Using Advanced Information Technology to Increase Performance chapter eighteen McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Differentiate between data and information, and explain how the attributes of useful information allow managers to make better decisions. 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 created the IT revolution and changed the way managers behave. Differentiate among seven performance-enhancing kinds of management information systems. Explain how IT is helping managers build strategic alliances and network structures to increase efficiency and effectiveness.

Factors Affecting the Usefulness of Information Figure 18.1

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

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 Most of management is about making decisions To make effective decisions, managers need information, both from inside and outside the organization 5

A Product Life Cycle Figure 18.2 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 Embryonic 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 Mature 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 6

The Network of Computing Power The strategy behind cloud computing was to create a cost-effective Internet-based global platform of hardware and software provided by a network of thousands of interlinked IT companies that had the capability to provide a full range of on-demand software applications

A Four-Tier Information System with Cloud Computing Figure 18.3 8

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

Six Computer-Based Management Information Systems Figure 18.4 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. 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. Decision Support Systems Provides computer-built models that help managers make better non-programmed decisions. New productive capacity, new product development, launch a new promotional campaign, enter a new market or expand internationally 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. 10

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

Types of E-Commerce Figure 18.5

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

Flatter Structures and Horizontal Information Flows Boundaryless Organization An organization whose members are linked by computers, faxes, computer-aided design systems, and video teleconferencing and who rarely, if ever, see one another face-to-face.

Flatter Structures and Horizontal Information Flows Virtual organization A company in which employees are linked to an organization’s centralized databases by computers, faxes, and videoconferencing and rarely meet face-to-face.