2. Using Advanced Information Technology to Increase Performance
chapter eighteen
Using Advanced Information Technology to Increase Performance
McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

3. Learning Objectives
Differentiate between data and information, and list the attributes of useful information
Describe three reasons why managers must have access to information to perform their tasks and roles effectively.
Describe the computer hardware and software innovations that have created the IT revolution.

4. Learning Objectives
Differentiate among seven different kinds of management information systems.
Explain why managers are using IT to build strategic alliances and network structures to increase efficiency and effectiveness

5. Information and the Manager’s Job
Data
Raw, unsummarized, and unanalyzed facts.
Information
Data that are organized in a meaningful fashion 2

6. Attributes of Useful Information

7. Discussion Question
Which factor is most important in affecting the usefulness of information?
Quality
Timeliness
Relevance
Completeness
There is no one best answer. All may be most or least important depending on the situation.

8. Factors Affecting the Usefulness of Information
Figure 18.1

9. What is Information Technology?
Information Technology – set of methods or techniques for acquiring, organizing, storing, manipulating, and transmitting information

10. Question?
What is the specific form of IT that managers utilize to generate the detailed information they need to perform their roles effectively?
Management information system
Decision support system
Decision information system
Management support system
The correct answer is “A” – management information system. See next slide.

11. What is Information Technology?
Management Information System – specific form of IT that managers utilize to generate the specific, detailed information they need to perform their roles effectively

12. What is Information Technology?
Managers need information for three reasons:
To make effective decisions
To control the activities of the organization
To coordinate the activities of the organization

13. Information and Decisions
Most of management is about making decisions
To make effective decisions, managers need information, both from inside and outside the organization

14. Information and Control
Managers achieve control by:
Establishing measurable goals
Measuring actual performance
Comparing actual performance with goals
Taking any corrective action

15. Information and Coordination
Coordination problems that managers face in managing global supply chains are increasing
Managers have adopted sophisticated IT that helps them coordinate the flow of materials, semifinished goods, and finished goods throughout the world

16. The Effects of Advancing IT
IT revolution began with the development of the first computers
Modern computers can read, process, and store billions of instructions per second
This power forms the foundation of the ongoing IT revolution 6

17. The Effects of Advancing IT
Products resulting from advancing IT
Powerful microprocessors and PCs, high-bandwidth wireless smart phones, sophisticated word-processing software, expanding computer networks, inexpensive digital cameras, useful online information and retailing services

18. The Effects of Advancing IT
IT helps create new product opportunities that managers and their organizations can take advantage of
IT creates new and improved products that reduce or destroy demand for older, established products

19. IT and the Product Life Cycle
Refers to the way in which the demand for a product changes in a predictable way over time

20. A Product Life Cycle
Figure 18.2

21. A Product Life Cycle Embryonic stage Growth stage
Product has yet to gain widespread acceptance
Customers are unsure what a product has to offer
Growth stage
Many consumers are buying the product for the first time
Demand increases rapidly

22. A Product Life Cycle Mature stage Decline stage
Market peaks because most customers have already bought the product
Demand is typically replacement demand
Decline stage
Advancing IT leads to the development of a more advanced product making the old one obsolete

23. A Product Life Cycle
Advances in IT are one of the most important determinants of the length of a product’s life cycle
The shorter the length of a product’s life cycle because of advancing IT the more important it is to innovate products quickly and continuously

24. Types of Management Information Systems
Computer Networks
Networking
The exchange of information through a group or network of interlinked computers
Servers are powerful computers that relay information to client computers connected on a Local Area Network (LAN).
Mainframes are large computers processing vast amounts of information .
The Internet is a world wide network of computers. 8

25. A Typical Four-Tier Information System
Figure 18.3

26. Types of Management Information Systems
Operating system software
software that tells computer hardware how to run
Applications software
software designed for a specific task or use

27. Six Computer-Based Management Information Systems
Figure 18.4

28. The Organizational Hierarchy
Traditionally, managers have used the organizational hierarchy as the main system for gathering information necessary to make decisions and coordinate and control activities

29. The Organizational Hierarchy
Drawbacks
Can reduce timeliness of information
Reduces quality of information
Tall structure can make for an expensive information system

30. Types of Information Systems
Transaction Processing Systems
Systems designed to handle large volumes of routine transactions.
Were the first computer-based information systems handling billing, payroll, and supplier payments. 11

31. Types of Information Systems
Operations Information Systems
Systems that gather, organize, and summarize comprehensive data in a form of value to managers.
Can help managers with non-routine decisions such as customer service and productivity.

