McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

18 Chapter Managing Information Systems McGraw-Hill© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives After reading this chapter, you should be able to: Understand the difference between data and information, and how firms use each to achieve organizational goals. Integrate the components of a firm’s information technology. Compare different types of networks, including local area networks, intranets, extranets, and the Internet. Understand the role of software and how it changes business operations. Discuss the ethical issues involved with the use of computer technology. Understand how productivity, efficiency, and responsiveness to customers can be improved with information technology. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Two Perspectives This chapter looks at information from two perspectives:  How the firm’s information systems and information technology are part of management.  How management information systems are used by managers. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Management Skills for Information Systems Management Analytical Skills—Managers need to be able to gather, synthesize, and compare data about their firms and about the options available to them. Organizational Skills—Managers need to be able to make sense of information by organizing data to facilitate analysis and comparison. Flexibility and Innovation Skills—Managers must be able to be flexible in adapting standard business practices to new information technologies. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Information Related to MIS Management information systems provide access to important information used in many other chapters:  Planning process (chapter 5)  Decision making (chapter 6)  Human resource management (chapter 10)  Communication (chapter 15)  Control (chapter 16)  Operations management (chapter 17) © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Data and Information Data—raw facts, such as the number of items sold or the number of hours worked in a department. Information—data that have been gathered and converted into a meaningful context. Useful information is:  High quality  Timely  Relevant  Comprehensive © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Data and Information (continued) Databases—computer programs that assign multiple characteristics to data and allow users to sort the data by characteristic. Data warehouses—massive databases that contain almost all of the information about a firm’s operations. Data mining—the process of determining the relevant factors in the accumulated data to extract the data that are important to the user. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Information Technology Technology is the means of transforming inputs into products. Technology has improved operations management, including productivity, efficiency, and customer responsiveness. A firm’s information technology may incorporate its operations technology. Six Functions of Information Technology:  Captures data, Transmits data, Stores information, Retrieves information, Manipulates information, Displays information © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Equipment Local area networks (LAN) link computers in a firm so users can share information Servers store information for users linked to them Wireless equipment—computers no longer require a physical connection, instead satellites or central locations create links © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Computer Networks LAN The Internet is a network of networks. It provides:   Telnet connections with computers  File transfer protocols (FTP) to move files  World Wide Web provides access to protocols for text, documents, and images Extranets (wide area networks) link a company's employees, suppliers, customers, and other key business partners Intranets are internal networks that are private or semiprivate, access is limited to a firm's employees or certain employees © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Types of Software Operating system software tells the computer hardware how to run Applications software is developed for a specific task Artificial intelligence performs tasks as such as searching through data and Speech recognition software allows customers to speak numbers when placing orders over the phone © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Enterprise Resource Planning (ERP) Software Combines all of a firm’s computerized functions into a single, integrated software program that runs off a single database. This allows various departments to easily share information and communicate with each other. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

ERP Implementation Reasons To integrate financial data by providing one set of numbers for the company’s finance department, sales department, and individual business units To standardize manufacturing processes, so that a firm with multiple business units can save time, increase productivity, and reduce staff To standardize human resources information about employees and communicating information about benefits and services © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Computer Systems and Management Issues Computer Ethics—The analysis of the nature and social impact of computer technology and the development of policies for its appropriate use. Security—Controlling access to and transmission of data and information contained in the firm’s network. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Reasons for Computer Ethics Computer-generated errors are unlike human error. Computers are able to communicated over the great distances at low cost. Computers can store, copy, erase, retrieve, transmit, and manipulate huge amounts of information quickly and cheaply. Computers can depersonalize originators, users, and subjects of programs and data. Computers can use data created for one purpose for another purpose for long periods of time. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Ten Commandments for Computer Ethics Thou shalt not use a computer to harm other people. Thou shalt not interfere with other people’s computer work. Thou shalt not snoop around in other people’s files. Thou shalt not use a computer to steal. Thou shalt not use a computer to bear false witness. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Ten Commandments for Computer Ethics (continued) Thou shalt not use or copy software for which you have not paid. Thou shalt not use other people’s computer resources without authorization. Thou shalt not appropriate other people’s intellectual output. Thou shalt think about the social consequences of the program you write. Thou shalt use a computer in ways that show consideration and respect. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Ways to Implement Security User names and passwords Encryption – use of software that scrambles data Firewalls – a combination of hardware and software that controls access to and transmission of data and information contained in a network © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Information Systems Information systems combine computers, other hardware, software, and human resources to manipulate data into useable information. Operations information systems:  Process control systems  Office automation systems  Transaction-processing systems Expert systems Neural network systems © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Management Information Systems Management information system (MIS): an information system that provides information to managers to use in making decisions. Types of MIS used by businesses:  Information reporting systems  Decision support systems  Group decision support systems  Executive information systems  Human resource information systems © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

MIS and Organizational Structure Flatter management hierarchies Horizontal information flows now viable Reduction in time to make management decisions Reduction in the number of employees needed to perform many organizational activities Elimination of barriers between departments © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

MIS and Competitive Advantage Improved decision making Increased organizational efficiency Greater responsiveness to customers:  Personalized customer service  Improved product support Enhanced entry to new markets Greater ability to enter joint ventures, partnerships, and strategic alliances The addition of e-commerce © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Implementing MIS Consider the organization’s principle goals and information needs Evaluate current MIS for accuracy, reliability, timeliness, and relevance of information Create employee support for the change by showing how it will help employees Make the technology user-friendly Consider the human element © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Factors for Successful MIS Implementation User involvement Management support Time and cost evaluations Phased implementation Thorough testing Careful training and documentation System backup during the transition © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Applications: Management is Everyone’s Business — For the Manager Beware of outsourcing IT - in many cases, it results in dissatisfaction. Managers should analyze very carefully the pros and cons of outsourcing before agreeing to enter an IT outsourcing relationship. Be aware of trade-offs between owning the IT function or giving up control of it to an outside party. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Applications: Management is Everyone’s Business — For Managing Teams Groupware software supports collaborative efforts among group members, such as scheduling meetings, holding meetings, collaborating on projects, and sharing documents. With Groupware, teams can be more productive with less downtime despite conflicting demands placed on each team member’s work schedule to work on other tasks. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill

Applications: Management is Everyone’s Business — For Individuals Individuals need constant updating of computer skills to master upgraded versions of software and to learn new software. Cultivate a constructive relationship with the IT person in your department. © 2004 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill