1. Management Information Systems: Solving Business Problems with Information Technology Part Two: Business Integration Chapter Seven: Integration of Information: Model Integration Prof. Gerald V. Post Prof. David L. Anderson

2. Model Specific Way of Looking at the World –specific and concrete –mathematical equations –subjective descriptions –financial models –consumer models –management models Assist in Understanding More Complex Issues –enable comparison between model and actual results Some Processes Defy Modeling –Too much variability or complexity

3. Dangers of Models Number of Alternatives Expense Time Difficulty to Mirror Reality

4. Biases in Decision-Making Acquisition (input) Processing Output Feedback

5. Re-Engineering Analyze and Model the Entire Company Make Major Changes to the Operation of the Business Small Changes over Time can Actually cause a business to be misaligned with its Target

6. Decision Support Systems Database –Collects Model –Evaluates –Model should Directly Access Database –Different Brands of Software are Used for Each Component Output –Produces –Graphs

7. Input and Output Variables Input Variables –To Receive Data –Quantities of Raw Materials –Labor Hours –Money Invested in Capital Equipment –Identified by Statistical Techniques Process Data Output Variables –Profit –Quantity Produced –Quality Ratings

8. Software and Models Generic Modeling Tools SPSS or SAS Decision Support System Database Management System Spreadsheets

9. Enterprise Wide Decision Support Systems Data Warehouse –focuses on single large server or mainframe that provides consolidation point for enterprise data from diverse production systems –architecture, usually based on relational database management system, used to maintain historical data that has been extracted from the operational data store Data Mart –focuses exclusively on serving a distinct community of knowledge workers

10. Steps to a Data Warehouse Determine needs of end users and model data that the data warehouse should contain Identify necessary data sources from among the many corporate data sources Analyze corporate data sources in depth, documenting functions and processes Use information about corporate data sources to decide the transformation/integration logic Develop the metadata, which identifies the source data, describes the transformation and integration, and defines the data model Construct the physical data-warehouse database; populate Warehouse from various sources Generate necessary end-user applications

11. Data Warehouse Not Repositories for all Corporate Data Not Separate, Read-Only Data Stores Do not Require Relational Databases Not always big

12. Four Processes for the Delivery of Decision Support Data Extract all data relevant to the business decision- making processes of groups of knowledge workers for the specific production systems responsible for capturing that information. Store the resulting data sets in one location: the data warehouse. Develop a unique cut or series of cuts of the data warehouse for each knowledge worker community. Supply the decision-support tools appropriate to the knowledge workers’ style of computing.

13. Management Processes Feedback Long feedback cycles Limited understanding of relationships among measures Sequential & functional Incomplete feedback; limited to no feedforward Personnel ControlAction Control Results Control Rigid contracts with suppliers Rigid job descriptions, hiring criteria & standardized performance appraisals for employees Process & job segmentation Rigid procedures & policies Direct supervision Primarily financial Internally oriented Functional

14. Management Processes Feedback Short feedback cycles Relationships among measures preserved Interactive & interfunctional Process Control Information-Enabled Process & work integration Real-time access to a broad set of process performance Interfunctional & interorganizational measures Boundaries and Values Clearly defined and communicated Consistently enforced Early warning systems Action control for high risk operations Output Control Broad set of internal & external measures Benchmarking Interfunctional & interorganization al Feedforward Improved understanding of relationships among inputs, process, and outputs Predictive models/causal models Interactive scenario planning

15. Input Control (includes Personnel Control) Supplier certification Employee certification (advanced degrees, professional) & performance monitoring Formal business intelligence systems Management Processes Feedback Short feedback cycles Relationships among measures preserved Interactive & interfunctional Process Control Information-Enabled Process & work integration Real-time access to a broad set of process performance Interfunctional & interorganizational measures Boundaries and Values Clearly defined and communicated Consistently enforced Early warning systems Action control for high risk operations Output Control Broad set of internal & external measures Benchmarking Interfunctional & interorganization al Feedforward Improved understanding of relationships among inputs, process, and outputs Predictive models/causal models Interactive scenario planning

