History of IT in business Manual transactions MS-Office Business Software (Accounting) Computer Communications( WWW, Internet, E- commerce etc Data, Information, Knowledge ,processes , organization. DSS, ES, KM, Data mining and Data- warehousing, Business Intelligence. Future of IT
Cont…… IT related and managerial solutions and business strategies are being used to make business more effective , efficient and competitive. Typically a business has two resources 1-Physical resources. (Personnel, Material, Machines (including facilities and energy) and Money. They build physical system of an organization. 2- Virtual resources. (Information (including data) also known as conceptual resources. They build physical system of an organization.
Cont…. Physical recourses and virtual recourses are used to cope with business problems/pressures. Data and information is used to represent the physical resources. Virtual systems to represent/control physical systems Computers are not being used merely to manage physical firm (As virtual systems) but are also have a big breakthrough in business applications. H/W and S/W are physical sources, also machines ,materials and human resources are physical resources.
Chapter Preview Marketplace pressures faced by today’s businesses and various tactical and strategic responses. The distinction between data, information, and knowledge. The characteristics of high quality information. The components of an information system. The capabilities organizations aspect of information systems. How computer technology is applied to business problems and pressures. Business processes are required to be more effective and efficient competitively. In which areas and level of businesses, an IS may have big impact. Opportunities to use information systems strategically. All about “Information Processing Life Cycle”
Learning Objectives Describe The characteristics of the digital economy and e-business. Discuss the relationships among business pressures, organizational responses, and information systems. Describe strategic information system (SISs) and how information technology helps companies improve their competitive positions.
Digital Economy An economy based on electronic goods and services produced by digital technologies, electronic business and traded through electronic commerce. That is, a business with electronic production and management processes and that interacts with its partners and customers and conducts transactions through Internet and Web technologies. Also sometimes called the Internet economy, the new economy, or the Web economy .
Infrastructure for e-business e-business/ e-commerce the conducting of business functions (e.g., buying and selling goods and services, servicing customers, collaborating with business partners) electronically, in order to enhance an organization’s operations. The infrastructure for e-business is network computing, known as the internet, or to its counter part within organizations, called an intranet, many companies link their intranet to those of their business partners over networks called extranets.
Today’s pressure on Business Environment Pressure on business environment is characterized by: Rapid Change and changing work force Global competition for trade and labor Business Complexity Global Economy “traditional barriers” Hyper-competition Customer orientation Information overload Innovative technologies
Cont……Need for the real time operations (Information float) High performance telecom services can reduce it.Technological innovation and obsolescence (CAD/CAM)Social responsibility (Issue of regulation and deregulation)Ethical issuesDigital divideMarket researchGlobalization/internationalization.
Traditional Management CEO Condensed reports Commands Finance Marketing Accounting HRM MIS Analyze data Layers of middle managers Collect data Customers
Some Key Definitions Data: raw facts; collected, not organized. Information: data organized in a meaningful way. Knowledge Consists of information that has been organized to convey understanding, experience, accumulated learning, or expertise as it applies to current business problems or processes. Knowledge is used to generate new information required for a business solution. Knowledge workers create information and knowledge and integrate it into the businesses.
Data and Information Data consists of facts and figures that are relatively meaningless to user. E.g. the number of hours worked for each employee in the company Information is processed data that are more meaningfully. E.g. the hours works for each employee multiplied by the hourly rate, the out put information is the gross earning
Data Vs Information Vs Knowledge Data Knowledge Information Simple observations Data with relevance Valuable information of the world: and purpose: from the human mind: •Easily captured •Requires unit of includes reflection, •Easily structured analysis synthesis, context •Easily transferred •Needs consensus on •Hard to capture meaning electronically •Compact, quantifiable •Human mediation •Hard to structure necessary •Often tacit •Often garbled in •Hard to transfer transmission •Highly personal to the source More human contribution Greater value
Knowledge Knowledge is information organized, processed and analyzed to make derstandable and applicable to problem solving and decision making. A knowledge consists of concepts, theories, heuristics, methods, procedures and relationships that defines how the information is used to solve a problem or make a decision.. Knowledge consists of information that has been organized and processed to convey understanding ,experiences, accumulated learning or expertise as it applies to a current business problem or a process. The information that is processes to extract critical implications and to reflect past experiences and expertise provides the solution to a business problem. Knowledge base contains knowledge for understanding ,formulating and solving a specific class of problems in intelligent systems.
