Using Management Information Systems
David Kroenke
Information Systems Management
Chapter 10
© 2007 Prentice Hall, Inc.
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Learning Objectives
Understand the relationship of the CIO and CTO
to other senior executives.
Know the IS department’s responsibilities for
planning the use of IT/IS, managing infrastructure,
developing systems, and protecting information
assets.
Understand the purpose and advantages of
outsourcing.
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Learning Objectives (Continued)
Understand the risks of outsourcing.
Know users’ rights and responsibilities with
regard to the IS organization.
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The Information Systems Department
The main functions of the information systems
department are as follows:





Plan the use of IT to accomplish organizational goals
and strategy.
Develop, operate, and maintain the organization’s
computing infrastructure.
Develop, operate, and maintain enterprise
applications.
Protect information assets.
Manage outsourcing relationships.
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The Information Systems Department (Continued)
The title of the principal manager of the IS
department varies from organization to
organization.
A common title is chief information officer, or
CIO.
Other common titles are vice president of
information services, director of information
services, and, less commonly, director of
computer services.
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The Information Systems Department (Continued)
The CIO, like other senior executives, reports to
the chief executive officer (CEO), though
sometimes these executives report to the chief
operation officer (COO), who in turn reports to the
CEO.
In some companies, the CIO reports to the chief
financial officer (CFO).
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The Information Systems Department (Continued)
Most IS departments include a technology office
that investigates new information systems
technologies and determines how the organization
can benefit from them.

Today many organizations are investigating Web
services technology and planning on how they can best
use that technology to accomplish their goals and
objectives.
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The Information Systems Department (Continued)
The chief technology officer or CTO, often heads
the technology group.
The CTO sorts through new ideas and products to
identify those that are most relevant to the
organization.
The CTO’s job requires deep knowledge of
information technology and the ability to envision
how new IT will affect the organization over time.
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The Information Systems Department (Continued)
The group operations, manages the computing
infrastructure, including individual computers,
computer centers, networks, and communications
media.


This group includes system and network administrators.
An important function of this group is to monitor the user
experience and respond to user problems.
Another group in the IS department is development

This group manages the process of creating new
information systems as well as maintaining existing
information systems.
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The Information Systems Department (Continued)
The size and structure of the development group
depends on whether programs are developed inhouse.

If not, this department will be staffed primarily by
systems analysis who work with users, operations, and
vendors to acquire and install licensed software and to
set up the system components around that software.

If the organization develops programs in-house, then this
department will include programmers, test engineers,
technical writers, and other development personnel.
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The Information Systems Department (Continued)
The last IS department is outsourcing relations.

This group exists in organizations that have negotiated
outsourcing agreements with other companies to provide
equipment, applications, or other services.
There is also a data administration staff function.

The purpose of this group is to protect data and
information assets by establishing data standards and
data management practices and polices.
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The Information Systems Department (Continued)
Keep the distinction between IS and IT.


Information systems (IS) exist to help the organization
achieve its goals and objectives.
Information technology (IT) is just technology.
 It concerns the products, techniques, procedures, and
designs of computer-based technology.
 IT must be placed into the structure of an IS before an
organization can use it.
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Figure 10-1 Typical Senior-Level Reporting
Relationships
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Align Information Systems with Organizational
Strategy

Information systems must be aligned with
organizational strategy.

