1. MANAGEMENTINFORMATION SYSTEMBy,Ikhlaq

2. History of IT in business Manual transactions MS-Office Business Software (Accounting) Computer Communications( WWW, Internet, E-commerce etc Data, Information, Knowledge ,processes, organization. DSS, ES, KM, Data mining and Data-warehousing, Business Intelligence. Future of IT 3. Cont IT related and managerial solutions and businessstrategies are being used to make business moreeffective , efficient and competitive. Typically a business has two resources 1-Physical resources. (Personnel, Material, Machines (including facilities and energy) and Money. They build physical system of an organization. 2- Virtual resources. (Information (including data) also known as conceptual resources. They build physical system of an organization. 4. Cont. Physical recourses and virtual recourses are used tocope with business problems/pressures. Data and information is used to represent the physicalresources. Virtual systems to represent/control physical systems Computers are not being used merely to managephysical firm (As virtual systems) but are also have abig breakthrough in business applications. H/W and S/W are physical sources, also machines,materials and human resources are physical resources. 5. Chapter Preview Marketplace pressures faced by todays businesses and various tactical and strategic responses. The distinction between data, information, and knowledge. The characteristics of high quality information. The components of an information system. The capabilities organizations aspect of information systems. How computer technology is applied to business problems and pressures. Business processes are required to be more effective and efficient competitively. In which areas and level of businesses, an IS may have big impact. Opportunities to use information systems strategically. All about Information Processing Life Cycle 6. Learning Objectives Describe The characteristics of the digital economy and e-business. Discuss the relationships among business pressures, organizational responses, and information systems. Describe strategic information system (SISs) and how information technology helps companies improve their competitive positions. 7. Digital Economy An economy based on electronic goods and servicesproduced by digital technologies, electronicbusiness and traded through electroniccommerce. That is, a business with electronicproduction and management processes and thatinteracts with its partners and customers and conductstransactions through Internet and Webtechnologies. Also sometimes called the Internet economy, the neweconomy, or the Web economy . 8. Infrastructure for e-business e-business/ e-commerce the conducting of business functions (e.g., buying and selling goods and services, servicing customers, collaborating with business partners) electronically, in order to enhance an organizations operations. The infrastructure for e-business is network computing, known as the internet, or to its counter part within organizations, called an intranet, many companies link their intranet to those of their business partners over networks called extranets. 9. Todays pressure on Business Environment Pressure on business environment is characterizedby: Rapid Change and changing work force Global competition for trade and labor Business Complexity Global Economy traditional barriers Hyper-competition Customer orientation Information overload Innovative technologies 10. ContNeed for the real time operations (Information float) High performance telecom services can reduce it.Technological innovation and obsolescence (CAD/CAM)Social responsibility (Issue of regulation and deregulation)Ethical issuesDigital divideMarket researchGlobalization/internationalization. 11. Traditional ManagementCEOCondensed reports Commands Finance MarketingAccounting HRM MIS Analyze data Layers of middle managersCollectdata Customers 12. Some Key Definitions Data: raw facts; collected, not organized. Information: data organized in a meaningful way. Knowledge Consists of information that has beenorganized to conveyunderstanding, experience, accumulated learning, orexpertise as it applies to current business problems orprocesses. Knowledge is used to generate new information requiredfor a business solution. Knowledge workers create information and knowledge andintegrate it into the businesses. 13. Data and Information Data consists of facts and figures that are relativelymeaningless to user. E.g. the number of hours workedfor each employee in the company Information is processed data that are moremeaningfully. E.g. the hours works for each employeemultiplied by the hourly rate, the out put informationis the gross earning 14. Data and information 15. Data, Information, and Knowledge 16. Data Vs Information Vs KnowledgeDataKnowledge InformationSimple observations Data with relevance Valuable informationof the world: and purpose:from the human mind:Easily capturedRequires unit of includes reflection,Easily structuredanalysissynthesis, contextEasily transferred Needs consensus on Hard to capturemeaning electronicallyCompact,quantifiableHuman mediationHard to structurenecessary Often tacitOften garbled in Hard to transfertransmissionHighly personal tothe sourceMore human contributionGreater value 17. Knowledge Knowledge is information organized, processed andanalyzed to make derstandable and applicable to problemsolving and decision making. A knowledge consists ofconcepts, theories, heuristics, methods, procedures andrelationships that defines how the information is used tosolve a problem or make a decision.. Knowledge consists of information that has been organizedand processed to convey understanding,experiences, accumulated learning or expertise as itapplies to a current business problem or a process. The information that is processes to extract criticalimplications and to reflect past experiences and expertiseprovides the solution to a business problem. Knowledge base contains knowledge for understanding,formulating and solving a specific class of problems inintelligent systems. 