BBA MIS PPT -2.

ppt
Management Information
System and Management
Processes

1
Learning Objectives
• Describe the digital economy and digital enterprises

• Recognize the relationship between performance,

organizational pressures, and responses and
technology

• Define IS and IT

• Understand what the adaptive enterprise is

Chapter 1 2
Learning Objectives (Continued)

• Understand the support role that IS and IT play in

the organization

• Understand the importance of learning about IT

Chapter 1 3
 Organizations and Information
Systems
• Organization
– A formal collection of people and other resources
established to accomplish a set of goals
 Value Chain
• Term coined by Michael Porter in a 1965
article in the Harvard Business Review
• Def: a series of activities that includes inbound
logistics, warehouse and storage, production,
finished product storage, outbound logistics,
marketing and sales, and customer service

Schematic
 Organizations
• Organizational structure
– Organizational subunits and the way they are
related to the overall organization
• Traditional organizational structure
– Major department heads report to a president or
top-level manager

Schematic
 A.Bailey, S. Burry,
Legal counsel President

C.Rodrig, V. Cisborn,
B. Wong, R. Henderson, K. Kelly,
VP Information VP Human
VP Accounting VP Marketing VP Production
Systems Resources

S. Samuel L. Bashran,
Supervisor Supervisor
Traditional Organizational Structure
 Terminology (1)
• Hierarchical organizational structure
– See previous slide
– Series of levels
– Those at high levels have more power and
authority within an organization
• Flat organizational structure
– An organizational structure with a reduced
number of layers of management
 Terminology (2)
• Empowerment
– Giving employees and their managers more
power, responsibility, and authority to make
decisions, take certain actions, and have more
control over their jobs
Other Organizational Structures (1)
• Project organizational structure
Schematic
– An organization structure centred on major
products or services
– Contrast with traditional structure
• Team organizational structure
– An organizational structure centred on work
teams or groups
 B. Woods,
President
Air & Aerospace Co.

O. Teco,
T. Walker, W. Butler,
Senior VP,
Senior VP, Senior VP,
Communications &
Aircraft Division Aerospace Division
Satellite Division

VP, VP, VP, VP, VP, VP, VP, VP, VP, VP, VP,
Finance Marketing Production Sales Finance Marketing Production Sales Finance Marketing Production

Project Organizational Structure

Other Organizational Structures (2)
• Multidimensional organizational structure
– A structure that may incorporate several
structures at the same time
Schematic
 Vice President, Vice President, Vice President,
Marketing Production Finance

Publisher, Marketing Production Finance

College Division Group Group Group

Publisher, Marketing Production Finance

Trade Division Group Group Group

Publisher,
Marketing Production Finance
High School Group Group Group
Division

Multidimensional Organizational Structure

Other Organizational Structures (3)
• Advantages and disadvantages of different
organizational structures
– Read the book!
 Organizational Culture
and Change (1)
• Culture
– A set of major understandings and assumptions
shared by a group
• Organizational culture
– The major understandings and assumptions for a
business, a corporation, or an organization
 Organizational Culture
and Change (1)
• Organizational change
– Deals with how for-profit and non-profit
organizations plan for, implement, and handle
change
• Organizational learning
– The way organizations adapt to new conditions or
alter their practices over time
 Models of Change
• ‘Change model’
– A representation of change theories developed by
Kurt Lewin and Edgar Schein in 1969
– Three-stage approach
• Unfreezing
• Moving
• Refreezing

Schematic
Change Model
 Reengineering
• Also called ‘Process redesign’
– The radical redesign of business processes, organizational
structures, information systems, and values of the
organization to achieve a breakthrough in business results
– For example, to…
• Reduce delivery time
• Increase product and service quality
• Improve customer satisfaction
• Increase revenues and profitability
 Rules, Rules, Rules

• Reengineering requires finding and

vigorously challenging old rules
Rule Original rationale Potential problem
Small orders held Reduce delivery Customer deliver is
until full truckload costs delayed
No order accepted Reduce potential for Customer service is
until credit approved bad debt poor
All product decisions Reduce number of Perception of limited
made at headquarters items in inventory product selection
 Other Models
• Continuous improvement
– Constantly seeking ways to improve the business
processes to add value to products and services
 Continuous Improvement vs.
Reengineering