Types of Knowledge Tacit knowledge is personal, context-specific and hard to formalize and communicate A knowledge developed and internalized by the knower over a long period of time . . . incorporates so much accrued and embedded learning that its rules may be impossible to separate from how an individual acts. ‘knowing how’ Explicit knowledge can be easily collected, organized and transferred through digital means. A theory of the world, conceived of as a set of all of the conceptual entities describing classes of objects, relationships, processes, and behavioral norms. Often referred to as ‘knowing that’, or declarative knowledge.
What is Knowledge Management? Knowledge Management is process of knowledge base and capturing, storing, knowledge discovery, Facilitating the knowledge sharing processing and integrating for the purpose of problem solving and decision-making in businesses.
Knowledge Key Concepts Knowledge identification – what is important? Knowledge discovery and analysis – finding and organizing knowledge. Knowledge acquisition – going and getting needed knowledge by asking or promoting idea generation Establishment of organizational knowledge bases – storing and organization corporate knowledge Knowledge distribution and use – ensuring that those who need knowledge can access it Knowledge assets - regarding markets, products, technologies, and organizations that a business owns or needs to own Best practices - collection of the most successful solutions and case studies Intellectual capital – Cumulative/A massed collection of knowledge by an organization over the years Knowledge system - collects knowledge, stores it in a database, maintains the database, and disseminates the knowledge to users Competitive intelligence - collection of competitive information
Implementing Knowledge Management Reorganize as knowledge-based organizations Created a new position, chief knowledge officer (CKO) creating knowledge management infrastructure building a knowledge culture making it pay off Facilitate organizational learning learn from their experiences in order to survive Other officers are CEO,CFO,COO,CIO,CTO
Promoting Idea Generation Key source of knowledge is creative idea generation by individuals or groups Software tools (GDSS) can promote productive idea generation for groups Software tools also available for individuals to help stimulate creative production of ideas
What Makes Information Useful (GIGO)? It is accurate It is relevant Free of errors Applies to the issue under It is complete study Includes everything needed It is timely Available when needed It is flexible Can be viewed in various It is verifiable ways Basis for results can be traced It is reliable It is accessible Results are always consistent All those who need the it confirms validity information can get to it It is secure Free from contamination (accidental or deliberate)
Data Visualization Analyzed data can be even more useful if presented using Data Visualization techniques Visual Interactive Modeling – graphic display of decision consequences Visual Interactive Simulation – simulation model is animated and can be viewed and modified by decision maker Geographic Information Systems – display data related to geographic location using digitized maps Global Information systems: A system that consists of a networks that cross national boundaries. VR & AR
Information Specialists Employee who are full time responsible for developing and operating information systems. System analyst is an expert who works with user in developing system at defining problems and in preparing written documentation of how the computer will assist in solving the problem. Database administrator works with user and system analyst in creating the data needed to produce the information needed by users
Information Specialists Network specialist works with user and system analyst in establishing the data communication network that ties together widespread computing resources. Programmers use the documentation prepared by the system analyst to create the software program that lead the computer to transform data into information needed by users. Operators operates the computing equipment and using software program.
Information Infrastructure Information Infrastructure: The physical & Virtual facilities, services and management that support all organizational computing resources. Computer hardware General-purpose software Networks and communications facilities Databases Information management personnel
Cont… Information Infrastructure (continued) Defines integration, operation, documentation, maintenance, an d management of computing resources. Defines how specific computing resources are arranged, operated, and managed.
Information Architecture A High-level plan that defines The organization’s information requirements The way these requirements are being satisfied. Blueprints for future directions This architecture includes planning the drawing ,purpose, and building constraints. It can be divided into 2 major parts Organizational objectives and problems Existing infrastructure Information architecture is different from computer architecture which only describes the hardware needs of computer system Computer architecture involves several processors, whereas the information architecture is just like planning a house.
What is Information processingcycle Input Procedures/Processes Output Disseminate Results
What is an Information System? A system that collects, analyzes processes, stores,, and disseminates information for a specific purpose.. Data Calculations Process Collect Produce And Instructions Inputs Outputs Transform Reports Store
Information system An IS Collects, processes, stores, analyses and disseminates information for a specific purpose. It includes inputs, outputs, mechanism, to control these Also includes the feedback to control all these A set of interrelated components that collect(or retrieve), process, store, and distribute information to support decision making and control in an organization What is a system: A set of components which systematically interact with each other and have same objective.