16. Defining DirectionExecuting and AdaptingSustaining Value Environmental context and resources Purpose, core values, and core competenci es Strategy Organizational context, resources, and leadership Coordinatin g mechanism s Units, grouping s Incentive s Formal and informal power Authority Information Boundary systems Managemen t processes Operating processes People Technology Work Control Values and Behavior Process Performance Time Quality Cost Flexibility Innovation potential Stakeholder Satisfaction Employees/partners Customers Shareholders Society Benchmarks Best of class Best of breed Reputation Other Sustainability Resiliency Flexibility

17. ? Hierarchy (Control) Entrepreneurial (Autonomy) Complex Organizatio n Simple Stable Certain Environment Dynamic Uncertain

18. SCOPE OF CHANGE Incremental Change to a Process or Function Intrafunctional Interfunctional Interorganizational Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture LOW Urgency of Stimulus HIGH Episode #3 1991-1993 Team-based Organization Redesign 1988-1991 Business Process Redesign Within Plant Episode #2 1985-1988 Corporatewide Reorganization Episode #1

19. SCOPE OF CHANGE Incremental Change to a Process or Function Intrafunctional Interfunctional Interorganizational Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture LOW Urgency of Stimulus HIGH Episode #2 1988-1990 Quality Mgmt. Episode #3 1991-1992 Business Process Reengineering 1992-1993 Bus. Unit #1 Restructuring 1991-1992 SBU Restructuring Episode # 1 1986-1988 Focused Redesign/Key Leveraged Areas 1985 Post-takeover Restructuring

20. SCOPE OF CHANGE Incremental Change to a Process or Function Intrafunctional Interfunctional Interorganizational Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture LOW Urgency of Stimulus HIGH 1978-1980 Ideal Sales Org. Study & Ideal Mfg. Org. Study 1983-1986 Redesign of Field Sales, Distribution & Mfg. (separate initiatives) Episode # 1 1991-1992 EDI Initiatives 1987-1988 Business Process Redesign 1990-1993 Area Business Team Reorganized Episode # 2 Episode # 3

21. Strategic Business Planning Strategic IS Planning IS Investment Plan VISION Strateg y External Strategic Models Strategi c Goals Competitive Social Political Critical Success Factors CDS VBP CAS IS Products and Services SDMSDM Strategic and IS Planning Process

22. REQUESTS COMPLETED AGREEMENT S REACHED WORK COMPLETIONS

23. Traditional organizationsCustomer-driven organizations Product and service planning Short-term focus Reactionary management Management by objectives Long-term focus Prevention-based management Customer-driven strategic planning process Measure of performance Bottom-line financial results Quick returns on investment Customer satisfaction Market share Long-term profitability Quality orientation Total productivity Attitudes toward customers Customers are irrational and a pain. Customers are a bottleneck to profitability. Voice of the customer is important Professional treatment and attention to customers are required. Quality of products and services Provided according to organizational requirements Provided according to customer requirements and needs Marketing focusSeller’s market Careless about lost customers Increased market share and financial growth achieved through customer satisfaction. Process management approach Focus on error and defect detection Focus on error and defect prevention Product and service delivery attitude It is OK for customers to wait for products and services. It is best to provide fast-time-to-market products and services People orientationPeople are the source of problems and are burdens on the organization. People are an organization’s greatest resource. Basis for decision making Product-driven Management by opinion Customer-driven Management by data Attitudes toward customers Hostile and careless “Take it or leave it” attitude Courteous and responsive Empathic and respectful attitude Improvement strategy Crisis management Management by fear and intimidation Continuous process improvement Total process management Mode of operation Career-driven and independent work Customers, suppliers, and process owners have nothing in common Management-supported improvement Teamwork between suppliers, process owners, and customers practiced.

24. Scope of electronic integration Business governance Tightly coupled Loosely coupled Common roleUnique role IT governance Transactions Inventory triggers Process linkages Expertise Electronic infrastructure Competitive advantage Collaborative advantage Business network redesign “EDI” “Standard business contracts” “Strategic alliances” “Knowledge networks” Information Technology Development Effort

