CIBMBusiness Information SystemsCH02- InformationTechnology inManagement
The Functions and Roles of a ManagerManagers have several responsibilities in anorganization. These responsibilities, referred toas management functions, are to plan,organize, direct, and control the variousbusiness processes in the company. Managersalso play several roles when they interact withpeople, both inside and outside theorganization. These management roles are:interpersonal ensures that information isprovided, informational roles links allmanagerial work together, and decisional rolesmakes significant use of the information.
Types of Management DecisionsTo understand how information technology can be useful, it isimportant to understand the three types of decisions thatmanagers make: structured, semi-structured, and unstructured.A manager makes a structured decision when he or sheunderstands the situation clearly and uses establishedprocedures and information to resolve the problem. A semi-structured decision occurs when there’s some uncertaintyabout a problem and a manager must use his or her judgment.Sometimes a manager faces unique circumstances or mustanticipate events over a relatively long period of time. In thesesituations, a manager must make an unstructured decision,which requires many quantitative and ethical judgments thathave no clear answers.
Levels of ManagementThere are three management levels in an organization:operational, tactical, and strategic. A manager at theoperational level is responsible for supervising the day-to-day activities in the organization’s value chain. Amanager at the tactical level is called a middlemanager and may be responsible for a largeorganizational unit such as a sales region or a productionplant. Tactical-level managers responsible for thedevelopment and use of information systems in anorganization are called information systems managers.A manager at the strategic level is called a top managerand is responsible for the long-range issues related to thebusiness’ growth and development. The top managerresponsible for the overall planning of informationsystems in an organization is called the chief informationofficer (CIO).
Management Information RequirementsThe time dimension of information relates to when theinformation was created, how frequently the information isneeded, how often it is updated, and whether the informationrelates to past, present, or future time periods.The content dimension of information relates to its accuracy andcompleteness, how relevant the information is, whether theinformation has a broad or a narrow scope, and whether thesource of the information is within the organization or from theenvironment.The form dimension of information relates to how the informationis arranged and presented in a report, whether the reportcontains detailed or summary information, and what medium isused to present the information.
INFORMATION TECHNOLOGY TO SUPPORT MANAGERIALCOMMUNICATIONSCommunication is a social process of people exchangingideas or other messages through some physical medium.The number of people participating in a communicationcan vary a person might send a message to one otherperson, called a one-to-one communication, or to manyother people, called a one-to-many communication.The physical location of a sender and receiver can varyfrom being in the same room, called same-placecommunication, to being in geographically dispersedlocations around the world, called different-placescommunication. The time difference between when amessage is sent and when it is received can vary fromsimultaneous communication, or same-timecommunication, to hours, days, or longer, called different-time communication.
Collaborative WorkA workgroup can be a committee, a single social unit toperform some task. Groupware is software that allows groupsof users to share calendars, send messages, access data, andwork on documents simultaneously. Many of theseapplications focus on the concept of work flow—the path ofinformation as it flows through a workgroup.However, the advent of the World Wide Web changed theworkgroup landscape. Corporations are installing intranetsusing Hypertext Markup Language (HTML), Web browsers,and other Internet technologies that enable managers andemployees to access and share the company’s internal dataand to collaborate on projects easily. Because these intranetsare built on standardized protocols like TCP/IP, corporationscan open up their intranets to strategic partners andcustomers, creating extranets.
Distributed ComputingIn the age of networks, the challenge for acompany’s chief information officer (CIO) and otherinformation systems managers is to integrate allkinds of computers into a single, seamless system.This approach, often called distributed computing,allows PCs, workstations, networks computers, andmainframes to coexist peacefully and complementeach other. Many organizations are adding thinclients network computers, Internet appliances, andsimilar devices to the mix.
