(c) Murray Turoff 2000 1 IS Management Introduction and Issues CIS 679 Management of Information System New Jersey Institute of Technology First Set of

(c) Murray Turoff 2000 1

IS Management Introduction and Issues

CIS 679 Management of Information System

New Jersey Institute of Technology First Set of Notes for course

© Copyright 2000 Murray Turoff


First Set: Table of Contents

Management Challenges & Issues Specific Management Functions Forecasting Methods IS Issues Overview Historical IS Background


Management of IS wisdom

Learn the signals of problems Act to minimize mistakes based upon

signals No rules only understandings work Be aware of alternatives and what is going

on externally as well as internally Be both a risk taker and a risk avoider Be flexible, calm, recognize talent and

advance it Don’t build empires


Management IS Problems I

New generations 3-7 years Hardware & Software

Highly skilled people Short supply Highly priced Too specialized Too many unskilled Mavericks Rapid Obsolescence

Rapid cost changes Relative bases Declining & Increasing


Management problems II

Shifting applications Clerical automation Office automation Management information Decision support Strategic relevance Collaborative Systems

Foreign vocabulary to users MIS, GDSS, AI, VR, CMC, Expert

Systems


Management problems III

Multiple objectives Tradeoffs (not optional)

Reductionism training & approaches Difficult to deal with or see forest

Changing management wisdom No recipes Management rules change

Scope, Size & Complexity


Grand management issues for IS

MIS quarterly, December 1991, June 1996

Delphi study Every four years IS executives

Chief Information Officers (CIO) 200 – 300 participated


Rank order of issues I

1991 original ranking (#), 1996 issue 1. Developing information

architecture, (6) 2. Effective use of data resource,

Facilitating and Managing Business Process Redesign

3. Improving IS strategic planning, (13)

4. Specifying, recruiting, and developing IS human resources, (1)

5. Facilitating organizational learning and use of IS technologies, (10).


Rank order of issues II

6. Building a responsive it infrastructure, (9)

7. Aligning the IS organization with that of the enterprise, (2)

8. Using information systems for competitive advantage, Recruiting and developing IS human resources.

9. Improving the quality/effectiveness of software development, (7)

10. Planning, implementing, and managing telecommunications networks/systems, (3)


Rank order of issues III

11. Increasing understanding of role and contribution of IS. Implementing and Managing Collaborative Support Systems

12. Enabling multi-vendor data interchange and integration, (16).

13. Developing and managing distributed systems, Increased understanding of IS role and contribution

14. Planning & using case technology, (5) 15. Planning and managing the

applications portfolio, Managing the existing portfolio of legacy applications.


Rank order of issues IV

16. Measuring the IS effectiveness and productivity, (18)

17. Facilitating and managing decision and executive support system, (8)

18. Facilitating and managing end-user computing, planning, integrating, multi-vendor, and open systems.

19. Improving information security and control, Developing and managing electronic data interchange

20. Establishing effective disaster recoveries capabilities, Outsourcing selected information services.


1. Data resources

1991 Information architecture* Data resource*

* indicates it made both the 1991 and the 1996 lists


2. Communication resources

1991 Telecommunications systems

(1991)/networks(1996)* Electronic data interchange* Distributed systems* Global systems*


3. Development management

1991 IS human resources* Software development* Case technology

1996 Outsourcing IS


4. Planning

1991 IS role and contribution* Strategic planning* IS organization/enterprise

alignment* IS asset accounting IS effectiveness (1991)/quality

measurement(1996)*

1996 Business process redesign Organizational learning


5. Applications management

1991 Applications portfolio Organizational learning Competitive advantage (old

business/new business)* End-user computing* Executive/decision support

1996 Legacy applications


6. Cost control

1991 Security and control Disaster recovery

1996 None

This signaled the new technology cycle where costs are very secondary starting in 1995.


7. Technology management

1991 Technology infrastructure Image technology Technology islands

1996 Collaborative Systems Vendor integration/open systems


Major constant management concerns

Applications management Technology management Development management Planning Cost control Data resources Communication resources

What do you think are the three top issues in each category today?


