Information management INFORMATION SYSTEMS IN ORGANIZATIONS Information management Zatil Ridh'wah Hj Darot

Definition The management of organizational processes and systems that acquire, create, organize, distribute and use information. It is a continuous cycle of related activities: Identification of information needs ___________________of information Analysis and interpretation of information Organization and storage of information Information access and dissemination Information use

Benefits of Information Management Achieve business outcomes Resource allocation Able to ___________ Able to support in decision making Business planning and continuity

Role of Information Technology in Information Management IT builds the technical information infrastructure that facilities the efficient processing and movement of data, files and messages. The IT infrastructure provides access to applications, databases and communication services that enables the organization to perform its ___________, reliable and quick.

Challenges of information management People Different attitudes towards and familiarity with IT Do not trust others Culture ______________-culture Politics Refuse to share to get credit on their own, to impress superiors or for promotion

Impact of Information systems on organization Economic impact Transaction cost theory Agency theory Organizational and behavioral impact Flattened organizational structure Organizational resistance

Economic impacts Information technology changes both the relative costs of capital and the costs of information. Information systems is a _________________. Cost of information technology decreases, hence: Substitutes for labor Substitutes capital

Transaction cost theory Firms seek to economize cost of participating in market (transaction costs) IT lowers market transaction costs for firm IT _____________________attributes (communicate suppliers, monitoring contract compliance, buying insurance, obtaining information on products, etc.) rather than employing more labor.

Transactional cost theory shows that as transaction costs decrease, firm size (the number of employees) should shrink because it becomes easier and cheaper for the firm to contract for the purchase of goods and services in the marketplace rather than to make the product or offer the service itself. Firm size can stay constant or contract even if the company increases its revenues.

example Chrysler Corporation use computer links to external suppliers. Achieves economics by obtaining more than 70% of its parts from other companies Cisco Systems and Dell Computers outsources their production to contract manufacturers such as Flextronics instead of making their own products.

example Eastman Chemical Company split from Kodak in 1994 Used to have $3.3. billion in revenue and 24000 full-time employees. In 2003, have $5.8 billion in revenue and 15000 employees.

Agency theory A firm is viewed as “_____________” among self-interested individuals rather than a unified, profit-maximizing entity. Basically, principal (owner) employ “agents” (employees) to perform work on his/her behalf. Agents need constant supervision and management otherwise they pursue own interest rather than owner’s interests. As firms expand in size and scope, agency costs rise (owners need more effort in supervising and managing employees) Nexus of contract: corporation/ organizations/ business are simply collections of contracts between parties (shareholders, directors, employees, suppliers and customers)

Agency theory IT enables managers to oversee a great number of employees. Thus reducing agency cost. shows that by reducing overall management costs, information technology enables firms to increase revenues while shrinking the number of middle managers and clerical workers.

Organizational and behavioral impacts IT flattens organizations Managers now _____________________on time – faster at making decisions IT provide managers with information to supervise larger numbers of workers IT enables lower-level employees information they need to make decisions without supervision

Organizational resistance As mentioned, IT reduces structure and work itself. Employees becomes afraid that they are disposable. Some ____________________, a change would disrupt their flow of work. Others see new technology as a scary alien. Most common failure of implementation of new systems are due to resistance of employees to change.

Overcoming organizational resistance Gradually implement IS through stages (enable employees to accept gradually) Communicate with employees about upcoming technological changes Employee participation in the changes ______________employees using the system

Competitive advantage A product or service that an organization’s customers value more highly than similar offerings from its competitors. Competitive advantages are typically _______________________ To stay ahead of competition, organizations must constantly develop new competitive advantages.

sustaining competitive advantage Porter’s Competitive Forces Model 5 competitive strategies

Porter’s Five Forces Model Used to assist in analyzing competition in an industry and determine relative attractiveness of that industry. In order to analyze an industry a firm must analyze 5 competitive forces: Rivalry of competitors within its industry Threat of new entrants into an industry and its markets Threat ______________________ Bargaining power of customers Bargaining power of suppliers

5 competitive strategies In order for a firm to survive and succeed, it must develop and implement strategies to counter the 5 competitive forces. The five competitive strategies are: _______________ Differentiation Innovation Growth Alliance Information systems is a critical enabler of these five competitive strategies.

Cost leadership Organization can use information systems to reduce operational ______________________. For example: A supply chain management system can incorporate an efficient customer response system to directly link consumer behavior to distribution and production and supply chains Helps lower inventory and distribution costs

Differentiation Use information systems to enable new products and services Change customer ______________ in using existing products and services Examples: BIBD NEXGEN mobile application offers multiple services online such as, transfer services, make cardless withdrawals, make payments online and many more.

Innovation Use information system to identify and create new products and services. Or develop new business processes via automation. Using digital modelling and simulation of product design to reduce time and cost to market. Also work on ____________________business operations.

Growth Use information systems to expand domestic and international operations or integrate into other products and services. Example: Establish global intranet and global operation platform Establish omni-channel strategy to gain growth The use of Global Information System to aid in _____________________

Strategic alliance Create and enhance relations with partners via application. Example: Develop virtual organizations and inter-organizational information systems

Other competitive strategies Locking customers or suppliers Enhance relations and build valuable new relationships via customer/partner relationship management systems Switching costs Via extranets and proprietary software applications Example, Amazon’s user friendly and useful B2C website

Other competitive strategies Raising barrier to entry Improving operations, __________________ organizational structure by increasing amount of technology used. Example, Google’s search engine P&G’s digitization strategy (they are working on digitizing almost every aspect of its operation to make it the world's most technologically enabled firm)

Tutorial questions Why is information management important? Find an organization who uses information technology to reduce agency cost. Give examples of companies using the 5 different types of competitive strategies.