1

CHAPTER 1
INTRODUCTION TO
INFORMATION SYSTEMS


Management Information Systems, 9
th
edition,
By Raymond McLeod, Jr. and George P. Schell
2004, Prentice Hall, Inc.
2
Learning Objectives:
Understand how computer hardware has evolved
to its present level of sophistication.
Understand the basics of computer and
communications architectures.
Know the distinction between physical and
conceptual systems.
Understand how business applications have
evolved from an initial emphasis on accounting
data to the current emphasis on information for
problem solving.
3
Learning Objectives (cont.):
Know how to tailor information systems to
managers based on where they are located in the
organizational structure and what they do.
Know the relationship between problem solving
and decision making, and know the basic problem-
solving steps.
Understand what enterprise resource planning
systems are and the reasons for their popularity.
Know what innovations to expect in information
technology.

4
Introduction
The first computers were as large as a room and
used light -bulb -sized vacuum tubes for much
of their circuitry
Vacuum tubes were later replaced with
transistors and chips made using silicon wafer
technology
This change resulted in a dramatic and long-
term lowering of costs of manufacturing leading
to the high growth in the demand for computers
5
Half the Size But Twice the
Speed
Miniaturization has been a key factor in
lowering costs and increasing computer
performance
Redesigning a circuit is to be half the scale
of a previous one and also double its speed
Thus, continually shrinking the computer
chip size has been important in increasing
computer processor speeds
6
HISTORY OF INFORMATION SYSTEMS
The earliest mainframe computers could only
process a single task by a single user
1946: ENIAC (Electronic Numerical Integrator and
Calculator) was developed
1951: first computer installed by the U.S. Census Bureau
1954: first computer used by G.E.
Over the last half century, hardware has seen many-
fold increases in speed and capacity and dramatic
size reductions
Applications have also evolved from relatively
simple accounting programs to systems designed to
solve a wide variety of problems
7
[Insert Figure 1.1 here]
8
Multitasking
IBM revolutionized the computer industry
in the mid-1960s by introducing the IBM
System/360 line of computers
These computers were the first to perform
multiple processing tasks concurrently
9
Smaller Computers
The first small-scale systems, called
minicomputers, were smaller and less
powerful but could handle processing for
small organizations more cheaply
Even smaller microcomputers designed for
individual use were later developed, first by
Apple and Tandy Corp.
In 1982, IBM introduced the first personal
computer, or PC, in 1982, which has since
become the standard for individual
computing
10
11
Moore's Law
Coined in the 1960s by Gordon Moore, one
of the founders of Intel
States that the storage density (and therefore
the processing power) of integrated circuits
is doubling about every year
By the 1970s the doubling rate had slowed
to 18 months, a pace that has continued up
to the present
12
13
INTRODUCTION TO
COMPUTER ARCHITECTURE
Most computers have similar architectures
that combine software and hardware
Software includes the operating system
which controls the computer hardware and
application software, such as word
processing, spreadsheets, etc.
