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