Chapter Eight

Information Technology and

Control

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2004 8-1
 Evolution of Organizational
Applications of Information
Technology
TOP 3. Strategic Weapon
(strategy, plans, INTERNAL EXTERNAL
non-programmed) Knowledge Extranets
Management E-Commerce
Intranets Integrated
Enterprise resource Enterprise
planning
2. Business Resource
Management Information
MANAGEMENT systems
LEVEL Decision Support Systems
Executive information Direction of
1. Operations systems Information
Transaction Management control systems System
processing systems Balanced Scorecard Evolution
Data warehousing
FIRST-LINE
(operational, past, LOW SYSTEM COMPLEXITY HIGH
programmed)
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2004 8-2
A Simplified Feedback Control
Model

Set Strategic
Goals

Establish Standards Take Corrective

of Performance Action
as Needed

Measure Actual
Performance and
Compare to
Standards

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2004 8-3
 Major Perspectives of the
Balanced Scorecard
Financial
Do actions contribute to improving
financial performance?

Examples of measures: profits,

return on investment

Customers Internal Business Processes

Does the chain of internal activities and
Mission
How well do we serve our customers? processes add value for customers and
Strategy
shareholders?
Goals
Examples of measures: customer Examples of measures: order-rate
satisfaction, customer loyalty fulfillment, cost-per-order

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, Thomson Learning
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, 28-36.
2004 8-4
 Example of ERP Network
Financial and
Sales Accounting

Human Central Purchasing

Resources Database

Inventory and
Manufacturing
Distribution

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2004 8-5
 Two Approaches to Knowledge
Management
Explicit Tacit
Provide high-quality, reliable, and fast Channel individual expertise
information systems for access of to provide creative advice
codified, reusable knowledge on strategic problems
People-to-documents Person-to-person

Develop an electronic Develop networks for

document system that
Knowledge linking people so that
codifies, stores, Management tacit knowledge can
disseminates, and allows Strategy be shared
reuse of knowledge
Invest moderately in
Invest heavily in information information technology,
technology, with a goal of Technology with a goal of facilitating
connecting people with conversations and the ex-
Reusable, codified knowledge change of tacit knowledge

Source: Based on Morten T. Hansen, Nitin Nohria, and Thomas Tierney,

Thomson Learning
Whats Your Strategy for Managing Knowledge? Harvard Business 2004 8-6
Review, March-April 1999, 106-116.
Electronic Data Interchange for
International Transactions
Manufacturers Customers
Bank Bank

Suppliers MANUFACTURER Customer

Export Freight Import

Forwarder Clearing Agent

Export Import
Customs Customs

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2004 8-7
 Key Characteristics of Traditional vs.
Emerging Interorganizational
Relationships

Traditional Interorganizational Emerging Interorganizational

Relationships Relationships

Arms-length relationship Interactive, electronic

relationship
Suppliers Use of telephone, mail, some
EDI for ordering, invoicing, Electronic ordering, invoicing,
payments payments

Direct access to manufacturer,

Limited communication with
Customers real-time information exchange
manufacturer
Electronic access to product
Mix of phone response, mail
information, consumer ratings,
hard copy information
customer service data

Source: Based on Charles V. Callahan and Bruce A. Pasternack,

Thomson Learning
Corporate Strategy in the Digital Age, Strategy & Business, Issue 15,
Second Quarter 1999, 10-14.
2004 8-8