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CHAPTER 1

INTRODUCTION TO

INFORMATION SYSTEMS

Management Information Systems, 9th edition,

By Raymond McLeod, Jr. and George P. Schell© 2004, Prentice Hall, Inc.

http://vig.prenhall.com/home






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Learning Objectives:

• Understand how computer hardware has evolvedto 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 haveevolved from an initial emphasis on accountingdata to the current emphasis on information for problem solving.



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Learning Objectives (cont.):

• Know how to tailor information systems tomanagers based on where they are located in theorganizational structure and what they do.

• Know the relationship between problem solvingand decision making, and know the basic problem-solving steps.

• Understand what enterprise resource planningsystems are and the reasons for their popularity.

• Know what innovations to expect in informationtechnology.



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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 withtransistors 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



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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



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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



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[Insert Figure 1.1 here]



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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



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Smaller Computers

• The first small-scale systems, calledminicomputers, were smaller and less powerful but could handle processing forsmall organizations more cheaply

• Even smaller microcomputers designed forindividual use were later developed, first byApple and Tandy Corp.

• In 1982, IBM introduced the first personalcomputer, or PC, in 1982, which has since become the standard for individualcomputing



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Moore's Law

• Coined in the 1960s by Gordon Moore, one

of the founders of Intel

• States that the storage density (and thereforethe processing power) of integrated circuits

is doubling about every year

• By the 1970s the doubling rate had slowedto 18 months, a pace that has continued up

to the present



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INTRODUCTION TO

COMPUTER ARCHITECTURE

• Most computers have similar architectures

that combine software and hardware

• Software includes the operating systemwhich controls the computer hardware and

application software, such as word

processing, spreadsheets, etc.

• Hardware includes, processors, memory

and peripheral devices



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Computer Hardware

• The processor manages the input andoutput 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 thetemporary workspace for the CPU

– Permanent data storage devices such as CD-

ROM, floppy and hard disk drives





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INTRODUCTION TO

COMMUNICATIONS ARCHITECTURE• Modem: a hardware device that sends the

computer’s digital signals by modulating ananalog 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 it’s cheapand easy to install



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THE EVOLUTION IN

COMPUTER APPLICATIONS• An information system is a conceptual system

that enables managers to control and monitor a

firm’s physical systems used to transform input

resources into output resources



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Transaction Processing Systems

• A transaction processing systems is

shown in Figure 1.8

• It gathers data from the firm’s physical

system and environment and enters it into

its database

• The software also transforms the data into

information for the firm’s managers andother individuals in the firm’s environment



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Management Information Systems

• Management information systems (MIS)transform the data in frontline systems, such astransaction 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 byorganizational 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



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Virtual Office Systems

• Office automation - the use of electronics tofacilitate communication, began with wordprocessing

• Subsequent applications include electronic mail,

voice mail, electronic calendaring, and audio andvideo conferencing

• These personal productivity systems nowaccount 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 officeactivities can be performed without the need for an

employee to be in a specific location



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Decision Support Systems (DSS)

• A DSS is a system used to assist managers inmaking decisions to help solve a specific problem

• Figure 1.10 shows the 3 sources for theinformation to be delivered to users: a relational

database, a knowledge base, and amultidimensional 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 itsown





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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 inintegrating 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 managementof all of a firm’s resources on an organization-

wide basis



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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



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THE ROLE OF INFORMATION IN

MANAGEMENT PROBLEM SOLVING

• While a problem can be harmful or potentiallyharmful to a firm in a negative way , it can also bebeneficial or potentially beneficial in a positive way

• The outcome of the problem-solving activity is asolution

• 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



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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 andcommunications

• To take advantage of these new

possibilities, managers must learn toincorporate information systems intodecision making



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END OF CHAPTER 1



38

CHAPTER 2

INFORMATION SYSTEMSFOR COMPETITIVE

ADVANTAGE


By Raymond McLeod, Jr. and George P. Schell© 2004, Prentice Hall, Inc.







