MBARARA UNIVERSITY OF SCIENCE AND TECHNOLOGY

DEPARTMENT OF MANAGEMENT SCIENCES Master of Business Administration (MBA)

MBA 5106: INFORMATION TECHNOLOGY FOR MANAGERS

Information System
What is System? Set of Interrelated components, with clearly defined boundary, working together to achieve common set of objectives Information Systems Set of interrelated components that Collect/retrieve, process, store, and distribute information to support decision making, coordination, control Help managers and workers analyze problems, visualize complex subjects, create new products Not necessarily employ computers - Smoke signals, Card storage in library, etc.

Perspectives on Information Systems

Information system:
Set of interrelated components Collect, process, store, and distribute information By computers and software as a tool Support decision making, coordination, control, problem analysis and create new product Provide solutions to challenges in business Env.

Information vs. data

Data are streams of raw facts Information is data shaped into meaningful form

Perspectives on Information Systems

Data and Information

Raw data from a supermarket checkout counter can be processed and organized to produce meaningful information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales territory.

Figure 1-3

Perspectives on Information Systems

Information system: activities produce required information

Input: Captures raw data from organization or external environment

Processing: Converts data into meaningful form Output: Transfers processed information to people or activities that use it Feedback: Output returned to appropriate members of organization to help evaluate or correct input stage

Perspectives on Information Systems

Functions of an Information System

An information system contains information about an organization and its surrounding environment. Three basic activities input, processing, and outputproduce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.

Figure 1-4

Perspectives on Information Systems

Computer/Computer program vs. information system

Computers and software are technical foundation and tools to store and process information similar to the material and tools used to build a house Cannot produce required information to a particular organization

Perspectives on Information Systems

Dimensions (boarders) of IS
Understanding of IS dimensions is IS literacy

Where computer literacy is focus on primarily on knowledge of IT MIS try to achieve this boarders, deals with behavioral and technical issues surrounding development, use and impact of IS in the firm.

Perspectives on Information Systems

Information Systems Are More Than Computers

Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment.

Figure 1-5

Perspectives on Information Systems

Organizational dimension of IS
structure: different levels and specialties
hierarchy of authority, responsibility: Senior Middle Operational management, Knowledge service Data workers

business process: Organization coordinate its work through its hierarchy and business process Culture : ways of doing things, part is embedded in IS.

The Role of Information Systems in Business Today

How IS transforming business

Increased technology investments IS provide economic value to business Increased responsiveness to customer demands Shifts in media and advertising and commerce

New federal security and accounting laws required

Globalization opportunities
Internet reduced costs of operating, on global scale Customers and firms Using foreign markets, easily replicate service E.g. Google and ebay

The Role of Information Systems in Business Today

Emerging digital firm

Its significant business relationships are digitally enabled and mediated Its core business processes are accomplished through digital networks Key corporate assets are managed digitally

Digital firms offer greater flexibility in organization and management

Time shifting, space shifting

Business process
Business process : tasks, rules, behaviors that been developed to produce business results. For example
Developing new product Creating market plan Hiring an employee Considered source of competitive strength. IS automate many business process.

The Role of Information Systems in Business Today

Business firms invest heavily in information systems to achieve six strategic business objectives:
Operational excellence New products, services, and business models Customer and supplier intimacy Improved decision making Competitive advantage Survival

The Role of Information Systems in Business Today

Operational excellence:
Improvement of efficiency of operation to attain higher profitability Information technology tool to achieving greater efficiency and productivity

The Role of Information Systems in Business Today

New products, services, and business models:

Business model: describes how company produces, delivers, and sells product or service to create wealth Information systems and technology a major enabling tool for new products, services, business models
E.g. Apples iPod, iTunes and Netflixs Internetbased DVD rentals

The Role of Information Systems in Business Today

Customer and supplier intimacy:

Serving customers well leads to customers returning, which raises revenues and profits
E.g. High-end hotels that use computers to track customer preferences and use to monitor and customize environment

Intimacy with suppliers allows them to provide vital inputs, which lowers costs
E.g. J.C.Penneys information system which links sales records to contract manufacturer

The Role of Information Systems in Business Today

Improved decision-making
Without accurate information:
Managers must use forecasts, best guesses, luck Leads to:
Overproduction, underproduction of goods and services Misallocation of resources Poor response times

Poor outcomes raise costs, lose customers

IS provide real-time data for making decisions E.g. Verizons Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc.