Function of IS Input – the collection of raw data for processing information system Processing – the conversion of data into information for more meaningful Output – the distribution of processed information Feedback – output that is returned to help evaluate or correct input
Major Capabilities of Information SystemPerform high-speed, high-volume, numerical computation.Provide fast, accurate, and inexpensive communication within and between organizations.Automate both semiautomatic business processes and manual tasks..Increase the effectiveness and efficiency of people working in groups in one place or in several locations, anywhere.Facilitate work in hazardous environment .Fast, intelligent ,accurate processing of business transactions.Large capacity storage, retrieval, analysis, and data and fast access to data spread around the world.
Capabilities of Information SystemsIncrease communication Computer to Computer or human to human.Reduce information overloadSpan organizational boundariesSupport and improve decision making & problem solving.Span boundaries in-side organizationDistinctive capabilities for providing competitive advantage. e.g. airlines, online banking
IS Terms Open system: Connected to its environment by means of resource flows. An open system interacts with its environment by means of its physical recourses flows. Closed system: Not connected to its environment. They usually exist in tightly controlled laboratory systems. A closed system does not interact with customers, managers or any one else. Information system is a virtual/conceptual system as well as an open system. A physical system is also an open system.
Cont… Open and closed loop systems Not all systems are able to control their own operations. A system without the control mechanism, feedback loop, and objective elements is called an open loop system. A system with the following three control elements is called a closed loop system. Control mechanism Feedback loop Objective elements
What is a subsystem & Super Sys? A subsystem is simply a system within a system. This means that systems exist on more than one level and can be composed of subsystems or elemental parts. What is a Super System? (not frequently used) When a system is part of a larger system, the larger system is the super system.
What is Meant by a (CBIS) Computer-based Information Systems An information system using computer and telecommunications technology to perform its intended tasks. Use computer hardware and software to process and disseminate information Fixed definitions of data and procedures for collecting, storing, processing, disseminating, a nd using these data Can be computer-based or manual MIS is a first information oriented system.
The Components of CBIS are as follows Hardware Set of devices such as processor, monitors, keyboards, printers that will accept the data process them and displays them Software Set of computer programs, that enables the hardware to function to process data Data bases An organized collection of related files or records that stores data and the associations among them Network A connecting system that permits the sharing or resources among different computers Procedures The strategies, policies, methods and rules for using the information system People The most important element in information systems, including who work for it or uses it
Components of CBIS Backup data Restart job Virus scan
Components of IS Hardware, Input and output devices Software, A set of computer programs that enables to process data. Database, Organized collection of files or records that stores and associate the data. Network, Connecting systems to share resources among different computers. Procedures, strategies, methods and rules for using IS People. Who work with IS or use outputs of IS
Types of CBIS MIS: Management Information System TPS: Transaction Processing Systems (Priory known as EDP and accounting information system and then AIS accounting information system) EIS: Executive information system Enterprise-wide system (A network of different information systems) DSS: Decision Support System GSS: Group support system ES OAS: Office automation system GIS ERP IOS: Inter-organizational information system. Connect two or more organizations having a common interest or business need. Important in facilitating e-commerce. Intelligent systems/Intelligent agents SIS: Strategic information system.
Cont…. HRIS: Human resource information system MKIS; Manufacturing information system FIS: Financial information system. ESS: Executive support system. AIS: Accounts Information system
Types of Business pressuresMarket Pressure: The global economy and strong competition The changing nature of the workforce Market research Powerful customers/Customer orientation/Order fulfillment and customer services..Technology Pressures: Technological Innovation and Obsolescence Information Overload. Need for real time operationsSocietal Pressure: Social responsibility Government regulation and Deregulation De-Centralization Spending for social programs Protection Against Terrorist Attacks. Ethical Issues Labor pressures.