39


• Be able to use the general systems model of the firm as atemplate 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.



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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 thefirm, its business areas, and its information resources.

• Know four basic global strategies that can be practiced bymultinational corporations and understand the role ofinformation in each.



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THE FIRM AND ITS ENVIRONMENT

• The physical system of a firm is an open system inthat it interfaces with its environment

• Firms take resources from their environments,transforms these resources into products and

services, and return the transformed resources to theenvironment

• Figure 2.1 shows this flow of resources from theenvironment, 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



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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



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Environmental elements exist outside the firm and have

a direct or indirect influence on it.



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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 fromthe government, the material flow to suppliers,and the personnel flow to competitors



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COMPETITIVE ADVANTAGE

• In the IS field, competitive advantage refers to theuse 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 firm’smanagers use both conceptual and physical

resources to meet the firm’s strategic objectives



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Porter’s Value Chains

• Porter argued that firm’s opportunities to createcompetitive advantage occur at different steps inthe value chain (Figure 2.3)

• The Margin is the value of the firm’s products

and services less their costs, as perceived by thefirm’s customers

• The value chain is made of the primary andsupport activities that contribute to a firm’s

margin value. Increasing that marginal value is theobjective of the chain model

• Firms can create value by performing activities,which Porter calls value activities



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S f



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Expanding the Scope of the

Value Chain (Figure 2.4)• Additional advantages that can be achieved

by linking the firm’s 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 workingalone

• Porter termed this the value system



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Th Di i f C titi



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The Dimensions of Competitive

Advantage

1. Strategic advantage: plans used to achieve an

advantage

2. Tactical advantage: methods for accomplishinga 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

The Dimensions of Competitive Advantage



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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

CHALLENGES FROM GLOBAL



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CHALLENGES FROM GLOBAL

COMPETITORS

• The biggest players in today’s globalmarketplace are multinational corporations(MNCs)

• Information processing and communications- based coordination are especially crucial foran MNC due to the scale and geographic

dispersal of their business activities• Coordination, in particular, has become a key

to achieving competitive advantage in aglobal marketplace



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INFORMATION MANAGEMENT

• A firm’s information resources consist of:

– Computer hardware

– Computer software

– Information specialists

– Users – Facilities

– Databases

– Information• Achieving competitive advantage through the useof information requires the effective managementof these resources, otherwise known as

information management



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The Dimensions of Information

• Information can be viewed as having four basicdimensions that contribute to information value:

• Relevancy: information is relevant when it pertains to the problem at hand

• Accuracy: information has value when it isaccurate

• 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 asolution

Th Ch i N t f



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The Changing Nature of

Information Management • The task of information management faces new

problems as new technologies are making olderstyle 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 imagemanagement is now a second important task for

information managers• Knowledge management is a third task, requiring

an easy-to-use database management system andsoftware packages for use in analyzing data



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STRATEGIC PLANNING FOR

INFORMATION RESOURCES

• The chief information officer (CIO) provides thestrategic direction for a firm’s informationresources; and

• The CIO also coordinates the IS department’sstrategic effort with the firm’s overall strategic business plan

• As strategic planning in specific business areas is

also developed, the firm’s information resourcesmust also be coordinated with these efforts (seeFigure 2.6)



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Strategic Planning for Information



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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

firm’s plan will reflect the support provided byinformation 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



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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 firm’s

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



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An Example Strategic Plan for



63

An Example Strategic Plan for

Information Resources

Figure 2.9 (see text) is an example of an SPIRreport. 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 inthree organizational units; and

• A summary of the work plan forimplementing systems enabling the firm tomeet its information services goals

GLOBAL BUSINESS STRATEGIES



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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



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END OF CHAPTER 2

CHAPTER 3



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CHAPTER 3

USING INFORMATION

TECHNOLOGY TO ENGAGEIN ELECTRONIC

COMMERCE

Management Information Systems, 9th

edition,By Raymond McLeod, Jr. and George P. Schell

© 2004, Prentice Hall, Inc.