18. Types of Knowledge Tacit knowledge is personal, context-specific and hard to formalize and communicate A knowledge developed and internalized by the knower over along period of time . . . incorporates so much accrued andembedded learning that its rules may be impossible toseparate from how an individual acts. knowing how Explicit knowledge can be easily collected, organized and transferred through digital means. A theory of the world, conceived of as a set of all of theconceptual entitiesdescribingclassesofobjects, relationships, processes, and behavioral norms.Often referred to as knowing that, or declarativeknowledge. 19. What is Knowledge Management? Knowledge Management is process of knowledge base and capturing, storing, knowledge discovery, Facilitating the knowledge sharing processing and integrating for the purpose of problem solving and decision-making in businesses. 20. Knowledge Key Concepts Knowledge identification what is important? Knowledge discovery and analysis finding and organizingknowledge. Knowledge acquisition going and getting needed knowledge byasking or promoting idea generation Establishment of organizational knowledge bases storing andorganization corporate knowledge Knowledge distribution and use ensuring that those who needknowledge can access it Knowledge assets - regarding markets, products, technologies, andorganizations that a business owns or needs to own Best practices - collection of the most successful solutions and casestudies Intellectual capital Cumulative/A massed collection of knowledgeby an organization over the years Knowledge system - collects knowledge, stores it in adatabase, maintains the database, and disseminates the knowledgeto users Competitive intelligence - collection of competitive information 21. Implementing Knowledge Management Reorganize as knowledge-based organizations Created a new position, chief knowledge officer(CKO) creating knowledge management infrastructure building a knowledge culture making it pay off Facilitate organizational learning learn from their experiences in order to survive Other officers are CEO,CFO,COO,CIO,CTO 22. Promoting Idea Generation Key source of knowledge is creative idea generationby individuals or groups Software tools (GDSS) can promote productive ideageneration for groups Software tools also available for individuals to helpstimulate creative production of ideas 23. What Makes Information Useful (GIGO)? It is accurate It is relevant Free of errors Applies to the issue under It is completestudy Includes everything needed It is timely Available when needed It is flexible Can be viewed in various It is verifiable ways Basis for results can be traced It is reliable It is accessible Results are always consistent All those who need the it confirms validityinformation can get to it It is secure Free from contamination(accidental or deliberate) 24. Data Visualization Analyzed data can be even more useful ifpresented using Data Visualization techniques Visual Interactive Modeling graphic display ofdecision consequences Visual Interactive Simulation simulation model isanimated and can be viewed and modified by decisionmaker Geographic Information Systems display data relatedto geographic location using digitized maps Global Information systems: A system that consists ofa networks that cross national boundaries. VR & AR 25. Information Specialists Employee who are full time responsible for developingand operating information systems. System analyst is an expert who works with user indeveloping system at defining problems and inpreparing written documentation of how thecomputer will assist in solving the problem. Database administrator works with user and systemanalyst in creating the data needed to produce theinformation needed by users 26. Information Specialists Network specialist works with user and systemanalyst in establishing the data communicationnetwork that ties together widespread computingresources. Programmers use the documentation prepared bythe system analyst to create the software programthat lead the computer to transform data intoinformation needed by users. Operators operates the computing equipment andusing software program. 27. Information Infrastructure Information Infrastructure: The physical & Virtual facilities, services and management that support all organizational computing resources. Computer hardware General-purpose software Networks and communications facilities Databases Information management personnel 28. Cont Information Infrastructure (continued) Defines integration, operation, documentation, maintenance, an d management of computing resources. Defines how specific computing resources are arranged, operated, and managed. 29. Information Architecture A High-level plan that defines The organizations information requirements The way these requirements are being satisfied. Blueprints for future directions This architecture includes planning the drawing,purpose, and building constraints. It can be divided into 2 major parts Organizational objectives and problems Existing infrastructure Information architecture is different from computerarchitecture which only describes the hardware needs ofcomputer system Computer architecture involves severalprocessors, whereas the information architecture is justlike planning a house. 