Hardware includes, processors, memory
and peripheral devices
14
15
Computer Hardware
The processor manages the input and
output devices, data storage devices, and
operations on the data
The central processing unit (CPU)
controls all the other components
Two types of memory are:
Random access memory (RAM) acts as the
temporary workspace for the CPU
Permanent data storage devices such as CD-
ROM, floppy and hard disk drives
16
17
INTRODUCTION TO
COMMUNICATIONS ARCHITECTURE
Modem: a hardware device that sends the
computers digital signals by modulating an
analog carrier wave
Data rates for various communications systems:
Telephone lines: 56 kbps
Cable modem: up to 2 Mbps
WiFi: 11 Mbps
Local Area Networks: 10 to 100 Mbps
Wireless has recently taken off because its cheap
and easy to install
18
19
THE EVOLUTION IN
COMPUTER APPLICATIONS
An information system is a conceptual system
that enables managers to control and monitor a
firms physical systems used to transform input
resources into output resources
20
Transaction Processing Systems
A transaction processing systems is
shown in Figure 1.8
It gathers data from the firms physical
system and environment and enters it into
its database
The software also transforms the data into
information for the firms managers and
other individuals in the firms environment
21
22
Management Information Systems
Management information systems (MIS)
transform the data in frontline systems, such as
transaction processing systems into information
useful to managers
Typical MIS modules are report-writing software,
and models that can simulate firm operations
Information from the MIS is then used by
organizational problem solvers as an aid in decision-
making, as illustrated in Figure 1.9
Firms can also interact with suppliers or others to
form inter organizational information systems
(IOS), in which the MIS supplies information to the
other members of the IOS as well as the firm's users
23
24
Virtual Office Systems
Office automation - the use of electronics to
facilitate communication, began with word
processing
Subsequent applications include electronic mail,
voice mail, electronic calendaring, and audio and
video conferencing
These personal productivity systems now
account for a large portion of a firm's use of the
computer as a communications vehicle
With improvements in networking, the concept of
a virtual office has developed, in which office
activities can be performed without the need for an
employee to be in a specific location
25
Decision Support Systems (DSS)
A DSS is a system used to assist managers in
making decisions to help solve a specific problem
Figure 1.10 shows the 3 sources for the
information to be delivered to users: a relational
database, a knowledge base, and a
multidimensional database
Two additional types of DSS-related software are:
group decision support systems: used in aiding a
group of managers work out decisions, and
artificial intelligence: in which a program is created
for a computer to logically analyze a problem on its
own
26
27
Enterprise Resource Planning
Systems (ERP)
Over time, firms began to use many different
kinds of information systems throughout the firm
During the 1990s firms began to see the value in
integrating all of these systems so that they could
function as a coordinated unit
ERP systems are computer-based systems aimed
at meeting this need that enable the management
of all of a firms resources on an organization-
wide basis
28
MANAGERS AS INFORMATION
SYSTEM USERS
Managers exist at various managerial levels
and within various business areas of the firm
What level an IS is developed for influences
how it operates (see Figure 1.11)
The 3 primary management levels are (see
Figure 1.12):
1. Strategic planning level
2. Management control level
3. Operational control level
29
30
31
What Managers Do
Managerial Functions (Managers do the
following):
Plan what they are to do
Organize to meet the plan
Staff their organization with resources
Direct them to execute the plan
Control the resources, keeping them on course (see
Figure 1.13)
Managerial Roles:
Mintzbergs framework is made of 10 roles that
managers play, grouped into interpersonal,
informational, and decisional activities (see Table 1.1)
32
33
34
THE ROLE OF INFORMATION IN
MANAGEMENT PROBLEM SOLVING
While a problem can be harmful or potentially
harmful to a firm in a negative way, it can also be
beneficial or potentially beneficial in a positive way
The outcome of the problem-solving activity is a
solution
A decision is a particular selected course of action
Simon described problem-solving as being made up
of four phases:
Intelligence activity
Design activity
Choice activity
Review activity
35
36
THE FUTURE OF INFORMATION
TECHNOLOGY
The future of information technology will
be driven by the following two trends:
Ongoing cost reductions and increased power
of information technologies
Convergence between computers and
communications
To take advantage of these new
possibilities, managers must learn to
incorporate information systems into
decision making
37
END OF CHAPTER 1
38
CHAPTER 2
INFORMATION SYSTEMS
FOR COMPETITIVE
ADVANTAGE


Management Information Systems, 9
th
edition,
By Raymond McLeod, Jr. and George P. Schell
2004, Prentice Hall, Inc.
39
Learning Objectives:
Be able to use the general systems model of the firm as a
template for evaluating any type of organization.
Be able to use the eight-element environmental model as a
framework for understanding the environment of a
business organization.
Recognize that competitive advantage can be achieved
with conceptual as well as physical resources.
Understand Michael E. Porter's concepts of value
chains/systems.
Know the dimensions of competitive advantage.

40
Learning Objectives (cont.):
Become acquainted with the multinational corporation and
recognize its special need for coordination.
Know the basic types of information resources available to
the firm.
Know the dimensions of information that should be
provided by an information system.
Know how to manage information in the form of legacy
systems, images, and knowledge.
Know how a firm goes about strategic planning for the
firm, its business areas, and its information resources.
Know four basic global strategies that can be practiced by
multinational corporations and understand the role of
information in each.
