Using Advanced Information Technology to Increase Performance McGraw-Hill/Irwin Contemporary Management, 5/e Copyright © 2008 The McGraw-Hill Companies,
Mar 26, 2015
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Using Advanced Information Technology to Increase
Performance
McGraw-Hill/IrwinContemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
chapter eighteen
18-3
Learning Objectives
• Differentiate between data and information, and list the attributes of useful information
• Describe three reasons why managers must have access to information to perform their tasks and roles effectively.
• Describe the computer hardware and software innovations that have created the IT revolution.
18-4
Learning Objectives
• Differentiate among seven different kinds of management information systems.
• Explain why managers are using IT to build strategic alliances and network structures to increase efficiency and effectiveness
18-5
Information and the Manager’s Job
• Data– Raw, unsummarized, and unanalyzed facts.
• Information– Data that are organized in a meaningful
fashion
18-6
Attributes of Useful Information
Attributes
Quality The accuracy and reliability of available information affects the quality of decisions that managers make using the information.
Timelessness The availability of real-time information that reflects current conditions allows managers to maximize the effectiveness of their decisions.
Completeness Complete information allows managers to consider all relevant factors when making decisions.
Relevance Having information specific to a situation assists managers in making better decisions.
18-7
Discussion Question
Which factor is most important in affecting the usefulness of information?
A. Quality
B. Timeliness
C. Relevance
D. Completeness
18-8
Factors Affecting the Usefulness of Information
Figure 18.1
18-9
What is Information Technology?
• Information Technology – set of methods or techniques for acquiring, organizing, storing, manipulating, and transmitting information
18-10
Question?
What is the specific form of IT that managers utilize to generate the detailed information they need to perform their roles effectively?
A. Management information system
B. Decision support system
C. Decision information system
D. Management support system
18-11
What is Information Technology?
Management Information System – specific form of IT that managers utilize to generate the specific, detailed information they need to perform their roles effectively
18-12
What is Information Technology?
Managers need information for three reasons:
1. To make effective decisions
2. To control the activities of the organization
3. To coordinate the activities of the organization
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Information and Decisions
• Most of management is about making decisions
• To make effective decisions, managers need information, both from inside and outside the organization
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Information and Control
Managers achieve control by:1. Establishing measurable goals 2. Measuring actual performance3. Comparing actual performance with
goals4. Taking any corrective action
18-15
Information and Coordination
• Coordination problems that managers face in managing global supply chains are increasing
• Managers have adopted sophisticated IT that helps them coordinate the flow of materials, semifinished goods, and finished goods throughout the world
18-16
The Effects of Advancing IT
• IT revolution began with the development of the first computers
• Modern computers can read, process, and store billions of instructions per second
• This power forms the foundation of the ongoing IT revolution
18-17
The Effects of Advancing IT
• Products resulting from advancing IT– Powerful microprocessors and PCs, high-
bandwidth wireless smart phones, sophisticated word-processing software, expanding computer networks, inexpensive digital cameras, useful online information and retailing services
18-18
The Effects of Advancing IT
• IT helps create new product opportunities that managers and their organizations can take advantage of
• IT creates new and improved products that reduce or destroy demand for older, established products
18-19
IT and the Product Life Cycle
• Product Life Cycle– Refers to the way in which the demand for a
product changes in a predictable way over time
18-20
A Product Life Cycle
Figure 18.2
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A Product Life Cycle
• Embryonic stage– Product has yet to gain widespread
acceptance– Customers are unsure what a product has
to offer
• Growth stage– Many consumers are buying the product for
the first time– Demand increases rapidly
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A Product Life Cycle
• Mature stage– Market peaks because most customers
have already bought the product– Demand is typically replacement demand
• Decline stage– Advancing IT leads to the development of a
more advanced product making the old one obsolete
18-23
A Product Life Cycle
• Advances in IT are one of the most important determinants of the length of a product’s life cycle
• The shorter the length of a product’s life cycle because of advancing IT the more important it is to innovate products quickly and continuously
18-24
Types of Management Information Systems
• Computer Networks– Networking
• The exchange of information through a group or network of interlinked computers
• Servers are powerful computers that relay information to client computers connected on a Local Area Network (LAN).
• Mainframes are large computers processing vast amounts of information .
• The Internet is a world wide network of computers.
