Unit 9 Executive Information Systems; Enterprise Information Systems; & Information Resources Information Systems 1-1.

Unit 9Executive Information Systems;Executive Information Systems;Enterprise Information Systems;Enterprise Information Systems;

&&Information Resources Information SystemsInformation Resources Information Systems

1-1

Chapter 16Executive Information SystemsExecutive Information Systems

Copyrigh 2001 Prentice-Hall, Inc.16-2

The Executive PositionThe Executive Position

Unique demands of the executive positionUnique demands of the executive position

Executives require unique information Executives require unique information processingprocessing

An executive is not just a lower-level manager on a higher level!

16-3

Marketinginformation

system

Manufacturinginformation

system

Financialinformation

system

Human resource

informationsystem

Environmental information and data

Environmental information and data

Top-levelmanagers

A Firm Without An EIS

16-4

Environmental Information and data

Environmental Information and data

Marketinginformation

system

Manufacturinginformation

system

Financialinformation

system

Human resource

informationsystem

Executive information

system

A Firm With An EIS

16-5

What Do Executives Do?What Do Executives Do?

Term executive is loosely appliedTerm executive is loosely applied– No clear dividing line between executives and No clear dividing line between executives and

other managersother managers Executive manager on the upper level of the Executive manager on the upper level of the

organizational hierarchy who exerts a organizational hierarchy who exerts a strong influence on the firmstrong influence on the firm

Long term planning horizonLong term planning horizon

16-6

Fayol's Management Fayol's Management FunctionsFunctions

PlanPlan OrganizeOrganize StaffStaff DirectDirect ControlControl

16-7

Mintzberg's Managerial Mintzberg's Managerial RolesRoles

Different levels of management perform Different levels of management perform same roles but relative time spent on each same roles but relative time spent on each differsdiffers

High-level management focusHigh-level management focus– Long-range, entrepreneurial improvementsLong-range, entrepreneurial improvements– Responding to unanticipated situations Responding to unanticipated situations

16-8

Kotter's Agenda and Kotter's Agenda and NetworksNetworks

John P. Kotter, Harvard professorJohn P. Kotter, Harvard professor Executives follow a three step strategyExecutives follow a three step strategy

– Agenda -- objectives the firm is to achieveAgenda -- objectives the firm is to achieve– Networks -- cooperative relationshipsNetworks -- cooperative relationships

» Hundreds or thousandsHundreds or thousands

» Inside and outside the firmInside and outside the firm

– Environment -- norms and values so the Environment -- norms and values so the network members can achieve agendasnetwork members can achieve agendas

16-9

How Do Executives Think?How Do Executives Think?

Daniel J. Isenberg, Harvard professorDaniel J. Isenberg, Harvard professor Studied more than one dozen executives Studied more than one dozen executives

over a 2-year periodover a 2-year period What they think aboutWhat they think about

1. How to get things done1. How to get things done

2. A few overriding issues2. A few overriding issues

16-10

How Do Executives Think? How Do Executives Think? (cont.)(cont.)

More concerned with process than solutionMore concerned with process than solution Thought processes do not always follow the Thought processes do not always follow the

step-by-step patterns of the systems step-by-step patterns of the systems approachapproach

Intuition is used at each stepIntuition is used at each step

16-11

Unique Information NeedsUnique Information Needs

Mintzberg was first to conduct a formal Mintzberg was first to conduct a formal study of executive information needsstudy of executive information needs

Studied 5 executives in early 1970s Studied 5 executives in early 1970s Five basic activitiesFive basic activities

– desk workdesk work– telephone callstelephone calls– unscheduled meetingsunscheduled meetings– scheduled meetingsscheduled meetings– tourstours

16-12

How Minzberg’s How Minzberg’s CEOs Spent TimeCEOs Spent Time

Legend:Interpersonal

Communication

Desk Work22%

Unscheduled Meetings

10%

Telephone Calls6%

Scheduled Meetings

59%

Tours3%

16-13

Unique Information NeedsUnique Information Needs

Jones & McLeod StudyJones & McLeod Study Studied 5 executives in early 1980sStudied 5 executives in early 1980s QuestionsQuestions

1) How much information reaches the executive ?1) How much information reaches the executive ?

2) What was the information value ?2) What was the information value ?

3) What are the information sources ?3) What are the information sources ?

4) What media are used to communicate the 4) What media are used to communicate the information ?information ?

5) What use is made of the information ?5) What use is made of the information ?

16-14

HIGHHIGH HIGHHIGH

HIGHHIGH HIGHHIGH

HIGHHIGH

AVGAVG

LOWLOW

AVGAVG

LOWLOWAVGAVG

LOWLOWAVGAVG

LOWLOW

BankCEO

VicePresidentof Tax

The Volume of Information Reaching the Executives

0

10

20

30

40

50

60

Retail ChainCEO

InsurancePresident

VicePresident ofFinance

AVGAVG

LOWLOW

Nu

mb

er

of

Tra

ns

ac

tio

ns

16-15

Jones & McLeod Study Jones & McLeod Study (cont.)(cont.)