The purpose of an information system is to help
the organization accomplish its goals and
objectives.
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Figure 10-2 Planning the Use of IS/IT
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Communicate IS issues to the Executive Group
The CIO is the representative for IS and IT issues
within the executive staff.
Provides the IS perspective during discussions of
problems solutions, proposals, and new initiatives.
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Develop Priorities and Enforce Within the IS
Department
The CIO must evaluate every proposal, at the
earliest stage possible, as to whether it is consistent
with the goals of the organization and aligned with its
strategy.
No organization can afford to implement every good
idea.
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Develop Priorities and Enforce Within the IS
Department (Continued)
Projects that are aligned with the organization's
strategy must be prioritized.
The IS department must develop the most
appropriate systems possible, given constraints on
time an money.
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Sponsor the Steering Committee
A steering committee is a group of senior
managers from the major business functions that
works with the CIO to set the IS priorities and
decide among major IS projects and alternatives.
The steering committee serves an important
communication function between IS and the users.
The steering committee provides a forum for users
to express their needs, frustrations, and other
issues they have with the IS department.
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Sponsor the Steering Committee (Continued)
The IS department sets up the the steering
committee’s schedule and agenda and conducts
the meetings.
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Managing the Computing Infrastructure
Managing the computing infrastructure is the most
visible of all of the IS department’s functions.
To many employees, the IS department is the
“computer department”.
This management function must be in alignment
with infrastructure design.
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Align Infrastructure Design with Organizational
Structure
The structure of the IS infrastructure must mirror
the structure of the organization.
A highly controlled and centralized organization
needs highly controlled and centralized information
systems.
A decentralized organization with autonomous
operating units requires decentralized information
systems that facilitate autonomous activity.
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Figure 10-3 Distributed Check-Printing Company
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Figure 10-4 Problematic Centralized IS
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Figure 10-5 Decentralized Order-Management
System
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Create, Operate, and Maintain Computing
Infrastructure
Three more tasks in managing the computing
infrastructure are to:



Create and maintain infrastructure for end-user
computing.
Create, operate, and maintain networks.
Create, operate, and maintain data centers, data
warehouses, and data marts.
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Establish Technology and Product Standards
Failure of the network software upgrade points out
the need for technology and product standards.
If no standards exist it could mean difficulties for
upgrading computers and programs.
Some users’ computers become incompatible with
others.
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Track Problems and Monitor Resolutions
The IS department provides the computing
infrastructure as a service to users.
The system is used to record user problems and
monitor their resolution.
When a user reports a problem the department
assigns a tracking number, and the problem enters
a queue for service.
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Track Problems and Monitor Resolutions
(Continued)
Problems are prioritized on the basis of how critical
they are to the user’s work.
Higher-priority items are serviced first.
The user is told its priority and given an
approximate date for resolution.
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Manage Computing Infrastructure Staff
The IS department must manage the computing
infrastructure staff.
The organization of an operation department has
subdepartments for the network, computer center,
data warehouse and user support.
The operations staff must constantly update its
knowledge to keep up with upgrades in both
hardware and software products.
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Figure 10-6 Organization of a Typical IS Operation
Group
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Managing Enterprise Application
In addition to managing the computing
infrastructure, the IS department manages
enterprise applications as well.
Enterprise applications means software programs
that span more than one department, such as
some functional applications as well as ERP, EAI,
and SCM applications.
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Figure 10-7 Managing Enterprise Applications
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Develop new Applications
The IS department manages the development of
new applications.
The process of creating a new application begins
when the IS department aligns its priorities with
the organization's strategy.
The IS department develops system plans and
proposals and submits them to the steering
committee for approval.
Once approved, the development process is
initiated.
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Maintain Systems
The IS department has the responsibility for
system maintenance.
Maintenance means either to fix the system to do
what it is supposed to do in the first place or to
adapt the system to changed requirements.
The IS department must have a means to track
user issues and problems, prioritize them, and
record their resolution.
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Maintain Systems (Continued)
Companies need special maintenance activities to
support legacy systems.
A legacy information system is one that has
outdated technologies and techniques but is still
used, despite its age.

Legacy system maintenance entails adapting those
systems to new tax laws, accounting procedures, or
other requirements that must be implemented for the
legacy system to be relevant and useful.
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Integrate Enterprise Applications

A third element concerns enterprise application
integration.

EIA requires developers to create intermediary
layers of software, and possibly intermediary
databases, to enable the integration of disparate
systems.
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Figure 10-8 Organization of a Typical IS
Development Group
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Manage Development Staff
The last management function is to manage the
development staff.
A computer programmer or developer is both a
software designer as well as a programmer.
Sustaining-application developers work on existing
applications.
Sustaining developers have fewer years of
experience or less knowledge than new-application
developers.
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Manage Development Staff (Continued)
Sustaining developers and new developers can
belong to separate development teams.
Product quality assurance (PQA) engineers
specialize in the testing of software.

PDQ engineers in some cases are programmers who
develop automated testing suites.
Technical writers develop product installation
instructions, help text, and other support
documentation.
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Administer Data
Data administration describes a function that
pertains to all of an organization’s data assets.
Database administration describes a function
that pertains to a particular database.
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Define Data Standards
Data standards are definitions, or metadata, for
data items shared across the organization.

