17Chapter PowerPoint Presentation by Charlie Cook © Copyright The McGraw-Hill Companies, Inc., All rights reserved. Managing Information Systems and Technologies

© Copyright McGraw-Hill. All rights reserved.17–2 Learning Objectives After studying the chapter, you should be able to:After studying the chapter, you should be able to:  Differentiate between data and information, and list the attributes  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 information technology revolution.  Differentiate among five kinds of management information systems.

© Copyright McGraw-Hill. All rights reserved.17–3 Learning Objectives (cont’d)  Explain how advances in information systems can give an organization a competitive advantage.

© Copyright McGraw-Hill. All rights reserved.17–4 Chapter Outline Information and the Manager’s JobInformation and the Manager’s Job  Attributes of Useful Information  Information Systems and Technology  Information and Decisions  Information and Control  Information and Coordination The Information Technology RevolutionThe Information Technology Revolution  The Tumbling Price of Information  Wireless Communication  Computer Networks

© Copyright McGraw-Hill. All rights reserved.17–5 Chapter Outline (cont’d) The Information Technology Revolution (cont’d)The Information Technology Revolution (cont’d)  Software Developments Types of Management Information SystemsTypes of Management Information Systems  The Organizational Hierarchy: The Traditional Information System  Transaction-Processing Systems  Operations Information Systems  Decision Support Systems  Expert Systems and Artificial Intelligence

© Copyright McGraw-Hill. All rights reserved.17–6 Chapter Outline (cont’d) The Impact and Limitations of Information Systems and TechnologyThe Impact and Limitations of Information Systems and Technology  Information Systems and Organizational Structure  Information Systems and Competitive Advantage  Limitations of Information Systems

© Copyright McGraw-Hill. All rights reserved.17–7 Information and the Manager’s Job DataData  Raw, unsummarized, and unanalyzed facts. InformationInformation  Data that is organized in a meaningful fashion Why Managers Need InformationWhy Managers Need Information  To make effective decisions  To control activities of the organization  To coordinate the activities of the organization

© Copyright McGraw-Hill. All rights reserved.17–8 Attributes of Useful Information

© Copyright McGraw-Hill. All rights reserved.17–9 Factors Affecting the Usefulness of Information Figure 17.1

© Copyright McGraw-Hill. All rights reserved.17–10 Information Systems and Technology

© Copyright McGraw-Hill. All rights reserved.17–11 The Information Technology Revolution Information Technology The Tumbling Price of Information Wireless Communications Computer Networks Software Development

© Copyright McGraw-Hill. All rights reserved.17–12 A Typical Three-Tier Information System Figure 17.2

© Copyright McGraw-Hill. All rights reserved.17–13 The Information Technology Revolution The Tumbling Price of InformationThe Tumbling Price of Information  The cost of computer hardware has dropped dramatically while the power of computers has risen sharply. Wireless communicationsWireless communications  Cellular service has grown rapidly to over 110 million users.  Wireless access now connects laptops to networks.

© Copyright McGraw-Hill. All rights reserved.17–14 The Information Technology Revolution Computer NetworksComputer Networks  Networking The exchange of information through a group or network of interlinked computersThe 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).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.Mainframes are large computers processing vast amounts of information. The Internet is a world wide network of computers.The Internet is a world wide network of computers.

© Copyright McGraw-Hill. All rights reserved.17–15 Four Computer-Based Management Information Systems Figure 17.3

© Copyright McGraw-Hill. All rights reserved.17–16 Software Developments

© Copyright McGraw-Hill. All rights reserved.17–17 Types of Information Systems Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)  Systems designed to handle large volumes of routine transactions. Were the first computer-based information systems handling billing, payroll, and supplier payments.Were the first computer-based information systems handling billing, payroll, and supplier payments. Operations Information Systems (OIS)Operations Information Systems (OIS)  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.Can help managers with non-routine decisions such as customer service and productivity.

© Copyright McGraw-Hill. All rights reserved.17–18 Types of Information Systems Decision Support Systems (DSS)Decision Support Systems (DSS)  Provide interactive models to help middle and upper managers make better decisions. Excellent for unusual, non-programmed decisionsExcellent for unusual, non-programmed decisions Analyzes investment potential, new product pricing.Analyzes investment potential, new product pricing.  Executive Support System (ESS) Sophisticated version of a DSS matched a top manager’s needs.Sophisticated version of a DSS matched a top manager’s needs.  Group Decision Support System An executive support system that links top managers so that they can function as a team.An executive support system that links top managers so that they can function as a team.