Specific Management Functions

The functions that management must carry out and be responsible for

Importance or significance of each function depends upon: Nature of the business Nature of the organization External Environment


Major management functions

Surveillance Evaluation Planning Forecasting & assessment Policy formulation & analyses Development & implementation Maintenance & operations General management


Surveillance

Technology, Applications, Industry, Public Policy, Legal, Ethical, Complexity & control of systems, Education & training, System accreditation, User self implementation approaches, Computer & information industry, Industrial v/s governmental practices, etc.


Evaluation

User, Costs, Organization structure, Efficiency, Effectiveness/Quality, Strategic relevance, Goals & objectives, Learning, Power and authority, Culture. Information value and flow, Life cycles, Sunset, Evolution, Accountability, Crisis management ability, Public services delivery, Social responsibility. User participation and management involvement


Planning

IS and organizational objectives, Long range approaches, Measures of planning effectiveness, System obsolescence, System evolution, Acquisitions, Hardware, Systems interconnection, Manpower needs, Short term/long term, Normative approaches, etc.


Forecasting & Assessment

Hardware, software, and service performance and costs, Vendor offerings, Networks, Regulation and liability, Applications, Markets, Technology, Industry change & overlap (e.g. ecommerce, communications), Computer crime, Exports & imports, Employment demands, Technology performance, Computer literacy and training, Vendor evaluation, Electronic marketplace


Policy formulation & analyses I

Standards, Privacy & information rights, Paperwork reduction, Database quality and duplication, Records and performance compliance, Liability, Ownership, Remote work, Impact of metaphors, Technology transfer, Public access to information systems, Top management involvement, People, Organizational, Technology, or System obsolescence


Policy Formulation and Analysis II

Organizational structure, Centralized vs. Decentralized, End user computing, Steering committees, Acquisition policies, Life cycle analysis, ZBB analysis, Sunset analysis, Strategic relevance, Labor & job impacts, Productivity & Quality


Development & implementation

User acceptance and involvement, Prototyping systems, Evolutionary & modular approaches, Estimations & overruns, Programming productivity, Requirements definition, Validation & verification, Conversion, Auditing, Off the shelf software, Role of research & development


Maintenance & operations

Software performance measurement, Structured design & programming, Benchmarks, Quality & data assurance, Security & disaster recovery, Reliability, Obsolescence detection, Saturation detection, Conversion, Auditing, Services contracting, System acceptance testing, Operational user feedback


Management

Personnel Classification, Pay, Moral. Certification,

Mobility, Training & continuing education, Adequacy & demand, Turnover

Decentralization, End user computing. Life cycle costing, Productivity measurement, Software engineering & standards, Interface systems design & standard, Programming support technology, Multiple vendor systems, Management Span, Accountability,



Forecasting Methods and Examples

Can be done with a great deal of accuracy on the right variables

Extrapolation for 2 to 5 years as long as no structural (technology, social system, organizational, industrial, governmental) changes.

Normative for longer periods like 10-15 years.

5-10 considered the “no man’s land” of forecasting in computer field

Time scale of change decreasing


Forecasting Methods

Single trend extrapolation Growth Analogy (limit or not) Substitution Subjective estimations Personal judgment Genius & Expert Opinion Consensus & Focus Group Delphi Normative Techniques


Trend Analysis

Linear Regression Analysis Good as long as no substitution

process taking place. Easy if data is available Must discover any underlying

models for confidence. Should look at confidence limits Speed of Computers, memory size Cost verses quantity of product


Number of Transistors per Die(symbols reversed)


Moore’s Law

Computing Power grows 100 times every 10 years at state of the art!

Or costs of total systems go down by a factor of 10 every 10 years

Logarithmic relationships of performance or costs.

Year Dollars1955 10,000,0001965 1,000,0001975 100,0001985 10,0001995 1,000


Costs modified by performance and adjusted for inflation


Technical Progress Function

T = A(X)**B T = The value of the technological

parameter X = the cumulative production

quantity A = a constant associated with unit

number one B = the rate of progress associated

with the external environment. Log(T) = B*log(X) + log(A) (linear

form)


Substitution Effects:Cyclic investment in new technology

(U.S. Bureau of Statistics proxy measure for IS expenditures)

OCAM investment growth rates

0.10.20.30.40.50.60.70.8

65 70 75 80 85 90 95

Year

%/y

r

Minicomputers

PersonalComputers

XT

AT

DOS

Mainframes

Windows 3.11


Technical Progress Alternative Functions

Could be costs instead of technology parameter.