25. Conventional and IT Design Variables Class of variableConventional and design variables SourceIT design variables Structural Work process Communications Interorganizational relations Definition of organizational subunits Determining purpose, output of subunits Reporting mechanisms Linking mechanisms Control mechanisms Staffing Tasks Workflows Dependencies Output of processes Buffers Formal channels Informal communications/ collaboration Make versus buy decision Exchange of materials Communications mechanisms Nadler and Tushman; Galbraith; Thompson Nadler and Tushman; Mintzberg Galbraith; Nadler and Tushman Nadler and Tushman Mintzberg Nadler & Tushman Thompson Galbraith Mintzberg Virtual components Electronic linking Technological leveling Production automation Virtual components Electronic communications Technological metrixing Electronic customer/ supplier relationships Electronic linking

26. Virtual Negotiated organizations Traditional Vertically integrated conglomerates IT Design Variables and Four Prototypical Organizations Virtual components Electronic linking and communications Technological matrixing Technological leveling Electronic workflows Production automation Electronic customer/ supplier links Substitute electronic for physical components Essential part Participate in matrixed group Use to supervise remote workers and groups Crucial part of strategy NA Used extensively Substitute electronic for physical components Essential part Use for coordination NA Crucial part of strategy Communicate designs Used extensively Use to replace isolated components Optional Use for various groups Use to reduce layers of management Use where applicable to restructure work Use where applicable Potentially important Force components into electronic subsidiary Essential part Use for coordination and task forces Use to reduce layers of management Key to coordinating work units Coordinate production among work units Key to operations

27. Three Generic Strategies Uniqueness Perceived by the Customer Low Cost Position Industrywide Particular Segment Only DIFFERENTIATION OVERALL COST LEADERSHIP FOCUS Strategic Advantage Strategic Target

28. Commitme nt to customer satisfaction Human resource developme nt Total quality care Error prevention philosophy Total quality solution Design and product quality Competitiv e market- driven enterprise Quality services Quality manageme nt and supervision Person al quality Productivity efficiency and effectiveness Market-driven quality and productivity technologies for continuous improvement Focus Elements of a Customer- and Market-Driven Enterprise

29. Success factors Top management leadership and commitment Continuous improvement focus Continuous education and training Continuous recognition and reward Participative management and employee empowerment Convince top management of benefits of becoming market driven. Communicate and demonstrate management’s commitment. Establish focal point and recruit other qualified individuals. 12 3 Increase amount of customer-oriented interdepartmental teamwork. 4 Introduce market- driven strategic planning process. 5 Apply tools of market research, auditing, marketing training, and consulting. Create and use market- based performance measures. 6 7 Develop new improvement programs with customer-oriented professionals. Develop customer commitment throughout enterprise. Monitor progress toward objectives. 8 9 10 Steps to Becoming a Customer- and Market-Driven Enterprise

30. Product Line Target Market s Marketing Sales Distribution Manufacturing Labor Purchasing Research & Developmen t Finance and Control GOALS Definition of how the business is going to compete Objectives for profitability growth, market share, social responsiveness, etc. The Wheel of Competitive Strategy

31. Internal Factors Company Strengths/ Weakness es Industry Opportunitie s/ Threats Personal Values Societal Expectations External Factors Competitive Strategy Context for Competitive Strategy

32. Developing Strategies. Market measures and firm performance are used to highlight problems and opportunities. Corporate straightedges are developed from process improvements and innovations. Potential strategies are evaluated and prioritized. Processes are re-engineered and new systems are designed and implemented. expectations goals rivalry Business Strategies and Priorities Process Changes Data Needs IS Changes System Development & Implementation Business Operations & Rules Existing Data and IS Corporate Strategy Development strengths weaknesses opportunities critical success factors monitor rivals Market Measures Market share Concentration Growth Profitability Performance Measures ROA EPS Subjective ROI Growth Cost leadership Differentiation Innovation Linkage Re-engineering Organization Decentralization

33. Strategy analysis. Strategy determines the identity of a firm. Formulating strategies is only the first step. As an effective manager, you must also be able to implement strategies. Formulation (Deciding what to do.) Implementation (Achieving results.) Corporate Strategy Pattern of purposes and policies defining the company and its business 1. Organization structure and relationships. Division of work. Coordination of divided responsibility. Information systems. 2. Organizational processes and behavior. Standards and management. Motivation and incentive systems. Control systems. Recruitment and development of managers. 3. Top leadership. Strategic. Organizational. Personal. 1. Identification of opportunity and risk. 2. Determining the company’s material, technical, financial, and human resources. 3. Personal values and aspirations. 4. Acknowledgment of noneconomic responsibility to society.