30. What is Information processingcycle Input Procedures/Processes Output Disseminate Results 31. What is an Information System? A system that collects, analyzes processes, stores,, anddisseminates information for a specific purpose..DataCalculations ProcessCollect Produce And Instructions InputsOutputsTransform ReportsStore 32. Information systemAn IS Collects, processes, stores, analyses anddisseminates information for a specific purpose.It includes inputs, outputs, mechanism, to control theseAlso includes the feedback to control all theseA set of interrelated components that collect(orretrieve), process, store, and distribute information tosupport decision making and control in an organization What is a system: A set of components which systematically interact with each other and have same objective. 33. Function of IS Input the collection of raw data forprocessing information system Processing the conversion of datainto information for more meaningful Output the distribution of processedinformation Feedback output that is returned tohelp evaluate or correct input 34. Major Capabilities of Information SystemPerform high-speed, high-volume, numerical computation.Provide fast, accurate, and inexpensive communication within and between organizations.Automate both semiautomatic business processes and manual tasks..Increase the effectiveness and efficiency of people working in groups in one place or in several locations, anywhere.Facilitate work in hazardous environment .Fast, intelligent ,accurate processing of business transactions.Large capacity storage, retrieval, analysis, and data and fast access to data spread around the world. 35. Capabilities of Information SystemsIncrease communication Computer to Computer or human to human.Reduce information overloadSpan organizational boundariesSupport and improve decision making & problem solving.Span boundaries in-side organizationDistinctive capabilities for providing competitive advantage. e.g. airlines, online banking 36. Information systems are more thancomputers 37. Functions of an information system 38. IS Terms Open system: Connected to its environment by means ofresource flows. An open system interacts with its environment by means ofits physical recourses flows. Closed system: Not connected to its environment. Theyusually exist in tightly controlled laboratory systems. A closed system does not interact withcustomers, managers or any one else. Information system is a virtual/conceptual system as wellas an open system. A physical system is also an open system. 39. Cont Open and closed loop systems Not all systems are able to control their ownoperations. A system without the controlmechanism, feedback loop, and objective elements iscalled an open loop system. A system with the following three control elements iscalled a closed loop system. Control mechanism Feedback loop Objective elements 40. An Open loop System 41. A Closed Loop System 42. What is a subsystem & Super Sys? A subsystem is simply a system within a system. Thismeans that systems exist on more than one level andcan be composed of subsystems or elemental parts. What is a Super System? (not frequently used) When a system is part of a larger system, the largersystem is the super system. 43. Fig 44. What is Meant by a (CBIS) Computer-based Information Systems An information system using computer and telecommunications technology to perform its intended tasks. Use computer hardware and software to process and disseminate information Fixed definitions of data and procedures for collecting, storing, processing, disseminating, a nd using these data Can be computer-based or manual MIS is a first information oriented system. 45. CBIS MODEL 46. The Components of CBIS are as follows Hardware Set of devices such as processor, monitors, keyboards, printers that will accept the data process them and displays them Software Set of computer programs, that enables the hardware to function toprocess data Data bases An organized collection of related files or records that stores data and the associations among them Network A connecting system that permits the sharing or resources among different computers Procedures The strategies, policies, methods and rules for using the information system People The most important element in information systems, including who work for it or uses it 47. Components of CBISBackup dataRestart jobVirus scan 48. Components of IS Hardware, Input and output devices Software, A set of computer programs that enables toprocess data. Database, Organized collection of files or recordsthat stores and associate the data. Network, Connecting systems to share resourcesamong different computers. Procedures, strategies, methods and rules for usingIS People. Who work with IS or use outputs of IS 49. Types of CBIS MIS: Management Information System TPS: Transaction Processing Systems (Priory known as EDP andaccounting information system and then AIS accounting informationsystem) EIS: Executive information system Enterprise-wide system (A network of different information systems) DSS: Decision Support System GSS: Group support system ES OAS: Office automation system GIS ERP IOS: Inter-organizational information system. Connect two or more organizations having a common interest or business need. Important in facilitating e-commerce. Intelligent systems/Intelligent agents SIS: Strategic information system. 