Market Pressures The Global Economy and Hyper competition Developing Countries are preferred. Traditional barriers. Globalization and internationalization/International market place. Cross cultural Impact The Changing Nature of the Workforce Diverse and versatile Workforces, Increasing no of females, minorities, and physically challenged persons work in all types of the positions. Changing Traditional Work Environment. Need for Real Time operations. Fast, accurate, operations. Automated and intelligent Powerful Customers Knowledgeable Customers
Technology Pressures Technological Innovation and Obsolescence Has huge impact ranging from genetic engineering to food processing. Need for the real time operations,Todays companies don’t have the luxury of information float. Information float is the time between when a business event occurs and when the info captured about the event reaches the necessary decision makers. Information Overload Huge amount of information available to the consumers The amount of information doubles every year and most of it is free The information and knowledge generated and stored inside organization are also increasing So every one feels the pressure of this huge knowledge ,which becomes sometimes difficult to choose the best among so much knowledge
Societal Pressures Social Responsibility Social Responsibility Act Government Regulation and Deregulation Deregulation intensifies competition. Issues of health, safety ,environment pollution and equal opportunity ,licensing, copyright. It is a matter of general public interest. Protection Against Terrorist Attacks Strong systems for security and attack pattern detection. Ethical Issues Are not cut and dried Email monitoring, Sharing Customer data, Revealing personal information Ethics is the business context refers to standards and values for judging whether a particular conduct in the workplace is right or wrong These issues are very important because they can damage the reputation of an organization as well as the persons. The situation is critical when it comes between the countries
Cont… Labor pressures Labor costs differ from one country to another. In addition companies pay high fringe and environment protection costs. So that they have difficulty in competing in developed countries. For this it requires good communication ,between the languages and cultural issues The issue becomes more complex when Govt.involves through laws of taxes, subsidies, import/export policies. Decentralization A social process in which businesses and industry moves from urban centers to outlying districts .It is spread of power away from the center to local branches or governments . Digital Divide
Organizational Responses Pressures provoke proactive and reactive organizational responses. Business responses to pressures may involve use of Information Technology and Information Systems, also some strategic business plans In some cases, IT is the only solution to business pressures. Knowledge of IT capabilities is essential to today’s business people.
Directions of Organizational Responses Business Responses Managerial IT/MIS-Business Strategic plans-Data/Information/Knowledge management-IT resources
Business Pressures and OrganizationalResponses
Organizational responses Developing Business strategic plans (SBP) for systems using IT and IS. Customer focused services and products and order fulfillment. Continuous improvement efforts (JIT and TQM) E.g. e-commerce, e -business, e-marketing. Business process reengineering BPR Empowering employees and fostering collaborative work and KM. Global marketplace analysis Business alliances/Mergers
Cont…… Reviving up employees financial energies (Motivational theories on customer and employee) Business alliances (Supply chain management SCM Using CBIS at different levels of business processes. E-commerce, Use of computing and communication in business e.g. Internet ,WWW, E-commerce and Expert systems, business intelligence, E-marketing, E- banking, E-business etc. Use of CAD/CAM Data mining and data warehousing Critical mass /Mass customization.
Cont… is a strategy of producing customized Make-to-Order products and services Mass Customization In mass production they produce a large quantity of identical items In mass customization they produce a large quantity of items that fit the desires of each customer. Business Alliances : Joining hands with the competitors /companies to improve services. Electronic Business and E-Commerce is the newest and most promising strategy. Business Process Re-Engineering: organization fundamentally and radically re designs its business process.
Customer relation ship marketing in action Make it easy for customers to do business with you Focus on end-customer for your products and services Redesign your customer –facing business processes form the end customer’s view. Wire your company for the profit :design a comprehensive ,evolving electronic business architecture. Adopt a customers-focused approach and prevent losing customers to competitors. To pay more attention to customers and their preferences Foster customer loyalty. In e-commerce, especially this is the key to the profitability.
Continuous improvement They also make continuous efforts to improve their productivity and quality Productivity is the ratio of outputs to inputs. They improve this ratio by increasing outputs, reducing costs, increasing output faster than cost or combination of both Just in time This is inventory approach, it attempts to reduce costs by scheduling materials and parts to arrive at the workstation exactly when they are required It minimizes the space and cost
TQM( Total Quality Management) It is organized effort to improve quality whenever possible IT can enhance it by improving data monitoring, collection, analysis, and reporting, Another expect is the decision making power to select the best alternate course of action However this task is difficult in large organizations, but there is always survival to the fittest
Empowering employees Giving employees the authority to act and make decisions on their own is a strategy used by many companies Managers delegate authority to self-directed teams who can execute the work faster and with fewer delays then were possible in the traditional organizations. IT supports it but also supports the centralized control
Hierarchical Organizational Structure Headquarters Division A Division B Division C Administrative Services Plant 1 Plant 2 Plant 3 Top managers Accounting Finance Marketing POM HRM CRM Middle managersSupervisory First line managers Operating Employees
The General System Model Of The Firm The figure shows the flow of resources from the environment ,through the firm and back to the environment. It presents all types of organizations functional in the form of a system. It involves the flow of physical resources and virtual resources for all types of organizational structures. The physical flow include flow of personal ,material ,machine and money. Virtual flow involves flow of data, information and decisions. Firm control mechanism contribute the firm to control its own operations including performance standards to meet its objectives, the firms, management and information processing the transform data into information. The feed back loop is composed of virtual resources .Data are gathered from the firm and the environment and entered in to the firm processor, which is transformed into the information ,eventually information is provided to managers to make decisions to effect necessary changes in the physical system.
