20 October ACHIEVING BUSINESS SUCCESS THROUGH INFORMATION TECHNOLOGY

Management of Information Technology Chapter 4 Chapter 4 The Value Added by Information Systems Asst. Prof. Wichai Bunchua

20 October Deming’s Four Ways of Increasing Quality Four ways an organization can increase its quality

20 October The role of feedback in making changes

20 October A model of the value added by information systems

20 October How Information Systems Add Value to Managers

20 October The nature of management The management is a complicated one Manager live in a world of tensions; they must constantly balance a variety of visions, needs, and constraints. They have their own visions of the organization’s future, but they are pulled, too, by the visions, needs, and hopes of others who have vested interests.

20 October How managers spend their time Managers talk and listen; the overwhelming majority of management time is spent in verbal communication. From Mintzberg’s research Scheduled meeting59 % Unscheduled meeting 10 % Telephone call 6 % Tours 3 % Desk work 22 %

20 October Adding Value to Management with Information Systems Characteristics of managers Social Spend two-thirds of time in meetings Have many brief encounters Constantly attempt to gain information Consider traditional MIS reports as not too important

20 October Adding Value to Management with Information Systems Conclusion - Systems considered valuable Must offer useful support in additional to produce reports That help them communicate quickly and effectively, especially in meetings That aid in assimilating and monitoring information that aid the executive processes – particular decision making

20 October How Information Systems Add Value to Ploblem Solving and Decision Making

20 October Ploblem Solving and Decision Making Problem solving and decision making are two of the most important activites in business Problem solving processes involves five activites (see Figure 4-11) Decision making is a subset of problem solving; it consists of the first three stages.

20 October Problem Solving Problem solving processes involves five activites Problem investigation Develop alternatives Select an alternative Implement the solution Monitor

20 October Problem Solving First, an investigation is conducted to gather information about the problem. Particulars of the problem are identified; the problem is defined; and the constraints, problem scope, and problem environment are described

20 October Problem Solving (cont.) Next, a number of alternative problem solutions are developed These alternatives are then evaluated, and, in the next stage, one is selected. In the fourth stage, the selected alternative is implemented Finally, after implementation, the situation is monitored and the problem solution is modified

20 October Components of Problem Solving Process

20 October Decision Making Decision making is a subset of problem solving; it consists of the first three stages. Simon, one of the pioneers of decision science called these three stages intelligence, design, and choice The third stage, the selection of an alternative, is referred to as choice selection

20 October Decision Making Models Classical decision theory Behavioral decision theory Bounded rationality model Contextual rationality model Constrianed results model

20 October Classical Decision Theory Classical decision theory It assumes that managers are always rational, that they have perfect information about the problem and its alternatives, and that they have a complete specification of the objectives to be maximized.

20 October Behavioral Decision Theory Behavioral decision theory It assumes that the decision makers have imperfect knowledge about the problem and its alternatives; and that they are unable or unwilling to make a rational assessment of the best possible decision. Simon used the term bounded rationality to refer the behavior of decision makers working within the limits of their knowledge of the problem and their ability or willingness to make rational decisions

20 October Contextual Rationality Model James March defined the term Contextual rationality model This model recognizes that people making decisions under pressures in a complex environment involving many decisions and multiple criteria for each, with limited knowledge and time. Most decisions occur in an ambiguous environment; the specific issues involved may be unclear, the relationship to the solution alternatives may be indirect, and the whole process occur in a political environment.

20 October Constrianed Results Model Constrianed results model O’Reilly stated that the decision making process often works backwards. Instead of freely identifying alternatives and rationally selecting them, decision makers begin by identifying one or a few outcomes that they deem acceptable. They then constrain the decision process so that it will generate one of these results.

20 October Adding value to decision making with information systems The goal of information is to improve the quality of decisions and their resulting problem solving To do this, information systems facilitate activity in each of the five stages. Consider two of the models Information systems and bounded rationality decision making Information systems and constrained results decision making

20 October Information systems and bounded rationality decision making

20 October Group Decision Making

20 October Group decision making Most of decision making assumes that decisions are made by a sole, authoritarian individual In the military In some medical situations In tightly controlled group Mostly in business is not done by a single individual, instead by groups

20 October Advantages of Group decision- making Greater group commitment to the decision and its implementation Better group understanding of the problem and the rationale for the decision Improved communication to implementors Reduced likelihood of descriptive activity at implementation More comprehensive consideration of the problem and related issues

20 October Disadvantages of Group decision-making More time consuming Greater cost (of the decision, not necessarily of the problem solution) Inappropreate influence of group dynamics (domination, rigidity, groupthink) Tendency toward compromise solutions of poor quality

20 October Information Systems and Competitative Advantage A number of different ways that information systems can add value to organizations and to individuals Add value to both processes and products. Can be used for both innovation and improvement in product quality and process quality Can be used to falicitate management and to enhance problem solving and decision making

20 October Information Systems and Competitative Advantage Porte and Millar, “Competitative Advantage” The information revolution is affecting competitative in three vital ways: It changes industry structure and, in so doing, alters the rule of competition It creates competitative advantage by giving companies new ways to outperform theirs rivals It spawns whole new businesses, often from within a company’s existing operations.

20 October Questions?Questions?

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