The Automated OfficeAn automated office enables individuals, workgroups, andorganizations to acquire, process, store, and distributeinformation electronically using computers andtelecommunication networks. Computer conferencing, voiceteleconferencing, and video teleconferencing fall under thegeneral category of electronic meeting technologies; theyenable members of a workgroup to conduct meetings evenwhen participants are scattered around the world.Experts have also predicted the paperless office—an office ofthe future in which magnetic and optical archives will replacepaper documents.To reduce the flow of paper, a growing number of organizationsare turning to document imaging systems that can scan, store,retrieve, and route bit-mapped images of paper documents.
Inter - organizational Information SystemsAnother way a company can automate communicationsand reduce paper flow between itself and its suppliers,customers, and other organizations is through an inter -organizational information system. Such systems usenetworking and telecommunication technologies thatenable a company to share business data and exchangetransactions with other companies electronically.Electronic Data Interchange (EDI)Electronic data interchange (EDI) is the direct, computer-to-computer exchange of standardized, common businesstransaction documents, such as purchase orders andinvoices, between business partners, suppliers, and customers.EDI systems have been developed for particular businesspartners in specific industries for several decades.
International Information SystemsInformation technology, especially networks,telecommunications, and the Internet, have made iteconomically feasible for a company to do businessinternationally and conduct its business processes virtuallyanytime and anywhere. Any information system that supportsinternational business activities is called an internationalinformation system.An international environment is multilingual and multicultural,has multiple governments, has many different regulationsregarding privacy and intellectual property protection, hasvarying standards for telecommunications and othertechnologies, and has multiple geographic conditions, timezones, and monetary currencies. All these factors affect the flowof data between countries, commonly called transborder dataflow.
INFORMATION TECHNOLOGY TO SUPPORT MANAGERIAL DECISION MAKINGDecision-Making ConceptsDecision making is a process that includes four phases:intelligence, design, choice, and implementation.Managers use conceptual models in decision making to copewith the complexities of a situation. A model is a simplifiedrepresentation, or abstraction of reality, containing only the mostrelevant aspects of the real situation. A manager may use amental model, a mathematical model, an analog model, or aniconic model.A manager’s decision style reflects how that individualapproaches decision-making. One manager may have arational decision style where another may prefer a satisfyingdecision style.
Management Information SystemsA management information system (MIS) gives a managerthe information he or she needs to make decisions,typically structured decisions, regarding the operationalactivities of the company. Management informationsystems are also referred to as management reportingsystems because their main output is a variety of reportsfor managers. An MIS provides three types of reports:detailed reports, summary reports, and exception reports.Decision Support SystemsA decision support system (DSS) helps a manager makesemistructured decisions. The DSS design philosophy is toprovide managers with the tools they need to analyzeinformation they deem relevant for a particular decision orclass of decisions.
Components of a Decision Support SystemA DSS has three major components. The datamanagement component is a database of relevantinternal and external information of theorganization. The model management componentallows the manager to evaluate alternativeproblem solutions and identify the best or mostsatisfying solution by using appropriate software,such as a spreadsheet and statistical modellingtools. The third DSS component is the user interface,or dialog management, through which a managerutilizes the data and modelling capabilities of theDSS easily and effectively.
Group Decision Support SystemsGroup decision support systems (GDSS) are designed toimprove the productivity of decision-making meets byenhancing the dynamics of collaborative work. The GDSSalso includes specific communication-oriented softwaretools that support the development and sharing of ideas.Geographic Information SystemsA geographic information system (GIS) is a special type ofdecision support system designed to work with maps andother spatial information. A GIS is used to support a widevariety of managerial decisions that involve geographicinformation.
Executive Information SystemsAn executive information system (EIS) combines features of MISand DSS to support unstructured decision making by topmanagers. An EIS has similar design components to a DSS. TheEIS data management component provides interactive accessto the company’s important information, and the modelmanagement component provides access to data on thecompany’s critical success factors.An EIS enables the executive to drill down through theavailable information to the level of detail needed. This abilityto access both internal and external information makes an EIS apowerful tool during the intelligence phase of decision making.
