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Why Managers Must Understand IT
• Managers play a key role– Frame opportunities and threats so others can
understand them– Evaluate and prioritize problems and solutions– Lead the effort to pursue IT policies that best meet
organizational needs
• Gains in productivity – Require innovations to business practices – Automating these improved processes to take
advantage of IT capabilities
Information Technology for Managers 1
What is Information Technology?
• Information technology (IT) – Includes all tools that capture, store, process,
exchange, and use information
• Field of IT includes:– Computer hardware– Software– Networks and related equipment– Databases
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What is Information Technology? (continued)
• IT infrastructure– Organization’s defined set of IT hardware, software,
and networks
• IT support organization– Staff to plan, implement, operate, and support IT
• Information systems– Enable a firm to meet fundamental objectives– Types: function IT, network IT, and enterprise IT
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Information Technology for Managers 4
Function IT
• Includes information systems that improve the productivity of individual users in performing stand-alone tasks
• Examples – Computer-aided design (CAD) software– Word processors– Spreadsheet software– Decision support systems– e-learning systems
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Function IT (continued)
• Decision support system (DSS) – Employs models and analytic tools – Helps users:
• Gain insights into data
• Draw conclusions from the data
• Make recommendations
• E-learning systems – Encompass a number of computer-enhanced
learning techniques
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Network IT
• Information systems that improve communications and support collaboration among members of a workgroup
• Examples – Web conferencing– Wikis– Electronic corporate directories
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Network IT (continued)
• Web conferencing – Conduct meetings or presentations in which
participants are connected via the Internet
• Wiki – Web site that allows users to edit and change its
content easily and rapidly
• Electronic corporate directories– Used in large organizations to find the right person
with whom to collaborate on an issue or opportunity
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Enterprise IT
• Information systems used to define interactions among employees and/or with external customers, suppliers, and other business partners
• Examples – Transaction processing– Enterprise resource planning– Interorganizational systems
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Enterprise IT (continued)
• Transaction processing system (TPS) – Captures data for company transactions– Updates the firm’s records, which are maintained in
electronic files or databases
• Enterprise resource planning system (ERP)– Group of computer programs with a common
database – Used by firms to plan, manage, and control their
routine business operations
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Enterprise IT (continued)
• Interorganizational information systems – Support the flow of data among organizations to
achieve shared goals
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Enterprise IT (continued)
• Electronic data interchange (EDI)– Supports the direct transfer of information in the form
of predefined electronic documents– Standards
• United Nations/EDI for Administration, Commerce, and Transport (UN/EDIFACT)
• ANSI ASC X12
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The Role of Managers Vis-À-Vis IT
• Managers have a crucial role in leading the successful introduction and adoption of IT
• Critical responsibilities – Identifying appropriate opportunities to apply IT– Smoothing the way for its successful introduction
and adoption– Mitigating its associated risks
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Identifying Appropriate IT Opportunities
• Management must ensure a good return on the investment– IT-related expenses in many organizations can
account for 50 percent or more of capital spending– Great variation exists in IT-related spending
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Smooth Introduction and Adoption of IT
• Managers must overcome resistance – So that the new IT system is accepted and used throughout the organization
–
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Smooth Introduction and Adoption of IT (continued)
• Three major theories on organizational change management– Change Management Continuum Model– Unified Theory of Acceptance and Use of Technology – Three Worlds of IT
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Smooth Introduction and Adoption of IT (continued)
• Change Management Continuum Model– Seven stages of commitment grouped into three
major phases: • Inform
• Educate
• Commit
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Smooth Introduction and Adoption of IT (continued)
• Unified Theory of Acceptance and Use of Technology – Identifies four key factors that directly determine a
user’s acceptance and usage of IT
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Smooth Introduction and Adoption of IT (continued)
• Three Worlds of IT– Three types of IT require different types of organizational change
– Four organizational complements allow improvements with IT• Better-skilled workers• Higher levels of teamwork• Redesigned processes• New decision rights
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Smooth Introduction and Adoption of IT (continued)
• Successful enterprise IT system requires: – Top-down imposition of standards and procedures
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A Manager Takes Charge
• Toys “R” Us EDI System Rescued
• Tim Meester: director of vendor partnerships
• Errors in EDI data made it difficult for the vendors to get paid
• Biggest challenge– Change the Toys “R” Us culture – Make employees realize that less than 100 percent
accuracy was unacceptable
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A Manager Takes Charge (continued)
• Team had to: – Develop corrective actions– Address recurring problems both at Toys “R” Us and
the vendor sites– Provide consistent advice to each vendor
• Toys “R” Us implemented an extranet to link itself with all 1300 of its vendors
Information Technology for Managers 30
Ensuring that IT Risks Are Mitigated
• Special measures are needed to ensure that the information and its control mechanisms stand up to intense scrutiny– Laws mandate stringent control requirements and
accurate record keeping for publicly held corporations
• Managers are responsible for ensuring that physical IT assets are protected against loss or damage
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What if Managers Do Not Participate in IT?
• Failed IT projects can lead to lowered returns on investment and missed opportunities
• Managers at 80 percent of surveyed firms believe that their operational and financial data is not as effective as it should be for developing strategies and planning
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Summary
• Managers have three critical responsibilities when it comes to IT– Identifying appropriate opportunities to apply IT– Smoothing the way for its successful introduction
and adoption– Mitigating its associated risks
• Most effective users of IT obtain maximum value from IT investments that: – Align with the organization’s strategic needs– Are well managed and executed
Information Technology for Managers 35
Summary (continued)
• Successfully implementing the three types of IT (function, network, and enterprise) requires different types of organizational change
• Four organizational compliments allow IT to improve performance– Better-skilled workers– Higher levels of teamwork– Redesigned processes– New decision rights
Information Technology for Managers 36