management information systems mis 503 mba program

Management Information Systems

MIS 503

MBA Program

What is MIS?

MIS: An Amalgamation of MIS: An Amalgamation of DisciplinesDisciplines

PsychologyComputerScience

ManagementScience

Sociology

Business

Information Science

Major MIS Constituents

Organization Technology

People

MIS as a System

• We will consider IS within the context of organizations, so we will consider how IS interacts with organizations, people, business processes, and strategy.

A Framework for Managing Information Technology

Vision for the Organizationand Information TechnologyVision for the Organization

and Information Technology

IT and Organization StructureIT and Organization Structure

Corporate Strategic PlanCorporate Strategic Plan

Alliances &PartnershipsAlliances &Partnerships

Ongoing ITOperationsOngoing ITOperations

Integration ofIT and DecisionMaking

Integration ofIT and DecisionMaking

StrategyStrategy

IT InitiativesIT Initiatives IT InfrastructureIT Infrastructure

Today’s IT Landscape

• IT has flattened the competitive landscape…

This NEW Paradigm Affects Organizations in Myriad Ways

• New Business Environment– Open, Competitive, Dynamic Marketplace

• New Enterprise– Open, Networked, Information-based Organization

• New Geopolitical Order– Open, Volatile, Multipolar World

• New Technology– New Goals of IT– Open, User-centered, Networked Computing

• New Competition– Your competition is no longer only the firm across the street

Business Environment Changes Creating New Challenges and Opportunities

• Worker Productivity• Quality Emphasis• Responsiveness to the Marketplace• Globalization• Outsourcing• Communication Fluidity and Ubiquity• Offshoring• Partnering• Social and Environmental Responsibility

The New Enterprise• Hierarchical Structure is out• Problems with Hierarchies

– Hierarchies seek to separate governed from governors– Middle managers act as a communication channel between

top and bottom

• Information Technology has supplanted ‘human relays’, which has resulted in …

Flatter, Leaner Organizations

ExternalIndividuals Workgroups Organizations Organizations

Managerial tasks:Structuring the organizationFormulating strategyManaging and controllingForming interorganizations relationsReportingDesigning products and servicesManaging and designing business processes

Managerial tasks:Structuring the organizationFormulating strategyManaging and controllingForming interorganizations relationsReportingDesigning products and servicesManaging and designing business processes

Changing technology:Transaction processingDecision supportExpert systemsGroup decision support systemExecutive information systemsPersonal support systemsGroupwareInterorganizational systemsCommunicationsNetworkingDatabaseThin Clients

Changing technology:Transaction processingDecision supportExpert systemsGroup decision support systemExecutive information systemsPersonal support systemsGroupwareInterorganizational systemsCommunicationsNetworkingDatabaseThin Clients

A Framework for IT: An IT Value Chain

Three Types of Information Systems

Validate Update Output

Report

WorkstationInput

Database

1 Transactions System (Operational Systems)

User

Workstation

2 Decision System

Model BaseDatabase

RetrievalSystem

Analysis andPresentation

ModelManagement

User

Computer

Workstation

Mailboxes

3 Communication System

Workstation

CommunicationsLink

User 1 User 2

IT-Enabled Organizational Forms

Verifone, Blueberry Pancake

Calyx and Corolla,Snap Together

Oticon, Spaghetti

Mrs. Fields, Hierarchical and Flat

Frito-Lay, Hybrid

Three Shifts in the Application of IT

• From Personal to Work-Group Computing• From Systems Islands to Integrated Systems

– Management and control of physical assets and facilities– Financial management and control systems– Technologies to manage and support human resources

• From Internal to Inter-organizational Computing

Enabling TechnologyEnabling Technology The PromiseThe Promise The ChangeThe Change

High-PerformanceHigh-PerformanceTeamTeamWorkgroupWorkgroup

ComputingComputing

BusinessBusinessProcessProcessRedesignRedesign

IntegratedIntegratedSystemsSystems

IntegratedIntegratedOrganizationOrganization

High-PerformanceHigh-PerformanceTeamTeam


WorkgroupComputing

OrganizationalTransformation

BusinessProcessRedesign

WorkgroupWorkgroupComputingComputing

IntegratedIntegratedSystemsSystems

InterenterpriseInterenterpriseComputingComputing

ExtendedExtendedEnterpriseEnterprise

IntegratedIntegratedOrganizationOrganization

High-PerformanceHigh-PerformanceTeamTeam

RecastingRecastingExternalExternalRelationshipsRelationships

OrganizationalOrganizationalTransformationTransformation

BusinessBusinessProcessProcessRedesignRedesign


Summary of Work-Group Computing Shifts

Organizational HierarchyOrganizational Hierarchy Business Team OrganizationBusiness Team Organization