They describe the name, official definition, usage,
relationship to other data items, processing restrictions,
version, security code, format and other features of data
items that are shared across the organization.
Data standards can also include data owner.
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Figure 10-9 Data Administration
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Maintain the Data Dictionary
A data dictionary is a file or database that
contains data definitions.
Without maintenance, the data dictionary, an
essential tool, loses its value.
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Define Data Policies
Data administration is concerned with the creation
and dissemination of data policies.
The data administrator works with senior
executives, the legal department, functional
department managers, and others to determine
data policy.
Data policies are dynamic and must change as
new corporate policies and new systems are
developed and as new laws are created.
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Figure 10-10 Example of Data Dictionary Fields
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Plan for Disaster Recovery
Disaster-recovery planning is the creation of
systems for recovering data and systems in the
event of a catastrophe such as:




Earthquake
Flood
Terrorist event
Other significant processing disruption
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Outsourcing
Outsourcing is the process of hiring another
organization to perform a service.
Outsourcing is done to save costs, to gain
expertise, and to free up management time.
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Figure 10-11 Popular Reasons for Outsourcing IS
Services
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International Outsourcing
Large companies outsource outside of the United
States because of a large, well-educated, Englishspeaking population that will work for 20 to 30
percent of the labor cost here in this country.
International outsourcing is advantageous for
customer support and other functions that must be
operational 24/7.
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Alternatives to Outsourcing
Some organizations outsource the acquisition and
operation of computer hardware.
Acquiring licensed software
Outsource entire system
Web storefront
Entire business function
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Figure 10-12 IS/IT Outsourcing Alternatives
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Figure 10-13 Outsourcing Risks
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Figure 10-14 User Information Systems Rights
and Responsibilities
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Summary
The major functions of the IS department are to
plan the use of IT so as to accomplish the
organization’s goals and objectives:




Manage the organization’s computing infrastructure.
Develop, operate, and maintain enterprise applications.
Protect the organization’s information assets.
Manage outsourcing relationships.
The principal manager of the IS department is the
chief information officer (CIO).
© 2007 Prentice Hall, Inc.
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Summary (Continued)
In most companies, the CIO reports to the CEO
and is a member of the senior management team.
The CIO communicates IS/IT issues to executive
staff, communicates and enforces priorities within
the IS department, assesses emerging technology
in light of those priorities, and sponsors the
steering committee.
© 2007 Prentice Hall, Inc.
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Summary (Continued)
The chief technology officer (CTO) identifies new
IT products and ideas that will be relevant to the
organization.
Information systems consist of the five
components and exist to help the organization
achieve its goals and objectives.
The IS department has various planning functions.
© 2007 Prentice Hall, Inc.
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Summary (Continued)
The IS department manages the computing
infrastructure by:



Aligning it with organization’s structure and dynamics.
Creating and maintaining facilities for end-user
computing.
Creating, operating, and maintaining the computer
network, computing centers, data warehouses, and data
marts.
Data administration and database administration
are functions in the IS department that protect the
organization’s information assets.
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Summary (Continued)
Outsourcing is the process of hiring another
organization to perform a function or service.
Companies outsource hardware, programs,
applications, and even entire business functions.
As a future user of information systems, facilities,
and services, you have rights and responsibilities.
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Key Terms and Concepts
Chief information officer (CIO)
Chief technology officer (CTO)
Data administration
Data dictionary
Data standards
Database administration
Legacy information system
Steering committee
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Ethics Guide–Using the Corporate Computer
Suppose you work at a company that has the
following computer use policy:

