Chapter 14
Information Technology
in Management
Topics
Managing a Business or Organization
Types of Management Decisions
Management Information Requirements
Information Technology to Support
Managerial Communications
Information Technology to Support
Managerial Decision Making
Information Technology to Support
Business Strategy
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Managing a Business or Organization
Managers have several functions in an organization, all
aimed at accomplishing the goals and objectives of the
firm.
Planning
Establish goals
and develop
strategies and plans
Controlling
Evaluate and modify
plans, coordination,
and leadership
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Organizing
Assign responsibility
to individuals
and groups
Directing
Lead by motivating
and communicating
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Managing a Business or Organization
Managers play several roles in an organization, interacting
with other managers, employees, customers, vendors, and
other people.
Interpersonal
•Figurehead
•Leader
•Liaison
Informational
•Monitor
•Disseminator
•Spokesperson
Decisional
•Entrepreneur
•Disturbance handler
•Resource allocator
•Negotiator
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Types of Management Decisions
Managers use several methods to solve different types
of problems in various decision- making situations.
Decision Type
Problem Type
Methodology
Structured
Repetitive, routine
Procedures, rules
Semi-structured
Partial Structure,
Partial “fuzzy”
Judgment,
procedure
Unstructured
“Fuzzy,” complex
Judgment,
intuition
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Types of Management Decisions
An organization usually has a hierarchy of managers
responsible for work at several levels.
Strategic
Tactical
Operational
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Top Managers
Plan and control overall
organizational direction
Middle Managers
Plan and control
organizational units
Lower-level managers
Plan and control day-today business processes
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Management Information Requirements
Information has several dimensions and characteristics that can
be adjusted to make the information more valuable to a manager.
Decision
Structure
Unstructured
Decisions
Semistructured
Structured
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Information
Characteristics
Strategic
Managem
ent
Tactical
Manageme
nt
Operational
Management
Information
•Ad hoc
•Unscheduled
•Summarized
•Infrequent
•Forward looking
•External
•Wide scope
•Pre-specified
•Scheduled
•Detailed
•Frequent
•Historical
•Internal
•Narrow focus
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Information Technology to Support
Managerial Communications
Communication is critical for individuals to be
able to work together.
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Communication Concepts
A sender must convey
The message must be transmitted reliably
A receiver must receive
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Communication Concepts
One-to-one communication
One-to-many communication
Many-to-many communication
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Communication Concepts
Same-place communication
Different-place communication
Same-time communication
Different-time communication
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Communication Concepts
Same Time
Different Time
Face-to-face meetings
Same
Place
•Electronic copy boards
•Electronic decision room tools
•Team-building
•Electronic presentation tools
•Team room tools
Terms
in
place
•Shiftwork
Platforms
•Groupware
•Local Area Networks
•Advanced Workstations
Electronic Meeting
•Operating Environments
Ongoing Coordination
•Integrated Office Suites
•Intranets
Different
Place
•Voice teleconferencing
•Computer conferencing
•Video teleconferencing
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•Voice mail
•Electronic mail
•Facsimile
•Group editing
•Project managers/schedulers
•Work flow systems
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Collaborative Work
A workgroup can be




A committee
A product design team
An executive board
Any group of people who act as a single social unit
to perform some task
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Distributed Computing . . .
Distributed Computing integrating all
kinds of computers into a single seamless
system.
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The Automated Office
Enables individuals, workgroups, and organizations
to acquire, process, store, and distribute information
electronically, using computers and
telecommunication networks.
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Intraorganizational
Information Systems
EDI – Electric Data Interchange
Before EDI
e-mail
After EDI
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Business Alliances
A cooperative arrangement between
two or more businesses with
complementary capabilities.
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International Information Systems
Information technology, especially networks,
telecommunications, and the Internet, have
made it economically feasible for a company
to do business internationally and conduct its
business processes virtually anytime and
anywhere.
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Information Technology to Support
Managerial Decision Making
Decision-Making Concepts
Management Information Systems
Decision Support Systems
Executive Information Systems
Expert Systems
Expert Systems in Action
Information Systems in Perspective
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Decision-Making Concepts
Decision making involves understanding the problem,
identifying possible solutions, selecting the most desirable
solution, and implementing it.
Is there a problem?
Intelligence
Phase
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What are the
alternatives?
Design
Phase
Which should you choose?
Choice
Phase
Is the choice working?
Implementation
Phase
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Management Information Systems
The components of a management information system.