41
THE FIRM AND ITS ENVIRONMENT
The physical system of a firm is an open system in
that it interfaces with its environment
Firms take resources from their environments,
transforms these resources into products and
services, and return the transformed resources to the
environment
Figure 2.1 shows this flow of resources from the
environment, through the firm, and back to the
environment
The flow of physical resources is at the bottom and
the flow of conceptual resources is at the top
42
43
The General Systems Model of
the Firm
Figure 2.1 shows three flows:
The Physical Resource Flow: includes personnel,
material, machines, and money
The Conceptual Resource Flow: The arrows in the upper
part of the figure show data, information, and decision-
related information. At right, a 2-way flow of data and
information that connects the firm to its environment
The Firm's Control Mechanism: The elements that
enable the firm to operate as a closed-loop system are
shown in the upper portion of the diagram
44
Environmental elements exist outside the firm and have
a direct or indirect influence on it.
45
Environmental Resource Flows
The firm is connected to its environmental
elements through resource flows, including:
information flowing from customers;
materials flowing to customers;
money flowing to stockholders;
machinery flowing from suppliers;
personnel flowing from suppliers; and
the global community and labor unions
Less frequent flows include: the money flow from
the government, the material flow to suppliers,
and the personnel flow to competitors
46
COMPETITIVE ADVANTAGE
In the IS field, competitive advantage refers to the
use of information to gain marketplace leverage
Porter argues that firms achieve competitive
advantage by providing one of the following:
products and services at a lower price,
higher quality products and services, or
meeting the special needs of certain market segments
An important point to recognize is that the firms
managers use both conceptual and physical
resources to meet the firms strategic objectives
47
Porters Value Chains
Porter argued that firms opportunities to create
competitive advantage occur at different steps in
the value chain (Figure 2.3)
The Margin is the value of the firms products
and services less their costs, as perceived by the
firms customers
The value chain is made of the primary and
support activities that contribute to a firms
margin value. Increasing that marginal value is the
objective of the chain model
Firms can create value by performing activities,
which Porter calls value activities
48
49
Expanding the Scope of the
Value Chain (Figure 2.4)
Additional advantages that can be achieved
by linking the firms value chain to those of
other organizations creating an inter-
organizational system (IOS)
The participating firms (business partners)
work as a coordinated unit, creating a
synergy that cannot be achieved by working
alone
Porter termed this the value system
50
51
The Dimensions of Competitive
Advantage
1. Strategic advantage: plans used to achieve an
advantage
2. Tactical advantage: methods for accomplishing
a strategy in a better way than competitors do
3. Operational advantage: everyday transactions
and processes that confer an advantage
Information systems shaped by all three have the
best chance to substantially increase a firm's
performance
52
The Dimensions of Competitive Advantage
(cont.)
Competitive advantage can be
created at all three levels of the
corporate pyramid:
Strategic advantage: advantage
achieved through the selection of
the fundamental strategic direction
and destination of the firm
Tactical advantage: methods for
accomplishing a strategy in a
better way than competitors do
Operational advantage: everyday
transactions and processes that
confer an advantage
53
CHALLENGES FROM GLOBAL
COMPETITORS
The biggest players in todays global
marketplace are multinational corporations
(MNCs)
Information processing and communications-
based coordination are especially crucial for
an MNC due to the scale and geographic
dispersal of their business activities
Coordination, in particular, has become a key
to achieving competitive advantage in a
global marketplace
54
INFORMATION MANAGEMENT
A firms information resources consist of:
Computer hardware
Computer software
Information specialists
Users
Facilities
Databases
Information
Achieving competitive advantage through the use
