Chapter 1 - The Importance of MIS
Chapter 1 - The Importance of MIS
Chapter 1
Course
Course Structure
Structure and
and Course
Course Modules
Modules
Course
Course Introduction
Introduction
• MIS: Your Most Important Class in Business School
• The Digital Revolution
• Nonroutine Skills and Job Security
What
What is
is MIS?
Understanding
Understanding Information
Information Systems
The
The Five-Component Model
Information Defined
The
The Characteristics of Good Data
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Core Learning Objectives (Assessable)
At the end of this course, students should be able to:
• Identify the fundamental concepts and theoretical foundations relating to the use
of information systems in today’s business organisations, and how these information
systems serve the operational and strategic needs of both business and management.
• Identify the component information technologies of the typical MIS solution, from the
perspectives of both a single-site and a multi-site deployment.
• Discuss the various types and levels of MIS solutions based on the typical and emerging
business situations and imperatives.
• Describe the information system development process, and the various roles
performed by information technology professionals, business functionaries and
managers.
• Discuss emerging trends and contemporary social and managerial issues of information
systems in the context of a fast-paced and turbulent environment.
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Other Learning Objectives (Soft Skills)
In addition to the core learning objectives, at the end of this course students
should benefit from:
• Improved analytical and evaluation skills.
• Improved critical thinking skills.
• Improved problem-recognition and problem-solving skills.
• Heightened awareness of general tactical, strategic and competitive business issues
and needs.
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Course Modules
MGMT205
Management Information Systems
Chapter 6 Chapter 9
Chapter 3 ▪ Network systems, ▪ Business
▪ Competitive telecommunications Intelligence Systems
advantage of MIS ▪ The Cloud ▪ Data mining
and information ▪ SaaS ▪ “Big data” and KMS 5
MIS: Your Most Important Class
in Business School
• Majoring in “computers” a few decades ago was considered the nerdy
thing to do.
• Today, computer and information technology has become the core of all business
activities, and technology-focused firms are now the most profitable and valuable.
• Apple Inc. was the first company to be worth more than US$1 trillion, and on August 19th 2020,
Apple became the first company to be valued at more than US$2 trillion.
• Amazon.com’s founder, Jeff Bezos, is the first person in history whose personal net worth is
more than US$200 billion.
• Information technology changed from a minor corporate support function to a
primary driver of corporate profitability.
• Tech jobs have become some of the highest paid.
• Why?
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The Digital Revolution
• The Information Age started in the 1970s with the Digital Revolution, or
the conversion from mechanical and analog devices to digital devices.
• This shift to digital devices meant monumental changes for companies, individuals,
and our society as a whole.
• The Digital Revolution didn’t just mean that new “digital” equipment was replacing
old mechanical, or analog, equipment.
• These new digital devices could now be connected to other digital devices and share
data among themselves, at ever increasing levels of speed.
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Bell’s Law
• In 1972, computer scientist Gordon Bell recognized that digital devices
would change the world as they evolved and became widely used.
• He formulated Bell’s Law, which states that:
• “a new computer class forms roughly each decade establishing a new industry.”
• And it has happened just as Bell predicted. About every 10 years since 1970, entirely
new classes of digital devices have emerged. They have created entirely new
industries, companies, and platforms.
• In the 1980s, we saw the rise of the personal computer (PC) and small local networks.
• In the 1990s, we saw the rise of the Internet and widespread adoption of cellular phones.
• In the 2000s, we saw a push toward making all “things” network-enabled. Social networking and
cloud-based services really took off, creating a flurry of new companies.
• In the 2010s, there was the rise of high mobility smart devices (smartphones, tablets, watches,
vehicles, personal assistants, etc.), bringing together everything previously achieved in these
always-connected, integrated and business-changing technologies.
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Other Technology “Laws” and
Their Implications for Business
Law Meaning Implications
The number of transistors per square inch on an Computers are getting exponentially faster.
Moore’s Law
integrated chip doubles every 18 months. The cost of data processing is approaching zero.