How much information reaches the How much information reaches the executiveexecutive– A transaction - a communication involving any A transaction - a communication involving any

mediummedium– Daily volumeDaily volume

» Varies from executive to executiveVaries from executive to executive

» Varies from day to dayVaries from day to day

16-16

0

5

10

15

20

25

30

0 1 2 3 4 5 6 7 8 9 10

All fiveexecutives

Vice President of tax

Bank CEO

Value

Per

cen

tage

of

tran

sact

ion

sThe Value of Information Reaching

Executives

16-17

Sources of InformationSources of Information

Some executives went down 7 levels to Some executives went down 7 levels to gather informationgather information

Sources were internal and externalSources were internal and external External sources provided the most volume External sources provided the most volume

but also the lowest average valuebut also the lowest average value

16-18

EnvironmentEnvironment

Upper levelsUpper levels

The The executiveexecutive

CommitteesCommittees

Internal support units Internal support units and individualsand individuals

1 level down1 level down

2 levels down2 levels down

3 levels down3 levels down

4 levels down4 levels down

Legend:Legend:Percentage of Percentage of totaltotaltrans-trans-actionsactions

.43.433.83.8

.05.055.25.2

.20.205.25.2

.10.105.35.3

.06.064.34.3

.02.024.44.4

.02.027.57.5

.13.134.64.6

Average Average transactiontransaction

valuevalue16-19

The Sources of Information Reaching the The Sources of Information Reaching the ExecutivesExecutives

Media Used for Media Used for CommunicationCommunication

Written media accounts for 61% of the Written media accounts for 61% of the transactionstransactions– Computer reportsComputer reports– Letters and memosLetters and memos– PeriodicalsPeriodicals

Oral media is preferred by executivesOral media is preferred by executives– ToursTours– Business mealsBusiness meals– Telephone callsTelephone calls

16-20

The Executive Does not The Executive Does not Control:Control:

LettersLetters MemosMemos Telephone callsTelephone calls Unscheduled meetingsUnscheduled meetings

16-21

The Media Pie The Media Pie (in Percentages of Total Transactions)(in Percentages of Total Transactions)

WrittenWritten

OralOral

Note:Note:Percentages do not add to 1.00 due to rounding

Computer Computer Reports (.03)Reports (.03)

Noncomputer Noncomputer Reports (.09)Reports (.09)

Memos (.19)Memos (.19)

Letters (.20)Letters (.20)Periodicals (.10)Periodicals (.10)

Business Business Meals (.02)Meals (.02)

Telephone Telephone Calls (.21)Calls (.21)

UnscheduledUnscheduledMeetings (.06)Meetings (.06)

Scheduled Meetings (.05)Scheduled Meetings (.05)

Tours (.03)Tours (.03)

16-22

Ranking of Media by ValueRanking of Media by Value

Medium Mode Average ValueMedium Mode Average Value

Scheduled meetings Oral 7.4Scheduled meetings Oral 7.4

Unscheduled meetings Oral 6.2Unscheduled meetings Oral 6.2

Tours Oral 5.3Tours Oral 5.3

Social activity Oral 5.0Social activity Oral 5.0

Memos Written 4.8Memos Written 4.8

Computer reports Written 4.7Computer reports Written 4.7

Noncomputer reports Written 4.7Noncomputer reports Written 4.7

Letters Written 4.2Letters Written 4.2

Telephone calls Oral 3.7Telephone calls Oral 3.7

Business meals Oral 3.6Business meals Oral 3.6

Periodicals Written 3.1Periodicals Written 3.1

16-23

Information Use by Decisional Role

Disturbance handler (.42)

Entrepreneur (.32)

Resource allocator

(.17)

Unknown (.06)

Negotiator (.03) 16-24

Jones & McLeod Study Jones & McLeod Study FindingsFindings

Most executives’ information came from Most executives’ information came from environmental sources, but the internal environmental sources, but the internal information was valued higherinformation was valued higher

Most of the executives’ information came in Most of the executives’ information came in written form, but the oral information was written form, but the oral information was valued highervalued higher

Executives receive very little information Executives receive very little information directly from a computerdirectly from a computer

16-25

Disturbance handler .42

Entrepreneur .32

Resourceallocator

.17

Negotiator .03

Unknown.06

Environment.43

Lowerlevels

.38

Internal support units & individuals .13

Upperlevels .05

Committees .02

Sources of Decisional InformationSources of Decisional Information

16-26

Unique Information NeedsUnique Information Needs

Study conducted by John Rockart and Study conducted by John Rockart and Michael Treacy, both of MITMichael Treacy, both of MIT

Studied 16 companies in early 1980sStudied 16 companies in early 1980s Found many computer users Found many computer users Found some executives interested in detailFound some executives interested in detail Coined the term “executive information Coined the term “executive information

system”system”

16-27

EIS FeaturesEIS Features A central purposeA central purpose A common core of dataA common core of data Two principal methods of useTwo principal methods of use

– Retrieve reportsRetrieve reports

– Conduct analysesConduct analyses A support organizationA support organization

– EIS coachEIS coach

– EIS chauffeurEIS chauffeur

From Rockart and Treacy16-28

Putting Computer Use in Putting Computer Use in PerspectivePerspective

Two key points:Two key points:

1. Computer use is personal1. Computer use is personal

2. Computer produces only a portion of the 2. Computer produces only a portion of the

executive's informationexecutive's information

16-29

Suggestions to Improve Suggestions to Improve EISsEISs

1. Take an inventory1. Take an inventory

2. Stimulate high-value sources2. Stimulate high-value sources

3. Take advantage of opportunities3. Take advantage of opportunities

4. Tailor the system to the executive4. Tailor the system to the executive

5. Take advantage of technology5. Take advantage of technology

16-30

Personal computer

Make corporate

information available

Informationrequests

Executivedatabase

Corporatedatabase

Electronicmailboxes

Softwarelibrary

Current news,explanations

Externaldata and

information

Informationdisplays

Executive workstationExecutive workstation

Corporate mainframeCorporate mainframe

To otherexecutive

workstation

To otherexecutive

workstation

An EIS Model

16-31

Make corporate

information available

Informationrequests

Executivedatabase

Corporatedatabase

Electronicmailboxes

Softwarelibrary

Current news,explanations

Externaldata and

information

Informationdisplays

Executive workstation

Corporate mainframe

To otherexecutive

workstation

To otherexecutive

workstation

An EIS Model

16-32

Dialogue Between Dialogue Between Executive and EISExecutive and EIS

Typically by a series of menus, keyboarding Typically by a series of menus, keyboarding is minimizedis minimized

Drill down to specific information needed Drill down to specific information needed from the overview levelfrom the overview level

16-33

MEDIAL INTERNATIONAL GROUP MIGMEDIAL INTERNATIONAL GROUP MIG

N P U P0

100

200

300

400

500

N P U P

Actual/Planned

Product Profitability Product Profitability AnalysisAnalysis

Magazines in Europe have been Magazines in Europe have been performing poorly. While sales performing poorly. While sales are up, production costs have are up, production costs have soared. This is due to the labor soared. This is due to the labor disputes in the pulp and paper disputes in the pulp and paper industry. Starting next month, industry. Starting next month, costs should be back in line costs should be back in line with earlier projections.with earlier projections.

Actual Planned Variance %VarianceNewspapers 1,421,709 1,559,184 (137,475) (8.82)Magazines 490,855 518,687 (27,832) (5.37)Periodicals 1,912,564 2,077,872 (165,308) (7.96)

Actual Planned Variance %VarianceNewspapers 1,421,709 1,559,184 (137,475) (8.82)Magazines 490,855 518,687 (27,832) (5.37)Periodicals 1,912,564 2,077,872 (165,308) (7.96)

x100

An Information Display That Includes a An Information Display That Includes a Computer-Generated Narrative ExplanationComputer-Generated Narrative Explanation

16-34

Incorporation ofIncorporation ofManagement ConceptsManagement Concepts

Critical success factorsCritical success factors Management by exceptionManagement by exception Mental modelMental model

– Information compressionInformation compression

16-35

0

500

1000

1500

2000

90 91 92 93 94 J F M A M J J A S O N D 95 96 97 98 99

SALES - $ IN MILLIONS

AS OF NOVEMBER 1994

SOURCEGLORIA YANDERSBILL BLASS

SALESSALES

CURRENTHISTORY

YEAR TO DATE OVER/ UNDER MB

PROGRAM ACTUAL THIS MO LAST MOHERC $861.4 $30.7 $59.1C-5B 621.9 0.3 4.5OTHER 398.7 12.9 10.1 TOTAL $1,882.0 $43.9 $44.4

YEAR-END FORECAST CURRENT FORECAST Y-L O/U MB YR CURRENT O/ U PRIOR

$949.8 $28.6 95 $2102.6 $ 8.0 699.0 1.2 96 2400.0 105.0 458.8 13.6 97 3130.0 98.0 $2107.6 $43.4 98 3390.0 58.0 99 2110.0 281.0

COMMENTSCOMMENTS FAVORABLE VARIANCE PRIMARILY DUE TO TWO ADDITIONAL HERCULESFAVORABLE VARIANCE PRIMARILY DUE TO TWO ADDITIONAL HERCULESSALESSALES

FORECAST

BUDGETACTUAL

16-36

EIS Implementation EIS Implementation DecisionsDecisions

Three Key Questions:Three Key Questions:

1. Do we need an EIS?1. Do we need an EIS?

2. Is there application-development software 2. Is there application-development software available?available?

3. Should we purchase prewritten EIS 3. Should we purchase prewritten EIS

software?software?