50. Cont. HRIS: Human resource information system MKIS; Manufacturing information system FIS: Financial information system. ESS: Executive support system. AIS: Accounts Information system 51. Types of Business pressuresMarket Pressure: The global economy and strong competition The changing nature of the workforce Market research Powerful customers/Customer orientation/Order fulfillment and customer services..Technology Pressures: Technological Innovation and Obsolescence Information Overload. Need for real time operationsSocietal Pressure: Social responsibility Government regulation and Deregulation De-Centralization Spending for social programs Protection Against Terrorist Attacks. Ethical Issues Labor pressures. 52. Market Pressures The Global Economy and Hyper competition Developing Countries are preferred. Traditional barriers. Globalization and internationalization/International market place. Cross cultural Impact The Changing Nature of the Workforce Diverse and versatile Workforces, Increasing no of females, minorities, and physically challenged persons work in all types of the positions. Changing Traditional Work Environment. Need for Real Time operations. Fast, accurate, operations. Automated and intelligent Powerful Customers Knowledgeable Customers 53. Technology Pressures Technological Innovation and Obsolescence Has huge impact ranging from genetic engineering to food processing. Need for the real time operations,Todays companies dont have the luxury of information float. Information float is the time between when a business event occurs and when the info captured about the event reaches the necessary decision makers. Information Overload Huge amount of information available to the consumers The amount of information doubles every year and most of it is free The information and knowledge generated and stored inside organization are also increasing So every one feels the pressure of this huge knowledge ,which becomes sometimes difficult to choose the best among so much knowledge 54. Societal Pressures Social Responsibility Social Responsibility Act Government Regulation and Deregulation Deregulation intensifies competition. Issues of health, safety ,environment pollution and equal opportunity ,licensing, copyright. It is a matter of general public interest. Protection Against Terrorist Attacks Strong systems for security and attack pattern detection. Ethical Issues Are not cut and dried Email monitoring, Sharing Customer data, Revealing personal information Ethics is the business context refers to standards and values for judging whether a particular conduct in the workplace is right or wrong These issues are very important because they can damage the reputation of an organization as well as the persons. The situation is critical when it comes between the countries 55. Cont Labor pressures Labor costs differ from one country to another. In addition companies pay high fringe and environmentprotection costs. So that they have difficulty in competing indeveloped countries. For this it requires good communication ,between thelanguages and cultural issues The issue becomes more complex when Govt.involvesthrough laws of taxes, subsidies, import/export policies. Decentralization A social process in which businesses and industry moves fromurban centers to outlying districts .It is spread of power awayfrom the center to local branches or governments . Digital Divide 56. Organizational Responses Pressures provoke proactive and reactiveorganizational responses. Business responses to pressures may involve use ofInformation Technology and Information Systems, alsosome strategic business plans In some cases, IT is the only solution to businesspressures. Knowledge of IT capabilities is essential to todaysbusiness people. 57. Directions of Organizational Responses Business Responses Managerial IT/MIS-Business Strategic plans-Data/Information/Knowledgemanagement-IT resources 58. Business Pressures and OrganizationalResponses 59. Organizational responses Developing Business strategic plans (SBP) forsystems using IT and IS. Customer focused services and products and orderfulfillment. Continuous improvement efforts (JIT and TQM)E.g. e-commerce, e -business, e-marketing. Business process reengineering BPR Empowering employees and fostering collaborativework and KM. Global marketplace analysis Business alliances/Mergers 60. Cont Reviving up employees financial energies(Motivational theories on customer and employee) Business alliances (Supply chain management SCM Using CBIS at different levels of business processes. E-commerce, Use of computing and communicationin business e.g. Internet ,WWW, E-commerce andExpert systems, business intelligence, E-marketing, E-banking, E-business etc. Use of CAD/CAM Data mining and data warehousing Critical mass /Mass customization. 61. Cont is a strategy of producing customized Make-to-Orderproducts and services Mass Customization In mass production they produce a large quantity of identical items In mass customization they produce a large quantity of items that fit the desires of each customer. Business Alliances : Joining hands with the competitors/companies to improve services. Electronic Business and E-Commerce is the newest andmost promising strategy. Business Process Re-Engineering: organizationfundamentally and radically re designs its business process. 62. Customer relation ship marketing in action Make it easy for customers to do business with you Focus on end-customer for your products and services Redesign your customer facing business processes formthe end customers view. Wire your company for the profit :design a comprehensive,evolving electronic business architecture. Adopt a customers-focused approach and prevent losingcustomers to competitors. To pay more attention to customers and their preferences Foster customer loyalty. In e-commerce, especially this isthe key to the profitability. 