Costs go down and performance goes up with quantity of production.

Learning curve: Efficiency in performing the Nth task is the same function of the cumulative task number.


Increased end user computing

1960 1 - 3 %1970 5 - 7 %1980 15 - 20 %1985 45 - 50 %1990 50 - 75 %

Next decade (2000+) may reach plateau between 80 – 90 %

Substitution of 100% of computing from all by IS professionals to a growing percentage by users.


Growth Analogy

Initial cell/invention Cell division/Inventive Process Cell division period/time between

inventions Nutrient media/Economic support Cell lifetime/Useful live of

invention Cell Death/Obsolescence Cell mass/Technical area Volume limit of mass/Limit on

demand


Growth Curves

Birth and rapid initial adoption Steady growth over initial period Heading toward a limit which

should be known Turnover with age Light efficiency of incandescent

lamps Use Perl (logistic) curve and

Gompertz curve


Substitution

Growth Curve to 100% of market Water based paints for oil based;

Percentage of plastic in automobiles, synthetic rubber for natural rubber.

Good for measuring technical substitution.

Usually 15% substitution sufficient for projecting rest of curve.

Three and higher substitutions possible


Substitution Example

The substitution of fiberglass & plastic for wood in personal boats

Data taken from the yearly London Boat Show (1950-1970)

Number of boats of each type exhibited as ratio to total number

Results is a clear substitution curve Indirect and imaginative data

collection a characteristic of good forecasters

Often direct data unobtainable


Substitution/Growth Curves

Perl Curve, Logistics Curve, Fermi Dirac Distribution

y = L(1/(1+ae**(-bt)))Y = ln((L/y-1) = ln(a) –bt (linear form)

Gompertz Curve

y = Le**(be**(-kt))Y = Ln(ln(L/y)) = ln(b) – kt (linear form)


Technology Progress Function as Substitution

Made up of overlapping substitution curves Vacuum tubes Transistors Integrated Circuits Large Scale IC, etc.

Curve is really an envelope of data points

Large difference between R&D and product values at same time

Need to understand underlying cause-effect relationships


Extrapolation Exercise

Find a useful IS data set with ten or more historical points.

Draw this curve and extrapolate five years or more into the future either by hand or analytically

Explain what the primary causes are of the trend and if there is any substitution processes taking place

Explain a situation where it would be useful for a management decision


Single Subjective Estimates

Personal judgment As good as data, models and

information to back it up Expert Opinion As many examples of wrong ones

as right ones by experts. Xerox, Video text, Picture Phone,

X.400


Some interesting forecasts

1953 IBM estimates market for only 50 computers in U.S. with IBM 650

1969 GE management claims BASIC is useless

1975 HP rejects idea of personal computer

1979 Tandy expects to sell only 4,000 portable computers


Group Subjective Estimates

If well structured can lead to more reliable results

Normal committee approaches often suffer from biases

Focus Groups and/or Delphi recommended


Forecasting Delphi Round One

Provide historical curve Ask for:

Future projection Assumptions used Uncertainties that would cause

change if true

Example: amount of sales of a product. Assumptions & uncertainties:

Modifications, competitors actions, government policies, economic conditions, etc.


Forecasting Delphi Round Two

Turn all into potential assumptions One persons assumption is

another’s uncertainty Ask for vote on validity:

Certain, Likely, Maybe, Unlikely, False

Show 50 % spread of projections


Forecasting Delphi Round Three

Show ordered assumption Focus on Maybe range Ask for modifications to original

projection Ask for significance of impact Determine actions organization

can take to force internal assumptions

Determine measures of external assumptions


Forecasting Delphi Round Four

Determine desirability and feasibility of actions

Determine usability of measures Round five for significant

disagreements


Results of Trend Delphi

A projection which might not differ from a regression analysis

A collaborative model of the groups reasons (assumptions) for the projection

A collaborative model of all the factors that could change the forecast

A plan for: Trying to influence the outcome Monitoring for surprise changes from

external sources


Modeling Delphi of Steel Industry

Flow diagram by three experts 45 flow of material legs between

different processes in the industry Only 15 legs reported in yearly data

40 other experts (planners) asked to fill in missing data for prior year Not asked to do anything else 25 decided to modify the model