Learning Objectives






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 electroniccommerce and business-to-consumer electronic commerce.

• Understand the role that business intelligence plays in

electronic commerce.



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• 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 interorganizational systems.

• Recognize the movement from electronic data interchange

to various Web-standard data exchange practices.

• Understand why many firms choose to have both a virtualstore and a physical store.



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Introduction

• Electronic commerce (or e-commerce), usescommunications 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



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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

Electronic Commerce Beyond the



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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 commercerefers 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



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Anticipated Benefits from



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 community3. Increased economic return on stockholder and

owner investments

These benefits contribute to the firm’s financial

stability and enable it to better compete in a business

world that is using more and more computer

technology



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Electronic Commerce Constraints

Three constraints on e-commerce are as follows:1. High costs

2. Security concerns

3. Immature or unavailable softwareEach of these constraints is being challenged as IT

and IS needs for e-commerce become increasingly

popular and the cost of the required computingresources keeps falling

Scope of Electronic Commerce



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Scope of Electronic Commerce

• The amount of economic impact varies from

industry to industry but about 94% of electroniccommerce is B2B leaving 6% for B2C

• E-commerce is estimated to be growing at

between 5% and 15% each year, though mayslow 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



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The Path to Electronic Commerce



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The Path to Electronic Commerce

• Implementing an e-commerce systemincludes 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 intelligenceto understand the potential role each

environmental element will play



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BUSINESS INTELLIGENCE

• Before engaging in e-commerce managersmust understand their firm’s 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

External Databases



83

External Databases

• Companies can also use commercial

databases that provide environmentalinformation instead of gathering itthemselves

• Firms use these databases because it isfaster and less expensive than trying toresearch the information on their own

• Figure 3.1 illustrates the use of externaldatabases and Web searches for businessintelligence



84

Search Engines



85

Search Engines

• A search engine is a special program that

provides links to Web sites based on akeyword or group of words supplied by theuser

• Search engines then look through theirdatabase of Web site content to see whichWeb sites use that word or phrase

• Other specialized indexing programs create

directories of Web site categories, workingon the ―backend‖ of the search engine



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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

IOS B fit



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IOS Benefits

• The trading partners enter into an IOS venturewith 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 thereplenishment process by electronicallymonitoring the firm’s inventory levels



Electronic Data Interchange (EDI)



90

Electronic Data Interchange (EDI)

• EDI is essentially electronic forms that can be sentover 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 EDIFACTinternational standards are used in Europe

Extranet



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Extranet

• Another way of establishing an IOS is byusing a secure form of Internet technologycalled an extranet

• Firms use them in collaboration with trustedsuppliers and large customers to sharesensitive information

• Security and privacy are serious concerns so

the extranets are generally secured behind afirewall



92

Electronic Funds Transfer (EFT)

• When data representing money istransmitted over a computer network, it is

called electronic funds transfer

• EFT is used by firms and individuals whohave their payroll checks deposited into

their bank accounts or who pay bills using

electronic payments• EFT also plays a major role in electronic

commerce

Proactive and Reactive Business



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, typicallyrespond in a reactive manner — accepting or

rejecting the sponsor’s offer to adopt IOS

• For example, the proactive approach taken by thelarge automobile manufacturers forced suppliers

to react by either adopting an EDI system or risk

losing participation in the supply chain





95



96

Indirect IOS Benefits

• The indirect benefits of participating in anIOS include:

– increased ability to compete;

– improved relationships with trading partners; – and improved customer service

• Figure 3.4 shows this relationship betweendirect and indirect benefits



97

A Challenge to EDI



98

g

• Newer approaches to inter organizational systems

for B2B data transfer XML, DHTML, andCORBA

– Extensible markup language (XML) is an extensionof the hypertext markup language used to code Web

pages

– Dynamic hypertext markup language (DHTML) adds features such as scripting and active controls sothe content of the displayed Web page can bedynamically generated