Environment Standards Info & Information Decisions Data Information Management Process Data Physical PhysicalResources Resources Input Transformation Output Resources Process Resources
What managers Do They plan, What they are to do They organize to meet the plan They staff their organization with the necessary resources. e.g. IT/IS and managerial resources. After having the resources they direct the resources to execute the plan. Finally they control the resources.
Management Levels High level (strategic) Long-range view Planning Middle level (tactical) Carry out the plan Assemble the material Hire the resources Organize and staff Low level (operational) Supervisor Directing and controlling
Strategic Planning Level The strategic planning level involves mangers at the top of the organizational hierarchy. The term strategic indicates the long-term impact of top managers decisions on the entire organization. The term executive is often used to describe a manager on the strategic planning level. Top level managers eg president, vice president chief executives, MD ,CIO,CKO,MEMBERS OF CORPORATE EXECUTIVE COMMITTEE, IS STEERING COMMITTEE etc. Management Control Level These managers include middle managers, regional managers, product directors, and divisional heads. Their level is called “management control level” due to their responsibility of putting plans into action and ensuring the accomplishment of goals.
Cont… Control level managers/Tactical level managers They are responsible to put strategic plans in to actions and ensure the goals are met.. Operational Control Level or Lower-level Lower level managers are persons responsible for carrying out the plans specified by managers on upper levels. Their level is called the “operational control level” because this is where the firm’s operations occur. These are departmental heads, supervisors and project leaders. they are responsible for plan accomplishment ,specified by managers on upper level
IMPLEMENTATION LEVELS OF IS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERS OPERATIONAL OPERATIONAL LEVEL MANAGERS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN MARKETING & ENGINEERING RESOURCES 74
All managers perform these functions, however with varyingemphasis as shown below.
Where managers are found Managers on the strategic level place greater emphasis on environmental information than do managers on the lower levels. Managers on the operational control level regard internal information as vital. The second figure shows that strategic planning-level managers prefer information in a summary format, whereas operational control-level managers prefer detail.
Management level fig 2.1 Environment information Internal Information
CEC Note :Corporate executive committee is responsible for strategic business planning and its responses. It also provides the top –level oversight of information recourses to the firm. It guides the IS steering committee, usually chaired by the CIO.
Business Environment It refers to the combination of all societal, legal, economic, physical and political factors that effect business activities in any way. SOCIETY Government Financial Global Communit Communit y y Suppliers THE FIRM Customers Labor Unions Stakeholders Competitors Owners
BPRBusiness process reengineering/re-design is to change the technological, human ,managerial and processing dimensions of a business. Some restructuring of management realignments, mergers, consolidations and operational integrations take place.Knowledge Workers: Create information and knowledge and integrate them into the businesses.
BI Business intelligence refers to the analysis performed by DSS, ES, EIS, data mining and intelligent systems. BI describes a verity of activities to pull together all the data required to make a sound business decision, regardless of where the data originate. One ultimate use of the data gathered and processed in the data life cycle for business intelligence. An Intelligent system is an IS typically employing AI, whose output resembles the human thought process and is used to support decision making e.g. neural computing, fuzzy logic, speech understanding, robotics, sensory systems and case based reasoning.
Data Mining and AnalysisConcerns Ethical Issues Valuable data-mined information may violate individual privacy Who is accountable for incorrect decisions that are based on DSS? Human judgment is fallible Job loss due to automated decision making? Legal Issues Discrimination based on data mining results Data security from external snooping or sabotage Data ownership of personal data
Business Strategic Plan Statement of the firms over all mission, the goals that follow the mission and the broad steps necessary to reach the mission ,for the business success and survival. It is a long range goals that describe the IT and IS initiatives needed to achieve the goals of organization. A typical business strategic plan has following missions • Efficiency • Effectiveness • Competitiveness.