63. Continuous improvement They also make continuous efforts to improve their productivity and quality Productivity is the ratio of outputs to inputs. They improve this ratio by increasing outputs, reducingcosts, increasing output faster than cost or combinationof both Just in time This is inventory approach, it attempts to reduce costsby scheduling materials and parts to arrive at theworkstation exactly when they are required It minimizes the space and cost 64. TQM( Total Quality Management) It is organized effort to improve quality wheneverpossible IT can enhance it by improving datamonitoring, collection, analysis, and reporting, Another expect is the decision making power to selectthe best alternate course of action However this task is difficult in large organizations, butthere is always survival to the fittest 65. Empowering employees Giving employees the authority to act and makedecisions on their own is a strategy used by manycompanies Managers delegate authority to self-directed teamswho can execute the work faster and with fewer delaysthen were possible in the traditional organizations. IT supports it but also supports the centralized control 66. Hierarchical Organizational StructureHeadquarters Division ADivision B Division CAdministrativeServices Plant 1Plant 2 Plant 3Top managers Accounting FinanceMarketingPOMHRMCRM Middle managersSupervisory First line managers Operating Employees 67. The General System Model Of The Firm The figure shows the flow of resources from the environment ,through the firm and back to the environment. It presents all types of organizations functional in the form of a system. It involves the flow of physical resources and virtual resources for all types of organizational structures. The physical flow include flow of personal ,material ,machine and money. Virtual flow involves flow of data, information and decisions. Firm control mechanism contribute the firm to control its own operations including performance standards to meet its objectives, the firms, management and information processing the transform data into information. The feed back loop is composed of virtual resources .Data are gathered from the firm and the environment and entered in to the firm processor, which is transformed into the information ,eventually information is provided to managers to make decisions to effect necessary changes in the physical system. 68. EnvironmentStandardsInfo &Information Decisions Data Information Management Process Data PhysicalPhysicalResources Resources Input TransformationOutput Resources ProcessResources 69. What managers Do They plan, What they are to do They organize to meet the plan They staff their organization with the necessary resources. e.g. IT/IS and managerial resources. After having the resources they direct the resources to execute the plan. Finally they control the resources. 70. Management Levels High level (strategic) Long-range view Planning Middle level (tactical) Carry out the plan Assemble the material Hire the resources Organize and staff Low level (operational) Supervisor Directing and controlling 71. IS Support Overview 72. Strategic Planning Level The strategic planning level involves mangers at the top of theorganizational hierarchy. The term strategic indicates the long-term impact of topmanagers decisions on the entire organization. The term executiveis often used to describe a manager on the strategic planning level. Top level managers eg president, vice president chiefexecutives, MD ,CIO,CKO,MEMBERS OF CORPORATEEXECUTIVE COMMITTEE, IS STEERING COMMITTEE etc. Management Control Level These managers include middle managers, regionalmanagers, product directors, and divisional heads. Their level iscalled management control level due to their responsibility ofputting plans into action and ensuring the accomplishment ofgoals. 73. Cont Control level managers/Tactical level managers They are responsible to put strategic plans in to actionsand ensure the goals are met.. Operational Control Level or Lower-level Lower level managers are persons responsible forcarrying out the plans specified by managers on upperlevels. Their level is called the operational control levelbecause this is where the firms operations occur. These are departmental heads, supervisors and projectleaders. they are responsible for plan accomplishment,specified by managers on upper level 74. IMPLEMENTATION LEVELS OF IS KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVELSENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERSKNOWLEDGE LEVELKNOWLEDGE & DATA WORKERS OPERATIONALOPERATIONAL LEVELMANAGERS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN MARKETING & ENGINEERINGRESOURCES74 75. People in Organizations 76. All managers perform these functions, however with varyingemphasis as shown below. 77. Where managers are found Managers on the strategic level place greater emphasison environmental information than do managers onthe lower levels. Managers on the operational controllevel regard internal information as vital. The second figure shows that strategic planning-levelmanagers prefer information in a summaryformat, whereas operational control-level managersprefer detail. 