1 MODULE 2 : The Challenge of Information System Technology Matakuliah: J0422 / Manajemen...

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MODULE 2 :The Challenge of Information System

Technology

Matakuliah : J0422 / Manajemen E-Corporation

Tahun : 2005

Versi : 1 / 2

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Learning Outcomes

In this chapter, we will study:

How the IT was implemented for concept of management?

What is the issues in Information Technology to achieve the concept of IT Management?

Are the IT resources appropriately placed in the firm? Organizational issues such as where the IT resource should report, how development and hardware resources should be distributed within the company.

Sample Case Study about Tale of Two Airlines in the Network Age

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Outline Topic

Challenges in Managing IT Assimilation.

Concept of IT Management.

Issues in Information Technology.

Case Study : Tale of Two Airlines in the Network Age

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Content

The rapid evolution and spread of information systems technology during the last 40 years is challenging both business and IT management to rethink the very nature of the business. New industry players are emerging (e.g., cable operators, system integrators), and new internal organizational structures are being defined. Major investments in computer hardware and software are required to capture the benefits of powerful new technologies.

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Challenges in Managing IT Assimilation

A Young TechnologyTechnological GrowthIT End-User CoordinationSpecializationShift in Focus

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A Young Technology Throughout the 1900s, significant changes in knowledge

and theory have occurred in these established disciplines and have been assimilated into an organized field of thought.

The challenge in IT, conversely, has been that of harnessing an exploding body of knowledge within a very short time frame.

Technological Growth Over a billion-fold improvement in processing and storage

capacity has occurred since 1953, and the rate of change is expected to continue through the 1900s and early 21st century.

The technology explosion has enabled the development of new value added applications, as well as improvements in old ones.

The natural tendency to resist change has been exacerbated by the prevailing accounting practice of writing off software expense as it is incurred, rather than capitalizing it and amortizing it over a period of years.

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IT End-user Coordination The complexities of developing IT systems have created

departments filled with specialists who remain with the firm even through the reasons for their presence have disappeared.

Specialization is required to develop expertise and competence within a given discipline, but in the process, specialists often develop their own language systems.

Specialization The increased complexity of contemporary technology has

created a number of IT subspecialties in increasingly narrow area of expertise.

As IT evolved, the number of experts required to manage the wide range of application development languages, data management approaches, telecommunications methodologies, and operating environments proliferated, which in turn increased the complexity of coordination and control.

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Shift in Focus A fifth challenges is the significant shift in the types of

applications being developed. Each applications that automated clerical and operational control functions (e.g., inventory management, airline seat reservations, and credit extension).

Increasingly, today’s use of IT are targeted toward less structured types of problems ( for example, decision support, electronic commerce).

The design and implementation of applications that transform work, processes, organizations, and industries require a very different approach than would be used to design and implement systems that automate existing business systems and structures.

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Concept of IT Management

The following four concepts are essential for an

understanding of the successful management of IT. Strategic Relevance.Corporate Culture.ContingencyTechnology Transfer.

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Strategic Relevance The strategic impact of the IT activity varies among

industries and firms and, over time, within an individual firm. Like the telephone, IT can be used in all firms to enhance operations.

IT maybe more significant to some operating units and functions within a firm than to others. This notion of a variation in strategic relevance is critical for understanding the diversity of potential IT management and operational approaches.

Corporate Culture The corporate culture-embodied by the organization’s

shared value and operationalized in its processes (e.g., the approach to corporate planning, philosophy of control, and speed of core product/technological change).

There are also generic tools that define the “state-of-the-art”; client-server IT architectures and graphical user interfaces are examples of generic IT tools for the mid-1990s.

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Contingency IT Management is also influenced by the notion of

contingency. Because IT management systems were often introduced during the 1960s and early 1970s to simplify information-intensive transaction processing, structured and mechanistic approaches resulted in great improvement.

More complex and flexible IT management approaches and tools were required to fit with the needs of a complex, changing business environment.

Technology Transfer The dramatic rate of IT evolution demands careful

management attention. Failure to successfully manage the introduction and assimilation of emerging technologies results in a costly and ineffective collection of disjointed “island of technology”.

IT must be considered a tool to expand the “intelligence” of the people within the organization.

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Issues in Information Technology

The IT EnvironmentIT Architecture and OrganizationManagement ProcessesProject Management

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The IT Environment Era I, from the 1950s to the early 1970s, the manager of data

processing was the single source for providing information processing services and for managing technology expertise.

Era II, began with the introduction of minicomputers and time sharing in the early 1970s. It was dramatically accelerated in the early 1980s by the personal computer, which introduced a wide range of new channels for users to acquire technology expertise and information processing capabilities.

Era III, A growing number of companies became aware of the opportunities to use IT to cause significant shifts in market share and competitive positioning and to produce organizational restructuring.

Era IV, is emerging in which the power of widely distributed, flexible information management systems and communication networks enabled virtually instantaneous delivery of information and knowledge to the desktop (and laptop) of individuals located all over the globe.