because they did not agree with it being the “best” model for them

Modeling Delphis need more exploration


Normative Approaches

Set objectives Work backwards from the future Build scenarios and models Reverse engineering Reverse of extrapolation

approaches



IS Issues Overview

General background on IS Themes that underlie almost every

area of IS management


Negative impacts of computers I

Job displacement Job deskilling Increased specialization

Decrease mobility Decreased authority Increased centralization Rigidity (lack of resiliency) Scapegoating


Negative impacts of computers II

Efficiency rather than effectiveness

Ends rather than means Unanticipated consequences

Inventory & message systems Over structuring and over

qualifying Over expectation Privacy, monitoring and moral Not meant for mortals, Godhood


Negative impacts of computers III

Escape (drunkard’s paradox) Creating templates (prescriptive) Substitution of unreal for real Sub-optimization Prior bad decisions & experiences Status symbols Unfriendly Cold


Typical conflicts in IS I

Centralization or decentralization Prescriptive or descriptive Effectiveness or efficiency Process, incentives or goals Development or purchase Outsourcing and contracting or in-

house


Typical conflicts in IS II

Privacy, security, and/or access Qualitative or quantitative Specialization or generalization Extrapolative or normative

Planning IMS or MIS, MIS or DSS, IS or MIS


Roots of MIS

Well structured problems Central database Model of the firm Computer Science Information Science Operations Research General approach/DBMS


Roots of DSS

Unstructured problems Tailored data and models Management science Industrial engineering Each problem unique User centered approach Toolkits


Centralization properties I

Overhead more obvious Distribute to users

Subsidize application development Subsidize technology acquisition Share expensive resources

People, software Equipment, network Data models


Centralization properties II

More talent & sophistication Vulnerable to budget limits Concentrate authority &

accountability Maintaining standards &

guidelines Job security and advancement Recognition of need for innovation Communication problems with

users Conflicting objectives with users


Centralization

Professional control Expert use Complex operations Reduced:

Hardware costs Expert costs Development costs

Staff specialization Narrow central control


Decentralization

User control User responsiveness Simpler operation Reduced:

User costs Communication costs Data quality costs

Staff generalization Broad lateral control


Necessary Centralization

Databases for necessary data Can be outsourced

Communications Can be outsourced

Standards and Policies Plans Evaluation


Productivity Statistical study (Strassmann)

Hundred of companies 20 years For same industry

Low profitability companiesHigh investment in computersLower profitability

High profitability companiesHigh investment in computersHigher profitability

Solve people & organizational problems first

Contrary to computer industry advice


No Clear Relationship(Prior Result from extremes; need for more investigation)


Performance specifications

IBM & Baltimore school system 2.9 million for PC’s & software If after 2 years:

First graders meet national average reading scores

IBM gets payment If not sale negated

Never saw the results of this Suspect it might not have turned

out well


Averages vs. actual

US economy annual growth rates1947-1992 (from Brynjolfsson & Hitt, 19xx)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

47-53 53-57 57-60 60-66 66-69 69-73 73-79 70-85 85-92

45-92 avg. growth rate=3.42% per year


Clearly something going onSuspect technology investment

Possible


Successful IS policies I

Link IS with business strategy Visible & active support from

senior management Change culture & structure of

organization Invest in people and their

developments


Successful IS policies II

Disciplined project management & accountability

Multi disciplinary design teams Sound methods for monitoring and

reviewing progress Emphasis on spreading benefits

through organization Uniform methods for review &

evaluation


Counter productive effects

Invasion of personal privacy Monitoring of work.

Drunker’s paradox Quantity not quality

Ergonomics ignored Training and guidance ignored


Farmer's horse & tractor method I

New tractor: $50,000 450 hp for 10,000 hours Running cost $20/hour

Horse : $2000 Running cost $1/hours

Productivity ratio: 450:1 Tractor is worth:

449 hp x 2,000 horses = $898,000


Farmer's horse & tractor method II

Operating advantage: 450 horses x 10,000 hours x $1/hour

minus 10,000 hours x $20/hour equal

$4,300,000 Total: $5,198,000 gain for only $50,000

When can you deposit the five million to pay off the loan?

