Introduction Managing and Using Information Systems: A Strategic Approach by Keri Pearlson & Carol Saunders

Copyright 2006 John Wiley & Sons, Inc. Introduction How effective can a business manager be when they are not involved in the IS decisions of their organizations? Should managers rely on experts to make these decisions? What risks is management making when it permits others to make critical IT decisions for the organization? Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Real World Examples Amazon.com has garnered a leadership position in the online world by leveraging their new business model. See www.amazon.com Expanded market offerings. Increased customization and personalization Smarter storage Cost cutting. Google has become the leader in the search engine market through innovation, simplicity, and by adding new features. See www.google.com Their mission statement can be found at http://www.google.com/corporate/ Copyright 2006 John Wiley & Sons, Inc.

THE CASE FOR PARTICIPATING IN DECISIONS ABOUT INFORMATION SYSTEMS Copyright 2006 John Wiley & Sons, Inc.

Participating in Information Decisions Business managers “must” be involved in information decisions. Figure I.1 describes reasons why. IS … is a critical resource. enables change in how people work together. is integrated with almost every aspect of business. enables business opportunities and new strategies. can be used to combat business challenges from competitors. Technology is ubiquitous. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. A Business View IT is a critical resource. IT is over 50% of capital goods dollars spent in the US. Over $3,800 a year per capita. High growth firms invest more in IT. Business managers decide resource allocation. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. People and Technology People and Technology work together. Technology is critical. Workers rely heavily on technology. Managers must know how to mesh both. Examine long-term and short-term consequences. Manage change carefully. Technology changes rapidly. Copyright 2006 John Wiley & Sons, Inc.

WHAT IF A MANAGER DOESN’T PARTICIPATE? Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Think About IT What risks does a manager take if they are NOT involved in IS decisions? If IS directly impacts profitability of a business then how can non-participation “hurt” the bottom-line? How does making the wrong decision impact business goals and organizational systems? Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Business Goals IS must support business goals. It is not an end but a means to an end. Support and strategic focus. Toys R Us IT debacle. Must meet user needs. Must be able to support business transactions. Copyright 2006 John Wiley & Sons, Inc.

Organizational Systems IT must support organizational systems The people, work processes, and structure. Carefully consider the consequences of making an IS change. How will this impact the way work is done? Will the people accept this new technology? What changes may need to be made in the structure of the organization? Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. WHAT SKILLS ARE NEEDED TO PARTICIPATE EFFECTIVELY IN INFORMATION TECHNOLOGY DECISIONS? Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Basic Skills Needed Myth - technical expertise is not needed to participate. Managerial role and skills needed (Fig I.2): Visionary – creativity, curiosity, confidence, focus on business solutions, flexibility. Informational and Interpersonal – communication, information gathering, interpersonal skills. Structured – project management, analytical skills, organizational skills, planning skills. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. BASIC ASSUMPTIONS Managers must know about both using and managing information. Managers must be knowledgeable participants in IS decisions. The general manager must have a basic understanding of the business and technology issues related to IS. Technology of today is different from the technology of yesterday. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. The role of the general manager and IS manager are distinct. The GM must have a basic understanding of IS to make decisions that may have significant implications for the business. The IS manager must have general business knowledge and a more in depth knowledge of IS to support its function. Copyright 2006 John Wiley & Sons, Inc.

Management Assumptions Four key activities of the classic view of management (Fig I.3). Planning Organizing Leading Controlling Classic view is seen as more of a tactical approach to management. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Mintzberg Model The Mintzberg model describes management in behavioral terms (Fig I.4). Interpersonal Informational Decisional Managers work in a chaotic environment. Quality information is crucial. More of a strategic view of management. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Business Assumptions Internal Model Understanding of what constitutes a business. Managers use to make sense of the chaotic business environment in which they function. Functional and process views of business. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Functional View Functional View of the business Based on the functions people perform. Information flows vertically in the organization. Sometimes information flows across the organization. Accounting, Operations, Marketing, Sales and Support. Executive Management receives the information and distributes as need arrives. See Figure I.5 Copyright 2006 John Wiley & Sons, Inc.

Figure I.5 Hierarchical View of the firm. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Process View This model sees the business by the processes it performs to achieve its goals. Porter describes business in terms of its primary and support activities. Primary – inbound and outbound logistics, operations, marketing and sales. Support – HR, technology, procurement, infrastructure. Activities are linked together to form a chain – the value chain (fig I.6). Copyright 2006 John Wiley & Sons, Inc.

Figure I.6 Process View of the Firm: The Value Chain Copyright 2006 John Wiley & Sons, Inc.

Information Hierarchy Data, Information, and Knowledge are not interchangeable terms. Data – set of specific objective facts or observations (inventory contains 100 widgets). Information – data endowed with relevance and purpose (75% of widgets were purchased by customers in December) – see fig I.8. Knowledge - information that has been synthesized and contextualized to provide value. Copyright 2006 John Wiley & Sons, Inc.

Figure I.8 Information Characteristics across Hierarchical Levels Top Management Middle Management Supervisory & Lower-Level Management Time Horizon Long: years Medium: weeks, months, years Short: day to day Level of Detail Highly aggregated Less accurate More predicted Summarized Integrated Often financial Very detailed Very accurate Often nonfinancial Orientation Primarily external Primarily internal with limited external Internal Decision Extremely judgmental Uses creativity and analytic skills Relatively judgmental Heavy reliance on rules Figure I.8 Information Characteristics across Hierarchical Levels Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Data Information Knowledge Definition Simple Observations of the sate of the world Data endowed with relevance and purpose Info from the human mind (includes reflection, etc) Characteristic Easily structured “ captured “ transferred Often quantified Mere facts Requires unit of analysis Data that has been processed Human mediation necessary Hard to structure Difficult to capture on machines Often tacit Hard to transfer Example Daily inventory reports of all inventory items sent to CEO of large manufacturing company Daily inventory report of items below economic order quality levels sent to inventory manager (IM) IM knows which items need to be reordered in light of related potential problems Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. System Hierarchy Information systems are comprised of three main elements: Technology People Process Infrastructure – everything that supports the flow of processing information Hardware, software, data, and components. Architecture – strategy implicit in these components. Copyright 2006 John Wiley & Sons, Inc.

Figure I.9 System Hierarchy Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. SUMMARY Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. Summary Business managers “must” be involved in information decisions. Technology is ubiquitous. IT is a critical resource. People and Technology work together. Certain key skills are needed. Data, Information, and Knowledge are distinct. Copyright 2006 John Wiley & Sons, Inc.

Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the 1976 United States Copyright Act without the express written consent of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein Copyright 2006 John Wiley & Sons, Inc.