Examples of Business ProcessesFunctional Area Business ProcessManufacturing and production Assembling the product Checking for quality Producing bills of materialsSales and marketing Identifying customers Making customers aware of the product Selling the productFinance and accounting paying creditors Creating financial statements Managing cash accountsHuman resources Hiring employees Evaluating employees job performance Enrolling employees in benefits plans
Operations, Tactics, Strategy Sector Operations Tactics StrategyProduction • Machine settings • Rearrange work area • New factory • Worker schedules • Schedule new products • New products • Maintenance sch. • Change inventory method • New industryAccounting • Categorize assets • Inventory valuation • New GL system • Assign expenses • Depreciation method • Debt vs. equity • Produce reports • Finance short/long term • International taxesMarketing • Reward salespeople • Determine pricing • Monitor competitors • Survey customers • Promotional campaigns • New products • Monitor promotions • Select marketing media • New markets
Environmental Resource flow A firm is connected to its environmental elements by environmental resource flow. Environmental resource flow is the flow of supply chain. Common flow includes exchange of money flow to stakeholders ,material flow to customer, information flow from customer and raw material flow from suppliers. Less common flow is money flow from the Gov, material flow to suppliers and personal flow to competitors.
Supply chain Flow of materials, information, payments, and services, from suppliers through factories and warehouses, to end customers Includes all organizations and processes that create and deliver products, information, and services to the end customers It includes many tasks such as purchasing, payment flow, material handling, production planning, logistics etc. Supply chain management - planning, organizing, coordinating, and controlling all activities in the supply chain
Simplified Supply Chain SCM Internal Downstream Upstream Organization’s Distributors material production processes, including information materials Suppliers handling, inventory money management, manuf acturing, quality Retailers control Customers
Activities of SCM Forecasting the customer demand Scheduling the production Establishing transportation networks Ordering replenishments stock from the suppliers Receiving stock from suppliers Managing inventory (Raw material, work in process and finished goods) Executing the products Transporting the resources to customers Tracking the flow of resources from suppliers, through the firm and to the customers. ERP software like SAP/Oracle help flow of supply chain.
Using IT Strategically Businesses today must understand how IT can reshape and refine business strategy Porter’s Strategic Analysis Model Helps in understanding strategic forces affecting organizations in particular industries IT can be applied to strengthen and support a specific business strategy Value Chain Helps in identifying ways IT can improve the quality and efficiency of organizational processes
SIS A system that will provide strategic advantage in meeting organizational objectives ,increasing market shares, or preventing competitors from entering a market and so will significantly impact an organization’s operations, success and survival. Strategic Systems: enable organizations to Increase market share and/or profits. Better negotiate with suppliers Prevent competitors from entering their territory, E.g.. Tracker Systems in cars. Courier Services Organizations implement systems that will impact the operations, success, survival.
Competitive Advantage Firms strive to obtain an advantage over their competitors. Firms achieve advantages by providing services and products at a low price, providing high quality products and providing customized services or products. Firms also achieve competitive advantages by using their virtual resources as well as using their physical resources.
Porter’s Value chain Porter believes that firm achieves competitive advantages by creating Value Chain. He illustrates that the primary and support activities can contribute to the MARGIN. MARGEN is the value of the firm’s products and services, as perceived by the firm’s customer, minus their costs. An increased margin is the objective of the value chain. Firm creates value by performing Vale Chain activities.
Porter’s Value Chain Model There are two types of value activities in Value Chain. 1-Primary value chain activities that manage the flow of physical resources through the firm that include Inbound logistics Operations Outbound logistics Marketing and sales operations Service activities. 2-Support value chain activities that influence the primary activities that include. Firm infrastructure HRM Technology development Procurements
Properties of Value Chain activities Each value activity whether primary or support contains following three essential ingredients Purchased inputs Human resources Technology Similarly each activity uses and creates information For example information specialists in services unit may combine purchased commercial database, leased computing equipment and custom-developed programs to produce decision support information for the executives of the firm.
Strategic plan for business areas Fully committed executives in strategic plans also see a need for developing respective strategic plans for each business area. In this approach each area has its independent plan which may have influence with the strategic plans of other areas. However such approach do not ensure that business areas will work together well.