Reengineering Continuous Improvement

Strong action to solve serious problem Routine action
Driven by senior executives Worker-driven
Broad in scope; cuts across Narrow in scope
organizations
Goal to achieve a major breakthrough Continuous, gradual
Often led by outsiders Led by workers
IS integral to the solution IS provides data to guide
 Total Quality Management
• Quality
– The ability of a product (including service) to meet
or exceed customer expectations
• TQM
– A collection of approaches, tools, and techniques,
that offers a commitment to quality throughout
the organization
 Outsourcing and Downsizing
• Outsourcing
– Contracting with outside professional services to meet
specific business needs
– E.g., advertising, hiring
• Downsizing
– Reducing the number of employees to cut costs
– Also called ‘rightsizing’
– May have serious side effects
• E.g., low employee morale, a need for expensive consultants, lost
time, waning productivity
 Competitive Advantage
• Competitive advantage
– A position, product, service, etc., within a business
that improves a position within a market with
respect to competitors
• Porter’s ‘Five force’ model of competitive
advantage
– Identifies factors that lead to competitiveness

Schematic
 Substitute
Products

Buyer Supplier
Rivalry
Power Power

New
Entrants

Porter’s Five-force Model

 Strategic Planning for Competitive
Advantage
• Four techniques:
– Strategic alliances (aka strategic partnerships)
– Creating new goods or services
– Improving existing goods or services
– Using information systems for strategic purposes

Next slide
1. Strategic alliance
– An agreement between two or more companies that
involves the joint production and distribution of
goods and services
– E.g., Chrysler + Daimler Benz
2. Creating new goods or services
– A company may become stagnant without the
introduction of new goods and/or services
– E.g., Compaq, Dell
3. Improving existing goods or services
– Small variations to existing goods or services, and/or
complete modifications
– E.g., “light” foods
4. Using information systems for strategic purposes
– IS for improving organizational effectiveness
– E.g., SABRE (airline reservation system)
 Performance-based Information
Systems
• Productivity
– A measure of the output achieved divided by
the input required

Output achieved
Productivity =
Input required
 Productivity
• An example is given in the top paragraph on p.
65
• This is a bad example!
• Why?
 Return on Investments (ROI) and the
Value of IS
• Return on investment (ROI)
– A measure of IS value that investigates the
represents
additional profits or benefits that are generated as
a percentage of the investment in information
systems technology
 Measures of IS Value
• Earnings growth
• Market share
• Customer awareness and satisfaction

One of my favourite quotes:

When you cannot measure, your knowledge is
of a meager and unsatisfactory kind.
Kelvin
 Justifying IS
• Categories:
– Tangible savings
– Intangible savings
– Legal requirements
– Modernization
– Pilot project
 Roles, Functions, and Careers in the
IS Department
• Categories:
– Operations
– Systems development
– Support
– Liaisons (information service units)

Schematic
 CEO

Other
CIO functional
areas

Information Information
Resource Systems
Management Operations Support service
development unit
Functions

Computer Systems
Data
facility analysis
administration
operations & design

Data Information
entry Programming centre

Local Information
Area network technololgy
operations
IS Department
 Information Centre
• Information centre
– Provides users with assistance, training,
application development, documentation,
equipment selection and setup, standards,
technical assistance, and troubleshooting
 Information Service Unit
• Information service unit
– Attached to a functional area of the business.
– Acts as a local information support organization
within a functional area.
– Performs the critical role of liaison between the
functional area and IS
 Chief Information Officer (CIO)
• Chief Information Officer (CIO)
– A manager at the vice-president level responsible
for IS planning, policy, and standards
– Focused on supporting corporate goals
 Other IS Roles
– Database Administrator
– Systems Programmer
– Network Specialist
– LAN Administrator
– Webmaster
– Trainer
 IS Principles
– Use of IS strongly influenced by organizational
structure and problem orientations
– IS are often intertwined within the value-added
processes
– IS usage may require change that could meet with
resistance
– Value-added IS needs to be continually sought
Digital Economy – “New” Economy
• E-Business: The use of electronic technologies to transact
business

• Collaboration: People and Organizations interact,

communicate, collaborate, and search for information

• Information Exchange: Storing, processing and transmission of

information

Chapter 1 43
Digital Business

Chapter 1 44
 Information Concepts

• Data vs. Information

• Characteristics of Valuable Information
• The Value of Information

Chapter 1 45
 What is an Information System?