of information requires the effective management
of these resources, otherwise known as
information management
55
The Dimensions of Information
Information can be viewed as having four basic
dimensions that contribute to information value:
Relevancy: information is relevant when it
pertains to the problem at hand
Accuracy: information has value when it is
accurate
Timeliness: Information should be available for
problem solving before crisis situations develop
or opportunities are lost
Completeness: information should be available
to present a complete picture of a problem or a
solution
56
The Changing Nature of
Information Management
The task of information management faces new
problems as new technologies are making older
style transaction processing systems obsolete
Managing legacy systems is one such problem,
such as converting them to run on new hardware
The use of multimedia data means that image
management is now a second important task for
information managers
Knowledge management is a third task, requiring
an easy-to-use database management system and
software packages for use in analyzing data
57
STRATEGIC PLANNING FOR
INFORMATION RESOURCES
The chief information officer (CIO) provides the
strategic direction for a firms information
resources; and
The CIO also coordinates the IS departments
strategic effort with the firms overall strategic
business plan
As strategic planning in specific business areas is
also developed, the firms information resources
must also be coordinated with these efforts (see
Figure 2.6)
58
59
Strategic Planning for Information
Resources (SPIR)
SPIR is the concurrent development of strategic
plans for both the firm and its information services
Developing the two plans together means that the
firms plan will reflect the support provided by
information services and the information services
plan will reflects the future demands for systems
support
Figure 2.7 illustrates the manner these two
planning processes influence each other
60
61
Core Content of a Strategic
Figure 2.8 shows the basic framework for a
strategic plan for information resource
management
Two core topics that should be in every firms
strategic plan for information resources are:
1. The objectives to be achieved by each
category of information system during the
time period covered by the plan
2. The information resources necessary to meet
those objectives
62
63
An Example Strategic Plan for
Information Resources
Figure 2.9 (see text) is an example of an SPIR
report. It includes the following aspects:
An executive summary, spelling out the goals
of the firm's information services unit;
Definitions of the scope of IT services in
three organizational units; and
A summary of the work plan for
implementing systems enabling the firm to
meet its information services goals
64
GLOBAL BUSINESS STRATEGIES
Bartlett and Ghoshal identified 4 main
strategic ways that MNCs can use
information to coordinate the activities of a
parent company with its subsidiaries (see
Figs. 2.10-13):
1. Decentralized control strategy
2. Centralized control strategy
3. Centralized expertise strategy
4. Centralized control and distributed
expertise strategy
65
66
67
68
69
END OF CHAPTER 2
70
CHAPTER 3
USING INFORMATION
TECHNOLOGY TO ENGAGE
IN ELECTRONIC
COMMERCE


Management Information Systems, 9
th
edition,
By Raymond McLeod, Jr. and George P. Schell
2004, Prentice Hall, Inc.
71
Learning Objectives
Recognize the importance and advantages of electronic
commerce.
Understand that within ten years electronic commerce will
be blended into everyday business processes and
consumers will not recognize e-commerce as a special
category.
Understand the difference between business-to-business
electronic commerce and business-to-consumer electronic
commerce.
Learn examples of good business-to-business electronic
commerce and business-to-consumer electronic commerce.
Understand the role that business intelligence plays in
electronic commerce.
72
Learning Objectives (cont.):
Know the role that inter-organizational systems, the
Internet, and the World Wide Web play in electronic
commerce.
Know what factors influence the adoption of inter
organizational systems.
Recognize the movement from electronic data interchange
to various Web-standard data exchange practices.
Understand why many firms choose to have both a virtual
store and a physical store.