Network connection speeds for high-end users Network speed is increasing. Higher speeds enable
Nielsen’s Law
will increase by 50% per year. new products, platforms, and companies.
The storage density on magnetic disks is Storage capacity is increasing exponentially. The
Kryder’s Law
increasing at an exponential rate. cost of storing data is approaching zero.
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What Do These “Laws” Mean for
Businesses, Managers … and You?
• The common thread running through these technology prediction “laws”
is that we are going to see the continued advancement in all types of
computer-based and information technologies, and that these advancements
continue to accelerate.
• These continued advancements will result in businesses becoming more heavily
dependent on information and computer technologies for every aspect of business
operations, planning, strategy, and competitiveness.
• Managers need to understand and embrace these advancements, and develop new
ways to leverage these advancements to the advantage of their businesses.
• Managers also need people around them who can adapt and thrive in this fast-
paced environment of constant change and advancement.
• Managers need a new calibre of employee who demonstrate a different set of skills
and competencies. Managers need you.
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Your Most Important Class in
Business School
• The textbook authors, David M. Kroenke and Randall J. Boyle, have stated
that “MIS is the most important class you will take in business school.”
• Why?
• Because this class will show you how technology is fundamentally changing
businesses.
• You’ll learn why managers and business leaders are constantly trying to find ways to
use new technology to create a sustainable competitive advantage.
• The 1st reason given why MIS is the most important course in business school is:
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Providing You with Skills that
Make/Keep You Valuable to Business
• Due to the rapid advance of technology in business, it is becoming
increasingly difficult for individuals (workers and managers) to maintain their
relevance to the organization.
• Routine skills (such as computer programming, marketing, management, tax
accounting, etc.) used to be the key marketable skills that guaranteed job security.
• Today, external firms can provide the same skills with greater levels of performance,
at significantly lower costs than maintaining a department of employees to do the
same.
• In 2004, the RAND Corporation published a description of the skills that workers in
the 21st century will need:
• Rapid technological change and increased international competition place the spotlight on the
skills and preparation of the workforce, particularly the ability to adapt to changing technology
and shifting demand. Shifts in the nature of organizations . . . favor strong nonroutine cognitive
skills. 12
Nonroutine Skills = Job Security
• Since routine skills can be easily outsourced to external or international
firms, today’s employee, at any level in the organisation, can assure their job
security through the development and use of strong nonroutine skills.
Robert Reich, former United States Secretary of Labor, identified four key nonroutine skills:
Abstract reasoning
Systems thinking
Collaboration
Ability to Experiment
• You will need to develop and rely on these four nonroutine skills to pursue your
studies in this course, giving you the 2nd reason why MIS is the most important
course in business school.
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Abstract Reasoning
• Abstract reasoning is the skill at the core of critical thinking and problem
solving.
• It is the ability to analyse information, detect patterns and relationships among
various elements or entities being considered, and solve problems on a complex,
intangible level.
• Abstract reasoning involves the ability to create, understand and manipulate concept
models about how structures, organisations, processes and technologies work and interact.
• A good example of abstract reasoning at work involves looking at everyday problems, and
reframing the problem from a completely different perspective, with the goal of
understanding the problem differently and developing a solution that is completely new.
TIP: Look at a problem not as a problem, but as an opportunity waiting for you to capitalize on… an
opportunity to make something work better, or an opportunity to create a new business revenue stream. While
the average person only sees a problem, you will see one or many avenues for profit or advantage. The more
often you engage in abstract reasoning, the easier and more automatic it becomes.
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Systems Thinking
• Systems thinking is the ability to model the components of the system to
connect the inputs and outputs among those components into a sensible
whole that reflects the structure and dynamics of the phenomenon observed.
• Systems thinking requires you to:
• Understand that a system is an organism, organisation, process or mechanism that is comprised
of various components or sub-parts that work together to achieve a desired outcome.
• Be able to recognize, identify and/or design the various component or sub-systems that are part
of the larger system, what their specific roles are, and how each component or sub-system
interacts with and depends on each other.
• Be able to make sense of an existing system by breaking it down to its component parts, and
recognize where that system can be altered or enhanced to improve performance.
Systems thinking means the ability to understand the system by first identifying each component of the
system, understanding the interaction and interdependence of each component, and recognizing
opportunities for improving the performance, the efficiency or the cost of the system.
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Collaboration
• Collaboration is the activity of two or more people working together to
achieve a common goal, result, or work product.
• Successful collaboration is not just about “talking” or “discussing” together.
It is about “doing” together.
• Successful collaboration requires many prerequisites, including the following:
• Effective communication.
• The ability to share needed resources.
• The ability to set and enforce performance targets and deadlines.
• Commitment towards achieving the stated outcome by all members of the collaboration activity.
Successfully achieving team goals and targets during a collaborative activity is not coincidental. There are a
number of important skills that have to be learned and practiced over time that continuously improve the
performance of the individuals assigned to a team, and to improve the performance of the teams themselves.
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Ability to Experiment
• Do you experience the “fear of failure”?
• Fear of failure is the fear that prevents us from trying something new, or from
putting forward a new idea.
• Experimentation is making a reasoned analysis of an opportunity, envisioning
potential solutions, evaluating those possibilities, and developing the most
promising ones, consistent with the resources available to you.
• To experiment is to be willing to put a new idea, or a new solution, or a new
procedure to the test, so see if it will yield the expected outcomes, or if it will
receive general acceptance from your peers and managers.
We all have ideas, and we all from time to time develop new solutions to problems. The problem is that many persons
are often afraid to put forward their ideas. They fear ridicule, obstacles, and most of all, they fear failure. Being willing to
experiment with a new idea has its risks, but being able to overcome these fears separates the thinkers from the followers.
Management will recognize your abilities and the benefits your ideas bring to the organisation.
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Job Security in The New Workplace
• Gone are the days when an employee’s job security was based on good
punctuality, low absenteeism, strong loyalty to the organisation, long hours,
and hard work.
• Today’s fast-paced, dynamic and often turbulent work environments mean that
managers are looking for different skills and different characteristics in their
employees. Managers no longer value the average employee who is eager to follow
every direction and instruction given by the manager.
• Managers value employees who are creative thinkers (abstract reasoning), who
understand how things work in the organisation (systems thinking), who are able to
contribute positively in their teams (collaboration), and who are problem solvers
and idea generators (able to experiment).
• These nonroutine skills bring real value to the organisation, and help the
organisation to be more adaptive and proactive in a quickly changing and highly
competitive business marketspace. 18
Introduction to
Management
Information Systems
What is MIS?
• Management Information Systems (or MIS) is defined as:
“the management and use of information systems that help
organisations achieve their strategies.”
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Information Systems vs
Information Technology
• Some IS solutions can be relatively simple and small-scaled, such as a
departmental inventory system, or a sales team assignment and performance
tracking system.
• Most IS solutions can be very complex, with aspects of the system spanning the
entire enterprise at every level, with focused and specialized parts of the IS being
designed for the activities of certain departments, such as:
• Sales
• Time and attendance
• Inventory management
• Online customer orders, or
• Accounting
• Regardless of the scale and reach of the information system, the technology (IT)
being used in the system make up only a part of the entire system.
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Achieving Strategies
• An organisation is not alive, and it cannot act.
• It is the people within a business who sell, buy, design, produce, finance,
market, account, and manage.
• So, information systems exist to help people who work in an organisation to achieve
the strategies of that business.
• As organisations seek more and more effective ways to be able to compete with,
and even outcompete their rivals, they rely on information systems to help them
understand their environments and strengths, and to make better decisions sooner
than their rivals.
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Example:
IS Use in Supermarkets
• Increase shopping space allows for a wider variety of items, as well as increased
diversification in their offerings: in-house bakery, deli, pharmacy, etc.