Expert SystemsAn expert system (ES) supports decision making byproviding managers with access to computerizedexpert knowledge. An ES is designed to replicatethe decision-making process of a human expert.Today’s expert systems are based on years ofartificial intelligence (AI) research devoted toreplicating elusive human cognitive abilities inmachines.A knowledge base is similar to the databasecomponent in an MIS or a DSS. In addition to facts,a knowledge base contains a system of rules fordetermining and changing the relationshipbetween those facts.
Along with the knowledge base, an ES includes a userinterface and an inference engine. The inference enginecombines the user input with the knowledge base, applieslogical principles, and produces the requested expertadvice.Expert systems are difficult to build. To simplify the process,many software companies sell expert system shells—genericexpert systems containing human interfaces and inferenceengines. These shells do not include the difficult-to-createknowledge base. A knowledge engineer—a specialist whointerviews and observes experts and converts their wordsand actions into the knowledge base—usually constructs theknowledge base.
Information Systems in PerspectiveInformation systems rarely fall cleanly into just oneof the categories of MIS, DSS, EIS, or ES. Anyspecific system can have a mix of their features.Which design features to incorporate into aninformation system should be chosen based onthe communication and decision-makingrequirements of the managerial users.
INFORMATION TECHNOLOGY TO SUPPORT BUSINESSSTRATEGYStrategy ConceptsThe competitive forces model is a tool used toexamine the five key factors that influence, andoften threaten, a company:I.Competition.II.New competition.III.Customers.IV.Suppliers.V.Substitution.
A strategy is an organization’s intention to pursue a set of activitiesover the long term to attain its goals.Managers use five strategies to achieve competitive advantage:A cost leadership strategy focuses on providing high-qualityproducts and services at the lowest cost in the industry. A firm canalso find ways to help its suppliers or customers reduce their costs orto increase costs of their competitors.A differentiation strategy focuses on providing products andservices that are particularly valued and are perceived bycustomers as uniquely different from the competition. This allows afirm to focus its products or services to give it an advantage inparticular segments or niches of market.An innovation strategy emphasizes finding new ways to restructurebusiness processes for producing or distributing products andservices or developing unique products and services.
An innovation strategy emphasizes finding new ways torestructure business processes for producing or distributingproducts and services or developing unique products andservices.A Growth Strategy focuses on expanding a business’s capacityto produce goods and services, expanding into globalmarkets, diversifying into new products and services.An Alliance strategy focuses on establishing new businesslinkages and alliances with customers, suppliers, competitors,consultants and other companies. These linkages may includemergers, acquisitions, joint ventures, forming of “virtualcompanies” or other marketing, manufacturing or distributionagreements between a business and its trading partners.
The Value Chain and Strategic Information SystemsInbound logistics receives and stores supplies and materialsfrom the firm’s environment and distributes them when andwhere they are needed in the organisation.• Operations use the supplies and materials to create ormanufacture the organisation’s products and services.• Outbound logistics delivers the products and services whenand where needed by customers.• Marketing and sales investigates customer needs andpromotes the value of and sells the products and services inthe environment (marketplace).• Service maintains and enhances the product or serviceusefulness to customers through, for example, training andmaintenance.
Value chain ExampleA collaborative intranet-based system can increase thecommunication and collaboration needed to dramaticallyimprove administrative coordination and support services. Acareer development intranet can help human resourcemanagement function provide employees with professionaldevelopment training programs. Computer aided engineeringand design extranets enable a company and it’s businesspartners to jointly design products and processes. E-commerceauction and exchanges can dramatically improveprocurement of resources by providing an online market placefor a firm’s suppliers
Competing on Efficiency and EffectivenessEfficiency is how primary and support activitiesproduce desired output with less work or lowercosts.Effectiveness is how customers evaluate thequality of the output—products and services—ofthe value chain.The ways to use information technology toimprove efficiency are:Empowering people.Eliminating waste.Using the best-known way to do the work.Automating work.Integrating across functions and organizations.
A company can improve effectiveness usinginformation technology by:Purchasing the product.Fitting the product to customer requirements.Using the product.Making the product easier to maintain.