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Management Information
Systems
MIS 503
MBA Program
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What is MIS?
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MIS: An Amalgamation of MIS: An Amalgamation of
DisciplinesDisciplines
PsychologyComputer
Science
Management
Science
Sociology
Business Information
Science
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Major MIS Constituents
Organization Technology
People
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A Framework for Managing Information Technology
Vision for the Organizationand Information Technology
IT and Organization Structure
Corporate Strategic Plan
Alliances &Partnerships
Ongoing ITOperations
Integration ofIT and Decision
Making
Strategy
IT Initiatives IT Infrastructure
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Today¶s IT Landscape
How IT flattened the competitive
landscape«
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10 Flatteners
Fall of the Berlin Wall
Netscape IPO
Work flow software
Open-sourcing
Outsourcing
Offshoring
Supply-chaining
Insourcing
In-forming
Wireless
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This NEW Paradigm AffectsOrganizations in Myriad Ways
New Business Environment
±O
pen, Competitive, Dynamic Marketplace New Enterprise
± Open, Networked, Information-based Organization
New Geopolitical Order ± Open, Volatile, Multipolar World
New Technology ± New Goals of IT
± Open, User-centered, Networked Computing
New Competition ± Your competition is no longer only the firm across the street
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Business Environment Changes Creating
New Challenges and Opportunities Worker Productivity
Quality Emphasis
Responsiveness to the Marketplace
Globalization
Outsourcing
Communication Fluidity and Ubiquity Offshoring
Partnering
Social and Environmental Responsibility
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The New Enterprise
Hierarchical Structure is out
Problems with Hierarchies
± Hierarchies seek to separate governed from governors
± Middle managers act as a communication channel between
top and bottom
Information Technology has supplanted µhuman
relays¶, which has resulted in «
Flatter, Leaner Organizations
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Hierarchical vs.
Open-Networked OrganizationsClosed Hierarchy Open Networked
Organization
Structure Hierarchical NetworkedScope Internal/Closed External/Open
Resource Focus Capital Human/Information
State Static/Stable Dynamic/Changing
Personnel/focus Managers Professionals
Key Drivers Reward and Punishment Commitment
Direction Management Commands Self-Management
Basis of Action Control Empowerment to actIndividual Motivation Satisfy Supervisors Achieve Team Goals
Learning Specific Skills Broader Competencies
Basis for Compensation Position in Hierarchy Accomplishment, Competence
Relationships Competitive (My Turf) Cooperative (Our Challenge)
Employee Attitude Detachment (Its a job) Identification (Its my company)
Dominant Requirements Sound Management Leadership
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ExternalIndividuals Workgroups Organizations Organizations
Managerial tasks:
Structuring the organization
Formulating strategy
Managing and controlling
Forming interorganizations relations
Reporting
Designing products and servicesManaging and designing
business processes
Changing technology:
Transaction processing
Decision support
Expert systems
Group decision support system
Executive information systemsPersonal support systems
Groupware
Interorganizational systems
Communications
Networking
Database
Thin Clients
A Framework for IT: An IT Value Chain
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Three Types of
Information Systems
Validate Update Output
Report
WorkstationInput
Database
1 Transactions System (Operational Systems)
User
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Workstation
2 Decision System
Model BaseDatabase
Retrieval
System
Analysis andPresentation
Model
Management
User
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Computer
Workstation
Mailboxes
3 Communication System
Workstation
CommunicationsLink
User 1 User 2
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IT-Enabled Organizational Forms
Verifone,Blueberry Pancake
Calyx and Corolla,Snap Together
Oticon, Spaghetti
Mrs. Fields, Hierarchical and Flat
Frito-Lay, Hybrid
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Three Shifts in the
Application of IT
From Personal to Work-Group Computing
From Systems Islands to Integrated Systems
± Management and control of physical assets and facilities
± Financial management and control systems
±
Tech
nologies to manage and supporth
uman resources From Internal to Inter-organizational Computing
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Enabling TechnologyEnabling Technology The PromiseThe Promise The ChangeThe Change
HighHigh--PerformancePerformance
TeamTeamWorkgroupWorkgroup
ComputingComputing
BusinessBusiness
ProcessProcess
RedesignRedesign
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IntegratedIntegrated
SystemsSystems
IntegratedIntegrated
OrganizationOrganization
HighHigh--PerformancePerformance
TeamTeam
Enabling TechnologyEnabling Technology The PromiseThe Promise The ChangeThe Change
Workgroup
Computing
Organizational
Transformation
Business
Process
Redesign
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WorkgroupWorkgroup
ComputingComputing
IntegratedIntegrated
SystemsSystems
InterenterpriseInterenterprise
ComputingComputingExtendedExtended
EnterpriseEnterprise
IntegratedIntegrated
OrganizationOrganization
HighHigh--PerformancePerformance
TeamTeam
RecastingRecasting
ExternalExternal
RelationshipsRelationships
OrganizationalOrganizational
TransformationTransformation
BusinessBusiness
ProcessProcess
RedesignRedesign
Enabling TechnologyEnabling Technology The PromiseThe Promise The ChangeThe Change
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Summary of Work-GroupComputing Shifts
Organizational HierarchyOrganizational Hierarchy Business Team OrganizationBusiness Team Organization
Personal ComputingPersonal Computing Work Work--Group ComputingGroup Computing
Emphasis on the individualEmphasis on the individual Emphasis on the groupEmphasis on the group
Designing TechnologyDesigning Technology Redesigning the entire systemRedesigning the entire system
TaylorismTaylorism The new work reengineeringThe new work reengineering
Technical UsersTechnical Users Direct support of all personnelDirect support of all personnel
Installing TechnologyInstalling Technology Leadership for evolving work Leadership for evolving work
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Islands of Technology Technology is implemented to manage
three resources:
± Physical Assets
± Human Resources
± Financial Assets
What if they are not speaking to oneanother???