16-37

Advantages of Prewritten Advantages of Prewritten SoftwareSoftware

1. Fast1. Fast

2. Doesn't strain information services2. Doesn't strain information services

3. Tailored to executives3. Tailored to executives

16-38

EIS Critical Success EIS Critical Success Factors Rockart and Factors Rockart and

DeLongDeLong1. Committed/informed executive sponsor1. Committed/informed executive sponsor

2. Operating sponsor2. Operating sponsor

3. Appropriate information services staff3. Appropriate information services staff

4. Appropriate information technology (IT)4. Appropriate information technology (IT)

5. Data management5. Data management

6. Link to business objectives6. Link to business objectives

7. Manage organizational resistance7. Manage organizational resistance

8. Manage the spread and evolution8. Manage the spread and evolution

16-39

Prerequisite Activities for the EIS

Purchasing andPerformance

Systems

Informationtechnology standards

Informationneeds

Analysis ofOrganization

InformationSystems Plan

Corporatedata model

EIS16-40

Future EIS TrendsFuture EIS Trends

Use will become commonplaceUse will become commonplace Decreasing software pricesDecreasing software prices Will influence MIS/DSSWill influence MIS/DSS The computer will always play a support The computer will always play a support

rolerole

16-41

SummarySummary

Executives have unique information needsExecutives have unique information needs– Need for EISNeed for EIS– Specific uses of EISSpecific uses of EIS

EIS developmentEIS development– Personal productivity softwarePersonal productivity software– PrewrittenPrewritten– CustomCustom

EIS success factorsEIS success factors

16-42

Chapter 15Enterprise Information SystemsEnterprise Information Systems

Copyright 2001 Prentice-Hall, Inc.15-43

What is an Enterprise What is an Enterprise Information System Information System

(EntIS)?(EntIS)? Computer-based system that can perform all Computer-based system that can perform all

standard accounting tasks for all of the standard accounting tasks for all of the organizational units in an integrated and organizational units in an integrated and coordinated fashioncoordinated fashion

System purpose is to collect and System purpose is to collect and disseminate data to all processes of the disseminate data to all processes of the organizationorganization

Also called enterprise resource planning Also called enterprise resource planning (ERP)(ERP)

15-44

EIS

EntIS

Mar

keti

ng I

nfor

mat

ion

Syst

ems

Info

rmat

ion

Res

ourc

es

Info

rmat

ion

Sys

tem

s

Hum

an R

eso u

rce

Info

rmat

ion

Sy s

t em

s

Fina

ncia

l Inf

orm

atio

n Sy

stem

s

Man

ufac

turi

ng I

nfor

mat

ion

Syst

ems

Planning and Control

Transaction Recording

Aggregation of Data

Data Details

EIS Sitting Atop Business Area ISs

15-45

Evolution of EntISEvolution of EntIS First ISs in 1960’s were TPSsFirst ISs in 1960’s were TPSs MISsMISs Manufacturing requirements planning (MRP)Manufacturing requirements planning (MRP)

– Developed to deal with complex issues of inventory Developed to deal with complex issues of inventory controlcontrol

MRP IIMRP II– Information systems that encompass the flow of Information systems that encompass the flow of

material from vendors, through manufacturing, and to material from vendors, through manufacturing, and to the firm’s customersthe firm’s customers

15-46

Evolution of EntIS (cont.)Evolution of EntIS (cont.) ERPs were next logical stepERPs were next logical step

– All information about organizational processes All information about organizational processes is consolidatedis consolidated

– Requires large commitment of hardware Requires large commitment of hardware resources, sophisticated software, database resources, sophisticated software, database management systems, and well-trained usersmanagement systems, and well-trained users

15-47

Driving Forces Driving Forces Behind ERP PopularityBehind ERP Popularity

Fears about Y2K problemsFears about Y2K problems Difficulty in achieving enterprisewide Difficulty in achieving enterprisewide

systemssystems Recent flurry of corporate mergersRecent flurry of corporate mergers Follow-the-leader competitive strategiesFollow-the-leader competitive strategies

15-48

ERP Software IndustryERP Software Industry

Only limited number of vendorsOnly limited number of vendors Five largest vendors had combined sales of Five largest vendors had combined sales of

$10 billion in 1998$10 billion in 1998 Largest vendor is SAP (www.sap.com)Largest vendor is SAP (www.sap.com) Training and consulting are also big Training and consulting are also big

expenditures in this areaexpenditures in this area

15-49

50%

21%

13%

9%

7%

SAP

Oracle

PeopleSoft

J.D. Edwards

Baan

15-50

1998 ERP Sales of Top Five Vendors

Back Office SystemsBack Office Systems

Another name for ERPAnother name for ERP Traditionally ERP focused on internal Traditionally ERP focused on internal

entitiesentities EntIS is evolving outside the firm EntIS is evolving outside the firm

15-51

EntIS FeasibilityEntIS Feasibility

ERP is a large investment and must be ERP is a large investment and must be treated as suchtreated as such

Investment entails more than cash outlaysInvestment entails more than cash outlays– Commitment to focus on interacting business Commitment to focus on interacting business

processesprocesses Benefits are not always economicBenefits are not always economic Many feasibility issues need considerationMany feasibility issues need consideration

15-52

Economic FeasibilityEconomic Feasibility Concerned with justifying an expenditure by Concerned with justifying an expenditure by

considering both costs and benefits in monetary considering both costs and benefits in monetary termsterms

Investment costs for ERPInvestment costs for ERP– Very high: $10 million for a moderate sized applicationVery high: $10 million for a moderate sized application– High likelihood of negative ROIHigh likelihood of negative ROI

Tangible and intangible benefits must be Tangible and intangible benefits must be consideredconsidered

