1 IS715 – The Development, Management and Exploitation of Business Information Systems Week 1 - Strategic Management Information in Context.

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IS715 – The Development, Management and

Exploitation of Business Information Systems

Week 1 - Strategic Management Information in

Context

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Objectives:1 to introduce the concept of

strategic information2 to understand the role of

information in organisations3 to look at internal sources of

strategic information4 to recognise the importance of

external sources

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What is Strategic Information (SI)?

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Lecture Structure: Building Blocks of Strategic InformationRequires awareness

of:1 data, information,

knowledge2 characteristics of

information3 managerial

activities4 managerial

decision making

5 management levels

6 information requirements of levels

7 systems to support8 CBIS & competitive

advantage

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1. Data, Information, Knowledge

What is this?

‘A slight inclination of the craniumis as adequate as a spasmodicmovement of the optic to anequine devoid of its visionary

capacity’

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What is this?

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Definitions

‘Data, is the record of an event or fact.’

‘Information is data processed for a purpose.’

G Curtis. Business Information Systems.

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More definitions...

‘Data items are the raw materials for producing information.’

‘Information is generally defined as data that is meaningful or useful to the recipient.’

Davis & Olsen. Management Information Systems

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Final definitions...

‘Data refers to facts.’

‘When data are filtered through one or more processors to that they take on both meaning and value to a person, they become information.’

Parker & Case. Management Information Systems.

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2. Characteristics of Information

TIME CONTENT FORM EXTRA

Timeliness Accuracy Clarity Confidence

Currency Relevance Detail Reliability

Frequency Completeness Order Appropriate

Timeperiod Conciseness PresentN Audience

Scope Media Media used

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3. Managerial Activities

‘To manage is to forecast and plan, to organise, to command, to co-ordinate and control.’ Fayol 1916

going to look at : information needs, levels of

management,nature of problems etc.

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What Does a Manager Do?

operational process involving management functions of : planning, organising, staffing, directing, leading, controlling

increasingly complex resulting from: IT developments globalisation international economics - Twin towers shrinking time frames - ‘chasing the sun’ social constraints - ‘green’ purchasing

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4. Managerial Decision Making

what Information does a manager need ? Information needs determined by decisions that must be made which are determined by set objectives

Objectives

Decisions

Info Needs Info Needs

Decisions

Info Needs Info Needs

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Model of Decision Making Simon (1960)

Intelligence

Choice

Design

Develop awareness that problem exists. Gather information on the problem.

Try to develop alternative solutions. May require additional info. at this stage

Heavily reliant on Design stage being undertaken properly. Should be straight

forward.

Decision StageSearch and scanning procedures

Formulate model, search for alternatives, Predict/measure outcomesSelect the

best or best alternatives, design a plan of action

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Decision Making ModelSTAGE ACTIVITIESIntelligence Identify problem

Aware need decisionDesign Identify possible solutions

Examine possible solutionsExamine implications of solutions

Choice Select best solution

Implementation Carry out 'best' solution

Evaluation Evaluate effectiveness of decision

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Types of Decision

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5. Management Levels

Operational

Tactical

Strategic

Unstructured(non-programmable)

Structured(programmable)

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Levels of Decision Making

Strategic Decision Making involves establishing objectives outlining long-term plans to meet those

objectives Tactical Decision Making

implementing decisions made at strategic level

allocating resources needed to meet organisational objectives

Operational Decision Making executing tasks ensure efficient, effective

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Nature of Decisions at Management Levels

Decision

Mang. level Decision Timescale Org. impact Frequency

Strategic Unstructured Long Large Infrequent

Tactical Medium Medium

Operational Structured Short Small Frequent

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6. Decision Levels and Info Type

Orientation

Planning Horizon

Performance Focus

Coverage

Level of Detail

Uncertainty

Degree of objectivity

Level of Accuracy

primarily internal

immediate/few days

current activities

specific activities

highly detailed

low

objectively measured

high accuracy levels required

internal & external

short /medium term

historical & current

dept/function

detailed & summarised reports

degree of uncertainty

objective & subjective data

moderate accuracy levels

more external

medium/long term

predictive rather than historical performance

total organisation

typically highly summarised

high levels of uncertainty

higher proportion is subjective

accuracy less critical to decisions at this level

Info AttributesInfo Attributes OperationalOperational TacticalTactical StrategicStrategic

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7. Computer Based Information Systems (CBIS)

What is an information system?‘An information system is a group of interrelated components that work collectively to carry out input, processing, output, storage and control actions in order to convert data into information products that can be used to support forecasting, planning, control, co-ordination, decision making and operational activities in an organisation.’Business Information Systems (Bocij 1999)

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What are the Resources? people - users of the system (designers etc.) hardware - all machinery software - includes manuals, company

documentation communication - intranets, extranets data - all data access regardless of form information technology - the technology computer based information systems (CBIS)

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What are the CBIS’s

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Transaction Processing Systems (TPS) basis of business

operations recording and

processing basic data sales, purchases

etc. batch or online

online - banking batch - bill

processing

main activities data capture data validation processing

classification sorting data retrieval calculation summarising

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outputs from TPS transaction

documents action documents

ie. airline tickets, picking slips to identify warehouse products

information documents

confirmation - list of credit card charges etc.

query responses/reports transaction logs error (edit) reports detail reports summary reports

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Strategic Use of TPS underestimated as purely technically

oriented can provide strategic advantage by

focusing on internal and customer interfaces

airlines - TPS systems provide strategic information i.e. Platform Thomas Cook

allows horizontal & vertical integration

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Exploitation of TPS for Strategic Decision Making tracking systems locational systems asset management systems growing area

electronic market place - securities, software, ideas, goods, services on the Internet

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Office Automation Systems (OAS) applying IT to

common office tasks word processing spreadsheets fax machines

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Management Information Systems (MIS) designed to produce information

needed for successful management of process, department or business

support recurring decisions, where information needs have been determined in advance

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Management Information Systems alternative views MIS - includes operational systems

and TPS that only used indirectly by managers

BIS - business information systems - used to describe all types of IS used in business ie. DSS, OIS and more appropriate than MIS

MIS taken to include DSS, EIS, ES

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Decision Support Systems (DSS)

provide information to support semi or unstructured decisions

provide information when needed users interact with the system

identify, retrieve information to support decision, solve problem

‘what if’ problems next phase - group decision support

systems aimed middle and lower management

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Executive Information Systems (EIS) internal, external information

highly summarised form spot opportunity, problem or trend identify course of action to solution can have forecasting capabilities

represent strategic planning tool serve control needs of high level

management

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EIS Characteristics immediate, easy

access to information user friendly

interface, graphic etc. no middle user

access to int/ext. databases through standard interface

includes future & current data

easily tailored to specific mangers

‘drill down’ capacity - see the detail behind the summaries

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Expert Systems

apply human knowledge & experience to range of problems comprises knowledge base controlled by rules

knowledge base represents knowledge, experience of experts

in given area rules

organise knowledge base, allow interrogation examples : choosing computer system,

performing medical diagnosis

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8. CBIS & Competitive Advantage

Porter - 5 competitive forces threat new entrants bargaining power of suppliers bargaining power of customers threat of substitute products or services rivalry amongst competitors

competitive strategies to address cost leadership product differentiation innovation

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Using CBIS for Strategic Advantage improving operational efficiency raising barriers to entry locking in customers and suppliers

- American Airlines, SABRE promoting business innovation increasing switching costs leverage