73
Introduction
Electronic commerce (or e-commerce), uses
communications networks and computers to
accomplish business processes
Most electronic commerce is between
businesses (B2B), rather than between a
business and a consumer, but B2C still has
many opportunities for growth and profit
74
ELECTRONIC COMMERCE
Here, we shall treat electronic business
and electric commerce as synonyms
Thus, any business transaction that uses
network access, computer-based systems,
and a Web browser interface qualifies as
electronic commerce
75
Electronic Commerce Beyond the
Boundary of the Firm
Business-to-customer (B2C) electronic commerce
refers to transactions between a business and the
final consumer of the product
Business-to-business (B2B) electronic commerce
refers to transactions between businesses in which
neither is the final consumer. These may involve
relatively few people, generally the information
systems groups of the companies are most affected
76
77
Anticipated Benefits from
Electronic Commerce
There are three main benefits of e-Commerce:
1. Improved customer service before, during, and
after the sale
2. Improved relationships with suppliers and the
financial community
3. Increased economic return on stockholder and
owner investments
These benefits contribute to the firms financial
stability and enable it to better compete in a business
world that is using more and more computer
technology

78
Electronic Commerce Constraints
Three constraints on e-commerce are as follows:
1. High costs
2. Security concerns
3. Immature or unavailable software
Each of these constraints is being challenged as IT
and IS needs for e-commerce become increasingly
popular and the cost of the required computing
resources keeps falling


79
Scope of Electronic Commerce
The amount of economic impact varies from
industry to industry but about 94% of electronic
commerce is B2B leaving 6% for B2C
E-commerce is estimated to be growing at
between 5% and 15% each year, though may
slow down, high growth in e-Commerce will
likely continue for the next several years
Table 3.2 gives examples of the extent of the use
of e-commerce in certain areas of the economy
80
81
The Path to Electronic Commerce
Implementing an e-commerce system
includes a significant risk of failure
The first step is a commitment to implement
the system as part of a strategic business
plan to use e-commerce to achieve
competitive advantage
The firm then gathers business intelligence
to understand the potential role each
environmental element will play
82
BUSINESS INTELLIGENCE
Before engaging in e-commerce managers
must understand their firms relationships
with customers, competitors, suppliers, and
other external entities
Business Intelligence (BI) is the gathering
of information about the environmental
elements that interact with your firm
83
External Databases
Companies can also use commercial
databases that provide environmental
information instead of gathering it
themselves
Firms use these databases because it is
faster and less expensive than trying to
research the information on their own
Figure 3.1 illustrates the use of external
databases and Web searches for business
intelligence
84
85
Search Engines
A search engine is a special program that
provides links to Web sites based on a
keyword or group of words supplied by the
user
Search engines then look through their
database of Web site content to see which
Web sites use that word or phrase
Other specialized indexing programs create
directories of Web site categories, working
on the backend of the search engine
86
87
THE INTERORGANIZATIONAL
SYSTEM (IOS)
An IOS is created through linkages with
other firms so they can work together as a
coordinated unit
This allows them to achieve benefits that
each could not achieve alone
Inter organizational systems are
fundamental to electronic commerce
88
IOS Benefits
The trading partners enter into an IOS venture
with the expectation of realizing benefits such as:
Comparative Efficiency
Internal efficiency
Inter organizational efficiency
Bargaining Power
Vendor stock replenishment is a special type of
IOS where the supplier can initiate the
replenishment process by electronically
monitoring the firms inventory levels
89
Bargaining Power
Bargaining power is derived from three
basic areas:
Unique product features
Reduced search-related costs
Increased switching costs
90
Electronic Data Interchange (EDI)
EDI is essentially electronic forms that can be sent
over networks
It involves transmitting data in a machine-
readable, structured format, enabling the data to be
received without the need for re-keying
Two major standards for EDI are the American
National Standards Institute standard ASC X12 is
used in North America and the EDIFACT
international standards are used in Europe
91
Extranet
Another way of establishing an IOS is by
using a secure form of Internet technology
called an extranet
Firms use them in collaboration with trusted
suppliers and large customers to share
sensitive information
Security and privacy are serious concerns so
the extranets are generally secured behind a
firewall
92
Electronic Funds Transfer (EFT)
When data representing money is
transmitted over a computer network, it is
called electronic funds transfer
EFT is used by firms and individuals who
have their payroll checks deposited into
their bank accounts or who pay bills using
electronic payments
EFT also plays a major role in electronic
commerce
93
Proactive and Reactive Business
Partners
The IOS sponsor typically takes a proactive
approach, stimulating interest in the IOS and
encouraging participation in the network
The participants, on the other hand, typically
respond in a reactive manneraccepting or
rejecting the sponsors offer to adopt IOS
For example, the proactive approach taken by the