© Copyright McGraw-Hill. All rights reserved.17–19 Types of Information Systems Expert Systems and Artificial IntelligenceExpert Systems and Artificial Intelligence  Employ human knowledge captured in a computer to solve problems usually requiring human insight. Uses artificial Intelligence to recognize, formulate, solve problems, and learn from experience.Uses artificial Intelligence to recognize, formulate, solve problems, and learn from experience.

© Copyright McGraw-Hill. All rights reserved.17–20 The Impact and Limitations of Information Systems Management Information SystemsManagement Information Systems  Have provided managers with better information, enabling better decision making. Effective information systems can be a source of competitive advantage.Effective information systems can be a source of competitive advantage.

© Copyright McGraw-Hill. All rights reserved.17–21 The Impact and Limitations of Information Systems (cont’d) Computer-based Information SystemsComputer-based Information Systems  Are increasingly associated with decentralization of managerial decision making.  Flattening (“delayering”) organizations Information systems reduce the need for the hierarchy to control the firm.Information systems reduce the need for the hierarchy to control the firm. Managers control and coordinate using the system, not workers.Managers control and coordinate using the system, not workers.

© Copyright McGraw-Hill. All rights reserved.17–22 How Computer-Based Information Systems Affect the Organizational Hierarchy Figure 17.4

© Copyright McGraw-Hill. All rights reserved.17–23 The Impact and Limitations of Information Systems (cont’d) Horizontal Information FlowsHorizontal Information Flows  Information networks can bridge functional departments which allows information to flow horizontally between departments, leading to much higher productivity, quality, and innovation.

© Copyright McGraw-Hill. All rights reserved.17–24 Communication Flows at Tel Co. and Soft Co. Figure 17.5 Source: T. A. Stewart, “Managing in a Wired Company,” Fortune, July 11, 1994, 54. NETMAP® is a registered trademark for the NETMAP Software Systems, Alta Analytics, Inc. Westerville, OH.

© Copyright McGraw-Hill. All rights reserved.17–25 Information Systems and Competitive Advantage Competitive Advantages of Information SystemsCompetitive Advantages of Information Systems  Improved managerial decision-making capability  Reduced need for hierarchical control systems  Increased efficiency by reducing requirements for personnel Virtual ProductsVirtual Products  Firms can use their information systems to custom tailor goods and services individually for each of their customers.

© Copyright McGraw-Hill. All rights reserved.17–26 Limitations of Information Systems Loss of the Human ElementLoss 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.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 itInformation systems should support face-to-face communication, and not be expected to replace it

© Copyright McGraw-Hill. All rights reserved.17–27 Limitations of Information Systems (cont’d) Causes of Difficult ImplementationsCauses 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.Makers of hardware use different standards which makes it hard to share information between systems.  Resistance by managers who do not use the system fully because out of fear of the technology or that they do not understand it.  Political resistance to the system because it changes the way information flows in the firm

© Copyright McGraw-Hill. All rights reserved.17–28 Limitations of Information Systems (cont’d) Difficult Implementations (cont’d)Difficult Implementations (cont’d)  To avoid problems: List major organization goals and the information types require measure those goals.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.Audit the current system to verify that information collected is accurate, reliable, timely, and relevant. Build support for the system with workers.Build support for the system with workers. Create formal training programs.Create formal training programs. Emphasize that face-to-face contact is important.Emphasize that face-to-face contact is important.

© Copyright McGraw-Hill. All rights reserved.17–29 Limitations of Information Systems (cont’d) Technological factorsTechnological factors  Consistent standards for systems do not exist. Makers of hardware use different standards which makes it hard to share information between systems.Makers of hardware use different standards which makes it hard to share information between systems.  Resistance by Individuals: many managers do not use the system fully. Some managers are afraid of technology or do not understand it.Some managers are afraid of technology or do not understand it.  Political Resistance: the information system changes the way information flows in the firm Some managers feel threatened by it.Some managers feel threatened by it. Managers may think they will be laid-off.Managers may think they will be laid-off.