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Problems With Enterprises that
aren¶t speaking« Redundancy of Functionality
Miscommunications due to lack of integration Poor quality customer service
Operational inefficiencies due to
miscommunications and redundant processing
Internal Focus
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Problems With Enterprises that
aren¶t speaking« Systems are perpetuated in order to treat
operational symptoms without recognizingfundamental problems
Organizational conflict and µturf¶ battles erupt due
to the historical creation of data processing
developing financial solutions, engineeringdeveloping physical assets, and administrative
groups to manage human resources
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What happens when an enterprise
shifts to integration
Technology ApplicationsTechnology Applications Organizational RestructuringOrganizational Restructuring
System IslandsSystem Islands Integrated SystemsIntegrated Systems
Separate SystemsSeparate Systems Integrated EnvironmentsIntegrated Environments
SingleSingle--form Systemsform Systems Integrated data, voice, & imageIntegrated data, voice, & image
Cost ReductionCost Reduction Enterprise EffectivenessEnterprise Effectiveness
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What happens when an enterprise
shifts to integration
Value ChainValue Chain Value Network Value Network
Simple Market CombatSimple Market Combat Competition via CooperationCompetition via Cooperation
Manual CommunicationsManual Communications Electronic CommunicationElectronic Communication
Enterprise TechnologyEnterprise Technology Interorganizational ComputingInterorganizational Computing
Purchaser of InformationPurchaser of Information Information Purchaser/Vendor Information Purchaser/Vendor
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Determining IT
Value
Models and Implications
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INFORMATION TECHNOLOGYMANAGEMENT S YSTEM
ISSUESMeasuring Benefits
No simple way to measure value
added benefits of IT
Can track IS performance measures
over time
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What is Value?
The most common meaning of value is monetary
worth It is difficult to determine the value of IT
investments because such value can come from
± traditional (measurable) monetary returns
± indirect returns that may be hard to measure ± prevention of negative return from not investing in IT
(such as loss of market share)
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But Value is not always easy to
measure«
It¶shard to measure directly
In the short term, benefits may not be realized
Benefits may happen after development costs
occur
No relationship to benefits included in measures
This has led to«
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Page 598
INFORMATION TECHNOLOGYMANAGEMENT SYSTEM ISSUES
A common way to assign value (i.e.,
allocate costs) is using chargeback systems
IS chargeback process ± places control of IS spending
with business managers, and is used to better understand
true costs
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5. Designing an Equitable Financing System
Page 598
INFORMATION TECHNOLOGYMANAGEMENT SYSTEM ISSUES
Why use a chargeback system?
