MANAGEMENT INFORMATION SYSTEMS Lecturer Henry O.Quarshie.

MANAGEMENT INFORMATION SYSTEMS

LecturerHenry O.Quarshie

Introduction

• Information systems can play a vital role in business success. They can provide the information a business needs for efficient operations, effective management, and competitive advantage.

• However, information systems can fail. If information systems do not properly support the strategic objective, business operations or management needs of an organization, they can seriously damage it’s prospects for survival and success. So, the proper management of information systems is a major challenge for managers.

Definition

• Management information systems are typically computer systems used for managing. The five primary components: 1.) Hardware, 2.) Software, 3.) Data (information for decision making), 4.) Procedures ( design, development and documentation), and 5.) People (individuals, groups, or organizations).

• Management information systems are distinct from other information systems because they are used to analyse and facilitate strategic and operational activities.

• Academically, the term is commonly used to refer to the study of how individuals, groups, and organizations evaluate, design, implement, manage, and utilize systems to generate information to improve efficiency and effectiveness of decision making, including systems termed decision support systems, expert systems and executive information systems.

The components of Information system

• People resourcesSpecialists-systems analysts, programmers,

computer operators.End users- anyone else who uses information

systems.• Hardware Resources Machines- computers, video monitors, magnetic

disk drive, printers, optical scanners.Media – floppy disks, magnetic tape, optical disks,

plastic cards, paper forms.

• Software Resources Programs- operating system programs,

spreadsheet programs, word processing programs, payroll programs.

Procedures- data entry procedures, error correction procedures, pay check distribution procedures

• Data Resources Product description, customer records,

employee files, inventory databases.• Information ProductsManagement reports and business documents

using text and graphics displays, audio responses, and paper forms.

The Roles of Information

• Information technology has reshaped the world of business. For this reason, you should view information systems strategically, that is, as vital competitive networks, as a means of organizational renewal, and as a necessary investment in technologies that help an enterprise achieve its strategic objectives.

• Information systems perform three vital roles in any type of organisation.

1: Support Business Operations,

2: Support Managerial decision making

3: Support Strategic competitive advantage.

The strategic Role of Information Systems

Information technology can be used to implement a variety of competitive strategies.

• 1: Improving Business Processes:Investments in information technology can help make a firm’s

operational processes substantially more efficient, and its managerial processes much more effective. By making such improvements to its business processes a firm may be able to:

• 1. Dramatically cut costs• 2. Improve the quality and customer service• 3. Develop innovative products for new markets

• Promoting Business Innovation Investments in information systems technology

can result in the development of new products, services, and processes. This can:

• 1. Create new business opportunities• 2. Enable a firm to enter new markets• 3. Enable a firm to enter into new market

segments of existing markets

3: Lock In Customers & Suppliers • Investments in information technology can also allow a business to

lock in customers and suppliers (and lock out competitors) by building valuable new relationships with them. This can be accomplished by:

• 1. Deters both customers and suppliers from abandoning a firm for its competitors or intimidating a firm into accepting less profitable relationships.

• 2. Offer better-quality service to customers allows a company to differentiate themselves from their competitors.

• 3. Create interorganizational information systems in which telecommunications networks electronically link the terminals and computers of businesses with their customers and suppliers, resulting in new business alliances and partnerships.

4: Creating Switching Costs • A major emphasis in strategic information

systems is to build switching costs into the relationships between a firm and its customers or suppliers. That is, investments in information systems technology can make customers or suppliers dependent on the continued use of innovative, mutually beneficial interorganizational information systems.

• 5: Raising Barriers to EntryInvestment in information technologies that increase

operational efficiency can erect barriers to entry for new players in the industry, and can discourage firms already in the market. This can be accomplished by:

• 1. Increasing the amount of investment or the complexity of the technology required to compete in a market segment.

• 2. Discourage firms already in the industry and deter external firms from entering the industry

6: Leveraging a Strategic IT PlatformInformation technology enables a firm to build a

strategic IT platform that allows it to take advantage of strategic opportunities. Typically, this means acquiring hardware and software, developing telecommunications networks, hiring information system specialists, and training end users. A firm can then leverage investment in information technology by developing new products and services.