Note lack of relationship to size and nature of farm

Correct view: Value of computer is what you are

willing to pay for the results.


IS observations

IS subject to overall situation Profits, plans, atmosphere Culture, management style, moral

No relationship between IS investment and business success

No easy, standard way to measure payoff of IS

Easy to manipulate results of IS IS costs migrate to hidden areas


Cost of workstation example

Hardware cost $10,000 Total yearly cost $23,500 4 year life 10.3% Time to learn 27.4% * Info support from others 18.3% * Software 7.6% Formal training 5.3% Mainframe use 1.5% Corporate support 29.7% *

75% may be hidden cost (*)


Turoff’s Cycle Model

No Maturity ever reached (Nolan Model)

No constant state (Cash Model) Explains CIO job tenure (~5-7

years) Minimum Mistakes Darwin process


Management Historical cycle I

Risk taker brought in as CIO New technology investment Encourage applications Gain competitive edge Effectiveness emphasis Cost growth and runaway Power acquisition by IS

Fire CIO


Management Historical cycle II

Risk avoider brought in as CIO Cost control instituted Efficiency emphasis Inhibit innovation Limit new applications/technology Loss of competitive edge

Fire CIO Pragmatic view of management

No excuse for failure The end result determines

managers capabilities Return to prior cycle


Real management alternatives

Dead end investments in hardware or modular systems development

Assembly line or job enrichment? Hidden cost or realistic life cycle

costs? Organizational dinosaur or beyond

centralization/decentralization? Invasion of new technology or

socio-technical design? Occupational obsolescence or new

concepts of work and job?



Historical IS Background


Early IS images

Priest & wisdom Ritual & language Shrines & temples Cures & salvation Omnipotent Beyond mortal understanding


Computer system fallacies

Usage as acceptance Automation Black boxing Centralization Performance maximization Cost minimization Efficiency Descriptive only Reductionism Scientific & logical


Human impression fallacies

What the computer says is always true Garbage in is garbage out

The computer is too complicated to understand

We are only automating what you are doing now

We cannot change the way the computer does it

It is the computers fault not ours Drunkard’s paradox


IS prior determinants

Structured tasks Handling “necessary” data

What is the value of necessary data?

Cost minimizing Expensive hardware Cheap people Automating Organizational support


IS new determinants

Expensive people Cheap hardware Performance maximization New uses Handling unnecessary data with

finite value. Handling subjective data Individual support Unstructured tasks Communications


Knowledge areas related to IS I

Computer Science Information Science Management Science Operations Research Industrial Engineering Communication Science (media) Electrical engineering


Knowledge areas related to IS II

Economics Psychology Sociology Anthropology English Cybernetics Systems Science Mathematics


Changes past, present, & future

Work in a home office Robots to do housework Robots to eliminate assembly line jobs Take a college course from home Having a computer diagnose your illness Have a computer operate on you Purchase food, home, car through the

computer Banking and investment through the

computer Love and friendship through a computer Wear a computer Use a personal avatar to represent you


Impressions of computers

Smart stupid Friendly unfriendly Forgiving unforgiving Controlled uncontrolled Easy to use hard to use Easy to change hard to change


Atmosphere

Human Computer Slow Rapid Sloppy Rigorous Forgetful Precise Brilliant Stupid

How to design a communication between the two?


Information domains of users I

Common IS support levels Simple inquiry, calculations,

messaging Organizing, filtering, summarizing Status briefing, report generation Tracking, monitoring


Information domains of users II

Current individual challenges Exception reporting Modeling, structuring, relating Searching, retrieval Diagnosis Discovery Hypothesis testing and analysis

Current group challenges Planning and decision analysis Decision implementation Command and control


Industry shifts I

Information & publishing going electronic

Computers doing & offering communications

Communications & broadcasting offering computer & information services

Financial institutions offering computer and communication service


Industry shifts II

Communications offering financial services

Education increasingly offered by industry

Lines blurring between Information, Publishing, Computers, Communications, Broadcasting, Finance & Investment, Education, Training, Retailing, Services, Brokering