large automobile manufacturers forced suppliers
to react by either adopting an EDI system or risk
losing participation in the supply chain
94
Adoption Influences
Premkumar and Ramamurthy identified
four critical factors in determining if a
firm will be proactive or reactive:
1. Competitive pressure
2. Exercised power
3. Internal need
4. Top management support
The second two are internal factors while
the first two are environmental
95
96
Indirect IOS Benefits
The indirect benefits of participating in an
IOS include:
increased ability to compete;
improved relationships with trading partners;
and improved customer service
Figure 3.4 shows this relationship between
direct and indirect benefits
97
98
A Challenge to EDI
Newer approaches to inter organizational systems
for B2B data transfer XML, DHTML, and
CORBA
Extensible markup language (XML) is an extension
of the hypertext markup language used to code Web
pages
Dynamic hypertext markup language (DHTML)
adds features such as scripting and active controls so
the content of the displayed Web page can be
dynamically generated
Common Object Request Broker Architecture
(CORBA) grew as a standard as the software industry
embraced object-oriented programming and databases
99
B2C STRATEGIES FOR ELECTRONIC
COMMERCE
Reasons why its important to understand
B2C business include:
More products and services are becoming
available for digital delivery
Consumers are overcoming their reluctance to
purchase using the Web
Higher communications speeds have made the
delivery of digital products practical
Fear of information theft (such as credit card
info), is being replaced with greater confidence
that sensitive information will be safeguarded
100
Products and Services to Be Delivered to the
Consumer Over the Internet
Digital Products: such as songs, albums, movies,
computer programs and their updates and services
Physical Products: Sales can be made over the
Web, but shipping has to be arranged. The growth
of private mail/shipping companies has indirectly
aided retail e-Commerce
A key difference between digital and physical
products is that digital products can be consumed
as soon as they are downloaded
101
Virtual Versus Hybrid Sales
Virtual sales are those made by a firm that does
not operate a physical storefront
Hybrid sales occur when firms have both a
physical storefront and a Web site where
customers can purchase products
Office Depots Web site (www.officedepot.com)
shows an example of the strategy restricting the
number of images displayed until the customer
has focused his/her search to a relatively few
choices (next slide)
102
103
EVOLUTION OF THE INTERNET
Understanding the Internet's evolution can help
forecast future opportunities
ARPANET makes it possible for military personnel
and civilian researchers to exchange information
relating to military matters. It forms a major portion
of what has come to be known today known as the
Internet
In 1989, Tim Berners-Lee, working at CERN, came
up with a way for physicists to communicate using
hypertext electronically linked documents.
This system quickly evolved into what is now known
as the World Wide Web
104
105
106
CYBERSPACE AND THE
INFORMATION SUPERHIGHWAY
The term cyberspace is from William Gibsons 1984
book Neuromancer to describe a society that had
become a slave to its technology
The information superhighway describes a system
that gives everyone access to the wealth of information
that exists in our modern society
The two main organizations in leadership roles in
establishing Internet and Web standards are The
Internet Society and the IETF (Internet Engineering
Task Force)
Web standards come from the World Wide Web
Consortium (W3C)
107
BUSINESS APPLICATIONS OF
THE INTERNET
The Internet can be used for any business
application that involves data communication,
including both communication inside the firm and
with the environment
Unlike proprietary networks, the Internet can be
used with any computer platform without any
special effort to access the network
The Internet also makes it possible to transmit a
wider variety of media than can be handled over
most conventional networks
108
Marketing Research and
Retailing Applications
By taking advantage of this new source of
customer information, industrial marketers
have gained new inroads to their markets
The Web business application with which
the general public is most familiar is
retailing most large retail chains now have
an established Web presence
109
Suggestions for Successful
Internet Use
1. Make sure your Web site is robust
2. Make sure your browser and database
structure are both flexible and intuitive
3. Emphasize content
4. Update often
5. Look beyond customers
6. Target content to specific users needs
7. Make the interface intuitive
8. Be in the right Web location
9. Create a sense of community
10. Get help if you need it
110
Future Impact of the Internet on
Business
The Internet is seen as the precursor to a National
Information Infrastructure
Each country will have its own NII, all linked together
in some manner that is yet to be defined
Having an NII will affect commerce in the different
countries in different ways. Industrialized countries
that make quick use of innovations in technology, the
effect can be swift and dramatic
Important new issues are also emerging, especially
the issue of circulating customers personal
information
111
END OF CHAPTER 3
112
CHAPTER 4
SYSTEM USERS AND
DEVELOPERS
Management Information Systems, 9
th
edition,
By Raymond McLeod, Jr. and George P. Schell
2004, Prentice Hall, Inc.
113
Learning Objectives:
Learn that the organizational context for systems
development and use is changing from a physical to a
virtual structure.
Recognize the benefits and disadvantages of the virtual
office and the virtual organization.