Strategic Planning for InformationResources SPIR SPIR involves a concurrent/repetitive development of strategic plans for information services and the firm, so that the firm’s plan reflects the support to be provided by the information services. IS plan reflects future demands for the systems support. SPIR may be different for different organizations ,but all SPIR have following two core elements. Objectives to be achieved by each category of system during the time period covered by the plan. The information resources necessary to meet the objectives.
The following figure illustrates the manner in which each planning process influences the other.
EXPANDING VALUE CHAIN Management must alert to the additional advantages by linkage of firm’s value chain to those of other organizations. Such linkage results in IOS. Firm can also take advantage of its value chain by linking to those of its suppliers by implementing systems that make input resources available when needed e.g. JIT. A firm can also link its value chain with those of its distribution channel members, creating a VALUE SYSTEM. When the buyers of a firm ‘s product are organizations, their value chain can also be linked to those of the firm and its channel members.
Dimensions of Value Chain Strategic advantage It has a fundamental effect in shaping the firm’s operations. E.g. conversion of existing data in to standard database and access via web applications, use of custom tailored software instead of proprietary software. Tactical advantage When a firm implements a strategy in a perfect way than its competitors , it achieves a tactical advantage. e.g. customer services can be extended to offer customer direct access to the information resulting customer satisfaction. Operational advantage Operation advantage deals with every day transactions and processes. this is where the IS interacts directly with the processes. eg a web browser is an IS and it has Cookies in order to have direct interaction with the processes of client.
Challenges from Global Competitorsand MNC MNC is a firm that operates across the products, markets, nations and culture. It consists of a parent company having a group of its subsidiaries ,which are geographically dispersed. It must not be confused with the limit of global competitors. Developed countries like USA and China are outsourcing some of their operations, India is major destination.
Cont…. Special Need for Information Processing in an MNC All firms need for information processing and coordination, but it is crucial for MNC because MNC is an open system that seeks to minimize its uncertainty in its environment. Uncertainty is a difference between the amount of information required to perform a task and the information already processed by an organization. Hence making good use of IT can cope uncertainty.
Cont…… The special Need for Coordination in an MNC. Coordination in a key to achieve competitive advantage in global marketplace. How ever companies are unable to gain strategic control of their world wide operations and manage them in a globally coordinated manner will not succeed in the international economy. So MNC faces grater restrictions than a national company eg because of conflicting business practices, cultural differences, governmental policies impositions and currency differences. However developing a GIS is very effective in competing global challenges.
ADVENTAGES OF MNC There are many advantages of Coordination in MNC Flexibility in responding to competitors in different countries and markets. Ability to keep abreast of international market needs. Knowledge sharing across the globe. Reduced cost of operations. Increased efficiency and effectiveness Ability to achieve and maintain the diversity in the firms products and in how products are produced and distributed.
WHAT IS A GIS MNC attempts GIS to overcome its problems Term coined are “Global Information System” A system that consists of network hat cross national boundaries. Constraints of GIS Politically Imposed Constraints IT infrastructure in owned by governmental authorities, Difference between governmental national policies for data processing, Crossing boundaries barriers for goods, product licensing , Taxes and customs etc. Cultural and Communication Barriers Business practices, development of cross cultural products, Language differences, value differences, Color differences, racial differences, Various religious aspects. Restriction on hardware/Software purchase and Import In case of foreign import and equipment may cause problem of interoperability / incompatibility.
Cont…. Restrictions on data Processing and communication Data and information dissemination across the world arises the issue of IPR, Privacy and confidentiality, data protection and security issues etc. Maintenance of TDF (Transborder data flow) Technological problems Poor Information technology infrastructure, software copy right and piracy are used in certain countries. Lack of Support from Subsidiary Managers Managers of subsidiary think that they can run their offices on their own without help of parent company, Similarly foreign office managers consider that the GIS is surveillance. Middle managers are having fear to be by –passed in they will be completely dependent on GIS.So they avoid support and feed back to the parent company. NOTE : However such problems can be minimized by implementation of Good KM and SPIR (Making strategy for enterprise)
What can we do with the stored data? Online analytical processing (OLAP) Analytical Processing - the activity of analyzing accumulated/aggregated data. It involves the storage of the data in a multidimensional form to facilitate the presentation of an almost infinite number of data views.