E Commerce Integration I

Offer opportunities Classified ads

Newspapers Broadcasters Publishers

Negotiate exchanges Communications

Phone companies Mails

Contract & liability Legal services


E Commerce Integration II

Clear funds Banking

Tax analysis Accounting

CPA firms Regulatory factors:

Federal reserve board Federal communications commission Congress, state legislator State regulatory bodies, courts

Web/E Money is key


Relative cost changes

People more than hardware Paper more than electronic storage Communications more than

computers Changing data more than fixed data Regulation & policies can delay

economic driven change but not prevent it in a world economy Example: Look at recent history of

phone companies


Technology evolution I

Large machines Batch operation Multi-programming Language development Time sharing Mini-computers User oriented languages Computer networks


Technology evolution II

Distributed systems Personal computers User developed systems Expert systems Case methodology Networking users & systems Workstation technology Multi-media Personal Networks


Application evolution

Administrative applications Report systems Data bases MIS & DSS Simulation & modeling AI & expert systems Office automation Networks Groupware Toolkits Operating system interfaces (GUI) Structural modeling


Major application examples

Payroll systems Inventory systems Linear programming Critical path scheduling Manufacturing processing &

control Statistical analysis (e.g.

marketing) Transaction processing systems The Web & Communications


Costs 1960's

Hardware 90% People 10% Make software Free systems Centralization Utilities Application development


Costs 1970's

Cost minimization Application justification Centralization data collection Top down system design Promise of IS to control operations


Costs 1980's

Hardware 10% People 90% Buy software Office automation Decentralization End user computing Get rid of IS empire Reduce explicit costs


Costs 1990's

Hardware and software 20% People 40% Information 40% Tailor software Value of information Balance of functions Data & communications Cognitive variability


Costs Future

Hardware and software 20% People 60% Information 20% Creation and organization of

information Decline of fixed data in value Collective intelligence abilities


Typical Evolution I

Expansion Under utilization Do everything

Cost cutting Control Political reactions

Maturity End user computing Steering committees

Strategic Toolboxes Tied to corporate goals Distributed systems Communications


IS Management Issues

Remote work Work at home Lateral project groups Multiple work roles Standards & policies Quality measurement Prototyping Evaluation Evolution User involvement


Factors generating IS demand I

Rapid evolution of technology Penetration to end users Multitude of alternatives Changing skill levels Quantification of office functions Fragmented organizational

responsibilities Psychological and social impacts


Factors generating IS demand

Environmental constraints Time, travel, costs Information as a commodity More complexity Dispersion of operations Social pressures


Individual level considerations

Decision accountability Remote work Specialization/generalization Skills & learning Alienation/connectiveness Superconnectivity & Information

Overload


Problem areas I

Privacy Tracking of individuals Diverse sources of data Detection of values Value of a name

Job displacement Specialization Ownership of information

Copyrights Protectionism Proprietary


Problem areas II

Overlapping industries Computers Information (publishing) Communication Financial

Complexity of systems EFT, social security IRS, FBI, Census

Size of system Integration, decomposition

Automation Training


Areas of concern

Public understanding Education Information rights Industry structure Rate of change


Trends of concern

Specialization Centralization Measurement Mobility Reductionism Sub-optimization


Understanding the art of computing

Reducing a single complex problem to a large number of simple problems

Inconsistent with process, incentive and goal orientations

Inconsistent with understanding users and organizations


Environmental Factors I

Future trends in computer & communications technology

Shortening time intervals for change

Complexity of problems Increasing information based work

force Attitude of younger generations


Environmental Factors II

Costs of people & services Increasing relative costs of energy Networking as a social technology The underground economy Personal computing and bulletin

board systems


Current Management Wisdom I

Centralized core DP staff Separate systems analyses Separate maintenance User groups & involvement Application programmers Evolutionary design


Current Management Wisdom II

Distributed equipment Feedback approaches Steering committees Networks & End user computing Strategic & operational systems Standards & integration Evaluation & evolution


THE END CIS 679 Management Information Systems Introduction and Issues The first set http://eies.njit.edu/[email protected]

Documents

(c) Murray Turoff 2000 1 IS Management Introduction and Issues CIS 679 Management of Information System New Jersey Institute of Technology First Set of