Introduction
Information Management
Objectives
Understand the role of Information
Technology and Electronic Commerce in
business
Be able to specify an information
technology product for your company
Be literate in the fundamental vocabulary
of technology infrastructure
Acquire basic personal IT skills
What Is Information?
Data
Raw facts. Computers store data.
Information
Data in the correct form. Output of an information
system.
Knowledge
Solutions to problems. Information and rules needed
to solve specific problems.
Wisdom
Questions that should be asked.
Role of Information in Organizations
RESOURCE
COMMODITY
ASSET
What is Information?
Business resources are:
Land, Labor, Capital. ….Information
Replacement for traditional resources
Medium of exchange
Product
Information
Adds to knowledge
Has surprise value
Reduces uncertainty
Leads to action
Changes a decision
Relevant
Varies by function and level of
management
Why Study Information
Technology?
Moore’s Law:
Chip capacity
doubles every 18
Months.
Next Generation
72% used
a computer
before they
were 10
72% have a
PC at home
59% expect
to get their
news from the
Internet by 2000
66% call themselves
Intermediate,
Expert or Power
users
The Value of Technology
Electric Power Growth Trends
The Value of Technology
IT Growth Trends
Information Systems
Concepts 2
IS Productivity Paradox
Realizing benefits from IS
Integrated Information Systems
Interorganizational Information
Systems
Strategic Information Systems
Transformational Information
Systems
Why the Benefits of IT are
Not Achieved
Lack of knowledge about IT and IT
management
Incompatible hardware and software
Inefficiencies in work processes
Incompatible organizational cultures and
climates
IT Productivity Paradox
IS Productivity Paradox
$1 trillion dollars spent on computer
and communication technologies
since 1980
Systematic relationship to financial
performance?
People make the difference
Four pathways for realizing benefits
Definition: Information
System
a computerized system that processes
data and produces information (SSC)
a collection of components that collects,
processes, stores, retrieves and
disseminates information for a specific
purpose
a computer system designed to
accomplish business objectives (IS Primer,
Part I)
IS Categories
Types of Information
Systems
Cost displacement …
Automation systems
Improved management …
Transaction Processing and Information Reporting
Strategic support …
Decision Support, Executive Information Systems
and Expert Systems
Basis of competition …
Data Warehousing, e-Business, Strategic
Information Systems
Components of IS and
Definition of System
System: A group of parts or components
working together to accomplish a goal
Components of IS:
Data
Hardware
Software
Trained personnel
Procedures
Managing Information with
Information Systems
TECHNOLOGY + DATA + PROCEDURES + PEOPLE
= INFORMATION SYSTEM
Benefits of IS
Types
Distribution
Efficiency
Automation
Arise from changes in work tasks,
procedures and arrangements not just
from technology
Potential vs. Actual
Information Management
in the 21st Century
Succeeding in a Global Environment
The Focus on Quality and Performance
Business Process Redesign
Building Individual Capabilities and
Productivity
Time to Market
Challenges for Effective
Information Management
Using Technology Appropriately to Meet
Information Needs
Dealing with Too Little, Too Much, or
Conflicting Information
Responding in a Timely Fashion
1
Types of Information
Systems
Transaction Processing Systems (TPS)
Information Reporting Systems (IRS)
Decision Support Systems (DSS)
Executive Information (Support) Systems
(EIS)
Expert Systems (ES)
Transaction Processing
Systems
Transaction - Basic business event, act or
process
TPS
backbone of an org’s information systems
capture data on “business events”
store these data in databases
use data to efficiently handle day-to-day
business operations
provide information needed by law
may be complex
Transaction Processing
Terms
Batch processing - transactions are
collected as they occur and placed in
groups or batches to be processed
periodically
On-line processing - data are processed
as soon as transaction occurs
Transaction Processing:
Question
Which business events?
What data should be captured?
When should it be captured?
Transaction Processing:
Guidelines
Capture sufficient data
Keep accurate
Minimize redundancy
Keep current
Information Reporting
Retrieving data stored in databases
to produce predefined information
reports for managers and other
employees
Routine reports
Structured problems
Types of Reporting
Periodic
Exception
Information Reporting:
Questions
How many reports should be
produced?
When should reports be received?
Who should control the distribution
of reports?
Information Reporting:
Guidelines
Keep evaluating the report
Highlight important data
Include positives and negatives
Decision Support
Retrieving data stored in databases
and then combining these data with
analytical rules to create on-demand
(often ad hoc, normally interactive)
reports to help employees make the
decisions they face.
Semi-structured problems
Sensitivity and goal seeking analysis
Decision Support:
Functionality
Decision structures
Access to data (Special database)
Analytical tools (Model base)
User-friendly interface
Decision Support:
Questions
When should such support be
restrictive rather than flexible?
Who should define and design these
support tools?
Decision Support:
Guidelines
Interface should be consistent with
user’s cognitive view of problem
A DSS database is established
separate from operational databases
It may be desirable to restrict user’s
actions
Executive Information
Also called Executive Support
Systems (ESS)
Geared toward top level managers
Provide drill down
Have excellent GUI
Offer status access
Offer access to external databases
May include DSS
Executive Information:
Questions
How can use of the system be
promoted?
Who should use the system?
Executive Information:
Guidelines
Timeliness of information is critical.
The system must provide broad,
aggregated data with the ability to
expand to the detail level.
The system must be tailored to the
needs of the managers within the
specific company.
Expert SystemsCharacteristics
Artificial Intelligence (AI) application
Acts like expert
Provides explanations
May be rule- or case-based
May provide consistent, reproducible
second opinion
Expert Systems:
Components
Knowledge rule database
Domain database
Database management system
Knowledge Acquisition/Explanation
subsystem
GUI
Inference engine
Expert Systems: Questions
How accurate is the information provided
by the system?
How should the system be used?
How can the system be designed to
respond to unusual situations?
How can the system be updated?
How can you give the system common
sense?
Expert System: Guidelines
The key to a good expert system is
successful knowledge acquisition from the
expert.
The information must be timely and
complete.
Strategic Information
Systems
 Tactics
becoming a low-cost producer
improving products/services
introducing new
products/services
creating barriers to entry
discourage customers from
switching to competitors
gaining power position over
suppliers or customers
providing management with
higher quality information
timely
accuracy
completeness