Computers, email, and the Internet are to be used
primarily for official company business. Small amounts
of personal email can be exchanged with friends and
family, and occasional usage of the Internet is permitted,
but such usage should be limited and never interfere
with your work.
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Ethics Guide–Using the Corporate Computer
(Continued)
Suppose you are a manager and you learn that one of your
employees has been engaged in the following activities:
Playing computer
games during work
hours
Playing computer
games on the company
computer before and
after working hour
Responding to emails
from an ill parent
Watching DVDs during
lunch and other breaks
Sending emails to plan
a party that involves
mostly people from
work
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Ethics Guide–Using the Corporate Computer
(Continued)
Sending emails to plan
a party that involves no
one from work
Searching the Web for a
new car
Reading the news on
CNN.com
Checking the stock
market over the
Internet.
Bidding on items for
personal use on eBay
Selling personal items
on eBay
Paying personal bills
online
Paying personal bills
online when traveling
on company business
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Ethics Guide–Using the Corporate Computer
(Continued)
Buying an airplane
ticket for an ill parent
over the Internet
Changing the content of
a personal Web site
Changing the content of
a personal business
Web site
Buying an airplane
ticket for a personal
vacation over the
Internet
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Security Guide–Secure Development
A self-validating number has one or more digits
that verify the accuracy of the other digits.
Vendors frequently use self-validating numbers to
limit usage of products or electronic services.
When you install Microsoft Windows, you supply a
serial number, which is a self-validating number.
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Security Guide–Secure Development (Continued)
The install program knows the algorithm for
checking the number, and if you enter any invalid
sequence, it will be able to determine that.
Such numbers are also used to limit access to
Web sites.
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Opposing Forces Guide–Is Outsourcing Fool’s
Gold?
“People are kidding themselves. It sounds so
good-just pay a fixed, known amount to some
vendor, and all your problems go away”.
“Except it doesn’t work that way. Your trade one set
of problems for another. Consider the outsourcing
of computer infrastructure. What’s the first thing the
outsource vendor does? It hires all of the
employees who were doing the work for you.”
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Opposing Forces Guide–Is Outsourcing Fool’s
Gold? (Continued)
What you’re really outsourcing is middle-level
management of the same IT personnel you had.
So now you’re paying a premium for the services
of your former employees, who are now managed
by strangers who are paid by the outsource
vendor, who evaluates those managers on how
well they follow the outsource vendor’s profitgenerating procedures.
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Opposing Forces Guide–Is Outsourcing Fool’s
Gold? (Continued)
How quickly can they turn your operation into a
clone of all their other clients?
Do you really want to do that?
How do you undo an outsource agreement?
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Problem Solving Guide–What If You Just Don’t
Know?
What if you have to make a decision and you just
don’t know which way to go?
For complex issues like outsourcing, it can be
difficult to know what the right decision is.
In many cases, more analysis won’t necessarily
reduce the uncertainty.
Consider outsourcing as a typical, complex, reallife decision problem.
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Problem Solving Guide–What If You Just Don’t
Know? (Continued)
The question is, will outsourcing save your
organization money?
Will the cap on financial exposure be worth the
loss of control?
Or, is your organization avoiding managing the IS
function because you would just like to have the
whole IS mess out of your hair?
Suppose the CIO is adamantly opposed to the
outsourcing of computer infrastructure?
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Problem Solving Guide–What If You Just Don’t
Know? (Continued)
Why is that? Are the projected savings real?
Or are they the result of a paper analysis that
misses many of the intangibles?
You could do another study; you could commission
an independent consultant to examine this
situation and make a recommendation.
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Reflections Guide–Jumping Aboard the
Bulldozer
Brainard and Litan cite research that indicates
that organizations will move about 250,000 jobs
per year overseas between now and 2015.
Although that may sound like a lot, in the context
of the 137 million U.S. workers, and in the context
of the 15 million U.S. Americans who lose their
jobs due to other factors, 250,000 jobs overseas
is not much.
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Reflections Guide–Jumping Aboard the
Bulldozer (Continued)
The culprit is not overseas outsourcing; it is
productivity.
Because of information technology, Moore’s Law,
and all the information systems that you have
learned about in this book, workers productivity
continues to increase, and it is possible to have an
economic recovery without a binge of new hiring.
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Reflections Guide–Jumping Aboard the
Bulldozer (Continued)
This idea of creative destruction is all well and good
for an economic theory, but what do you, as a student
in the first decade of the twenty-first century, do?
How do you respond to the dynamics of shifting work
and job movement?
When you work with information systems, you are not
a professional of a particular system or technology;
rather, you are a developer or user of a system that
helps your organization achieve its goals and
objectives.
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Reflections Guide–Jumping Aboard the
Bulldozer (Continued)
Define yourself more generally as someone who
specializes in the use of EDI, XML or Gizmo 3.0 to
help your business achieve its goals and
objectives.
Your long-term success depends not on your
knowledge of XML, but rather on your ability to
think, to solve problems, and to use technology
and information systems to help your organization
achieve its goals and objectives.
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