Opportunity costs of NOT implementing ERPOpportunity costs of NOT implementing ERP

15-53

Technical FeasibilityTechnical Feasibility EntIS must be viewed as technically complex EntIS must be viewed as technically complex

systems resting organizational database systems resting organizational database management systemsmanagement systems

EntIS may reside on single computer or be EntIS may reside on single computer or be distributeddistributed– May strain computing resourcesMay strain computing resources– May strain communications resourcesMay strain communications resources

Usually requires latest technology particularly in Usually requires latest technology particularly in larger organizationslarger organizations

15-54

Operational FeasibilityOperational Feasibility

Persons in the organization must be willing Persons in the organization must be willing and able to achieve the change from current and able to achieve the change from current IS to an EntISIS to an EntIS

Is business process standardization Is business process standardization desirable?desirable?– Loss of personalization of customer dataLoss of personalization of customer data– Cultural changesCultural changes

Need for EntIS Champion Need for EntIS Champion

15-55

EntIS ChampionEntIS Champion

Person or group who serves as driving force Person or group who serves as driving force behind the organization’s change to EntISbehind the organization’s change to EntIS

Variety of people can be EntIS championVariety of people can be EntIS champion Lead the organization to a fundamental Lead the organization to a fundamental

revamping of core business processesrevamping of core business processes

15-56

Possible EntIS ChampionsPossible EntIS Champions1. Chief executive officer

2. Teams of senior management

a) Chief information officer

b) Vice president of manufacturing

c) Chief financial officer

d) Other senior managers

3. Collection of well-respected middle managers from a wide spectrum of organization operations

15-57

EntIS ImplementationEntIS Implementation

Particular attention must be paid to software Particular attention must be paid to software vendors, training, and cutovervendors, training, and cutover

Takes monthsTakes months– Average is about two yearsAverage is about two years– Due to complexity and legacy systems Due to complexity and legacy systems

developed years earlierdeveloped years earlier Variety of approaches can be takenVariety of approaches can be taken

15-58

EntIS Vendor SelectionEntIS Vendor Selection

Choice of vendor is importantChoice of vendor is important Underlying business concepts in vendor’s Underlying business concepts in vendor’s

system should be major criteriasystem should be major criteria After major ERP pieces are in place, firm After major ERP pieces are in place, firm

may want to consider bolt-on systemsmay want to consider bolt-on systems– Software that takes advantage of ERP featuresSoftware that takes advantage of ERP features

» Customer relations managementCustomer relations management

» Demand forecastingDemand forecasting

» LogisticsLogistics

15-59

User TrainingUser Training Cannot be an afterthoughtCannot be an afterthought Must be part of the initial designMust be part of the initial design Requires users to understand business Requires users to understand business

processes beyond their normal jobsprocesses beyond their normal jobs ERP vendors provide training servicesERP vendors provide training services SAP is a leader in TrainingSAP is a leader in Training

15-60

Training Related to Training Related to ERP SoftwareERP Software

Type of Training

Learning ERP Vendor Software

Training by ERP Vendor (or company specializing in ERP training)

Peer-to-peer training such as conferences

When Training Should Occur

Before the EntIS is planned and designed

As the is being designed and implemented; also after the system is implemented

Especially helpful after the implementation of EntIS projects

15-61

SAPPHIRESAPPHIRE

SAP’s user support groupSAP’s user support group Composed of SAP employees, customers, Composed of SAP employees, customers,

vendors of products that work with SAPvendors of products that work with SAP Purpose is NOT to sell SAPPurpose is NOT to sell SAP

– Learn its featuresLearn its features– Make better use of its capabilitiesMake better use of its capabilities

15-62

ERPWorld Organization ERPWorld Organization (www.erpworld.com) (www.erpworld.com)

15-63

ERPWORLD.COM is an International Industry Analyst group

focusing on eBusiness and Enterprise application projects

Not affiliated with any particular vendor

Promotes knowledge and understanding of ERP

EntIS Implementation EntIS Implementation Cutover ApproachesCutover Approaches

ImmediateImmediate– Extremely dangerousExtremely dangerous– Failure could stop all organizational Failure could stop all organizational

information processinginformation processing PhasedPhased

– Segments related to various business processes Segments related to various business processes are implemented in sequence of importanceare implemented in sequence of importance

– Most viable methodMost viable method

15-64

EntIS Implementation EntIS Implementation Cutover Approaches Cutover Approaches

(cont.)(cont.) Parallel, often proceeded with a pilot effortParallel, often proceeded with a pilot effort

– EntIS and original system operate together for a EntIS and original system operate together for a period of time until EntIS is proven to workperiod of time until EntIS is proven to work