• 7: Developing a Strategic Information BaseInformation systems allow a firm to develop a strategic

information base that can provide information to support the firm's competitive strategies. A firms’ database is considered a strategic resource which is used to support strategic planning, marketing, and other strategic initiatives. These resources are being used by firms in such areas as:

• 1. Strategic planning• 2. Marketing campaigns• 3. Erecting barriers to entry for competitors• 4. Finding better ways to lock in customers and suppliers

Solving business problem with Information System

• There are five main phases in System Approach:-

• 1. Define the problem:- Define a problem or opportunity using system

thinking.

• 2. Developing alternative solution: - In this we find the alternative solution of the giving problem. Source of alternative solutions are:-

• Experience. • Advice of others. • Recommendation of consultants. • Suggestion of expert system. • Help from software package.

3. Select the solution: - Evaluation has been done to meet the best solution for business and personal requirement.

• 4. Design and Implementation:- • After selecting a solution is must be designed and

implemented. • Design specifies the detailed characteristics and

capabilities of the people, hardware, software and all resources.

• In implementing stage we specify the resources, activities and time needed for proper implementation.

• 5. Post implementation review:- • Results of implementing a solution should be

monitored and evaluated. • The objective is to check that the

implemented solution meet the objectives of business or not.

Using Technology to Change Business

• Over the last 10 to 15 years, technology has drastically changed the attitude and processes of the workplace. More importantly, the continued evolution of telecoms and IT technology is fuelling the on-going transformation of the business environment to take advantage of available tools and opportunities.

• In Africa, as in many developing countries, there can still be a tension between the traditional practices and the improvements that can be realised through technology. One of the reasons for this standoff might be that decision makers still have not fully appreciated the irrevocable changes that technology had brought to the workplace. There are five key ways in which technology is changing the way we do business.

• 1. Productivity. One of the early driving forces supporting the take up and use of computers were assertions that increased productivity could be realised, thus allowing us more time to attend to do other things. Indeed, the use of computers has transformed the workplace as we know it. It has driven down the cost of data processing, and the ease with which large volumes of data can be manipulated by and transferred between various units within the organisation.

• Moreover, this increasing processing power, along with the broad range of off-the-shelf and customised hardware and software that are available, have resulted in changing employer and client expectation of work quality.

• 2. Collaboration. In situations where persons might not be in office physically, e.g. due to teleworking arrangements or offsite work assignments, and even to interact with clients, technology is offering a number of connectivity options that facilitate continued discussion and collaboration among work teams.

• 3. Resourcing. It is also changing the way businesses are resourced. Two key examples of this are:

• cloud computing, which allows a broad range of resources, such as software applications, hardware and infrastructure requirements, such as storage and processing power, to be accessed online, and

• outsourcing, where, thanks to technology, companies can devolve or delegate different aspects of their business to either affiliate or third parties, but still remain connected and have critical inputs to processes that have remained in-house.

• 4. Interaction and participation. This point is readily evident through the impact of social media in business. In addition to the providing organisations with another platform for marketing and promotion, and to disseminate information, social media offers consumers and the public a large, a voice. Many organisations are beginning to capitalise on the opportunities to secure feedback on their products and services, and even to use the collaborative environment that technology now fosters for crowdsourcing initiatives, such as crowdcreation, crowdvoting and even crowdwisdom.

• 5. Cost management. Invariably, increasing competition is fostering an ever-growing need to manage cost and streamline operations. Once again, technology is providing cost-effective alternatives, such expertise/labour and computing resource outsourcing, and also with respect to in-house solutions that can improve the efficiency, productivity and performance of the individual employee, and ultimately, that of the organisation.

BUSINESS VALUE OF THE INTERNET

• The internet is faster than the traditional selling method, which take longer time to complete.

• Information about product are readily available.

• Products can be sold or ordered 24 hours a day, 7 days a week, 365 days a year without the need for support staff.

• It creates the atmosphere of a global selling place.

• It offers you a wider audience for products and services

• A very good source for promoting your corporate image.

• It is the lowest and cheapest form of advertising.

• It enables companies to:– showcase their product and services,–provide up-to-date information on their

activities and products/services,

• It provides customers the ability to compare products, check inventory and shipping times independently.

• It saves time and eliminates many of the extra costs that are associated with ordering and traveling.

BUSINESS VALUE OF TELECOMMUNICATION

• Telecommunication is the exchange of information in any form ( voice, data, text, images etc.) over computer-based networks.

