© 2007 Prentice Hall, Inc.1 Using Management Information Systems David Kroenke Information Systems Management Chapter 10

© 2007 Prentice Hall, Inc.2 Learning Objectives Understand the relationship of the CIO and CTO to other senior executives. Know the IS department’s responsibilities for planning the use of IT/IS, managing infrastructure, developing systems, and protecting information assets. Understand the purpose and advantages of outsourcing.

© 2007 Prentice Hall, Inc.3 Learning Objectives (Continued) Understand the risks of outsourcing. Know users’ rights and responsibilities with regard to the IS organization.

© 2007 Prentice Hall, Inc.4 The Information Systems Department The main functions of the information systems department are as follows: Plan the use of IT to accomplish organizational goals and strategy. Develop, operate, and maintain the organization’s computing infrastructure. Develop, operate, and maintain enterprise applications. Protect information assets. Manage outsourcing relationships.

© 2007 Prentice Hall, Inc.5 The Information Systems Department (Continued) The title of the principal manager of the IS department varies from organization to organization. A common title is chief information officer, or CIO. Other common titles are vice president of information services, director of information services, and, less commonly, director of computer services.

© 2007 Prentice Hall, Inc.6 The Information Systems Department (Continued) The CIO, like other senior executives, reports to the chief executive officer (CEO), though sometimes these executives report to the chief operation officer (COO), who in turn reports to the CEO. In some companies, the CIO reports to the chief financial officer (CFO).

© 2007 Prentice Hall, Inc.7 The Information Systems Department (Continued) Most IS departments include a technology office that investigates new information systems technologies and determines how the organization can benefit from them. Today many organizations are investigating Web services technology and planning on how they can best use that technology to accomplish their goals and objectives.

© 2007 Prentice Hall, Inc.8 The Information Systems Department (Continued) The chief technology officer or CTO, often heads the technology group. The CTO sorts through new ideas and products to identify those that are most relevant to the organization. The CTO’s job requires deep knowledge of information technology and the ability to envision how new IT will affect the organization over time.

© 2007 Prentice Hall, Inc.9 The Information Systems Department (Continued) The group operations, manages the computing infrastructure, including individual computers, computer centers, networks, and communications media. This group includes system and network administrators. An important function of this group is to monitor the user experience and respond to user problems. Another group in the IS department is development This group manages the process of creating new information systems as well as maintaining existing information systems.

© 2007 Prentice Hall, Inc.10 The Information Systems Department (Continued) The size and structure of the development group depends on whether programs are developed in- house. If not, this department will be staffed primarily by systems analysis who work with users, operations, and vendors to acquire and install licensed software and to set up the system components around that software. If the organization develops programs in-house, then this department will include programmers, test engineers, technical writers, and other development personnel.

© 2007 Prentice Hall, Inc.11 The Information Systems Department (Continued) The last IS department is outsourcing relations. This group exists in organizations that have negotiated outsourcing agreements with other companies to provide equipment, applications, or other services. There is also a data administration staff function. The purpose of this group is to protect data and information assets by establishing data standards and data management practices and polices.

© 2007 Prentice Hall, Inc.12 The Information Systems Department (Continued) Keep the distinction between IS and IT. Information systems (IS) exist to help the organization achieve its goals and objectives. Information technology (IT) is just technology. It concerns the products, techniques, procedures, and designs of computer-based technology. IT must be placed into the structure of an IS before an organization can use it.

© 2007 Prentice Hall, Inc.13 Figure 10-1 Typical Senior-Level Reporting Relationships

© 2007 Prentice Hall, Inc.14 Align Information Systems with Organizational Strategy Information systems must be aligned with organizational strategy. The purpose of an information system is to help the organization accomplish its goals and objectives.

© 2007 Prentice Hall, Inc.15 Figure 10-2 Planning the Use of IS/IT

© 2007 Prentice Hall, Inc.16 Communicate IS issues to the Executive Group The CIO is the representative for IS and IT issues within the executive staff. Provides the IS perspective during discussions of problems solutions, proposals, and new initiatives.

© 2007 Prentice Hall, Inc.17 Develop Priorities and Enforce Within the IS Department The CIO must evaluate every proposal, at the earliest stage possible, as to whether it is consistent with the goals of the organization and aligned with its strategy. No organization can afford to implement every good idea.

© 2007 Prentice Hall, Inc.18 Develop Priorities and Enforce Within the IS Department (Continued) Projects that are aligned with the organization's strategy must be prioritized. The IS department must develop the most appropriate systems possible, given constraints on time an money.

© 2007 Prentice Hall, Inc.19 Sponsor the Steering Committee A steering committee is a group of senior managers from the major business functions that works with the CIO to set the IS priorities and decide among major IS projects and alternatives. The steering committee serves an important communication function between IS and the users. The steering committee provides a forum for users to express their needs, frustrations, and other issues they have with the IS department.