Know who the information specialists are and how they
can be integrated into an information services organization.
Be alerted to new directions that the information services
organization might take.
Understand what is meant by end-user computing and why
it came about.
114
Learning Objectives (cont.):
Appreciate that users, especially those with an end-user
computing capability, are a valuable information resource.
Know the benefits and risks of end-user computing.
Be aware of the types of knowledge and skill that are
important to systems development, practiced by both end-
users and information specialists.
Understand knowledge management and the challenges
that must be addressed for successful implementation.
Be aware of the special constraints that face developers of
global information systems.

115
Introduction
The first office automation applications were mostly
designed for secretarial and clerical tasks; but soon
spread to managerial and professional ranks, leading
eventually to the virtual office
As firms evaluated the advantages and disadvantages
of centralized and decentralized IS organizations,
three structures were identified: the partner,
platform, and scalable models
Systems development is an evolving activity, with
the organizational setting and the roles played by the
users and information specialists constantly changing
116
THE BUSINESS ORGANIZATION
Information systems have been developed
to support all organizational levels (Figure
4.1)
At the strategic level, executive information
systems are used by the firm's top managers
An MIS is designed to meet the information
needs of managers throughout the firm
At the lowest, operational level systems are
designed to meet the firms day-to-day
information needs in those business areas
117
118
OFFICE AUTOMATION
OA includes all of the formal and informal
electronic systems primarily concerned with the
communication of information to and from
persons inside and outside the firm
Figure 4.2 shows an OA model of computer- and
non computer-based applications used by a firm
Innovations in IT made it possible for many firm
activities to be conducted independent of their
location
This is called a virtual organization, and
evolved out of office automation
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A Shift from Clerical to Managerial
Problem Solving
The first OA applications supported secretarial and
clerical personnel
As managers and professionals became more computer
literate they learned to use the computer applications in
problems solving
They began using e-mail to communicate, electronic
calendaring to schedule meetings, video conferencing
to link problem solvers over a wide geographical area,
and so on
OA applications have also been extended by such
technologies as hand held computers and PDAs
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THE VIRTUAL OFFICE
Evidence of the virtual office began to
emerge during the 1970s as low-priced
microcomputers and communications
equipment made it possible for individuals
to work at home
At the time, the term teleprocessing was
used, later the term telecommuting was
introduced to describe how employees
could electronically commute to work
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Advantages and Disadvantages of
Telecommuting
Advantages:
Provides employees with scheduling flexibility so that
personal tasks can also be accommodated
Firms typically pay more attention to communications
needs of telecommuters
Disadvantages:
Employees can develop a sense of not belonging
Employees can get the idea that they are expendable
The division between home and office responsibilities
can become blurred
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Hoteling
The concept of hoteling is for the firm to
provide a sharable central facility that
employees can use as the need for office space and
support rises and falls
The guiding principles for hoteling include:
Design the spaces for functional needs
Similar sized offices are built
Centralized storage space is provided
Fewer enclosed office spaces
Assigned offices spaces are eliminated
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Advantages and Disadvantages of
Telecommuting
Advantages:
Reduced facility cost
Reduced equipment cost
Reduced work stoppages
Social contribution
Disadvantages
Low morale
Fear of security risks
The virtual office demands cooperation by both
the firm and the employees if it is to succeed
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THE VIRTUAL ORGANIZATION
In a virtual organization, firm operations are
designed so they are not tied to physical locations
Industries that are the most attracted to these
concepts are those that add value in the form of:
information, ideas and intelligence
Such as: education, health care, entertainment,
travel, sports, and consulting
Workers in this 3I Economy need to have the
knowledge and skills required to succeed as IT
and information systems are included in business
processes
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THE INFORMATION SERVICES
ORGANIZATION
Require
The Information Resources
The Information Specialists
Systems Analysts
Database Administrators
A Webmaster
Network Specialists
Programmers
Operators
A structure that is typical of a centralized
operation is illustrated in Figure 4.4
128
THE INFORMATION SERVICES
ORGANIZATION
Information services organizations usually require:
The Information Resources
The Information Specialists
Systems Analysts
Database Administrators
A Webmaster
