Managing and Using Information Systems: A Strategic Approach by Keri Pearlson & Carol Saunders Dr Mohamed Menacer (

 How effective can a business manager be when they are not involved in the IS decisions of their organizations?  Should managers rely on experts to make these decisions?  What risks is management making when it permits others to make critical IT decisions for the organization? 2

 Amazon.com has garnered a leadership position in the online world by leveraging their new business model. See  Expanded market offerings.  Increased customization and personalization  Smarter storage  Cost cutting.  Google has become the leader in the search engine market through innovation, simplicity, and by adding new features.  See  Their mission statement can be found at 3

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 Business managers “must” be involved in information decisions.  Figure I.1 describes reasons why. IS …  is a critical resource.  enables change in how people work together.  is integrated with almost every aspect of business.  enables business opportunities and new strategies.  can be used to combat business challenges from competitors.  Technology is ubiquitous. 5

 IT is a critical resource.  IT is over 50% of capital goods dollars spent in the US.  Over $3,800 a year per capita.  High growth firms invest more in IT.  Business managers decide resource allocation. 6

 People and Technology work together.  Technology is critical.  Workers rely heavily on technology.  Managers must know how to mesh both.  Examine long-term and short-term consequences.  Manage change carefully.  Technology changes rapidly. 7

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 What risks does a manager take if they are NOT involved in IS decisions?  If IS directly impacts profitability of a business then how can non-participation “hurt” the bottom-line?  How does making the wrong decision impact business goals and organizational systems? 9

 IS must support business goals.  It is not an end but a means to an end.  Support and strategic focus.  Toys R Us IT debacle.  Must meet user needs.  Must be able to support business transactions. 10

 IT must support organizational systems  The people, work processes, and structure.  Carefully consider the consequences of making an IS change.  How will this impact the way work is done?  Will the people accept this new technology?  What changes may need to be made in the structure of the organization? 11

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 Myth - technical expertise is not needed to participate.  Managerial role and skills needed (Fig I.2):  Visionary – creativity, curiosity, confidence, focus on business solutions, flexibility.  Informational and Interpersonal – communication, information gathering, interpersonal skills.  Structured – project management, analytical skills, organizational skills, planning skills. 13

 Managers must know about both using and managing information.  Managers must be knowledgeable participants in IS decisions.  The general manager must have a basic understanding of the business and technology issues related to IS.  Technology of today is different from the technology of yesterday. 14

 The role of the general manager and IS manager are distinct.  The GM must have a basic understanding of IS to make decisions that may have significant implications for the business.  The IS manager must have general business knowledge and a more in depth knowledge of IS to support its function. 15

 Four key activities of the classic view of management (Fig I.3).  Planning  Organizing  Leading  Controlling  Classic view is seen as more of a tactical approach to management. 16

 The Mintzberg model describes management in behavioral terms (Fig I.4).  Interpersonal  Informational  Decisional  Managers work in a chaotic environment.  Quality information is crucial.  More of a strategic view of management. 17

 Internal Model  Understanding of what constitutes a business.  Managers use to make sense of the chaotic business environment in which they function.  Functional and process views of business. 18

 Functional View of the business  Based on the functions people perform.  Information flows vertically in the organization.  Sometimes information flows across the organization.  Accounting, Operations, Marketing, Sales and Support.  Executive Management receives the information and distributes as need arrives.  See Figure I.5 19

20 Figure I.5 Hierarchical View of the firm.

 This model sees the business by the processes it performs to achieve its goals.  Porter describes business in terms of its primary and support activities.  Primary – inbound and outbound logistics, operations, marketing and sales.  Support – HR, technology, procurement, infrastructure.  Activities are linked together to form a chain – the value chain (fig I.6). 21

22 Figure I.6 Process View of the Firm: The Value Chain

 Data, Information, and Knowledge are not interchangeable terms.  Data – set of specific objective facts or observations (inventory contains 100 widgets).  Information – data endowed with relevance and purpose (75% of widgets were purchased by customers in December) – see fig I.8.  Knowledge - information that has been synthesized and contextualized to provide value. 23

Top ManagementMiddle Management Supervisory & Lower-Level Management Time HorizonLong: yearsMedium: weeks, months, years Short: day to day Level of Detail Highly aggregated Less accurate More predicted Summarized Integrated Often financial Very detailed Very accurate Often nonfinancial OrientationPrimarily externalPrimarily internal with limited external Internal DecisionExtremely judgmental Uses creativity and analytic skills Relatively judgmental Heavy reliance on rules 24 Figure I.8 Information Characteristics across Hierarchical Levels

DataInformationKnowledge DefinitionSimple Observations of the sate of the world Data endowed with relevance and purpose Info from the human mind (includes reflection, etc) Characteristic Easily structured “ captured “ transferred Often quantified Mere facts Requires unit of analysis Data that has been processed Human mediation necessary Hard to structure Difficult to capture on machines Often tacit Hard to transfer ExampleDaily inventory reports of all inventory items sent to CEO of large manufacturing company Daily inventory report of items below economic order quality levels sent to inventory manager (IM) IM knows which items need to be reordered in light of related potential problems 25

 Information systems are comprised of three main elements:  Technology  People  Process  Infrastructure – everything that supports the flow of processing information  Hardware, software, data, and components.  Architecture – strategy implicit in these components. 26

27 Figure I.9 System Hierarchy

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 Business managers “must” be involved in information decisions.  Technology is ubiquitous.  IT is a critical resource.  People and Technology work together.  Certain key skills are needed.  Data, Information, and Knowledge are distinct. 29