• Increased shopping space also allows supermarkets to improve the shopping experience
for their customers, such as wider isles.
• Customers receive more meaningful receipts.
• Supermarkets can issue membership cards to customers, allowing them to offer loyalty
reward points, and to track purchasing habits and patterns.
• Memberships and loyalty programmes allow supermarkets to build and maintain relationships
with their customers.
• Etc.
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Example:
IS Use in Banks
• Before banking institutions used computerized technologies, all customer
information was recorded in large books called ledgers.
• These physical ledgers were stored at the customers “home” branch only, resulting
in customers being required to do any and all transactions ONLY at their home
branch.
• Monthly branch reports had to be manually (by hand) produced by clerks
transcribing ledger figures into hand-written reports.
• Branch reports could take 2 to 3 weeks to complete, resulting in reports that were
always late.
• At the head office, all branch reports would be used to produce company reports,
which could be six (6) months late.
• In the event of a fire at a branch, and the ledger is destroyed, all customer data is
permanently lost. (No records of deposits or outstanding loans.) 28
Example:
IS Use in Banks
• With the introduction and widespread use of information systems in bank
operations, transaction data is now stored on networked “servers” which are
accessible at all branches.
• Now that customer data is available at all branches of the bank, customers can now
do business at any branch, not just their home branch.
• Banking reports are now instantly produced, as branches and head office alike can
access branch-wide and company-wide data via their data networks to quickly
produce performance real-time (not delayed) reports whenever needed.
• In the event of a fire at a branch, customer data will not be lost as all data is
electronically stored and backup up on remote servers.
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Example:
IS Use in Banks
• The implementation of information systems in banks have also created
the opportunities for management to offer new types of products and
services to enhance their customers’ experiences, that would otherwise not be
possible.
• These new products and services, all leveraging the banks IS, empower the
customer to do their own banking, often without visiting the bank. These include:
• Telebanking services
• ATM services
• Point-of-sale debit card transactions (LINX)
• Internet banking
• Mobile app banking
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The 5-Component Framework of IS
• All information systems, regardless of size, purpose, complexity or scope
of use, are comprised of the following five components:
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The 5-Component Framework of IS
• The five-component framework model of IS has 2 sides:
• The technology side (or the computer side)
• The human side
Actors
Instructions
• In this model, the hardware and people are the actors in the system. Both are
capable of doing work, but only when guided by the appropriate instructions
provided by software and procedures.
• Data serves as a common bridge between the two sides, since both sides are
focused on producing or using data (new or existing) to produce information. 32
The 5-Component Framework:
It’s All About the People
• The most important component in the five-component framework model
is the People. Here’s why:
• “People” includes the organisation’s managers, who recognize the need for the IS, allocate
resources for the development of the IS, and who depend on the information produced by the
system so that they can make better informed and timely decisions for the success of the
organisation.
• “People” includes the highly skilled IT and IS experts who develop and maintain the IS and its
various technology components.
• “People” includes the average employees who are the main users of the IS as they do their day-
to-day jobs. As they do their work, data is generated, and that data is then used to produce
information.
• Unfortunately, People are also the most unreliable and problematic part of an IS.
• Humans make mistakes. • Humans get distracted.
• Humans get exhausted. • Humans are sometimes lazy.
• Humans get angry. • Humans sometimes don’t like to follow rules.
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The 5-Component Framework:
It’s All About the People
• So, how can management deal with the “people problem”?
• In addition to establishing and enforcing the appropriate Procedures to ensure
that the IS operates in an effective and efficient manner, sometimes management
can make the decision to shift the operating bias of the IS from the human side to
the technology side… depending on the nature of the “people problem”.
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Increased IS Automation: An Example
• If employees in an insurance company are not properly capitalizing
customer names in the Customer Database (e.g., “ALICE” or “alice” instead
of the required format “Alice”), this can lead to data representation problems in
the future, as well as offended customers who receive automated correspondence
with their names possibly in lowercase.