78. Management level fig 2.1Environment informationInternal Information 79. Management level fig 2.2 Summary Information 80. CEC Note :Corporate executive committee is responsible forstrategic business planning and its responses. It alsoprovides the top level oversight of informationrecourses to the firm. It guides the IS steering committee, usually chaired bythe CIO. 81. Business Environment It refers to the combination of allsocietal, legal, economic, physical and political factors that effect business activities in any way. SOCIETYGovernment Financial GlobalCommunit Communit y ySuppliersTHE FIRM CustomersLaborUnions Stakeholders CompetitorsOwners 82. BPRBusiness process reengineering/re-design is to change the technological, human ,managerial and processing dimensions of a business. Some restructuring of management realignments, mergers, consolidations and operational integrations take place.Knowledge Workers: Create information and knowledge and integrate them into the businesses. 83. BI Business intelligence refers to the analysis performedby DSS, ES, EIS, data mining and intelligent systems. BI describes a verity of activities to pull together allthe data required to make a sound businessdecision, regardless of where the data originate. One ultimate use of the data gathered and processedin the data life cycle for business intelligence. An Intelligent system is an IS typically employingAI, whose output resembles the human thoughtprocess and is used to support decision making e.g.neural computing, fuzzy logic, speechunderstanding, robotics, sensory systems and casebased reasoning. 84. Data Mining and AnalysisConcerns Ethical Issues Valuable data-mined information may violateindividual privacy Who is accountable for incorrect decisions that arebased on DSS? Human judgment is fallible Job loss due to automated decision making? Legal Issues Discrimination based on data mining results Data security from external snooping or sabotage Data ownership of personal data 85. Business Strategic Plan Statement of the firms over all mission, the goals thatfollow the mission and the broad steps necessary toreach the mission ,for the business success andsurvival. It is a long range goals that describe the IT and ISinitiatives needed to achieve the goals of organization. A typical business strategic plan has followingmissions Efficiency Effectiveness Competitiveness. 86. Examples of Business ProcessesFunctional AreaBusiness ProcessManufacturing and production Assembling the product Checking for quality Producing bills of materialsSales and marketingIdentifying customers Making customers aware of the product Selling the productFinance and accounting paying creditors Creating financial statements Managing cash accountsHuman resourcesHiring employees Evaluating employees job performance Enrolling employees in benefits plans 87. Operations, Tactics, StrategySectorOperations TacticsStrategyProduction Machine settings Rearrange work area New factory Worker schedules Schedule new products New products Maintenance sch. Change inventory method New industryAccounting Categorize assets Inventory valuation New GL system Assign expenses Depreciation method Debt vs. equity Produce reports Finance short/long term International taxesMarketing Reward salespeople Determine pricing Monitor competitors Survey customers Promotional campaigns New products Monitor promotions Select marketing media New markets 88. Environmental Resource flow A firm is connected to its environmental elementsby environmental resource flow. Environmental resource flow is the flow of supplychain. Common flow includes exchange of money flow tostakeholders ,material flow tocustomer, information flow from customer andraw material flow from suppliers. Less common flow is money flow from theGov, material flow to suppliers and personal flowto competitors. 89. Supply chain Flow of materials, information, payments, andservices, from suppliers through factories andwarehouses, to end customers Includes all organizations and processes thatcreate and deliver products, information, andservices to the end customers It includes many tasks such as purchasing, paymentflow, material handling, production planning, logisticsetc. Supply chain management -planning, organizing, coordinating, andcontrolling all activities in the supply chain 90. Simplified Supply Chain SCMInternalDownstream UpstreamOrganizations Distributorsmaterial production processes, including informationmaterials Suppliershandling, inventory money management, manuf acturing, qualityRetailerscontrol Customers 91. Activities of SCM Forecasting the customer demand Scheduling the production Establishing transportation networks Ordering replenishments stock from the suppliers Receiving stock from suppliers Managing inventory (Raw material, work in process andfinished goods) Executing the products Transporting the resources to customers Tracking the flow of resources from suppliers, through thefirm and to the customers. ERP software like SAP/Oracle help flow of supply chain. 92. Using IT Strategically Businesses today must understand how IT canreshape and refine business strategy Porters Strategic Analysis Model Helps in understanding strategic forces affecting organizations inparticular industries IT can be applied to strengthen and support a specific businessstrategy Value Chain Helps in identifying ways IT can improve the quality andefficiency of organizational processes 93. SIS A system that will provide strategic advantage inmeeting organizational objectives ,increasingmarket shares, or preventing competitors fromentering a market and so will significantly impactan organizations operations, success and survival. Strategic Systems: enable organizations to Increase market share and/or profits. Better negotiate with suppliers Prevent competitors from entering their territory, E.g.. Tracker Systems in cars. Courier Services Organizations implement systems that will impact theoperations, success, survival. 94. Competitive Advantage Firms strive to obtain an advantage over their competitors. Firms achieve advantages by providing services and products at a low price, providing high quality products and providing customized services or products. Firms also achieve competitive advantages by using their virtual resources as well as using their physical resources. 