18-25Figure 18.3
A Typical Four-Tier Information System
18-26
Types of Management Information Systems
• Operating system software – software that tells computer hardware how
to run
• Applications software – software designed for a specific task or use
18-27
Six Computer-Based Management Information Systems
Figure 18.4
18-28
The Organizational Hierarchy
Traditionally, managers have used the organizational hierarchy as the main system for gathering information necessary to make decisions and coordinate and control activities
18-29
The Organizational Hierarchy
Drawbacks
• Can reduce timeliness of information
• Reduces quality of information
• Tall structure can make for an expensive information system
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Types of Information Systems
• Transaction Processing Systems – Systems designed to handle large volumes
of routine transactions.• Were the first computer-based
information systems handling billing, payroll, and supplier payments.
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Types of Information Systems
• Operations Information Systems– Systems that gather, organize, and
summarize comprehensive data in a form of value to managers.• Can help managers with non-routine
decisions such as customer service and productivity.
18-32
Types of Information Systems
• Decision Support Systems
– Provides computer-built models that help managers make better nonprogrammed decisions.
– New productive capacity, new product development, launch a new promotional campaign, enter a new market or expand internationally
18-33
Types of Information Systems
• Executive Support System – Sophisticated version of a decision support
system designed to meet the needs of top managers
• Group Decision Support System– An executive support system that links top
managers so that they can function as a team.
18-34
Expert Systems and Artificial Intelligence
• Artificial Intelligence– Behavior by a machine that, if performed by
a human being, would be called “intelligent”– Already possible to write programs that can
solve problems and perform simple tasks
18-35
Expert Systems and Artificial Intelligence
• Expert Systems– Most advanced management information
systems available– System that employs human knowledge,
embedded in computer software, to solve problems that ordinarily require human expertise
18-36
Enterprise Resource Planning Systems
• Enterprise Resource Planning Systems– multi-module application software packages
that allow a company to link and coordinate the entire set of functional activities and operations necessary to move products from the initial product design stage to the final customer stage
18-37
Enterprise Resource Planning Systems
1. Help each individual function improve its functional-level skills
2. Improve integration among all functions so that they work together to build a competitive advantage for the company
18-38
Types of Information Systems
• E-Commerce Systems – Trade that takes place between companies,
and between companies and individual customers, using IT and the Internet
18-39
Types of E-Commerce
Figure 18.5
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E-Commerce Systems
• Business-to-business (B2B) – trade that takes place between companies
using IT and the Internet to link and coordinate the value chains of different companies
18-41
E-Commerce Systems
• B2B marketplace – Internet-based trading platform set up to
connect buyers and sellers in an industry
18-42
Types of E-Commerce
• Business-to-customer (B2C) – trade that takes
place between a company and individual customers using IT and the Internet
18-43
Strategic Alliances, B2B Network Structures, and IT
• Strategic Alliances – formal agreement that commits two or more
companies to exchange or share their resources in order to produce and market a product
18-44
Strategic Alliances, B2B Network Structures, and IT
• B2B network structure – formal series of global strategic alliances
that one or several organizations create with suppliers, manufacturers, and/or distributors to produce and market a product
18-45
How Computer-Based Information Systems Affect the Organizational Hierarchy
Figure 18.6
18-46
The Impact and Limitations of Information Systems
• Horizontal Information Flows– Information networks can bridge functional
departments which allows information to flow horizontally between departments, leading to much higher productivity, quality, and innovation.
18-47
Communication Flows at Tel Co. and Soft Co.
Figure 18.7
18-48
Question?
What is composed of people linked by IT who rarely see one another face-to-face?
A. Knowledge workers
B. Boundaryless organization
C. Limitless firm
D. Web 2.0 organization
18-49
Boundaryless Organization
• Boundaryless Organization – composed of people linked by IT who rarely
see one another face-to-face– functional experts who form an alliance with
an organization
18-50
Boundaryless Organization
• Knowledge management system – company-specific virtual information system
that systematizes the knowledge of its employees and facilitates the sharing and integrating of expertise within and between functions and divisions through real-time, interconnected IT
18-51
Limitations of Information Systems
• Loss of the Human Element– Information systems cannot present all
kinds of information accurately.• Thick information, which is rich in
meaning and not quantifiable, is best suited to human analysis.
• Information systems should support face-to-face communication, and not be expected to replace it
18-52
Limitations of Information Systems
• Causes of Difficult Implementations– Information systems can be hard to develop
and put into service.– Consistent standards for systems do not
exist.• Makers of hardware use different
standards which makes it hard to share information between systems.
18-53
Limitations of Information Systems
• To avoid problems: – List major organization goals and the
information types require measure those goals.
– Audit the current system to verify that information collected is accurate, reliable, timely, and relevant.
– Investigate other sources of information
– Build support for the system with workers.
– Create formal training programs.
– Emphasize that face-to-face contact is important.
18-54
Movie Example: Las Vegas
When is it necessary to change technology that is functional?
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