– Often too costlyOften too costly– May require more computing resources than a May require more computing resources than a

firm can acquirefirm can acquire

15-65

Minimizing EntIS FailuresMinimizing EntIS Failures

1. Understand the organization’s span of complexity

2. Recognize processes where value cannot be maintained if standardization is imposed

3. Achieve a consensus in the organization before deciding to implement an enterprise information system

15-66

EntIS and the WebEntIS and the Web Ease of useEase of use

– Web browsers are a viable interface for EntISWeb browsers are a viable interface for EntIS– Users don’t have to learn a new interfaceUsers don’t have to learn a new interface– WWW can provide a portal for an ERP WWW can provide a portal for an ERP

vendor’s applicationsvendor’s applications– Organization can be given location in an Organization can be given location in an

electronic mall provided by vendorelectronic mall provided by vendor– Benefits entities outside the boundaries of the Benefits entities outside the boundaries of the

organizationorganization

15-67

EntIS and the Web (cont.)EntIS and the Web (cont.) Customer concernsCustomer concerns

– EntIS are large and complexEntIS are large and complex– Challenge to EntIS firms is to standardize sales Challenge to EntIS firms is to standardize sales

processesprocesses– Organizations may choose to only allow Organizations may choose to only allow

business-to-business transactions to interface business-to-business transactions to interface with their EntISwith their EntIS

15-68

Future of EntISFuture of EntIS

EntIS industry is currently growing at a rate EntIS industry is currently growing at a rate exceeding 30% per yearexceeding 30% per year

Two directions Two directions – Rapid developmentRapid development– Enterprise resource managementEnterprise resource management

User-friendly softwareUser-friendly software Converging database and Enterprise Converging database and Enterprise

systemssystems

15-69

Accelerated ERP Accelerated ERP Development ToolsDevelopment Tools

Two-year implementation efforts are just Two-year implementation efforts are just too longtoo long

Accelerated ERP model Accelerated ERP model – Simplification of the enterprise resource Simplification of the enterprise resource

planning stepsplanning steps– SAP’s is called ASAPSAP’s is called ASAP

First order of business is to become a First order of business is to become a competent user of ERP vendor’s softwarecompetent user of ERP vendor’s software

15-70

SummarySummary

EntIS EntIS – Integrates all organizational unitsIntegrates all organizational units

ERP enables the management of an ERP enables the management of an organization’s resourcesorganization’s resources– Deals with internal processesDeals with internal processes

EntIS historyEntIS history– Part of IS evolution beginning in 1960’sPart of IS evolution beginning in 1960’s– Currently growing at exceptional rateCurrently growing at exceptional rate

15-71

Summary [cont.]Summary [cont.]

EntIS considerationsEntIS considerations– CostCost– TrainingTraining– Success versus failureSuccess versus failure

EntIS futureEntIS future– Move beyond firm’s boundariesMove beyond firm’s boundaries– Focus on the Web environmentFocus on the Web environment

15-72

Chapter 18Information ResourcesInformation Resources

Information SystemsInformation Systems

MANAGEMENT INFORMATION SYSTEMS 8/ERaymond McLeod, Jr. and George Schell

Copyright 2001 Prentice-Hall, Inc.18-73

Information Resources Information Resources Include:Include:

Specialists Specialists – Systems analysts, programmers, database Systems analysts, programmers, database

administrators, network specialists, operations administrators, network specialists, operations personnel, and otherspersonnel, and others

Hardware Hardware SoftwareSoftware UsersUsers DataData InformationInformation

Represents a largeorganizationalinvestment!

18-74

Information SpecialistsInformation Specialists

Most located in the information services Most located in the information services unitunit

There is a trend to locate specialists There is a trend to locate specialists throughout the firmthroughout the firm

Actual organization chart depends on the Actual organization chart depends on the needs of the firmneeds of the firm

18-75

A Functional Organization StructureA Functional Organization Structurefor Information Servicesfor Information Services

Networkmanager

Managerof computeroperations

Managerof systems

maintenance

Managerof systems

administration

CIO

Managerof systems

development

Systemsanalyst

Systemsanalyst

Operationspersonnel

Databaseadministrators

Networkspecialists

Programmers Programmers

18-76

Information ResourcesInformation Resources

Most are located in information servicesMost are located in information services Most that are centrally located are CIO’s Most that are centrally located are CIO’s

responsibilityresponsibility Those located in functional areas are the Those located in functional areas are the

responsibility of the area managerresponsibility of the area manager

18-77

Model of an IRISModel of an IRIS Input subsystemsInput subsystems

– AISAIS– Information resources researchInformation resources research– Information resources intelligenceInformation resources intelligence

Output subsystemsOutput subsystems– HardwareHardware– SoftwareSoftware– Human resourcesHuman resources– Data and InformationData and Information– Integrated resourceIntegrated resource

18-78

A Model of an Information ResourcesA Model of an Information ResourcesInformation SystemInformation System

Dat

abas

e

Accountinginformation

system

Informationresourcesresearch

subsystem

Informationresources

intelligencesubsystem

Hardwaresubsystem

Softwaresubsystem

Human resourcessubsystem

Data andinformationsubsystem

Integratedresource

subsystem

Inte

rnal

so

urce

s

Env

iron

men

tal s

ourc

es Users

18-79

Information Resources Information Resources Research SubsystemResearch Subsystem

Describes functions involved in special Describes functions involved in special research projects within the firmresearch projects within the firm

Performed by systems analysts interacting Performed by systems analysts interacting with userswith users

18-80

Information Resources Information Resources Intelligence SubsystemIntelligence Subsystem