© 2007 Prentice Hall, Inc.20 Sponsor the Steering Committee (Continued) The IS department sets up the the steering committee’s schedule and agenda and conducts the meetings.

© 2007 Prentice Hall, Inc.21 Managing the Computing Infrastructure Managing the computing infrastructure is the most visible of all of the IS department’s functions. To many employees, the IS department is the “computer department”. This management function must be in alignment with infrastructure design.

© 2007 Prentice Hall, Inc.22 Align Infrastructure Design with Organizational Structure The structure of the IS infrastructure must mirror the structure of the organization. A highly controlled and centralized organization needs highly controlled and centralized information systems. A decentralized organization with autonomous operating units requires decentralized information systems that facilitate autonomous activity.

© 2007 Prentice Hall, Inc.23 Figure 10-3 Distributed Check-Printing Company

© 2007 Prentice Hall, Inc.24 Figure 10-4 Problematic Centralized IS

© 2007 Prentice Hall, Inc.25 Figure 10-5 Decentralized Order-Management System

© 2007 Prentice Hall, Inc.26 Create, Operate, and Maintain Computing Infrastructure Three more tasks in managing the computing infrastructure are to: Create and maintain infrastructure for end-user computing. Create, operate, and maintain networks. Create, operate, and maintain data centers, data warehouses, and data marts.

© 2007 Prentice Hall, Inc.27 Establish Technology and Product Standards Failure of the network software upgrade points out the need for technology and product standards. If no standards exist it could mean difficulties for upgrading computers and programs. Some users’ computers become incompatible with others.

© 2007 Prentice Hall, Inc.28 Track Problems and Monitor Resolutions The IS department provides the computing infrastructure as a service to users. The system is used to record user problems and monitor their resolution. When a user reports a problem the department assigns a tracking number, and the problem enters a queue for service.

© 2007 Prentice Hall, Inc.29 Track Problems and Monitor Resolutions (Continued) Problems are prioritized on the basis of how critical they are to the user’s work. Higher-priority items are serviced first. The user is told its priority and given an approximate date for resolution.

© 2007 Prentice Hall, Inc.30 Manage Computing Infrastructure Staff The IS department must manage the computing infrastructure staff. The organization of an operation department has subdepartments for the network, computer center, data warehouse and user support. The operations staff must constantly update its knowledge to keep up with upgrades in both hardware and software products.

© 2007 Prentice Hall, Inc.31 Figure 10-6 Organization of a Typical IS Operation Group

© 2007 Prentice Hall, Inc.32 Managing Enterprise Application In addition to managing the computing infrastructure, the IS department manages enterprise applications as well. Enterprise applications means software programs that span more than one department, such as some functional applications as well as ERP, EAI, and SCM applications.

© 2007 Prentice Hall, Inc.33 Figure 10-7 Managing Enterprise Applications

© 2007 Prentice Hall, Inc.34 Develop new Applications The IS department manages the development of new applications. The process of creating a new application begins when the IS department aligns its priorities with the organization's strategy. The IS department develops system plans and proposals and submits them to the steering committee for approval. Once approved, the development process is initiated.

© 2007 Prentice Hall, Inc.35 Maintain Systems The IS department has the responsibility for system maintenance. Maintenance means either to fix the system to do what it is supposed to do in the first place or to adapt the system to changed requirements. The IS department must have a means to track user issues and problems, prioritize them, and record their resolution.

© 2007 Prentice Hall, Inc.36 Maintain Systems (Continued) Companies need special maintenance activities to support legacy systems. A legacy information system is one that has outdated technologies and techniques but is still used, despite its age. Legacy system maintenance entails adapting those systems to new tax laws, accounting procedures, or other requirements that must be implemented for the legacy system to be relevant and useful.

© 2007 Prentice Hall, Inc.37 Integrate Enterprise Applications A third element concerns enterprise application integration. EIA requires developers to create intermediary layers of software, and possibly intermediary databases, to enable the integration of disparate systems.

© 2007 Prentice Hall, Inc.38 Figure 10-8 Organization of a Typical IS Development Group

© 2007 Prentice Hall, Inc.39 The last management function is to manage the development staff. A computer programmer or developer is both a software designer as well as a programmer. Sustaining-application developers work on existing applications. Sustaining developers have fewer years of experience or less knowledge than new-application developers. Manage Development Staff

© 2007 Prentice Hall, Inc.40 Manage Development Staff (Continued) Sustaining developers and new developers can belong to separate development teams. Product quality assurance (PQA) engineers specialize in the testing of software. PDQ engineers in some cases are programmers who develop automated testing suites. Technical writers develop product installation instructions, help text, and other support documentation.

