's labor force; maintaining employee records

Dimensions of Information Systems

 Organizations  Most organizations' business processes include formal rules developed over long time for accomplishing tasks.  These rules guide employees in a variety of procedures, from writing an invoice to responding to customer complaints.
Some of these procedures are formalized & written down, others are informal work practices EG: requirement to return telephone calls from co-workers or customers, not formally documented.

 Many business processes are incorporated into information systems, such as how to pay a supplier or how to correct an erroneous bill. 62

Dimensions of Information Systems

 Besides managers organisations require
knowledge workers - engineers, architects, or scientists design products or services & create new knowledge, & data workers - secretaries, bookkeepers, or clerks process organisation's paperwork. production or service workers - machinists, assemblers, or packers produce organization's products or services.

 Each organization has a unique culture, or fundamental set of assumptions, values & ways of doing things, accepted by most of its members.  Parts of organization's culture always found embedded in its information systems.
EG: United Parcel Service's concern of Placing service to Customer first - an aspect of its organizational culture found in company's package tracking systems. 63

Dimensions of Information Systems

 Management's job is to understand situations, make decisions & formulate action plans to solve organizational problems.  Managers
perceive business challenges in environment; set organizational strategy for responding to those challenges;& allocate human & financial resources to coordinate work & achieve success. BUT must also create new products & services and even recreate the organization from time to time.

 Substantial part of management responsibility: creative work driven by new knowledge & information.  IT can play powerful role in redirecting & redesigning the organisation 64

Dimensions of Information Systems

 Managerial roles & decisions vary at different levels of the organization.  Senior managers: make long-range strategic decisions about what products & services to produce.  Middle managers: carry out programs & plans of senior management  Operational managers: responsible for monitoring firms daily activities  Each level of management
expected to be creative & develop novel solutions to broad range of problems. has different information needs & information system 65 requirements.

Dimensions of Information Systems

 IT -one of many tools managers use to cope with change  Computer hardware physical equipment used for input, processing & output activities in information system. Consists of computer processing unit; various input, output & storage devices & physical media to link these devices together  Computer software consists of detailed, preprogrammed instructions that control & coordinate computer hardware components in information system

Dimensions of Information Systems

 Storage technology
 includes both physical media for storing data- magnetic disk, optical disc, or tape & software governing the organization of data on these physical media.

 Communications technology
 consisting of both physical devices & software, links various pieces of hardware & transfers data from one physical location to another

 Computers & communications equipment

 connected in networks for sharing voice, data, images, sound, or even video.

 Network links two or more computers to share data or resources such as printer


Dimensions of Information Systems

 Internet  World's largest & most widely used network  international network of networks that are both commercial & publicly owned.  connects hundreds of 1000s of different networks from more than 200 countries around the world.  more than 900m people working in science, education, govt & business use Internet to exchange information or business transactions with other organizations around the globe.  is extremely elastic- if networks are added or removed, or if failures occur in parts of system, 68 rest of Internet continues to operate.

Dimensions of Information Systems

 through special communication & technology standards, any computer can communicate with virtually any other computer linked to Internet using ordinary telephone lines.  has created new "universal" technology platform on which to build all sorts of new products, services, strategies & business models.  technology platform has internal uses, providing connectivity to link different systems 69 & networks within the firm.

Dimensions of Information Systems

 Internal corporate networks based on Internet technology are called intranets  Private intranets extended to authorized users outside the organization are called extranets  Extranets  used by firms to coordinate their activities with other firms for making purchases, collaborating on design & other inter organizational work  some of DaimlerChrysler's systems for coordinating with suppliers are based on 70 extranets.

Dimensions of Information Systems

 World Wide Web:
 An Internet service; is of special interest to organizations & managers.  Is system with universally accepted standards for storing, retrieving, formatting & displaying information in networked environment.  Information is stored & displayed as electronic "pages" that can contain text, graphics, animations, sound & video.  Web pages can be linked electronically to other Web pages, regardless of where they are located & viewed by any type of computer. 71

Dimensions of Information Systems

 World Wide Web:
 By clicking on highlighted words or buttons on Web page, one can link to related pages to find additional information, software programs, or still more links to other points on Web.  All Web pages maintained by an organization or individual are called a Web site.  Web site
Created by businesses with stylish typography, colorful graphics, push-button interactivity, sound & video to disseminate product information widely. Used to
"broadcast" advertising & messages to customers, collect electronic orders & customer data; & coordinate far flung sales forces & organisations on global 72 scale

Contemporary Approaches to Information Systems

 Information systems- multidisciplinary field.  Figure I- 6 illustrates major disciplines that contribute problems, issues & solutions in study of information systems  Field divided into technical & behavioural approaches  Information systems are socio technical systems.  Though composed of machines, devices & hard physical technology, they require substantial social, organisational & intellectual investments to make them work properly 73

Fig I- 6: Contemporary Approaches to Information Systems

Technical Approaches Computer Science Operations Research

Management Science



Economics Behavioral Approaches


Contemporary Approaches to Information Systems

 Technical Approach to information systems
 Emphasizes mathematically based models to study information systems, physical technology & formal capabilities of these systems.  Disciplines that contribute to technical approach:
computer science, management science & OR Computer science - concerned with establishing theories of computability, methods of computation & methods of efficient data storage & access. Management science- emphasizes development of models for decision-making & management practices. OR- focuses on mathematical techniques for optimizing selected parameters of organizations- 75 transportation, inventory control & transaction costs.

