CIBMBusiness Information SystemsCH02- Information Technology in Management

The Functions and Roles of a Manager Managers have several responsibilities in an organization. These responsibilities, referred to as management functions, are to plan, organize, direct, and control the various business processes in the company. Managers also play several roles when they interact with people, both inside and outside the organization. These management roles are: interpersonal ensures that information is provided, informational roles links all managerial work together, and decisional roles makes significant use of the information.

Types of Management Decisions To understand how information technology can be useful, it is important to understand the three types of decisions that managers make: structured, semi-structured, and unstructured. A manager makes a structured decision when he or she understands the situation clearly and uses established procedures and information to resolve the problem. A semi-structured decision occurs when there’s some uncertainty about a problem and a manager must use his or her judgment. Sometimes a manager faces unique circumstances or must anticipate events over a relatively long period of time. In these situations, a manager must make an unstructured decision, which requires many quantitative and ethical judgments that have no clear answers.

Levels of Management There are three management levels in an organization: operational, tactical, and strategic. A manager at the operational level is responsible for supervising the day-to-day activities in the organization’s value chain. A manager at the tactical level is called a middle manager and may be responsible for a large organizational unit such as a sales region or a production plant. Tactical-level managers responsible for the development and use of information systems in an organization are called information systems managers. A manager at the strategic level is called a top manager and is responsible for the long-range issues related to the business’ growth and development. The top manager responsible for the overall planning of information systems in an organization is called the chief information officer (CIO).

Management Information Requirements The time dimension of information relates to when the information was created, how frequently the information is needed, how often it is updated, and whether the information relates to past, present, or future time periods. The content dimension of information relates to its accuracy and completeness, how relevant the information is, whether the information has a broad or a narrow scope, and whether the source of the information is within the organization or from the environment. The form dimension of information relates to how the information is arranged and presented in a report, whether the report contains detailed or summary information, and what medium is used to present the information.

INFORMATION TECHNOLOGY TO SUPPORT MANAGERIAL COMMUNICATIONS

Communication is a social process of people exchanging ideas or other messages through some physical medium. The number of people participating in a communication can vary a person might send a message to one other person, called a one-to-one communication, or to many other people, called a one-to-many communication. The physical location of a sender and receiver can vary from being in the same room, called same-place communication, to being in geographically dispersed locations around the world, called different-places communication. The time difference between when a message is sent and when it is received can vary from simultaneous communication, or same-time communication, to hours, days, or longer, called different-time communication.

Collaborative Work A workgroup can be a committee, a single social unit to perform some task. Groupware is software that allows groups of users to share calendars, send messages, access data, and work on documents simultaneously. Many of these applications focus on the concept of work flow—the path of information as it flows through a workgroup. However, the advent of the World Wide Web changed the workgroup landscape. Corporations are installing intranets using Hypertext Markup Language (HTML), Web browsers, and other Internet technologies that enable managers and employees to access and share the company’s internal data and to collaborate on projects easily. Because these intranets are built on standardized protocols like TCP/IP, corporations can open up their intranets to strategic partners and customers, creating extranets.

Distributed Computing In the age of networks, the challenge for a company’s chief information officer (CIO) and other information systems managers is to integrate all kinds of computers into a single, seamless system. This approach, often called distributed computing, allows PCs, workstations, networks computers, and mainframes to coexist peacefully and complement each other. Many organizations are adding thin clients network computers, Internet appliances, and similar devices to the mix.

The Automated Office An automated office enables individuals, workgroups, and organizations to acquire, process, store, and distribute information electronically using computers and telecommunication networks. Computer conferencing, voice teleconferencing, and video teleconferencing fall under the general category of electronic meeting technologies; they enable members of a workgroup to conduct meetings even when participants are scattered around the world. Experts have also predicted the paperless office—an office of the future in which magnetic and optical archives will replace paper documents. To reduce the flow of paper, a growing number of organizations are turning to document imaging systems that can scan, store, retrieve, and route bit-mapped images of paper documents.

Inter - organizational Information Systems Another way a company can automate communications and reduce paper flow between itself and its suppliers, customers, and other organizations is through an inter - organizational information system. Such systems use networking and telecommunication technologies that enable a company to share business data and exchange transactions with other companies electronically.

Electronic Data Interchange (EDI) Electronic data interchange (EDI) is the direct, computer-to-computer exchange of standardized, common business transaction documents, such as purchase orders and invoices, between business partners, suppliers, and customers. EDI systems have been developed for particular business partners in specific industries for several decades.

International Information Systems Information technology, especially networks, telecommunications, and the Internet, have made it economically feasible for a company to do business internationally and conduct its business processes virtually anytime and anywhere. Any information system that supports international business activities is called an international information system. An international environment is multilingual and multicultural, has multiple governments, has many different regulations regarding privacy and intellectual property protection, has varying standards for telecommunications and other technologies, and has multiple geographic conditions, time zones, and monetary currencies. All these factors affect the flow of data between countries, commonly called transborder data flow.

INFORMATION TECHNOLOGY TO SUPPORT MANAGERIAL

DECISION MAKING

Decision-Making Concepts Decision making is a process that includes four phases: intelligence, design, choice, and implementation. Managers use conceptual models in decision making to cope with the complexities of a situation. A model is a simplified representation, or abstraction of reality, containing only the most relevant aspects of the real situation. A manager may use a mental model, a mathematical model, an analog model, or an iconic model. A manager’s decision style reflects how that individual approaches decision-making. One manager may have a rational decision style where another may prefer a satisfying decision style.

