Why Managers Must Understand IT
• Managers play a key role
– Frame opportunities and threats so others can
understand them
– Evaluate and prioritize problems and solutions
– Lead the effort to pursue IT policies that best meet
organizational needs
• Gains in productivity
– Require innovations to business practices
– Automating these improved processes to take
advantage of IT capabilities
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What is Information Technology?
• Information technology (IT)
– Includes all tools that capture, store, process,
exchange, and use information
• Field of IT includes:
–
–
–
–
Computer hardware
Software
Networks and related equipment
Databases
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What is Information Technology?
(continued)
• IT infrastructure
– Organization’s defined set of IT hardware, software,
and networks
• IT support organization
– Staff to plan, implement, operate, and support IT
• Information systems
– Enable a firm to meet fundamental objectives
– Types: function IT, network IT, and enterprise IT
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Function IT
• Includes information systems that improve the
productivity of individual users in performing standalone tasks
• Examples
–
–
–
–
–
Computer-aided design (CAD) software
Word processors
Spreadsheet software
Decision support systems
e-learning systems
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Function IT (continued)
• Decision support system (DSS)
– Employs models and analytic tools
– Helps users:
• Gain insights into data
• Draw conclusions from the data
• Make recommendations
• E-learning systems
– Encompass a number of computer-enhanced
learning techniques
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Network IT
• Information systems that improve communications
and support collaboration among members of a
workgroup
• Examples
– Web conferencing
– Wikis
– Electronic corporate directories
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Network IT (continued)
• Web conferencing
– Conduct meetings or presentations in which
participants are connected via the Internet
• Wiki
– Web site that allows users to edit and change its
content easily and rapidly
• Electronic corporate directories
– Used in large organizations to find the right person
with whom to collaborate on an issue or opportunity
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Enterprise IT
• Information systems used to define interactions
among employees and/or with external customers,
suppliers, and other business partners
• Examples
– Transaction processing
– Enterprise resource planning
– Interorganizational systems
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Enterprise IT (continued)
• Transaction processing system (TPS)
– Captures data for company transactions
– Updates the firm’s records, which are maintained in
electronic files or databases
• Enterprise resource planning system (ERP)
– Group of computer programs with a common
database
– Used by firms to plan, manage, and control their
routine business operations
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Enterprise IT (continued)
• Interorganizational information systems
– Support the flow of data among organizations to
achieve shared goals
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Enterprise IT (continued)
• Electronic data interchange (EDI)
– Supports the direct transfer of information in the form
of predefined electronic documents
– Standards
• United Nations/EDI for Administration, Commerce,
and Transport (UN/EDIFACT)
• ANSI ASC X12
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The Role of Managers Vis-À-Vis IT
• Managers have a crucial role in leading the
successful introduction and adoption of IT
• Critical responsibilities
– Identifying appropriate opportunities to apply IT
– Smoothing the way for its successful introduction
and adoption
– Mitigating its associated risks
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Identifying Appropriate IT
Opportunities
• Management must ensure a good return on the
investment
– IT-related expenses in many organizations can
account for 50 percent or more of capital spending
– Great variation exists in IT-related spending
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Smooth Introduction and
Adoption of IT
• Managers must overcome resistance
– So that the new IT system is accepted and used
throughout the organization
–
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Smooth Introduction and
Adoption of IT (continued)
• Three major theories on organizational change
management
– Change Management Continuum Model
– Unified Theory of Acceptance and Use of
Technology
– Three Worlds of IT
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Smooth Introduction and
Adoption of IT (continued)
• Change Management Continuum Model
– Seven stages of commitment grouped into three
major phases:
• Inform
• Educate
• Commit
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Smooth Introduction and
Adoption of IT (continued)
• Unified Theory of Acceptance and Use of
Technology
– Identifies four key factors that directly determine a
user’s acceptance and usage of IT
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Smooth Introduction and
Adoption of IT (continued)
• Three Worlds of IT
– Three types of IT require different types of
organizational change
– Four organizational complements allow
improvements with IT
•
•
•
•
Better-skilled workers
Higher levels of teamwork
Redesigned processes
New decision rights
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Smooth Introduction and
Adoption of IT (continued)
• Successful enterprise IT system requires:
– Top-down imposition of standards and procedures
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A Manager Takes Charge
• Toys “R” Us EDI System Rescued
• Tim Meester: director of vendor partnerships
• Errors in EDI data made it difficult for the vendors
to get paid
• Biggest challenge
– Change the Toys “R” Us culture
– Make employees realize that less than 100 percent
accuracy was unacceptable
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A Manager Takes Charge (continued)
• Team had to:
– Develop corrective actions
– Address recurring problems both at Toys “R” Us and
the vendor sites
– Provide consistent advice to each vendor
• Toys “R” Us implemented an extranet to link itself
with all 1300 of its vendors
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Ensuring that IT Risks Are Mitigated
• Special measures are needed to ensure that the
information and its control mechanisms stand up to
intense scrutiny
– Laws mandate stringent control requirements and
accurate record keeping for publicly held
corporations
• Managers are responsible for ensuring that
physical IT assets are protected against loss or
damage
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What if Managers Do Not Participate
in IT?
• Failed IT projects can lead to lowered returns on
investment and missed opportunities
• Managers at 80 percent of surveyed firms believe
that their operational and financial data is not as
effective as it should be for developing strategies
and planning
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Summary
• Managers have three critical responsibilities when
it comes to IT
– Identifying appropriate opportunities to apply IT
– Smoothing the way for its successful introduction
and adoption
– Mitigating its associated risks
• Most effective users of IT obtain maximum value
from IT investments that:
– Align with the organization’s strategic needs
– Are well managed and executed
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Summary (continued)
• Successfully implementing the three types of IT
(function, network, and enterprise) requires
different types of organizational change
• Four organizational compliments allow IT to
improve performance
–
–
–
–
Better-skilled workers
Higher levels of teamwork
Redesigned processes
New decision rights
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