32. Types of Information Systems
Decision Support Systems
Provides computer-built models that help managers make better nonprogrammed decisions.
New productive capacity, new product development, launch a new promotional campaign, enter a new market or expand internationally 12

33. Types of Information Systems
Executive Support System
Sophisticated version of a decision support system designed to meet the needs of top managers
Group Decision Support System
An executive support system that links top managers so that they can function as a team.

34. Expert Systems and Artificial Intelligence
Behavior by a machine that, if performed by a human being, would be called “intelligent”
Already possible to write programs that can solve problems and perform simple tasks 12

35. Expert Systems and Artificial Intelligence
Most advanced management information systems available
System that employs human knowledge, embedded in computer software, to solve problems that ordinarily require human expertise

36. Enterprise Resource Planning Systems
multi-module application software packages that allow a company to link and coordinate the entire set of functional activities and operations necessary to move products from the initial product design stage to the final customer stage

37. Enterprise Resource Planning Systems
Help each individual function improve its functional-level skills
Improve integration among all functions so that they work together to build a competitive advantage for the company

38. Types of Information Systems
E-Commerce Systems
Trade that takes place between companies, and between companies and individual customers, using IT and the Internet

39. Types of E-Commerce
Figure 18.5

40. E-Commerce Systems Business-to-business (B2B)
trade that takes place between companies using IT and the Internet to link and coordinate the value chains of different companies

41. E-Commerce Systems B2B marketplace
Internet-based trading platform set up to connect buyers and sellers in an industry

42. Types of E-Commerce Business-to-customer (B2C)
trade that takes place between a company and individual customers using IT and the Internet

43. Strategic Alliances, B2B Network Structures, and IT
formal agreement that commits two or more companies to exchange or share their resources in order to produce and market a product

44. Strategic Alliances, B2B Network Structures, and IT
formal series of global strategic alliances that one or several organizations create with suppliers, manufacturers, and/or distributors to produce and market a product

45. How Computer-Based Information Systems Affect the Organizational Hierarchy
Figure 18.6

46. The Impact and Limitations of Information Systems
Horizontal Information Flows
Information networks can bridge functional departments which allows information to flow horizontally between departments, leading to much higher productivity, quality, and innovation.

47. Communication Flows at Tel Co. and Soft Co.
Figure 18.7

48. Question?
What is composed of people linked by IT who rarely see one another face-to-face?
Knowledge workers
Boundaryless organization
Limitless firm
Web 2.0 organization
The correct answer is “B” – boundaryless organization. See next slide.

49. Boundaryless Organization
composed of people linked by IT who rarely see one another face-to-face
functional experts who form an alliance with an organization

50. Boundaryless Organization
Knowledge management system
company-specific virtual information system that systematizes the knowledge of its employees and facilitates the sharing and integrating of expertise within and between functions and divisions through real-time, interconnected IT

51. Limitations of Information Systems
Loss of the Human Element
Information systems cannot present all kinds of information accurately.
Thick information, which is rich in meaning and not quantifiable, is best suited to human analysis.
Information systems should support face-to-face communication, and not be expected to replace it

52. Limitations of Information Systems
Causes of Difficult Implementations
Information systems can be hard to develop and put into service.
Consistent standards for systems do not exist.
Makers of hardware use different standards which makes it hard to share information between systems.

53. Limitations of Information Systems
To avoid problems:
List major organization goals and the information types require measure those goals.
Audit the current system to verify that information collected is accurate, reliable, timely, and relevant.
Investigate other sources of information
Build support for the system with workers.
Create formal training programs.
Emphasize that face-to-face contact is important.

54. Movie Example: Las Vegas
When is it necessary to change technology that is functional?
Information Technology
Las Vegas Season 1
“Hellraisers and Heartbreakers” episode
Las Vegas is a series that takes place in the fictional Montecito casino in Las Vegas, NV. Ed Deline (James Caan), an ex-CIA agent, is in charge of casino security. Each episode involves stories with the casino guests and the casino employees, ranging from various scams to personal issues.
In this episode, the Montecito is getting new surveillance equipment. Ed’s former partner in the CIA, Jack Keller (Alec Baldwin) is handling the installation. In this scene, Jack is describing the changes to Ed and Danny (Josh Dushamel).
When is it necessary to change technology that is functional?
How should a manager handle employees’ resistance to technology changes?
Students should discuss the need to keep up with competition or ways that new technology can give a firm a competitive advantage.