• One potential fix for this problem is to design the software component of the IS to
be responsible for capitalization, regardless of what the employee actually types.
• Software can be designed to automatically capitalize text so that data entered into
the system maintains a uniform and standardized format.
• With this shift in bias of the IS to the technology side, relying on the software and
the hardware to resolve this problem, this is an example of making the IS more
automated.
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Making the IS More Manual
• Some organisations may decide to develop an IS that places the bias of
operations more towards the human side.
• Any of a number of reasons may lead a company to make this decision. These
may include:
• A distrust of technology.
• Not fully understanding the benefits of technology.
• Senior management who are older, and less reliant on new technology.
• A philosophical or values-based choice to provide their customers with a “human touch” as
opposed to “cold technology” when services are provided.
• There is nothing wrong with a company’s choice to design their IS to provide a more
“human touch”. It may be a compromise on the true capability of their system, but
each organisation must be allowed to maintain their own unique identity and style
of customer engagement.
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Examples: Data vs Information
• Based on our two definitions for data and information, consider the
following statements:
• Graphic designer James Smith earns $70.00 per hour, and his colleague Mary Jones earns
$50.00 per hour.
• The average hourly wage of all of our graphic designers is $60.00 per hour.
• The first statement presents us with several facts and figures, including the names
of the employees, their job specialty, and their respective hourly wages. Therefore,
the first statement presents us with data.
• The second statement provides us with knowledge that is based on the data
presented in the first statement. Average wage is knowledge derived from the data
of the individual wages. Therefore, the second statement presents us with
information.
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“Information” Further Defined
• There are several additional definitions for information that may be
useful to you as we deepen our study of information systems. These
definitions include:
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Characteristics of Good Data
and Information
• In addition to our own cognitive contributions to the quality of the
information we have, good information is also determined by the quality
of the data that we have at our disposal.
• Good data must be:
• Accurate
• Timely
• Relevant
• Just sufficient
• Worth its cost
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Good Data Must Be Accurate
• Simply stated, you cannot conceive accurate information from inaccurate
data.
• Good information is conceived from accurate, correct, and complete data that has
been processed correctly as expected.
• Accuracy is crucial; business professionals must be able to rely on the results of their
information systems.
• The IS function can develop a bad reputation in the organization if a system is
known to produce inaccurate data. In such a case, the information system becomes
a waste of time and money as users develop work-arounds in order to avoid the
inaccurate data.
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Good Data Must Be Timely
• Good information requires that data be timely—available in time for its
intended use.
• If a monthly report that arrives 6 weeks late, then the report is most likely useless.
• If your information system sends you a poor customer credit report after you have
already shipped their order, then your IS was not helpful in avoiding future
problems recovering your payment from your customer.
• Note, information systems that are able to produce data and/or information in near
real time will cost more to establish than systems that produce delayed data and/or
information.
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Good Data Must Be Relevant
• Data should be relevant both to the context and to the subject.
• For example: The company’s CEO needs data that is summarized to an
appropriate level for her job. A list of the hourly wages of every employee in the
company is unlikely to be useful. More likely, you need average wage information by
department or division. A list of all employee wages is irrelevant to the CEO’s
context.
• Data should also be relevant to the subject at hand.
• For example: If you need data about short-term (3-6 month) interest rates for a
possible line of credit, then a report that shows 15-year mortgage interest rates is
irrelevant.
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Good Data Must Be
Just Barely Sufficient
• Data needs to be sufficient for the purpose for which it is generated, but
just barely so.
• We are inundated with data; one of the critical decisions that each of us has to
make each day is what data to ignore.
• The higher you rise into management, the more data you will be given, and because
there is only so much time, the more data you will need to ignore.
• So, data should be sufficient, but just barely.
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Good Data Must Be Worth Its Cost
• Data is not free.
• There are costs for developing an information system, costs for operating and
maintaining that system, and costs of your time and salary for reading and
processing the data the system produces.
• For data to be worth its cost, an appropriate relationship must exist between the
cost of data and its value.
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