© 2007 Prentice Hall, Inc.41 Administer Data Data administration describes a function that pertains to all of an organization’s data assets. Database administration describes a function that pertains to a particular database.

© 2007 Prentice Hall, Inc.42 Define Data Standards Data standards are definitions, or metadata, for data items shared across the organization. They describe the name, official definition, usage, relationship to other data items, processing restrictions, version, security code, format and other features of data items that are shared across the organization. Data standards can also include data owner.

© 2007 Prentice Hall, Inc.43 Figure 10-9 Data Administration

© 2007 Prentice Hall, Inc.44 Maintain the Data Dictionary A data dictionary is a file or database that contains data definitions. Without maintenance, the data dictionary, an essential tool, loses its value.

© 2007 Prentice Hall, Inc.45 Define Data Policies Data administration is concerned with the creation and dissemination of data policies. The data administrator works with senior executives, the legal department, functional department managers, and others to determine data policy. Data policies are dynamic and must change as new corporate policies and new systems are developed and as new laws are created.

© 2007 Prentice Hall, Inc.46 Figure Example of Data Dictionary Fields

© 2007 Prentice Hall, Inc.47 Plan for Disaster Recovery Disaster-recovery planning is the creation of systems for recovering data and systems in the event of a catastrophe such as: Earthquake Flood Terrorist event Other significant processing disruption

© 2007 Prentice Hall, Inc.48 Outsourcing Outsourcing is the process of hiring another organization to perform a service. Outsourcing is done to save costs, to gain expertise, and to free up management time.

© 2007 Prentice Hall, Inc.49 Figure Popular Reasons for Outsourcing IS Services

© 2007 Prentice Hall, Inc.50 International Outsourcing Large companies outsource outside of the United States because of a large, well-educated, English- speaking population that will work for 20 to 30 percent of the labor cost here in this country. International outsourcing is advantageous for customer support and other functions that must be operational 24/7.

© 2007 Prentice Hall, Inc.51 Alternatives to Outsourcing Some organizations outsource the acquisition and operation of computer hardware. Acquiring licensed software Outsource entire system Web storefront Entire business function

© 2007 Prentice Hall, Inc.52 Figure IS/IT Outsourcing Alternatives

© 2007 Prentice Hall, Inc.53 Figure Outsourcing Risks

© 2007 Prentice Hall, Inc.54 Figure User Information Systems Rights and Responsibilities

© 2007 Prentice Hall, Inc.55 Summary The major functions of the IS department are to plan the use of IT so as to accomplish the organization’s goals and objectives: Manage the organization’s computing infrastructure. Develop, operate, and maintain enterprise applications. Protect the organization’s information assets. Manage outsourcing relationships. The principal manager of the IS department is the chief information officer (CIO).

© 2007 Prentice Hall, Inc.56 Summary (Continued) In most companies, the CIO reports to the CEO and is a member of the senior management team. The CIO communicates IS/IT issues to executive staff, communicates and enforces priorities within the IS department, assesses emerging technology in light of those priorities, and sponsors the steering committee.

© 2007 Prentice Hall, Inc.57 Summary (Continued) The chief technology officer (CTO) identifies new IT products and ideas that will be relevant to the organization. Information systems consist of the five components and exist to help the organization achieve its goals and objectives. The IS department has various planning functions.

© 2007 Prentice Hall, Inc.58 Summary (Continued) The IS department manages the computing infrastructure by: Aligning it with organization’s structure and dynamics. Creating and maintaining facilities for end-user computing. Creating, operating, and maintaining the computer network, computing centers, data warehouses, and data marts. Data administration and database administration are functions in the IS department that protect the organization’s information assets.

© 2007 Prentice Hall, Inc.59 Summary (Continued) Outsourcing is the process of hiring another organization to perform a function or service. Companies outsource hardware, programs, applications, and even entire business functions. As a future user of information systems, facilities, and services, you have rights and responsibilities.

© 2007 Prentice Hall, Inc.60 Key Terms and Concepts Chief information officer (CIO) Chief technology officer (CTO) Data administration Data dictionary Data standards Database administration Legacy information system Steering committee

© 2007 Prentice Hall, Inc.61 Ethics Guide–Using the Corporate Computer Suppose you work at a company that has the following computer use policy: Computers, , and the Internet are to be used primarily for official company business. Small amounts of personal can be exchanged with friends and family, and occasional usage of the Internet is permitted, but such usage should be limited and never interfere with your work.