Management Information Systems A management information system (MIS) gives a manager the information he or she needs to make decisions, typically structured decisions, regarding the operational activities of the company. Management information systems are also referred to as management reporting systems because their main output is a variety of reports for managers. An MIS provides three types of reports: detailed reports, summary reports, and exception reports.

Decision Support Systems A decision support system (DSS) helps a manager make semistructured decisions. The DSS design philosophy is to provide managers with the tools they need to analyze information they deem relevant for a particular decision or class of decisions.

Components of a Decision Support System A DSS has three major components. The data management component is a database of relevant internal and external information of the organization. The model management component allows the manager to evaluate alternative problem solutions and identify the best or most satisfying solution by using appropriate software, such as a spreadsheet and statistical modelling tools. The third DSS component is the user interface, or dialog management, through which a manager utilizes the data and modelling capabilities of the DSS easily and effectively.

Group Decision Support Systems Group decision support systems (GDSS) are designed to improve the productivity of decision-making meets by enhancing the dynamics of collaborative work. The GDSS also includes specific communication-oriented software tools that support the development and sharing of ideas. Geographic Information Systems A geographic information system (GIS) is a special type of decision support system designed to work with maps and other spatial information. A GIS is used to support a wide variety of managerial decisions that involve geographic information.

Executive Information Systems An executive information system (EIS) combines features of MIS and DSS to support unstructured decision making by top managers. An EIS has similar design components to a DSS. The EIS data management component provides interactive access to the company’s important information, and the model management component provides access to data on the company’s critical success factors. An EIS enables the executive to drill down through the available information to the level of detail needed. This ability to access both internal and external information makes an EIS a powerful tool during the intelligence phase of decision making.

Expert Systems An expert system (ES) supports decision making by providing managers with access to computerized expert knowledge. An ES is designed to replicate the decision-making process of a human expert. Today’s expert systems are based on years of artificial intelligence (AI) research devoted to replicating elusive human cognitive abilities in machines. A knowledge base is similar to the database component in an MIS or a DSS. In addition to facts, a knowledge base contains a system of rules for determining and changing the relationship between those facts.

Along with the knowledge base, an ES includes a user interface and an inference engine. The inference engine combines the user input with the knowledge base, applies logical principles, and produces the requested expert advice. Expert systems are difficult to build. To simplify the process, many software companies sell expert system shells—generic expert systems containing human interfaces and inference engines. These shells do not include the difficult-to-create knowledge base. A knowledge engineer—a specialist who interviews and observes experts and converts their words and actions into the knowledge base—usually constructs the knowledge base.

Information Systems in Perspective Information systems rarely fall cleanly into just one of the categories of MIS, DSS, EIS, or ES. Any specific system can have a mix of their features. Which design features to incorporate into an information system should be chosen based on the communication and decision-making requirements of the managerial users.

INFORMATION TECHNOLOGY TO SUPPORT BUSINESS STRATEGY Strategy Concepts The competitive forces model is a tool used to examine the five key factors that influence, and often 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 activities over the long term to attain its goals. Managers use five strategies to achieve competitive advantage: A cost leadership strategy focuses on providing high-quality products and services at the lowest cost in the industry. A firm can also find ways to help its suppliers or customers reduce their costs or to increase costs of their competitors. A differentiation strategy focuses on providing products and services that are particularly valued and are perceived by customers as uniquely different from the competition. This allows a firm to focus its products or services to give it an advantage in particular segments or niches of market. An innovation strategy emphasizes finding new ways to restructure business processes for producing or distributing products and services or developing unique products and services.

An innovation strategy emphasizes finding new ways to restructure business processes for producing or distributing products and services or developing unique products and services.

A Growth Strategy focuses on expanding a business’s capacity to produce goods and services, expanding into global markets, diversifying into new products and services. An Alliance strategy focuses on establishing new business linkages and alliances with customers, suppliers, competitors, consultants and other companies. These linkages may include mergers, acquisitions, joint ventures, forming of “virtual companies” or other marketing, manufacturing or distribution agreements between a business and its trading partners.

The Value Chain and Strategic Information Systems

Inbound logistics receives and stores supplies and materials from the firm’s environment and distributes them when and where they are needed in the organisation. • Operations use the supplies and materials to create or manufacture the organisation’s products and services. • Outbound logistics delivers the products and services when and where needed by customers. • Marketing and sales investigates customer needs and promotes the value of and sells the products and services in the environment (marketplace). • Service maintains and enhances the product or service usefulness to customers through, for example, training and maintenance.

Value chain Example A collaborative intranet-based system can increase the communication and collaboration needed to dramatically improve administrative coordination and support services. A career development intranet can help human resource management function provide employees with professional development training programs. Computer aided engineering and design extranets enable a company and it’s business partners to jointly design products and processes. E-commerce auction and exchanges can dramatically improve procurement of resources by providing an online market place for a firm’s suppliers

Competing on Efficiency and Effectiveness Efficiency is how primary and support activities produce desired output with less work or lower costs. Effectiveness is how customers evaluate the quality of the output—products and services—of the value chain. The ways to use information technology to improve 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 using information technology by: Purchasing the product. Fitting the product to customer requirements. Using the product.

Making the product easier to maintain.

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