1. Information Technology and Control
Chapter Eight
Information Technology and Control
Thomson Learning
© 2004

2. Evolution of Organizational Applications of Information Technology
3. Strategic Weapon
TOP
(strategy, plans,
non-programmed)
INTERNAL
EXTERNAL
Knowledge
Management
Intranets
Enterprise resource
planning
Extranets
E-Commerce
Integrated
Enterprise
2. Business Resource
Management Information
systems
Decision Support Systems
Executive information
· Management control systems
· Balanced Scorecard
MANAGEMENT
LEVEL
Direction of
Information
System
Evolution
1. Operations
Transaction
processing systems
Data warehousing
FIRST-LINE
(operational, past,
programmed)
LOW SYSTEM COMPLEXITY HIGH
Thomson Learning
© 2004

3. A Simplified Feedback Control Model
Set Strategic
Goals
Establish Standards
of Performance
Take Corrective
Action
as Needed
Measure Actual
Performance and
Compare to
Standards
Thomson Learning
© 2004

4. Major Perspectives of the Balanced Scorecard
Financial
Do actions contribute to improving financial performance?
Examples of measures: profits,
return on investment
Customers
How well do we serve our customers?
Examples of measures: customer satisfaction, customer loyalty
Internal Business Processes
Does the chain of internal activities and
processes add value for customers and
shareholders?
Examples of measures: order-rate
fulfillment, cost-per-order
Mission
Strategy
Goals
Learning and Growth
Are we learning and changing?
Examples of measures: continuous process improvement, employee retention, new product introductions
Sources: Based on Robert S. Kaplan and David P. Norton, “Using
The Balanced Scorecard as a Strategic Management System,”
Harvard Business Review, January-February 1996, 71-79;
Chee W. Chow, Kamal M. Haddad, and James E. Williamson,
“Applying the Balanced Scorecard to Small Companies,”
Management Accounting 79, No. 2 (August 1997), 21-27; and
Cathy Lazere, “All Together Now,” CFO, February 1998,
Thomson Learning
© 2004

5. Example of ERP Network Central Database Sales Financial and Accounting
Purchasing
Human
Resources
Inventory and
Manufacturing
Distribution
Thomson Learning
© 2004

6. Two Approaches to Knowledge Management
Explicit
Provide high-quality, reliable, and fast
information systems for access of
codified, reusable knowledge
Tacit
Channel individual expertise
to provide creative advice
on strategic problems
People-to-documents
Develop an electronic
document system that
codifies, stores,
disseminates, and allows
reuse of knowledge
Invest heavily in information
technology, with a goal of
connecting people with
Reusable, codified knowledge
Person-to-person
Develop networks for
linking people so that
tacit knowledge can
be shared
Invest moderately in
information technology,
with a goal of facilitating
conversations and the ex-
change of tacit knowledge
Knowledge
Management
Strategy
Technology
Thomson Learning
© 2004
Source: Based on Morten T. Hansen, Nitin Nohria, and Thomas Tierney,
“What’s Your Strategy for Managing Knowledge?” Harvard Business
Review, March-April 1999,

7. Electronic Data Interchange for International Transactions
Manufacturer’s
Bank’
Customer’s
Bank
Suppliers
MANUFACTURER
Customer
Export Freight
Forwarder
Import
Clearing Agent
Export
Customs
Import
Customs
Thomson Learning
© 2004

8. Key Characteristics of Traditional vs
Key Characteristics of Traditional vs. Emerging Interorganizational Relationships
Traditional Interorganizational
Relationships
Emerging Interorganizational
Relationships
Arm’s-length relationship
Use of telephone, mail, some
EDI for ordering, invoicing,
payments
Interactive, electronic
relationship
Electronic ordering, invoicing,
payments
Suppliers
Limited communication with
manufacturer
Mix of phone response, mail
hard copy information
Direct access to manufacturer,
real-time information exchange
Electronic access to product
information, consumer ratings,
customer service data
Customers
Thomson Learning
© 2004
Source: Based on Charles V. Callahan and Bruce A. Pasternack,
“Corporate Strategy in the Digital Age,” Strategy & Business, Issue 15,
Second Quarter 1999,