Describes functions involved in gathering Describes functions involved in gathering information from elements in the firm’s information from elements in the firm’s environmentenvironment– GovernmentGovernment

– SuppliersSuppliers

– Labor unionsLabor unions

– Global communityGlobal community

– CustomersCustomers

– CompetitorsCompetitors

18-81

CIO ResponsibilitiesCIO Responsibilities Can be top-level executive who participates on Can be top-level executive who participates on

executive and MIS steering committeeexecutive and MIS steering committee Contributes to strategic planning for firm and IS Contributes to strategic planning for firm and IS

functionsfunctions Primary source of leadership for:Primary source of leadership for:

– Achieving and maintaining information qualityAchieving and maintaining information quality– Keeping information resources secureKeeping information resources secure– Planning for contingenciesPlanning for contingencies– Keeping information costs under controlKeeping information costs under control

18-82

Achieving Quality Products Achieving Quality Products and Servicesand Services

1) Identify IS customers1) Identify IS customers– MIS steering committeeMIS steering committee– Use of a formal system works bestUse of a formal system works best

2) Define customer quality needs2) Define customer quality needs– Product quality needsProduct quality needs– Service quality needsService quality needs

18-83

IS Takes Six Basic Steps inIS Takes Six Basic Steps inAchieving Quality ManagementAchieving Quality Management

11

22

33

44

55

66

Identify IS customers

Define customer quality needs

Establish quality metrics

Define quality strategy

Implement IS quality programs

Monitor IS quality performance

18-84

Comparison of How IS and Middle-LevelComparison of How IS and Middle-LevelManager-Users Perceive Product QualityManager-Users Perceive Product Quality

Accurate 4.91 4.88 4.89Trusts output 4.90 4.86 4.87Works as specified 4.75 4.73 4.73User friendly 4.50 4.75 4.68Relevant 4.59 4.53 4.53Fast response time 4.12 4.55 4.42Meets all user needs 4.22 4.48 4.41No downtime 3.96 4.25 4.16Delivered on time 3.80 4.16 4.05Has user documentation 4.21 3.93 4.01Can be changed quickly 3.84 4.04 3.98Delivered on budget 3.45 3.67 3.61Low cost of operation 3.19 3.49 3.40Has programmer documentation 3.74 3.23 3.39Uses new technology 3.04 3.28 3.21

Dimension IS User AggregatePerceived Value

18-85

Achieving Quality Products Achieving Quality Products

and Services [cont.]and Services [cont.]3) Establish quality metrics3) Establish quality metrics

– Information Information productproduct quality quality– Information Information serviceservice quality quality

4) Define the IS quality strategy4) Define the IS quality strategy– Recruiting and trainingRecruiting and training– User-oriented systems development User-oriented systems development

» Market analysisMarket analysis» Product acceptance analysisProduct acceptance analysis» Task analysisTask analysis» Prototype testsPrototype tests» Operational Systems testsOperational Systems tests

18-86

See Table 18.2

Basic Competencies ExpectedBasic Competencies Expectedof IS Job Applicantsof IS Job Applicants

1. Concern for effectiveness 2. Initiative 3. Enthusiasm for work 4. Self-confidence 5. Concern with impact 6. Interpersonal astuteness 7. Conceptual thinking 8. Analytical thinking 9. Effective communication10. Flexibility

18-87

Special Attention to Human FactorsSpecial Attention to Human FactorsEnsures That Users’ Needs are Ensures That Users’ Needs are

IncorporatedIncorporatedinto Systems Designsinto Systems Designs1.

Planningphase

2.Analysis phase

3.Designphase

4.Implementation

phase

5.Use phase

Conduct amarket analysis

Conduct a productacceptance analysis

Conduct atask analysis

Conductprototype tests

Conductoperational

system tests

18-88

Achieving Quality Products Achieving Quality Products

and Services [cont.]and Services [cont.]

5) Implement IS quality programs5) Implement IS quality programs– Implementation varies with firmImplementation varies with firm

6) Monitor IS quality6) Monitor IS quality– Performance of IS specialists and the unitPerformance of IS specialists and the unit

18-89

Security ObjectivesSecurity Objectives

ConfidentialityConfidentiality AvailabilityAvailability IntegrityIntegrity

Current attention is focused on malicious software such as

computer viruses.

18-90

IntegrityIntegrityAvailabilityAvailability

InformationInformationUnauthorizedUnauthorized useuse

UnauthorizedUnauthorizeddisclosure disclosure and theftand theft

UnauthorizedUnauthorizeddestruction and destruction and denial of servicedenial of service

UnauthorizedUnauthorizedmodificationmodification

SecuritySecurity

ConfidentialityConfidentiality

Unauthorized Acts Threaten System Security Unauthorized Acts Threaten System Security ObjectivesObjectives

18-91

Identification

Authentication

Authorization

UserProfiles

Accesscontrol

files

DatabaseSoftwarelibrary

Auditlog

Reportwriter

Securityreports

Users

Access Control Functions18-92

Access ControlAccess Control Identification Identification

– What you know (password) or What you know (password) or – Where you are (terminal location)Where you are (terminal location)

