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11/19/2020
Lecture #2
Impact of MIS
SYED ABDULLAH HAYAT
AIOU FALL 2015
Learning Objectives
 Organizations and Information Systems
 How Information Systems Impact Organizations and Business
Firms
 Using Information Systems to Achieve Competitive
Advantage
 Organizing the IT Function
 Information Technology Services
 Evolution of IT Infrastructure: 1950–2014
 Three-era model of IT
Organizations and Information Systems
 Information technology and organizations influence
one another
 Complex relationship influenced by organization’s
Structure
Business processes
Politics
Culture
Environment, and
Management decisions
Organizations and Information Systems
THE TWO-WAY
RELATIONSHIP
BETWEEN
ORGANIZATIONS
AND
INFORMATION
TECHNOLOGY
Organizations and Information Systems
 What is an organization?
 Technical definition:
 Stable, formal social structure that takes resources from environment and processes
them to produce outputs
 A formal legal entity with internal rules and procedures, as well as a social structure

 Behavioral definition:
 A collection of rights, privileges, obligations, and responsibilities that is delicately
balanced over a period of time through conflict and conflict resolution
Organizations and Information Systems
 Features of organizations
 Use of hierarchical structure
 Accountability, authority in system of impartial
decision making
 Adherence to principle of efficiency
 Routines and business processes
 Organizational politics, culture, environments and
structures
 How Information Systems Impact Organizations and
Business Firms

 Economic impacts
 IT changes relative costs of capital and the costs of information
 Information systems technology is a factor of production, like capital and labor
 IT affects the cost and quality of information and changes economics of
information
 Information technology helps firms contract in size because it can reduce transaction
costs (the cost of participating in markets)
 Outsourcing
 How Information Systems Impact Organizations and
Business Firms
 Organizational resistance to change
 Information systems become bound up in
organizational politics because they influence
access to a key resource – information
 Information systems potentially change an
organization’s structure, culture, politics, and work
 Most common reason for failure of large projects
is due to organizational and political resistance to
change
 How Information Systems Impact Organizations and
Business Firms
 The Internet and organizations
 The Internet increases the accessibility, storage,
and distribution of information and knowledge for
organizations
 The Internet can greatly lower transaction and
agency costs
Example: Large firm delivers internal manuals
to employees via a corporate Web site, saving
millions of dollars in distribution costs
 How Information Systems Impact Organizations and
Business Firms
 Central organizational factors to consider when planning a new system:
 Environment
 Structure
 Hierarchy, specialization, routines, business processes
 Culture and politics
 Type of organization and style of leadership
 Main interest groups affected by system; attitudes of end users
 Tasks, decisions, and business processes the system will assist
 Using Information Systems to Achieve Competitive
Advantage
Network-based strategies
Take advantage of firm’s abilities to
network with each other
Include use of:
Network economics
Virtual company model
Business ecosystems
 Using Information Systems to Achieve Competitive
Advantage
 Traditional economics: Law of diminishing returns
 The more any given resource is applied to production, the
lower the marginal gain in output, until a point is reached
where the additional inputs produce no additional outputs
 Network economics:
 Marginalcost of adding new participant almost zero, with
much greater marginal gain
 Value of community grows with size
 Value of software grows as installed customer base grows
 Using Information Systems to Achieve Competitive
Advantage
 Virtual company strategy
 Virtual company uses networks to ally with
other companies to create and distribute
products without being limited by traditional
organizational boundaries or physical locations
 E.g. Li & Fung manages production, shipment
of garments for major fashion companies,
outsourcing all work to over 7,500 suppliers
 Using Information Systems to Achieve Competitive
Advantage
 Business ecosystems
 Industry sets of firms providing related services and products
 Microsoft platform used by thousands of firms
 Wal-Mart’s order entry and inventory management
 Keystone firms: Dominate ecosystem and create platform used by other firms
 Niche firms: Rely on platform developed by keystone firm
 Individual firms can consider how IT will help them become profitable niche
players in larger ecosystems
Organizing the IT Function

The information systems department is responsible for maintaining:

• Hardware

• Software

• Data storage

• Networks
Information Technology Services
Includes Specialists:

• Programmers: Highly trained, writers of the software

instructions for computers

• Systems analysts: Translate business problems into

solutions, act as liaisons between the information systems
department and rest of the organization

• Information system managers: Leaders of various

specialists
 Includes Specialists: (Continued)

• Chief Information Officer (CIO): Senior manager in

charge of information systems function in the firm

• End users: Department representatives outside the

information system department for whom applications are
developed
 Defining IT Infrastructure

• Includes hardware, software, and services

• A set of physical devices and software applications that are

required to operate the entire enterprise

• Your firm is largely dependent on its infrastructure for

delivering services to customers, employees, and suppliers.