Network Specialists
Programmers
Operators
Figure 4.4 shows the structure of a typical
information services organization
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130
Innovative Organizational Structures
During the 1990s, large firms sought to achieve a
"centrally decentralized" organizational structure
Three innovative organizational structures that
have since been identified are:
the partner model;
the platform model; and
the scalable model
Whereas the organizational structure in Figure 4.4
illustrates how the information specialists are
grouped, the innovative structures show how the
IT functions are grouped
131
Three Innovative Structures
The Partner Model (Figure 4.5): IT coordinates
business areas to achieve value innovation and
accomplish delivery of solutions
The Platform Model (Figure 4.6): IT provides
the networks so that innovation can be
accomplished by the business areas
The Scalable Model (Figure 4.7): shows that two
sourcing networks are utilized to interface with
vendors when engaging in infrastructure
management and solutions delivery within a
flexible structure
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133
134
135
What All Three Models Share
All three models recognize that the IT function is not
a self-contained unit, but interfaces with both users
and vendors
Responsibilities for certain functions must be
allocated to specialists such as divisional
information officers and account managers
All three models reflect an effort to make the IT unit
a team player in the firm's use of information
resources sharing and delegating functions when it
is best for the firm
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END-USER COMPUTING
The first Information Systems were developed with
IT specialists doing all of the work for the users
(Figure 4.8)
In the late 1970s, users began developing their own
computer applications
End-user computing evolved out of four main
influences
1. The impact of computer education
2. The information services backlog
3. Low-cost hardware
4. Prewritten software
In Figure 4.9 the end-user relies on the information
specialists for some degree of support
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138
139
USERS AS AN
INFORMATION RESOURCE
In deciding how the firm will use its
information resources, management must
consider how end-user computing will be
conducted, so as to maximize the benefits
and minimize the risks
140
Benefits and Risks of End-User
Computing
Benefits:
Match Capabilities and Challenges
Reduce Communications Gap
Risks:
Poorly Aimed Systems
Poorly Designed and Documented Systems
Inefficient Use of Information Resources
Loss of Data Integrity
Loss of Security
Loss of Control
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SYSTEMS DEVELOPMENT
KNOWLEDGE AND SKILL
The development of information systems requires
certain knowledge and skills
It is possible to identify not only the types of
knowledge and skill needed by information
specialists and users, but also how users can be
divided into general management and their staff
Table 4.1 identifies the types of knowledge
needed and whether they are of major,
intermediate, or minor importance
In the same way, we can identify different types of
skills and their relative importance (Table 4.2)
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143
144
Knowledge Management
This knowledge relates to the firm's processes,
technology, management, and interactions with its
environmental elements
Firms are embarking on projects to develop
knowledge management systems for the purpose
of achieving a competitive advantage
Firms typically regard KM as another type of
system to be developed as an IS that gathers
knowledge, stores it and makes it available to
users
Table 4.3 lists the challenges that must be faced by
firms in developing KM systems
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146
A Successful KM Development
Project at Nortel Networks
Nortel Networks (using knowledge management
software from Excalibur Technologies) credits its
pilot KM project with enabling its transformation
from a technology-focused company to one that is
opportunity/customer-focused
The old new product development system illustrated
in Figure 4.10 consisted of a five-phase process
The new project involved an NPD system that enabled
Nortel to:
leverage multidisciplinary NPD knowledge assets;
improve NPD decision making; and
facilitate learning and knowledge exchange
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CHALLENGES IN DEVELOPING
GLOBAL INFORMATION SYSTEMS
GIS describes the information system used by
multinational companies (MNC)
GIS developers must address the following
constraints:
Politically Imposed Constraints
Cultural and Communications Barriers
Restrictions on Hardware Purchases and Imports
Restrictions on Data Processing
Restrictions on Data Communications
Technological Problems
Lack of Support from Subsidiary Managers
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PUTTING THE SYSTEM USERS AND
INFORMATION SPECIALISTS IN
PERSPECTIVE
Early systems development was accomplished
solely by information specialists, but over time the
users have played increasingly important roles
Not only has systems development work changed,
but the setting in which the work is performed has
changed as well
Electronic communication networks enable firms
to become virtual organizations, so now their
development work can be done almost anywhere
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END OF CHAPTER 4