Personal ComputingPersonal Computing Work-Group ComputingWork-Group Computing

Emphasis on the individualEmphasis on the individual Emphasis on the groupEmphasis on the group

Designing TechnologyDesigning Technology Redesigning the entire systemRedesigning the entire system

TaylorismTaylorism The new work reengineeringThe new work reengineering

Technical UsersTechnical Users Direct support of all personnelDirect support of all personnel

Installing TechnologyInstalling Technology Leadership for evolving workLeadership for evolving work

Islands of Technology• Technology is implemented to manage

three resources:– Physical Assets– Human Resources– Financial Assets

• What if they are not speaking to one another???

Problems With Enterprises that aren’t speaking…

• Redundancy of Functionality• Miscommunications due to lack of integration• Poor quality customer service• Operational inefficiencies due to

miscommunications and redundant processing• Internal Focus

Problems With Enterprises that aren’t speaking…

• Systems are perpetuated in order to treat operational symptoms without recognizing fundamental problems

• Organizational conflict and ‘turf’ battles erupt due to the historical creation of data processing developing financial solutions, engineering developing physical assets, and administrative groups to manage human resources

What happens when an enterprise shifts to integration

Technology ApplicationsTechnology Applications Organizational RestructuringOrganizational Restructuring

System IslandsSystem Islands Integrated SystemsIntegrated Systems

Separate Systems Separate Systems Integrated EnvironmentsIntegrated Environments

Single-form SystemsSingle-form Systems Integrated data, voice, & imageIntegrated data, voice, & image

Cost ReductionCost Reduction Enterprise EffectivenessEnterprise Effectiveness

What happens when an enterprise shifts to integration

Value ChainValue Chain Value NetworkValue Network

Simple Market CombatSimple Market Combat Competition via CooperationCompetition via Cooperation

Manual Communications Manual Communications Electronic CommunicationElectronic Communication

Enterprise TechnologyEnterprise Technology Interorganizational ComputingInterorganizational Computing

Purchaser of InformationPurchaser of Information Information Purchaser/VendorInformation Purchaser/Vendor

Determining IT Value

Models and Implications

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUESMeasuring Benefits• No simple way to measure value

added benefits of IT• Can track IS performance measures

over time

What is Value?

• The most common meaning of value is monetary worth

• It is difficult to determine the value of IT investments because such value can come from– traditional (measurable) monetary returns– indirect returns that may be hard to measure– prevention of negative return from not investing in IT

(such as loss of market share)

But Value is not always easy to measure…

• It’s hard to measure directly• In the short term, benefits may not be realized• Benefits may happen after development costs

occur• No relationship to benefits included in measures• This has led to…

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

A common way to assign value (i.e., allocate costs) is using chargeback systems

IS chargeback process – places control of IS spending with business managers, and is used to better understand true costs

5. Designing an Equitable Financing System


Why use a chargeback system?

– Assign costs to those who consume– Control wasteful use of IT resources– Overcome belief that IT costs unnecessarily high– Provide incentives using subsidy – Change IS to be more business driven– Encourage managers to be knowledgeable consumers


Typical measures used to track IT costs:

– Total IT budget as percentage of total organization revenues or income

– Total IT budget as percentage of total organization budget– IS personnel costs as percentage of total organization

professional personnel salaries and wages– Ratio of hardware and software costs to IS personnel costs– Costs for IT hardware and software per managerial or

knowledge worker

IT Investment Equation

P(Success/Return) = P(Return on Investment Type) x P(Conversion Success)P(Success/Return) = P(Return on Investment Type) x P(Conversion Success)

Examples of IT Investment Equation

Budgeting system

0.5 1.0 0.5

EDI/JIT System 0.95 0.75 0.71

Infrastructure Network

0.5 0.7 0.35

Package Tracking System

0.2 1.0 0.2

Groupware 0.9 0.8 0.72

Web Order Entry 0.9 0.7 0.63

Web Home Pages

0 1.0 0

Type ofType ofInvestmentInvestment

Estimate of ReturnEstimate of ReturnProbability Based onProbability Based onType of ProjectType of Project