• You can think of infrastructure as digital plumbing, but its much

more than that!
 Evolution of IT Infrastructure: 1950–onward
• Electronic accounting machine era: (1930–1950)

• General-purpose mainframe and minicomputer era: (1959

to present)

• Personal computer era: (1981 to present)

• Client/server era: (1983 to present)

• Enterprise internet computing era: (1992 to present)

Seven Key Infrastructure Components

• Computer Hardware Platforms

• Operating System Platforms

• Enterprise Software Applications

• Data Management and Storage

• Networking/Telecommunications Platforms
• Internet Platforms

• Consulting and System Integration Services

 Three-era model of IT

The earliest information systems were developed in the early 1960s.

During the last 30 years, the field of IT has changed very significantly.
It now represents a different set of aims, means and responsibilities
than was typical in organizations in the 1970s, or in the 1980s. To
understand this philosophical change, we may divide this period into
three eras of IT and study how this shift has taken place. These eras
are:

 Data processing (DP) era (1960s onwards)

 Management information systems (MIS) era (1970s onwards
 Strategic information systems (SIS) era (1980s onwards)
Data processing (DP) era
This era is dominated by information systems that have as their primary
function the processing of predefined (business) transactions to produce fixed-
format reports on schedule. Their principal use is to automate the basic
business processes of the organization. Typical transactions handled by these
systems are payroll records, customer orders and purchase orders. In addition,
these systems could also provide predefined exception reports based on the
transactions processed. As these systems processed the transaction data of the
organizations without producing much management information, they are
called data processing systems (DPS), which also explains why this era is
called the data processing era. As these systems mainly processed business
transaction data, they are also referred to as transaction processing systems.
Management information systems (MIS) era
The primary function of information systems developed in this era, called
management information systems, was to provide two new capabilities to the
users: enquiry .

During the last decade, the use of management information systems by managers
and professionals has grown exponentially, stimulated by the increasing supply of
sophisticated software tools for end-user computing available on mainframes,
micros and through outside time-sharing services.

Some MIS do automate tasks previously performed manually (such as sales

analysis and job scheduling), others reflect creative applications often developed
by end-users. Another reason for end-user computing has been the availability of
innovative software such as spreadsheets, fourth generation languages (4GLs) and
financial planning packages.
Management information systems (MIS) era

The development of these systems obviously needs

systems analysts who are not only trained in IT but also
skilled in business disciplines such as finance, strategic
planning, logistics and marketing. Many of them also
have backgrounds in management science and
operations research.
Strategic information systems (SIS) era
Strategic information systems (SIS) are systems that
are used to support or shape the competitive strategy of
the organization: its plan for gaining or maintaining
competitive advantage or reducing the advantage of its
competitors (Wiseman 1988). Frequently, such systems
extend beyond the bounds of the organization itself to its
customers or clients, suppliers and competitors. Thus, the
use of telecommunications is often central to the
implementation of an SIS.
Strategic information systems (SIS) era

 An SIS has three characteristics:

 It significantly changes business performance as measured by one
or more key indicators. Whereas a DPS or an MIS might provide a
30% return on investment, an SIS can return 10 times that amount

 An SIS contributes to attaining a strategic goal. If

a system is one of the few components that is
critical to the successful attainment of a business
goal, such as increasing the sales volume of a
product by a specified percentage, then it is an
SIS
Strategic information systems (SIS) era

A system is an SIS if it fundamentally changes the way the

company does business, or the way it competes, or the
way it deals with its customers or suppliers, as for
example by opening up a new distribution channel for a
company’s products or services.
Strategic information systems (SIS) era
A strategic information system may be either a DPS or an
MIS. The dimension which makes a system strategic is its
direct support or shaping of the competitive strategy of the
organization. An SIS is a new information management product
line. It targets new user groups providing new benefits that are
not delivered by either DPS or MIS in their traditional forms. It
links the IS effort directly to the business, securing a
competitive edge by finding, getting and keeping clients. An
SIS frequently requires the activities of the IS development to
be extended. It may require new hardware and software as well
as additional personnel and an organizational and cultural
change.
Strategic information systems (SIS) era

These strategic information systems have three essential

characteristics:

• they significantly change the business performance of

the firm
• they contribute to attaining a strategic goal
• they fundamentally change the way the company does
business or the way it complete
Review of Lecture
 Organizations and Information Systems
 How Information Systems Impact Organizations and Business
Firms
 Using Information Systems to Achieve Competitive
Advantage
 Organizing the IT Function
 Information Technology Services
 Evolution of IT Infrastructure: 1950–2014
 Three-era model of IT