© 2007 Prentice Hall, Inc.62 Ethics Guide–Using the Corporate Computer (Continued) Playing computer games during work hours Playing computer games on the company computer before and after working hour Responding to s from an ill parent Watching DVDs during lunch and other breaks Sending s to plan a party that involves mostly people from work Suppose you are a manager and you learn that one of your employees has been engaged in the following activities:

© 2007 Prentice Hall, Inc.63 Ethics Guide–Using the Corporate Computer (Continued) Sending s to plan a party that involves no one from work Searching the Web for a new car Reading the news on CNN.com Checking the stock market over the Internet. Bidding on items for personal use on eBay Selling personal items on eBay Paying personal bills online Paying personal bills online when traveling on company business

© 2007 Prentice Hall, Inc.64 Ethics Guide–Using the Corporate Computer (Continued) Buying an airplane ticket for an ill parent over the Internet Changing the content of a personal Web site Changing the content of a personal business Web site Buying an airplane ticket for a personal vacation over the Internet

© 2007 Prentice Hall, Inc.65 Security Guide–Secure Development A self-validating number has one or more digits that verify the accuracy of the other digits. Vendors frequently use self-validating numbers to limit usage of products or electronic services. When you install Microsoft Windows, you supply a serial number, which is a self-validating number.

© 2007 Prentice Hall, Inc.66 Security Guide–Secure Development (Continued) The install program knows the algorithm for checking the number, and if you enter any invalid sequence, it will be able to determine that. Such numbers are also used to limit access to Web sites.

© 2007 Prentice Hall, Inc.67 Opposing Forces Guide–Is Outsourcing Fool’s Gold? “People are kidding themselves. It sounds so good-just pay a fixed, known amount to some vendor, and all your problems go away”. “Except it doesn’t work that way. Your trade one set of problems for another. Consider the outsourcing of computer infrastructure. What’s the first thing the outsource vendor does? It hires all of the employees who were doing the work for you.”

© 2007 Prentice Hall, Inc.68 Opposing Forces Guide–Is Outsourcing Fool’s Gold? (Continued) What you’re really outsourcing is middle-level management of the same IT personnel you had. So now you’re paying a premium for the services of your former employees, who are now managed by strangers who are paid by the outsource vendor, who evaluates those managers on how well they follow the outsource vendor’s profit- generating procedures.

© 2007 Prentice Hall, Inc.69 Opposing Forces Guide–Is Outsourcing Fool’s Gold? (Continued) How quickly can they turn your operation into a clone of all their other clients? Do you really want to do that? How do you undo an outsource agreement?

© 2007 Prentice Hall, Inc.70 Problem Solving Guide–What If You Just Don’t Know? What if you have to make a decision and you just don’t know which way to go? For complex issues like outsourcing, it can be difficult to know what the right decision is. In many cases, more analysis won’t necessarily reduce the uncertainty. Consider outsourcing as a typical, complex, real- life decision problem.

© 2007 Prentice Hall, Inc.71 Problem Solving Guide–What If You Just Don’t Know? (Continued) The question is, will outsourcing save your organization money? Will the cap on financial exposure be worth the loss of control? Or, is your organization avoiding managing the IS function because you would just like to have the whole IS mess out of your hair? Suppose the CIO is adamantly opposed to the outsourcing of computer infrastructure?

© 2007 Prentice Hall, Inc.72 Problem Solving Guide–What If You Just Don’t Know? (Continued) Why is that? Are the projected savings real? Or are they the result of a paper analysis that misses many of the intangibles? You could do another study; you could commission an independent consultant to examine this situation and make a recommendation.

© 2007 Prentice Hall, Inc.73 Reflections Guide–Jumping Aboard the Bulldozer Brainard and Litan cite research that indicates that organizations will move about 250,000 jobs per year overseas between now and Although that may sound like a lot, in the context of the 137 million U.S. workers, and in the context of the 15 million U.S. Americans who lose their jobs due to other factors, 250,000 jobs overseas is not much.

© 2007 Prentice Hall, Inc.74 Reflections Guide–Jumping Aboard the Bulldozer (Continued) The culprit is not overseas outsourcing; it is productivity. Because of information technology, Moore’s Law, and all the information systems that you have learned about in this book, workers productivity continues to increase, and it is possible to have an economic recovery without a binge of new hiring.

© 2007 Prentice Hall, Inc.75 Reflections Guide–Jumping Aboard the Bulldozer (Continued) This idea of creative destruction is all well and good for an economic theory, but what do you, as a student in the first decade of the twenty-first century, do? How do you respond to the dynamics of shifting work and job movement? When you work with information systems, you are not a professional of a particular system or technology; rather, you are a developer or user of a system that helps your organization achieve its goals and objectives.

© 2007 Prentice Hall, Inc.76 Reflections Guide–Jumping Aboard the Bulldozer (Continued) Define yourself more generally as someone who specializes in the use of EDI, XML or Gizmo 3.0 to help your business achieve its goals and objectives. Your long-term success depends not on your knowledge of XML, but rather on your ability to think, to solve problems, and to use technology and information systems to help your organization achieve its goals and objectives.