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)

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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