Authentication Authentication – What you have (badge)What you have (badge)

Authorization Authorization – Level of useLevel of use

High-grade threats are from sophisticated computer criminals 18-93

Contingency PlanningContingency Planning

Emergency planEmergency plan Backup planBackup plan

– RedundancyRedundancy– DiversityDiversity– MobilityMobility

» Reciprocal agreementReciprocal agreement» Hot siteHot site» Cold siteCold site» Empty shellEmpty shell

18-94

Vital Records PlanVital Records Plan Electronic vaultingElectronic vaulting

– Day end backup of files electronicallyDay end backup of files electronically

Remote journalingRemote journaling– Transmission of transaction data as the transactions Transmission of transaction data as the transactions

occuroccur

– Used to update remote database in batch form laterUsed to update remote database in batch form later

Database shadowingDatabase shadowing– Involves updating of duplicate database at remote site Involves updating of duplicate database at remote site

as transaction occuras transaction occur

18-95

Cost-Reduction StrategiesCost-Reduction Strategies

ConsolidationConsolidation– Reduces number of separate locations for Reduces number of separate locations for

information resourcesinformation resources– Easiest to achieve in terms of information Easiest to achieve in terms of information

resourcesresources– More difficult by end-user computing needsMore difficult by end-user computing needs

18-96

Cost-Reduction Strategies Cost-Reduction Strategies [cont.][cont.]

DownsizingDownsizing– Migrating to smaller platformsMigrating to smaller platforms– Advantage of cost reductionAdvantage of cost reduction– Advantage of increased productivity with PCs Advantage of increased productivity with PCs

located in user areaslocated in user areas– Risk of lost securityRisk of lost security

18-97

Cost-Reduction Strategies Cost-Reduction Strategies [cont.][cont.]

OutsourcingOutsourcing– Data entry and simple processing (editing, Data entry and simple processing (editing,

formatting)formatting)– Contract programmingContract programming– Facilities management (FM)Facilities management (FM)– Systems integration (SI)Systems integration (SI)– Support for maintenance, service, or disaster Support for maintenance, service, or disaster

recoveryrecovery

18-98

Objectives of OutsourcingObjectives of Outsourcing

Manage costs betterManage costs better ReduceReduce ContainContain PredictPredict Obtain relief from systems maintenance so Obtain relief from systems maintenance so

as to concentrate on new system as to concentrate on new system developmentdevelopment

Acquire needed expertiseAcquire needed expertise

18-99

Information Management Information Management in Three Pacific Rim in Three Pacific Rim

CountriesCountries Countries were U.S., Korea, and MexicoCountries were U.S., Korea, and Mexico Centralization versus decentralizationCentralization versus decentralization

– Most firms were centralizedMost firms were centralized CIO participation in strategic business CIO participation in strategic business

planningplanning– CIO has a long way to go before achieving CIO has a long way to go before achieving

status as a top-level executivestatus as a top-level executive

18-100

Information Management Information Management in Three Pacific in Three Pacific

Rim Countries [cont.]Rim Countries [cont.] Information systems planningInformation systems planning

– Most firms have IS planMost firms have IS plan– CIO is primarily responsibleCIO is primarily responsible

Sharing information resources with usersSharing information resources with users– In general, CIOs support end-user computing In general, CIOs support end-user computing

trendstrends

18-101

Proactive CIO StrategyProactive CIO Strategy1) CIO must emphasize quality management 1) CIO must emphasize quality management

of the IS resourceof the IS resource2) Achieve strong user ties2) Achieve strong user ties3) Strengthen executive ties3) Strengthen executive ties4) Assemble an IS management team4) Assemble an IS management team5) Assemble staff competent in leading-edge 5) Assemble staff competent in leading-edge

technologies technologies andand methodologies methodologies6) Build an IRIS6) Build an IRIS

18-102

The Future of the CIOThe Future of the CIO Business computing is moving from centralized to Business computing is moving from centralized to

decentralized computing in terms of:decentralized computing in terms of:– EquipmentEquipment– DevelopmentDevelopment– Decision makingDecision making

CIO RolesCIO Roles– Big brotherBig brother– Helping handHelping hand– WatchdogWatchdog– NetworkerNetworker

18-103

Equipment

Big brotherA

B Helping hand

D Network

WatchdogC

DecentralizedCentralized

Decentralized

Dev

elop

men

t Decentralized

Decisi

on m

aking

Centralized

Donovan’s Four Stages of Decentralized Donovan’s Four Stages of Decentralized ComputingComputing

18-104

SummarySummary Information resources located in IS are the Information resources located in IS are the

responsibility of the CIOresponsibility of the CIO IRIS is used to manage information resources IRIS is used to manage information resources

within an organizationwithin an organization CIO must: CIO must:

– Promote quality information products and servicesPromote quality information products and services

– Ensure security of ISEnsure security of IS

– Prepare for disastersPrepare for disasters

18-105

Summary [cont.]Summary [cont.] IS cost cutting considerationsIS cost cutting considerations

– ConsolidationConsolidation– DownsizingDownsizing– OutsourcingOutsourcing

CIO can be proactiveCIO can be proactive

18-106