• A set of interrelated components that collect,

manipulate, store, and disseminate data and
information and provide feedback to meet an
objective.(payroll process, ROP, RFID)

***This process could be manual or computerized.

Chapter 1 46
 Components of a MIS
• Hardware - computer equipment used to perform input, processing, and
output activities.

• Software - computer programs that govern the operation of the computer.

• Database - an organized collection of facts and information, typically

consisting of two or more related data files.

• Telecommunications - the electronic transmission of signals for

communications which enables organizations to carry out their processes
and tasks.

• People - the most important element in most computer-based

information systems.

• Procedures - include the strategies, policies, methods, and rules for using
the CBIS.

Chapter 1 47
 Major capabilities of Computerized
information systems
• Perform high-speed high-volume, numerical computations (DSS)
• Provide fast, accurate, reliable, and inexpensive communication
within and between organizations, anytime, anyplace.
• Store huge amounts of information in an easy to access, yet small
space (database management)
• Allow quick and inexpensive access to vast amounts of information
worldwide at any time
• Enable collaboration any where anytime(Extranet)
• Increase the effectiveness and efficiency of people working in
groups in one place or in several locations (ex. data exchange, video
conferencing)
• Vividly present information
• Facilitate global trade (ex. thaigem.com)
• Enable automation of routing decision making(ROP)
• Can be wireless, thus supporting unique applications

Chapter 1 48
 New Economy vs. Old Economy
• Example #1: Registering for Classes

– Old Economy: You would go to the Registrar’s Office on

campus with a paper registration document

– New Economy: You access your campus website, log into

registration site, and electronically register for classes from
anywhere

Chapter 1 49
 New Economy vs. Old Economy
• Example #2: Buying and Selling Textbooks

– Old Economy: You go to the bookstore in person and buy

new or sell used books

– New Economy: You go online to the Publisher’s Web site or

to Web-based services such as Amazon.com to buy or sell
books

Chapter 1 50
 New Economy vs. Old Economy
• Example #3: Photography

– Old Economy: You use a camera with film, which you have
to purchase and have developed; you mail copies of
pictures.

– New Economy: You can scan photos, make copies and e-

mail them. Digital cameras require no film or processing.
Digital photography and video integrated into cell phones
for immediate viewing

Chapter 1 51
 New Economy vs. Old Economy
• Example #4: Paying for Transportation

– Old Economy: Use tokens for bus and subway

transportation

– New Economy: Bus and subway riders now use

MetroCards; contactless cards that have a small radio
transmitter that transmit account information to a reader

Chapter 1 52
 New Economy vs. Old Economy
• Example #5: Paying for Goods, Checkout

– Old-old Economy: Customer selects goods, waits in line for

the cashier to key in price of items, and then pays in cash

– Old Economy: The clerk swipes the barcode of each item

and customer pays in cash, credit, or debit. Information
scanned is available for immediate analysis known as
source-data automation (inventory levels are updated,
Walmart, POS)

Chapter 1 53
 New Economy vs. Old Economy
• Example #6: Paying for Goods, Checkout continued

– Old Economy: Shoppers take their items to a self-service kiosk and

swipe the barcodes themselves

– New Economy: Wireless technology affixed to each item. Allows

you to select items that pass through a scanner, which reads
wireless signal, generates a bill, automatically debits your
designated account for payment and you leave (RFID – Japanese
Bank)

• Example #7: Netflix

Chapter 1 54
 Business Models

• A business model is a method of doing business by which a

company can generate revenue to sustain itself. The model
spells out how the company adds value to create a product or
service. (DELL vs HP)

– Reverse Auctions
– Affiliate Marketing
– Electronic aggregation (buying groups)