• quick access to business information • reduced traveling costs • better contact with vendors • better contact with customers • better information about prices • reduces physical risks of traveling • enables local businesses to be reached (via

communication centres)

HARDWARE AND SOFWARE EVALUATION FACTORS

• When an organization or an individual wants to purchase a hardware or software its needs to evaluate them before purchase. The following are the steps to follow.

HARDWARE EVALUATION FACTORS

• 1: Performance: What are its speed, capacity, and output.

• 2: Reliability: what are the risks of malfunction and maintenance requirements?

• 3: Cost: what is its lease or purchase price? What is its maintenance cost?

• 4: Availability: When is the firm delivery date?• 5: Compatibility: Is it compatible with existing

hardware and software?

• 6: Modularity: Can it be expanded and upgraded by acquiring modular “add on” units?

• 7: Technology: Does it use a new untested technology or run the risk of obsolescence?

• 8: Connectivity: Can it easily be connected to a wide area and local area network of different types of computers and peripherals?

• 9: Scalability: can it handle the processing demands of a wide range of end-users, transaction, queries etc ?

• 10: Software: Is the system and application software available that can best use the hardware?

SOFTWARE EVALUATING FACTORS

• 1: Efficiency: Is the software a well-developed system of computer instructions or objects that does not use much memory capacity or CPU time?

• 2: Flexibility: Can it handle its processing assignments easily without major modification?

• 3: Security: Does it provide control procedures for error, malfunctions, and improper use?

• 4: Language: Is it written in a programming language that is used by our own computer programmers?

• 5: Documentation: Is the software well documented? Does it include helpful user instruction?

• 6: Hardware: Does existing hardware have the features required to best use the software?

• 7: Other factors: What are the its performance, reliability, availability, compatibility, technology, modularity, cost etc

Evaluation of Information system services

1: Performance: What has been their past performance in view of their past promises?

2: System development. Are systems analysis and programming consultants available?

3: Maintenance: Is equipment maintenance provided? What is its quality and cost?

4: Conversion: What systems development, programming and hardware installation services will they provide during the conversion period?

5: Training: Is the necessary training of personnel provided? What is its quality and cost?

6: Backup: Are several similar facilities available for emergency backup?

7: Accessibility: Does the vendor have a local or regional office that offers after sales services?

8: Business position: Is the vendor financially strong with good industry market prospects?

Creating a Virtual Company

• A virtual company is an organization that uses information technology to link people, assets, and ideas. Six basic characteristics of successful virtual companies include:

• 1. Adaptability• 2. Opportunism (opportunity-exploiting organization)• 3. Excellence• 4. Technology• 5. Borderless• 6. Trust-based

• Forming virtual companies have become an important competitive strategy in today’s dynamic global markets. Information technology plays an important role in providing computing and telecommunications resources to support the communications, coordination, and information flows needed.

• Managers of a virtual company depend on IT to help them manage a network of people, knowledge, financial, and physical resources provided by many business partners to quickly take advantage of rapidly changing model opportunities.

• Business strategies of virtual companies include:

• 1. Share infrastructure and risk• 2. Link complementary core competencies• 3. Reduce concept to cash time through

sharing.

• 4. Increase facilities and market coverage.• 5. Gain access to new markets and share

market or customer loyalty• 6. Migrate from selling products to selling

solutions.

The Challenges of Strategic Information Systems

• The IS function can help managers develop competitive weapons that use information technology to implement a variety of competitive strategies to meet the challenges of the competitive forces that confront any organization.

• Successful strategic information systems are not easy to develop and implement. They may require major changes in the way a business operates, and in their relationships with customers, suppliers, competitors, internal and external stakeholders, and others.

• Success and sustain ability depends on many environmental and fundamental business factors, and especially on the actions and strategies of a company’s management team. Sustained success in using information technology strategically seems to depend on three sets of factors:

• The Environment: a major environmental factor is the structure of an industry.

• Foundation Factors - unique industry position, alliance, assets, technological resources, and expertise are foundation factors that give a company a competitive edge in the market.

• Management Actions and Strategies• - a company’s management must develop and initiate successful

actions and strategies that shape how information technology is actually applied in the marketplace. Examples include:

a. Preempting the market by being first and way ahead of competitors in a strategic business use of IT.

b. Creating switching costs and barriers to entryc. Developing strategies to respond to the catch-up moves of

competitorsd. Managing the business risks inherent in any strategic IT

initiatives•