Such strategic benefits often
are not realized. Why not?

When they are realized, they
are usually short-lived. Why
are they so difficult to sustain?

What is the basis by which an
organization can realize a
sustained competitive
advantage through its
information systems?
Strategic Information
Systems
IS that help gain strategic advantage
Significantly change manner in
which business supported by the
system is done
Outwardly aimed at direct
competition
Inwardly focus on enhancing the
competitive position
Create strategic alliances
Support Activities
Primary Activities
Firm Infrastructure
(general management, accounting, finance, strategic planning)
Human Resource Management
(recruiting, training, development)
Technology Development
(R&D< product and process improvement)
Procurement
(purchasing of raw materials, machines, supplies)
Inbound
Logistics
(raw
materials
handling
and
warehousing)
Operations
(machine
assembling,
testing)
Outbound
Logistics
(warehousing and
distribution
of finished
product)
Marketing
and Sales
(advertising,
promotion,
pricing,
channel
relations)
Service
(installation,
repair,
parts)
Value Chain Model
Chain of basic activities that
add to firm’s products or services
Primary activities
Secondary activities
Value Chain Primary
Activities
Inbound
Outbound
Operations
Marketing and Sales
After-Sale Services
Value Chain Support
Activities
Technology development
Procurement
Human Resources Management
Management Control
accounting/finance
coordination
general management
central planning
Competitive Forces
Threat of entry of new
competition
Bargaining power of suppliers
Bargaining power of buyers
Threat of substitute products or
services
Rivalry among existing firms
Strategies for
Competitive Forces
Note - strength of force is
determined by factors in industry
Gain a competitive edge
Build defenses against forces
Formulate actions to influence
forces
Three Generic
Strategies
Cost leadership (lowest cost
in industry)
Differentiation of
products/services
Focus (finding a specialized niche)
Be Low Cost Producer IT strategic if it can:
Help reduce production costs &
clerical work
Reduce inventory, accounts
receivable, etc.
Use facilities and materials
better
Offer interorganizational
efficiencies
Produce Unique Product
- IT strategic if it can:
Offer significant component of
product
Offer key aspect of value chain
Permit product customization to
meet customer’s unique needs
Provide higher/unique level of
customer service/satisfaction
Fill Market Niche - IT
strategic if it can:
Permit identification of special
needs of unique target market
Spot and respond to unusual
trends
Strategic Questions
Can IT create barriers to entry?
(new entrants)
Can IT build in switching costs?
(buyers)
Can IT strengthen customer
relationships? (buyers)
Strategic Questions
(cont)
Can IT change the balance of
power in supplier relationships?
(suppliers)
Can IT change the basis of
competition? (competitors)
Can IT generate new
products?(competitors,
substitutes)
Risks of IS Success
Change the Basis of Competition
Lower Entry Barriers
Promote Litigation or Regulation
Awake Sleeping Giant
Reflect Bad Timing
Are Too Advanced
Transformational
Information Systems
Radical changes in an
organization’s business
processes
Radical changes in an
organization’s structure
Radical changes in an industry’s
value streams
Business Process
Reengineering (BPR)
Completely changes manner in
which business is done
Fewer steps, shorter cycle times
Complete, more expert handling
of events
Not incremental improvement
Typically uses IT as an enabler
Involves discontinuous thinking
Characteristics of BPR
Combining jobs
Empowering employees
Jobs done simultaneously
Customizing product/service
Work performed where most
logical
Single point of customer contact
Transformational
Information Systems
Radical changes in an
organization’s structure
reduce layers of
management
empower front-line
workers
loosely couple work units
Radical changes in an
industry’s value streams
disintermediation
creating new markets