± Assign costs to those who consume
± Control wasteful use of IT resources
± Overcome belief that IT costs unnecessarily high ± Provide incentives using subsidy
± Change IS to be more business driven
± Encourage managers to be knowledgeable consumers
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Page 598
INFORMATION TECHNOLOGYMANAGEMENT SYSTEMISSUES
Typical measures used to track IT costs:
± Total IT budget as percentage of total organization
revenues or income
± Total IT budget as percentage of total organization budget ± IS personnel costs as percentage of total organization
professional personnel salaries and wages
± Ratio of hardware and software costs to IS personnel costs
± Costs for IT hardware and software per managerial or
knowledge worker
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IT Investment Equation
P(Success/Return) = P(Return on Investment Type) x P(Conversion Success)P(Success/Return) = P(Return on Investment Type) x P(Conversion Success)
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Examples of IT Investment Equation
Budgetingsystem
0.5 1.0 0.5
EDI/JIT System 0.95 0.75 0.71
Infrastructure Network
0.5 0.7 0.35
Package
Tracking System
0.2 1.0 0.2
Groupware 0.9 0.8 0.72
Web Order Entry 0.9 0.7 0.63
Web HomePages
0 1.0 0
Type of Type of
InvestmentInvestment
Estimate of ReturnEstimate of Return
Probability Based onProbability Based on
Type of ProjectType of Project
Estimate of Estimate of
Probability of Probability of
SuccessfulSuccessful
ConversionConversion
OverallOverall
Probability of Probability of
a Return: thea Return: the
SR IndexSR Index
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Stock Options and IT Projects Call i a
Stock
Real Option on IT
ProjectUnder lying Asset Co on stock on hich
option is purchased
An I syste that ill be
developed in the future
Current alue Current stock pr ice xpected of retur ns
fro I pro ject
olatility tock pr ice f luctuations in
the arket
Uncer tainty (var iance) in
expected cash f lo fro
the I pro ject
xercise r ice r ice in the option at
hich holder ay buyshares hen exercising
the option
Invest ent required in I
pro ject
xercise ate ate on the option hen it
can be exercised
ate for developing the I
pro ject
Lucas,
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The Productivity Paradox Organizational IT investments have not
shown a significant impact on a variety of
productivity statistics Possible explanations are:
± Results of IT spending occur locally and cannot be
expected to show up in national statistics
± Many firms may yeth
ave to undergo significantrestructuring or cost cutting for the benefits of IT to
become evident
± The measurements showing the lack of such a
relationship may be flawed
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Barriers to Estimating IT Value
Moore¶s Law
Evolving Organizational Use of Computing
Management¶s Aversion to IT
Pace of Change in Business is
Exacerbating our ability to accurately valueIT
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Three Types of IT Measurement
Metrics to Manage IT Internally
± Network uptime
Metrics for Business Unit Managers
± Detailed IT Usage Report
Metrics for Senior Managers
± Balanced Scorecard
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IT Measurement Methods Applied Information Economics
± Scientific and Mathematical method
± www.hubbardresearch.com
Balanced Scorecard ± Traditional financial measures with KPIs, customer perspectives and org growth, and learning
and innovation
± www.bscol.com
Economic Value Added ± EVA = Net Operating Profit (after tax) - [ Capital x Cost of Capital ]
± www.sternsteward.com
Economic Value Sourced ± Incorporates risk and time into valuation equation
± www.metagroup.com
Portfolio Management ± www.metricnet.com, www.metagroup.com
Real Option Valuation (ROV) ± Incorporates calculations for corporate µflexibility¶ - Black & Scholes Model
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IT value comes in many forms
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Contributions of IT New ways to design organizations and new
organization structures
New relationships between customers and
suppliers
Opportunities for electronic commerce
Efficiencies through EDI Changed basis of competition and industry
structure
Groupware
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Contributions of IT
Knowledge capture and accessibility
Increased productivity and flexibility of
knowledge workers
Electronic alternatives for
communications and supervision Improved opportunities of competition
among nations
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So, if you can find value, how do
you mange IT?
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The Role of the Manager Management and not technology determines return
on IT investments
± Successful organizations have strong IT leadership
Key management decisions related to IT ± Strategy
± Value of IT
± Investing in infrastructure
± Deciding on applications
± The role of knowledge
± E-business
± Options for service
± Change management
± Managing value nets
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MANAGING THE ASSETS IN ANIS ORGANIZATON
Page 584-585Figure 15.1 Selected IS Management Positions (1 of 3)
Possible IS Management Positions
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MANAGING THE ASSETS IN ANIS ORGANIZATON
Page 584-585Figure 15.1 Selected IS Management Positions (1 of 3)
Possible IS Management Positions
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MANAGING THE ASSETS IN ANIS ORGANIZATON
Page 584-585Figure 15.1 Selected IS Management Positions (1 of 3)
Possible IS Management Positions
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Senior IS Management Issues: Improving data and IT planning, especially linking IS to the business
Gaining business value through IT
Facilitating organizational learning about and through IT
Refining the IS unit¶s role and position
Guiding systems development by business managers
Managing organizational data as an asset
Measuring IS effectiveness
Integrating information technologies
Developing systems personnel
2. Selecting Effective IS Leadership
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INFORMATION TECHNOLOGYMANAGEMENT SYSTEM ISSUES
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IS steering committee or advisory board used to: Ensure frequent interaction
Set priorities
Ch
eck progress Allocate scarce resources
Communicate concerns
Provide education
Develop shared responsibility
3. Creating an Active Partnership with Business Managers
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INFORMATION TECHNOLOGYMANAGEMENT SYSTEM ISSUES
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Questions?
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