Features of OLAP Analysis by end users from their desktop, online, using tools like spreadsheets. Analyze the complex relationships between many types of business elements (Large data sets) Compare aggregated data over hierarchical time periods (monthly, quarterly, annually) Present data in different perspectives (Retrospective) Involve complex calculations between data elements. Respond quickly to users requests
What can we do with the storeddata? Data mining – intelligent search of data stored in data marts or warehouses Find predictive information Discover unknown patterns End users perform mining tasks with very powerful tools Mining tools apply advanced computing techniques (learning, intelligence) Data warehousing
Moore’s Law The term moor’s Law was coined by one of the founder of Intel in 1960. It states the power of computer doubles about every year with the same cost ,which was increased to 18 months latter on. 18 months =1.5 years 15 years=15/1.5=10 210=1024
Moor’s Law Application By same law after 30 years Comparison of salaries the power of computer purchased will be Year Friend You 30/1.5=20 1 $40,000 $5000 220=1024*1024=1048576 3 $57,600 $20,000 with same cost and so on… 6 $99,533 $80,000 Your friend hired at 9 $171,993 $320,000 $40,000 with 20% increase every year 12 $297,203 $1280,000 15 $513,567 $5120,000 You hired at $5000 with double salary every 1.5 years.
Role of information in problem solving anddecision making A problem is a condition or an event that is harmful or potentially harmful to a firm or that is beneficial or potentially beneficial for the firm. Problem solving A process of problem identification of causes and then repetitively analyzing and choosing different alternatives and finally to make some decision to solve the problem.
Classification of problems A structured problem is a problem if it consists of elements and relationships among the elements which are understood by the problem solver. A Semi-structured problem is a problem if it consists some of its elements and relation ships among the elements which are understood by the problem solver and some that are not understood by the problem solver. An un-structured problem is a problem if it consists of elements and relation ships among the elements which are not understood by the problem solver.
Solving Structured and Unstructuredproblems Structured problems lend themselves to programmed decisions Unstructured problems require un-programmed decisions
Problem solving Activities Identification of problem (where is problem ,what is problem, Definition of problem, Data gathered on scope, Constraints identified. 1-Internal constraints e.g. limited resources 2-Environmental constraints eg pressures to restrict resource flow Classification of problem into a standard category Causes evaluation Intelligence activity (brain storming, critical thinking, creative, thinking, reasoning, argumentation, logic, analysis, f orecasting and judgments) Design Activity Invent ,develop a most plausible course of action towards problem solving). Construct a standard mathematical model e.g. selecting a model Choice activity (Involves the selection of best alternative that actually solves the faced problem. Find potential solutions Reviewing the selected choice for further refinement and recommendation of the solution.
States of problem Process of problem solving Internal Constraints Current State Desired State Environmental Constraints
Elements of Problem Solving Process PROBLEM Desired Alternative STANDARDS State Solutions Problem Solver INFORMATION Constraints Current State Solution
Problem Identify InformationIntelligence Design Information Choice Information Solution Information Review
Thinking about decisions… A Framework for Computerized Decision Support Problem Structure Decision making processes fall along a continuum that ranges from highly structured to highly unstructured decisions Nature of Decisions Strategic planning decisions - the long-range goals and policies for resource allocation. Management control decisions - the acquisition and efficient utilization of resources in the accomplishment of organizational goals. Operational control decisions - the efficient and effective execution of specific tasks.
Thinking about decisions… Structured decisions have long been supported by computers Classes of structured decisions have been addressed mathematically with Management Science models Types of decisions Programmed decisions: Usually repetitive and routine decisions, also can be automated Non-Programmed Decisions :Are novel and unstructured, unusually consequential.
Decision Levels Decision Description Example Type of Information Level Strategic Competitive New product External events, advantage, become a that will change rivals, sales, costs market leader. Long- the industry. quality, trends. term outlook. Tactical Improving operations New tools to Expenses, schedules, without restructuring cut costs or sales, models, the company. improve forecasts. efficiency. Operations Day-to-day actions to Scheduling Transactions, keep the company employees, accounting, human functioning. ordering resource supplies. management, inventory.
Decision Making Process REALITY Examination Validation of Intelligence Phase the Model Design Phase Verification, Testing of Proposed Solution Choice PhaseSUCCESS Implementation of Solution FAILURE