Estimate of Estimate of Probability ofProbability ofSuccessfulSuccessfulConversionConversion

OverallOverallProbability ofProbability ofa Return: thea Return: theSR IndexSR Index

Stock Options and IT Projects Call Option on a

Stock Real Option on IT

Project Underlying Asset Common stock on which

option is purchased An IT system that will be developed in the future

Current Value Current stock price Expected PV of returns from IT project

Volatility Stock price fluctuations in the market

Uncertainty (variance) in expected cash flow from the IT project

Exercise Price Price in the option at which holder may buy shares when exercising the option

Investment required in IT project

Exercise Date Date on the option when it can be exercised

Date for developing the IT project

Lucas, 1999

The Productivity Paradox• Organizational IT investments have not shown a

significant impact on a variety of productivity statistics

• Possible explanations are:– Results of IT spending occur locally and cannot be

expected to show up in national statistics– Many firms may yet have to undergo significant

restructuring or cost cutting for the benefits of IT to become evident

– The measurements showing the lack of such a relationship may be flawed

Barriers to Estimating IT Value

• Moore’s Law

• Evolving Organizational Use of Computing

• Management’s Aversion to IT

• Pace of Change in Business is Exacerbating our ability to accurately value IT

Perceptions of IT

Lucas, 1999

Are we getting value for money invested in IT?

ROI on IT is difficult to measure; the organization is unhappy with IT

ROI is difficult to measure; the firm believes IT makes an important contribution

How important is IT? Stories of strategic IT use are dismissed as irrelevant to business

Stories of strategic IT use are instructive

How do we plan for IT? IT plans are made by specialists or missionary zealots

IT thinking is subsumed with business thinking

Is the IS function doing a good job?

There is a general cynicism about the track record of IT

The performance of IS is no longer an agenda item

What is the IT strategy? Many IT applications are under development

IS efforts are focused on a few key initiatives

What is the CEO’s vision for the role of IT?

The CEO sees a limited role for IT in the business

The CEO sees IT as a transformational change agent for the business

What to do we expect from the CIO?

The CIO is positioned as a specialist functional manager

The CIO is valued as a contributor to business thinking and business operations

IssueIssue IT a Cost/LiabilityIT a Cost/Liability IT an AssetIT an Asset

Three Types of IT Measurement

• Metrics to Manage IT Internally– Network uptime

• Metrics for Business Unit Managers– Detailed IT Usage Report

• Metrics for Senior Managers– Balanced Scorecard

IT value comes in many forms

Contributions of IT• New ways to design organizations and new

organization structures• New relationships between customers and

suppliers• Opportunities for electronic commerce• Efficiencies through EDI• Changed basis of competition and industry

structure• Groupware

Contributions of IT

• Knowledge capture and accessibility

• Increased productivity and flexibility of knowledge workers

• Electronic alternatives for communications and supervision

• Improved opportunities of competition among nations

So, if you can find value, how do you mange IT?

The Role of the Manager• Management and not technology determines return on IT

investments– Successful organizations have strong IT leadership

• Key management decisions related to IT– Strategy– Value of IT– Investing in infrastructure– Deciding on applications– The role of knowledge– E-business– Options for service– Change management– Managing value nets

MANAGING THE ASSETS IN AN IS ORGANIZATON

Page 584-585 Figure 15.1 Selected IS Management Positions (1 of 3)

Possible IS Management Positions

Senior IS Management Issues:• Improving data and IT planning, especially linking IS to the business

• Gaining business value through IT

• Facilitating organizational learning about and through IT

• Refining the IS unit’s role and position

• Guiding systems development by business managers

• Managing organizational data as an asset

• Measuring IS effectiveness

• Integrating information technologies

• Developing systems personnel

2. Selecting Effective IS Leadership

Page 594-595


IS steering committee or advisory board used to: • Ensure frequent interaction • Set priorities• Check progress• Allocate scarce resources• Communicate concerns• Provide education• Develop shared responsibility

3. Creating an Active Partnership with Business Managers

Page 595


Questions?

management information systems mis 503 mba program

Documents

infrastructure slide

street slide

information technology

decision system

competitive landscape

mba program slide

value chain slide

new challenges