Managers can use the system to access information about
the company’s business processes.
Detail, summary, and
exception reports
Information for
decision
making
Application
programs
Corporate
database
Manager
Management
workstation
Database
management
system
Maintained by transaction
processing systems
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Decision Support System
The components of a decision support system. Managers
can use the system interactively to analyze information for
decision making.
Interactive
decision
support
Manager
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Management
workstation
DSS
software
Database
managemen
t
Model
management
Dialog
management
Model
base
Database
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Components of a Decision Support System
Data Management
Model Management
Dialog Management
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Group Decision
Support Systems
Group decision support systems can enhance
the dynamics of face-to-face contact in
group meetings.
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Executive Support System
The components of an executive information system.
Managers can use the system to monitor the important
economic and social trends affecting the organization, as
well as the important performance measures of the company.
EIS software
components
Strategic
Information
Displays
Manager
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Executive
workstation
Database
management
Model
management
Dialog
management
External
databases
Internal
operations
databases
Analytical
models
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Expert Systems
An expert system (ES) supports decision making by
providing managers with access to computerized
expert knowledge.
 A KNOWLEDGE BASE
 AN INFERENCE ENGINE
 A USER INTERFACE
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Components of an Expert System
The components of an expert system. The software modules
perform inferences on a knowledge base built by an expert or
both. This provides expert answers to a user’s question in an
interactive process.
Expert
advice
ES software
components
User
interface
Workstation
User
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Knowledge
base
Inference
engine
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Expert Systems in Action
The expert system leads
the user through the process
of diagnosing problems with
malfunctioning cameras.
Blue Cross/Blue
Shield of Virginia
uses an expert
system for
insurance claim
processing.
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Whirlpool uses an expert
system named Consumer
Appliance Diagnostic System
to help handle over 3 million
annual telephone inquires.
American Express uses an
expert system to automate
the process of checking for
fraud and misuses of its
no-limit credit card.
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Comparison of design features for
MIS, DSS, EIS, and ES
Decision
support
features
MIS
DSS
EIS
ES
Type of decision
maker
Many operational
managers
Individual and
small groups of
tactical managers
Individual strategic
manager
Individual
strategic, tactical,
or operational
manager
Type of problem
Structured
Semi-structured
Unstructured
Structured
Type of
information
Pre-designed
reports on internal
operations
Interactive queries
and responses for
specific problems
Online access to
internal and
external
information on
many issues
Conclusions and
recommendations
for a particular
complex problem
Type of use
Indirect
Direct
Direct
Direct
Phase of decision
making
Intelligence
Design, choice
Intelligence
Implementation
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Information Technology to
Support Business Strategy
A strategy is an organization's
intention to pursue a set of
activities over the long term to
attain its goals.
An organization uses the the
competitive forces model to
evaluate its environment and
choose a strategy that will help
it achieve a competitive
advantage.
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Business is a good
game—lots of
competition and a
minimum of rules. You
keep score with
money.
—Nolan Bushnell,
founder of Atari
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Strategic Information Systems
THE COMPETITIVE FORCES MODEL:
 Competition: the degree of competitive rivalry among
firms in an industry
 New Competition: the probability of new companies
entering the industry
 Customers: the relative bargaining strength of
customers
 Suppliers: the relative bargaining strength of suppliers
 Substitution: the probability that customers may
substitute or switch to other products or services.
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Competitive Forces
Managers can decide how best to use information
technologies by understanding the competitive forces in
the business environment.
Probability
of new
companies
New Companies
Bargaining
strength of
suppliers
Suppliers
Bargaining
strength of
buyers
Degree of
rivalry
Business
organization
Competitors
Customers
Probability of
substitutes
Substitutes
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Competitive Forces
A cost leadership strategy focuses on providing highquality products and services at the lowest cost in the
industry.
A differentiation strategy focuses on providing products
and services that are particularly valued and are perceived
by customers as uniquely different from the competition.
An innovation strategy emphasizes finding new ways to
restructure business processes for producing or distributing
products and services or developing unique products and
services.
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Strategic Uses of
Information Technology
Create entry barriers, switching costs
and new products or services.
Automating work.
Modify or enhance a product or service
to differentiate it from the competitors’
and to increase its value to customers.
Integrating across functions
and organizations.
Emphasize the organization’s primary
and support activities.
Purchasing the product.
Empowering people.
Fitting the product to customer
requirements.
Eliminating waste.
Using the product.
Using the best-known way
to do the work.
Making the product
easier to maintain.
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