Contemporary Approaches to Information Systems

Behavioral Approach
 Issues - strategic business integration, design, implementation, utilization & management cant be explored usefully with models used in technical approach.  Focus: not on technical solutions; concentrates on changes in attitudes, management & organizational policy & behavior.  Sociologists study information systems as to how groups & organizations shape development of systems & how systems affect individuals groups & organizations.  Psychologists study information systems with interest in how human decision makers perceive & use formal information.  Economists study information systems to see what impact systems have on control & cost structures within the firm & within markets. 76

Socio technical Systems

 In information system, four main actors:
 suppliers of hard-ware & software (technologists)  business firms making investments & seeking to obtain value from technology  managers & employees seeking to achieve business value (& other goals); and  contemporary legal, social & cultural context (firm's environment)

 Together these actors produce what we call MIS  Study of MIS: arose in 1970s to focus on use of computerbased information systems in business firms & govt. agencies  MIS combines work of computer science, management science & OR to develop system solutions to real-world problems & managing IT resources. 77

Socio technical Systems

 Adopting socio technical systems perspective helps to avoid purely technological approach to information systems.
EG: ITs rapid decline in cost & growth in power does not translate into productivity enhancement or bottomline profits.

 If a firm has installed enterprise-wide financial reporting system; does not necessarily mean it will be used, or used effectively.  Likewise, fact that firm has introduced new business procedures & processes does not mean employees will be more productive compared to absence of investments in new info systems

Challenges of Information Systems

 Information systems investment challenge:

How can organizations obtain business value from their information systems?
Greatest challenges facing managers: to ensure their companies obtain meaningful returns on money they spend on information systems. One thing to use IT to design, produce, deliver & maintain new products; another thing to make money doing it. How can we evaluate our information systems investments as we do other investments? Are we receiving expected RoI from our systems Do our competitors get more?

Senior management expected to ask these questions:

Most companies lack clear-cut decision-making process for deciding which technology investments to pursue & for managing those investments 79

Challenges of Information Systems

 Strategic business challenge:

What complementary assets are needed to use information technology effectively?

Despite heavy IT investments, many organizations not realizing business value from their systems, because they fail to appreciate complementary assets required to make their technology assets work. To benefit fully from IT, realize genuine productivity & become competitive& effective, many organizations need to be redesigned. Need to make fundamental changes in
employee & management behavior, develop new business models, retire obsolete work rules, & eliminate inefficiencies of out-moded business processes 80 & organizational structures.

Challenges of Information Systems

 Globalization challenge:
 How can firms understand business & system requirements of global economic environment?
Rapid growth in international trade & emergence of global economy call for information systems to support production & sale of goods in many different countries. In past, each regional office of MNC focused on solving its own unique information problems. Given language, cultural & political differences among countries, this focus frequently resulted in chaos & failure of central management controls. To develop integrated, multinational, information systems, businesses must develop
global hardware, software & communications standards; create cross-cultural accounting & reporting structures;& 81 design transnational business processes.

Challenges of Information Systems

 IT infrastructure challenge:  How can organizations develop all IT infrastructure to support their goals when business conditions & technologies are changing so rapidly?
Many companies saddled with expensive & unwieldy IT platforms not adapted to innovation & change. Their information systems are complex & brittle; act as constraints on business strategy & execution. Meeting new business & technology challenges may require
redesigning the organization, & building a new IT infrastructure.

Challenges of Information Systems

 IT infrastructure challenge:
 Creating IT infrastructure for digital firm is an especially formidable task.  Most cos. crippled by fragmented & incompatible computer h/w, s/w, telecommunications networks & information systems that prevent information from flowing freely between different parts of organization  Although Internet standards are solving some of connectivity problems, creating data & computing platforms that span the enterprise & link the enterprise to external business partners is rarely seamless

Challenges of Information Systems

 Ethics and security:  Responsibility and control challenge:
How can organizations ensure that their information systems are used in an ethically & socially responsible manner? How can we design information systems that people can control & understand? A major management challenge is to make informed decisions that are sensitive to both negative consequences of information systems as well to positive ones.

Challenges of Information Systems

 Ethics and security:
 Managers face an ongoing struggle to maintain security & control.  Today, threat of unauthorized penetration or disruption of information systems is tremendous  Information systems are essential to business, govt. & daily life that organizations must take special steps to ensure their security, accuracy & reliability,  Firm invites disaster if it uses systems that
can be disrupted or accessed by outsiders dont work as intended, or do not deliver information in form people can correctly use

 Information systems must be designed so that they are secure, function as intended, and so that humans can control the process. 85