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Era I

Era II

Era III

Era IV

Regulatedmonopoly

Organizational Productivity/

Efficiency

FreeMarket

IndividualIndividual/Group

effectiveness

RegulatedFree market

Business process/Inter-organizational

Strategic/competitive

CollaborativeElectronicintegration

Organizationaleffectiveness

AdministrativeFramework

PrimaryTarget

Justification/Purpose

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IT Architecture and Organization The technologies of computing and telecommunications are

integrated with organizational design and industry issues. Resolving these architecture issues goes well beyond the technology itself and is heavily contingent on such influences as the corporate organization and culture.

The networked corporation is increasingly a reality, international coordination issues are more complicated than those in the domestic arena.

There are issues of organization reporting chains, levels of reporting, IT leadership styles, and other coordinating processes, which we believe can be examined more thoroughly in the 1990s than a decade ago.

The performance of operations can be measured on a number of dimensions; cost control, ability to meet batch report deadline.

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Management Processes The appropriate balance between user and IT responsibility

for costs must be established. Decisions concerning whether IT will operate as a cost center, profit center, investment center.

Firms must design and implement an appropriate IT budgeting policy. While many components of the IT budget are either fixed or transaction driven in the short run, others are discreationary.

The appropriate level and frequency of IT performance monitoring must be established. Reporting should reflect performance against goals and also against objective standards wherever possible.

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Project Management The first challenge lies in the area of implementation risk.

The advocates of these project management methodologies have implied that, by utilizing their approach. Implementation risk will be eliminated.

A common framework for defining and managing implementation risk can lead to a common language that can be used by business managers, user, and IT managers throughout the IT implementation process.

The second challenge revolves around the fact that different types of projects are best attacked by quite different management methodologies.

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Case Study : A Tale of Two Airlines

Case Study : A Tale of Two Airlines in the Information Age

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Inter-organizational IS, databases, and global interconnectivity together creates platforms for higher service levels. What assumptions did Prof. McPherson make regarding information

technology support at the London-based airlines?• Do you believe they are realistic assumptions for the technology

environment of the mid-1990s

What factors do you think lead to the difference between Prof. McPherson’s expectations and the reality of the situation?

• What alternative approaches could have been taken to resolve the situation?

What were the differences between the Atlanta-based and the London airline’s approach?

• In approaching the problem, did the Atlanta-based airline have any special advantages?

What advice would you give the London-based airline’s management?

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What did Prof. McPherson assume the British Airway's gate agent would know about him and what are the enabling technologies that would be required to execute them?

Assumptions Enabling IT

Ticket Fare The reservation record (stored in London or downloaded to a USA server

Gold Card Member and a regular patron

The reservation system should have his Gold Card data and should be able to use it to their advantage

That they will know he is on a connecting flight and the data on the connecting flight.

Integration of two computers reservation systems which historically had no need to be interconnected with one another. The information accessible will show when the plane touches down and when it actually attached to the gate

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What are the possible service alternatives for British Airways?1. Hold the airplane for Prof. McPherson

2. Hold the plane at the gate until the scheduled departure time

3. Send an agent to meet McPherson at his arrival gate and attempt to get him to the plane.

4. Have an agent at the London-based Airways departure gate briefed on McPherson’s situation and action alternative in hand.

“we held the plane until last moment. We have reserved a seat for you on flight number and is there anyone in London we can call to notify them of your delay”

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Delta (Atlanta-based airline) situation? Different tradeoffs are possible in bad weather.

• They held the plane for 15 minutes to pick up an extra 8 known connecting passengers.

• There information systems had identified the 8, the time they needed to connect, plus analyzed the tailwind data

A clearly empowered gate staff and crew existed. Information, guidelines and training had allowed a partial transfer of operational decision-making to the customer interface

It is easier to do this at the hub than in the outlying regions. Service failures tend to take place at a distance.

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Reaction from Chairman of British Airways in London He had the head of British Airways in USA and his marketing manager

visit Prof. McPherson three weeks later.

What do you think will be the focus of the discussion?• Inflexibility of the British Airways information architecture • Difficulties of getting London-based files and other airline data to the gate

agent• Conflict between operational excellence and now the additional need for

high touch customer service – Facilitated by flexible use of the new technologies

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The bottom line of this case is that in the information age, the expectation of what constitute good service have increased dramatically. Making it happen seamlessly requires the integration of large amount of different technologies and databases being passed across organizations in a seamless fashion.

The new technologies require fundamental changes in training and attitudes. One airline had done it and the other had experienced a collapse in outlying region.

In the today's networked economy business environment distance is no longer an excuse for inferior customer services

There has been an increased in global customer and global business customers

Customers are highly knowledgeable and therefore the level of expecting has increased significantly.

Ability to use IT appropriately (including empowerment) will continue to be a source of completive advantage.

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Chapter Summary

Executives should consider the following questions as they attempt to forecast the value of digital business strategies and the ability of their organizations to execute them:

• Do the perspective and skills of the IT team, IT users, and general management team fit the firm’s changing strategy and organization and the IT applications, operating environment, and management processes?

• Is the firm organized to identify, evaluate, and assimilate new information technologies on a timely basis?

• Are there strategic planning, the management control, and the project management systems – the three main management systems for integrating the IT environment with the firm-defined and appropriately implemented and managed?

• Are the security, priority-setting, and control systems for IT operations appropriate for the role it plays in the firm?

• Are appropriate organizational structures and coordinating mechanisms in place to ensure IT is appropriately aligned to the needs of the firm?

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