The Role of Information Systems in Business Today

Competitive advantage
Achieve higher sales and profit through using IS by:
Doing things better Charging less for superior products real time Responding

Using the internet is competitive advantage E.g. Dell: Consistent profitability over 25 years; Dell remains one of the most efficient producer of PCs in world. But Dell has lost some of its advantages to fast followers-- HP

The Role of Information Systems in Business Today

Survival
Information technologies are necessity of doing business May be:
Industry-level changes, e.g. Citibanks introduction of ATMs Governmental regulations requiring record-keeping
E.g. Toxic Substances Control Act, Sarbannes-Oxley Act

Types of Information Systems

Types of Operations Support Systems Transaction Processing Systems
Record and process data from business transactions. Examples: sales processing, inventory systems, accounting systems

Process Control Systems

Monitor and control physical processes Example: in a petroleum refinery use sensors to monitor chemical processes

Enterprise Collaboration Systems

Enhance team and work group communications Examples: e-mail, videoconferencing

Types of Information Systems

Processing Transactions Batch Processing
Accumulate transactions over time and process periodically Example: a bank processes all checks received in a batch at night.

Online Processing
Process transactions immediately Example: a bank processes an ATM withdrawal immediately

Types of Information Systems

Management Support Systems What are they?
Provide information and support for effective decision making by managers

Types of Management Support Systems

Management Information Systems (MIS)
Provide reports and displays to managers Example: daily sales analysis reports

Decision Support Systems (DSS)

Provide interactive ad hoc support for decision making Example: A what-if-analysis to determine where to spend advertising dollars

Executive Information Systems (EIS)

Provide critical information for executives and managers Example: easy access to actions of competitors

Other Categories
Expert Systems
Provide expert advice and act as consultant to users Example: process monitor, credit application advisor

Knowledge Management Systems

Supports creation, organization of business knowledge Example: Internet access to best business practices

Strategic Information Systems

Support operations/management processes that provide strategic product/services for competitive edge Example: Online stock trading, shipment tracking

The Role of Information Systems in Business Today

The Interdependence Between Organizations and Information Technology

There is a growing interdependence between a firms information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.

Figure 1-2

Perspectives on Information Systems

Levels in a Firm

Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.

Figure 1-6

Perspectives on Information Systems

Organizational dimension (cont.)

Experts are employed and trained for different business functions (tasks):
Sales and marketing Human resources Finance and accounting Production and manufacturing)

Perspectives on Information Systems

Management dimension
Make decisions, formulate action plan and solve organizational problem Managers set organizational strategy for responding to business challenges In addition, managers must act creatively:
Creation of new products and services Occasionally re-creating the organization

Perspectives on Information Systems

Technology dimension
Computer hardware Software: instructions that control H/W

Data management technology: S/W governing data

Networking and telecommunications technology
H/W and S/W link pieces of H/W and transfer data: Network, Internet, intranets and extranets, WWW

IT infrastructure: platform that the firm can built on its IS

Perspectives on Information Systems

Business perspective on IS:

IS instrument for creating value to firms Investments in IS result in superior returns:
Increases productivity and revenue

IS provides information that helps managers making better decisions and improve the execution of business process Value of IS

Perspectives on Information Systems

Business information value chain

Raw data acquired and transformed through stages that add value to that information Value of information system determined by its ability to result in better decisions, greater efficiency of business process, and higher profits

Business perspective: Calls attention to organizational and managerial nature of information systems

Perspectives on Information Systems

The Business Information Value Chain

From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability.

Figure 1-7

Perspectives on Information Systems

Investing in information technology does not guarantee good returns Considerable variation in the returns firms receive from systems investments Factors:
Adopting right business model according (suite) to new technology complementary investments (business processes,
models, management behavior and culture)

Perspectives on Information Systems

Complementary assets:
Assets required to derive value from a primary investment Firms supporting their technology investments with investment in complementary assets receive superior returns E.g.: invest in technology and the people to make it work properly

Perspectives on Information Systems

Complementary assets include:

Organizational investments, e.g.
Appropriate business model Efficient business processes

Managerial investments, e.g.

Incentives for management innovation Teamwork and collaborative work environments

Social investments, e.g.

The Internet and telecommunications infrastructure Technology standards

Perspectives on Information Systems

Contemporary Approaches to Information Systems

The study of information systems deals with issues and insights contributed from technical and behavioral disciplines.

Figure 1-9

Contemporary Approaches to Information Systems

Technical approach: Emphasizes mathematically based models

Computer science theories of commutation ,data storage management science: models of DM and practices operations research: optimizing selected parameters of org.

Behavioral approach: Behavioral issues such strategic business integration, implementation...

Psychology: how decision makers use formal information Economics: how IS change the control and cost structures Sociology: how system affect individuals and groups

Contemporary Approaches to Information Systems

Management Information Systems

Use of computer-based information systems in business firms Combines work of CS, management, and operating research toward developing system solutions to real word problems Concerned with behavioral issues of development, use and impact of IS

Main actors : Suppliers of hardware and software,

Business firms, Managers and employees, Firms environment (legal, social, cultural context)