Chapter 1 55
Drivers Forcing Changes In Business
Models
Business Pressures
• Environmental, organizational, and technological
factors

• React frequently and quickly to both the threats and

the opportunities resulting from this new business
environment

Business
• A responseCritical
can be a Response Activities
reaction to a pressure already in
existence, an initiative intended to defend an
organization against future pressures, or an activity
that exploits an opportunity created by changing
conditions

Chapter 1 56
The Drivers of Change (Continued)

Chapter 1 57
 Business Pressures, Organizational
Responses, and IT Support
• Business Pressure - The business environment is the
combination of social, legal, economic, physical, and political
factors that affect business activities

• Significant changes in any of these factors are likely to create

business pressure on the organization

• The three types of business pressures faced are: market,

technology, and societal pressures.

Chapter 1 58
Information System - Classification By Support
Function

Chapter 1 59
 Transaction Processing System (TPS)
• TPS automates routine and repetitive tasks that are critical to
the operation of the organization, such as preparing a payroll,
billing customers, Point-of-Sale, and Warehouse operations
• Data collected from this operation supports the MIS and DSS
systems employed by Middle Management
• Primary purpose to perform transactions and collect data

Chapter 1 60
 Management Information Systems
(MIS)
• These systems access, organize, summarize, and
display information for supporting routine decision
making in the functional areas. Geared toward
middle managers, MIS are characterized mainly by
their ability to produce periodic reports such as a
daily list of employees and the hours they work, or a
monthly report of expenses as compared to a budget
• Primary purpose to process data into information

Chapter 1 61
 Decision Support Systems (DSS)
• These systems support complex non-routine decisions
• Primary purpose to process data into information
• DSS systems are typically employed by tactical level
management whose decisions and what-if analyses are less
structured
• This information system not only presents the results but
also expands the information with alternatives
• Some DSS methodologies
– Mathematical Modeling (MIP)
– Simulation (What-If)
– Queries
– Data mining (Bank, Texas Tax Department)
– Forecasting (Nike vs Benetton)

Chapter 1 62
 ERP Systems

 Process Focus
Ex. Sales rep

Chapter 1 63
 Expand our Scope to Include External
Environments
The flow of materials, information, money, and services from raw
material suppliers through factories and warehouses to the end
customers is a supply chain.
– Upstream supply chain
Components of the Supply Chain

• includes the organizations first-tier suppliers and their

suppliers (information sharing, VMI, E-procurement)
– Internal supply chain
• includes all the processes used by an organization in
transforming the inputs of the suppliers to outputs
(ERP, DSS, etc)
– Downstream supply chain
• includes all the processes involved in delivering the
products to final customers (extranet, cross-ducking)

Chapter 1 64
 Inter-Organizational Systems (IOS)
• IOS are systems that connect two or more organizations. These
systems are common among business partners and play a major role
in e-commerce as well as in supply chain management support
• The first type of IT system that was developed in the 1980s to improve
communications with business partners was electronic data
interchange (EDI), which involved computer-to-computer direct
communication of standard business documents (such as purchase
orders and order confirmations) between business partners. These
systems became the basis for electronic markets, which later
developed into electronic commerce.
• Web-based systems (many using XML) deliver business applications
via the Internet. Using browsers and the Internet, people in different
organizations communicate, collaborate, access vast amounts of
information, and run most of the organization’s tasks and processes.

Chapter 1 65
 Extranets
• Connect several intranets via the Internet, by adding a
security mechanism and some additional functionalities

• Form a larger virtual network that allows remote users (such

as business partners or mobile employees) to securely connect
over the Internet to the enterprise’s main intranet

• Extranets are also employed by two or more enterprises

(suppliers & buyers) to share information in a controlled
fashion, and therefore they play a major role in the
development of business-to-business electronic commerce
and Supply Chain systems (Philip Moris)

Chapter 1 66
 Why Study Information Systems?
• You will be more effective in your chosen career if you
understand how successful information systems are built, used,
and managed
• You also will be more effective if you know how to recognize
and avoid unsuccessful systems and failures
• According to the US Bureau of Labor Statistics, the “top seven
fastest growing occupations fall within IT or computer related
field”

Chapter 1 67