– Common Object Request Broker Architecture(CORBA) grew as a standard as the software industryembraced object-oriented programming and databases

B2C STRATEGIES FOR ELECTRONIC



99

COMMERCE

• Reasons why it’s important to understandB2C business include:

– More products and services are becomingavailable for digital delivery

– Consumers are overcoming their reluctance to purchase using the Web

– Higher communications speeds have made thedelivery of digital products practical

– Fear of information theft (such as credit cardinfo), is being replaced with greater confidencethat sensitive information will be safeguarded

Products and Services to Be Delivered to the



100

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 growthof private mail/shipping companies has indirectly

aided retail e-Commerce

• A key difference between digital and physical

products is that digital products can be consumedas soon as they are downloaded

Virtual Versus Hybrid Sales



101

Virtual Versus Hybrid Sales

• Virtual sales are those made by a firm that doesnot operate a physical storefront

• Hybrid sales occur when firms have both a

physical storefront and a Web site where

customers can purchase products

• Office Depot’s Web site (www.officedepot.com)

shows an example of the strategy restricting the

number of images displayed until the customerhas focused his/her search to a relatively few

choices (next slide)





102

EVOLUTION OF THE INTERNET



103

• Understanding the Internet's evolution can help

forecast future opportunities• ARPANET makes it possible for military personnel

and civilian researchers to exchange informationrelating to military matters. It forms a major portion

of what has come to be known today known as theInternet

• In 1989, Tim Berners-Lee, working at CERN, cameup 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

CYBERSPACE AND THE



106

INFORMATION SUPERHIGHWAY

• The term cyberspace is from William Gibson’s 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 informationthat exists in our modern society

• The two main organizations in leadership roles inestablishing Internet and Web standards are The

Internet Society and the IETF (Internet EngineeringTask Force)

• Web standards come from the World Wide WebConsortium (W3C)

BUSINESS APPLICATIONS OF



107

THE INTERNET

• The Internet can be used for any businessapplication that involves data communication,including both communication inside the firm andwith the environment

• Unlike proprietary networks, the Internet can beused with any computer platform without anyspecial effort to access the network

• The Internet also makes it possible to transmit a

wider variety of media than can be handled overmost conventional networks

Marketing Research and



108

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 havean established Web presence

Suggestions for Successful



109

Internet Use

1. Make sure your Web site is robust2. 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 intuitive8. Be in the right Web location

9. Create a sense of community

10. Get help if you need it

Future Impact of the Internet on



110

Business

• The Internet is seen as the precursor to a NationalInformation Infrastructure

• Each country will have its own NII, all linked togetherin some manner that is yet to be defined

• Having an NII will affect commerce in the differentcountries in different ways. Industrialized countriesthat make quick use of innovations in technology, theeffect can be swift and dramatic

• Important new issues are also emerging, especiallythe issue of circulating customers’ personalinformation



111

END OF CHAPTER 3

CHAPTER 4



112

CHAPTER 4

SYSTEM USERS ANDDEVELOPERS


By Raymond McLeod, Jr. and George P. Schell

© 2004, Prentice Hall, Inc.





113

g j

• Learn that the organizational context for systems

development and use is changing from a physical to avirtual structure.

• Recognize the benefits and disadvantages of the virtual

office and the virtual organization.

• Know who the information specialists are and how theycan 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 whyit came about.

Learning Objectives (cont ):



114


• 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 areimportant 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.

Introduction



115

• The first office automation applications were mostly

designed for secretarial and clerical tasks; but soonspread 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

THE BUSINESS ORGANIZATION



116

• Information systems have been developed

to support all organizational levels (Figure4.1)

• 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 aredesigned to meet the firm’s day-to-day

information needs in those business areas



117

OFFICE AUTOMATION



118

• OA includes all of the formal and informal

electronic systems primarily concerned with thecommunication 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 theirlocation

• This is called a virtual organization, andevolved out of office automation



119

A Shift from Clerical to Managerial

P bl S l i



120

Problem Solving

• The first OA applications supported secretarial andclerical 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



121

THE VIRTUAL OFFICE



122

• 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 employeescould electronically ―commute‖ to work

Advantages and Disadvantages of

T l ti



123

Telecommuting

• Advantages:

– Provides employees with scheduling flexibility so that

personal tasks can also be accommodated

– Firms typically pay more attention to communicationsneeds 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

Hoteling



124

g

• The concept of ―hoteling‖ is for the firm to

provide a ―sharable‖ central facility thatemployees can use as the need for office space andsupport 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

Advantages and Disadvantages of

T l ti



125

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 boththe firm and the employees if it is to succeed

THE VIRTUAL ORGANIZATION



126

• 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 theknowledge and skills required to succeed as IT

and information systems are included in business

processes

THE INFORMATION SERVICES

ORGANIZATION



127

ORGANIZATIONRequire

• The Information Resources

• The Information Specialists

• Systems Analysts

• Database Administrators• A Webmaster

• Network Specialists

• Programmers

• Operators

• A structure that is typical of a centralizedoperation is illustrated in Figure 4.4

THE INFORMATION SERVICES

ORGANIZATION



128

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 typicalinformation services organization



129

Innovative Organizational Structures



130

• During the 1990s, large firms sought to achieve a"centrally decentralized" organizational structure

• Three innovative organizational structures thathave 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 aregrouped, the innovative structures show how the IT functions are grouped

Three Innovative Structures



131

• The Partner Model (Figure 4.5): IT coordinates

business areas to achieve value innovation andaccomplish delivery of solutions

• The Platform Model (Figure 4.6): IT provides

the networks so that innovation can beaccomplished by the business areas

• The Scalable Model (Figure 4.7): shows that two

sourcing networks are utilized to interface with

vendors when engaging in infrastructuremanagement and solutions delivery within a

flexible structure



132



133



134

What All Three Models Share



135

• 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 divisionalinformation 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 itis best for the firm

END-USER COMPUTING• The first Information Systems were developed with



136

• The first Information Systems were developed withIT 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 maininfluences

1. The impact of computer education

2. The information services backlog

3. Low-cost hardware4. Prewritten software

• In Figure 4.9 the end-user relies on the informationspecialists for some degree of support



137



138

USERS AS AN

INFORMATION RESOURCE



139

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

Benefits and Risks of End-User

Computing



140

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

SYSTEMS DEVELOPMENT

KNOWLEDGE AND SKILL



141

KNOWLEDGE AND SKILL

• The development of information systems requirescertain knowledge and skills

• It is possible to identify not only the types ofknowledge and skill needed by information

specialists and users, but also how users can bedivided into general management and their staff

• Table 4.1 identifies the types of knowledgeneeded 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)



142



143

Knowledge Management



144

• This knowledge relates to the firm's processes,

technology, management, and interactions with itsenvironmental elements

• Firms are embarking on projects to developknowledge 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 gathersknowledge, stores it and makes it available to

users• Table 4.3 lists the challenges that must be faced by

firms in developing KM systems



145

A Successful KM Development

Project at Nortel Networks



146

Project at Nortel Networks • Nortel Networks (using knowledge management

software from Excalibur Technologies) credits its pilot KM project with enabling its transformationfrom a technology-focused company to one that isopportunity/customer-focused

• The old new product development system illustratedin 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



147



148

CHALLENGES IN DEVELOPING

GLOBAL INFORMATION SYSTEMS



149

• 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

PUTTING THE SYSTEM USERS AND

INFORMATION SPECIALISTS IN



150

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 firmsto become virtual organizations, so now their

development work can be done almost anywhere



END OF CHAPTER 4

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