95. Porters Value chain Porter believes that firm achieves competitiveadvantages by creating Value Chain. He illustrates that the primary and support activitiescan contribute to the MARGIN. MARGEN is the value of the firms products andservices, as perceived by the firms customer, minustheir costs. An increased margin is the objective of the valuechain. Firm creates value by performing Vale Chain activities. 96. Porters Value Chain Model There are two types of value activities in Value Chain. 1-Primary value chain activities that manage the flow ofphysical resources through the firm that include Inbound logistics Operations Outbound logistics Marketing and sales operations Service activities. 2-Support value chain activities that influence the primaryactivities that include. Firm infrastructure HRM Technology development Procurements 97. Properties of Value Chain activities Each value activity whether primary or support contains following three essential ingredients Purchased inputs Human resources Technology Similarly each activity uses and createsinformation For example information specialists in servicesunit may combine purchased commercialdatabase, leased computing equipment andcustom-developed programs to produce decisionsupport information for the executives of the firm. 98. Strategic plan for business areas Fully committed executives in strategic plans also see aneed for developing respective strategic plans for eachbusiness area. In this approach each area has its independent planwhich may have influence with the strategic plans ofother areas. However such approach do not ensure that businessareas will work together well. 99. Strategic Planning for InformationResources SPIR SPIR involves a concurrent/repetitivedevelopment of strategic plans for informationservices and the firm, so that the firms planreflects the support to be provided by theinformation services. IS plan reflects future demands for the systemssupport. SPIR may be different for different organizations,but all SPIR have following two core elements. Objectives to be achieved by each category of system during thetime period covered by the plan. The information resources necessary to meet the objectives. 100. The following figure illustrates the manner in which each planning process influences the other. 101. EXPANDING VALUE CHAIN Management must alert to the additional advantages bylinkage of firms value chain to those of otherorganizations. Such linkage results in IOS. Firm can also take advantage of its value chain by linking tothose of its suppliers by implementing systems that makeinput resources available when needed e.g. JIT. A firm can also link its value chain with those of itsdistribution channel members, creating a VALUE SYSTEM. When the buyers of a firm s product areorganizations, their value chain can also be linked to thoseof the firm and its channel members. 102. Dimensions of Value Chain Strategic advantage It has a fundamental effect in shaping the firms operations. E.g.conversion of existing data in to standard database and access via webapplications, use of custom tailored software instead of proprietarysoftware. Tactical advantage When a firm implements a strategy in a perfect way than its competitors, it achieves a tactical advantage. e.g. customer services can be extendedto offer customer direct access to the information resulting customersatisfaction. Operational advantage Operation advantage deals with every day transactions and processes.this is where the IS interacts directly with the processes. eg a webbrowser is an IS and it has Cookies in order to have direct interactionwith the processes of client. 103. Challenges from Global Competitorsand MNC MNC is a firm that operates across theproducts, markets, nations and culture. It consists of a parent company having a group ofits subsidiaries ,which are geographicallydispersed. It must not be confused with the limit of globalcompetitors. Developed countries like USA and China are outsourcing some of their operations, India is major destination. 104. Cont. Special Need for Information Processing in anMNC All firms need for information processing andcoordination, but it is crucial for MNC becauseMNC is an open system that seeks to minimize itsuncertainty in its environment. Uncertainty is a difference between the amount ofinformation required to perform a task and theinformation already processed by an organization. Hence making good use of IT can copeuncertainty. 105. Cont The special Need for Coordination in an MNC. Coordination in a key to achieve competitiveadvantage in global marketplace. How ever companies are unable to gain strategiccontrol of their world wide operations and managethem in a globally coordinated manner will notsucceed in the international economy. So MNC faces grater restrictions than a nationalcompany eg because of conflicting businesspractices, cultural differences, governmental policiesimpositions and currency differences. However developing a GIS is very effective incompeting global challenges. 106. ADVENTAGES OF MNC There are many advantages of Coordination inMNC Flexibility in responding to competitors in different countries and markets. Ability to keep abreast of international market needs. Knowledge sharing across the globe. Reduced cost of operations. Increased efficiency and effectiveness Ability to achieve and maintain the diversity in the firms products and in how products are produced and distributed. 107. WHAT IS A GIS MNC attempts GIS to overcome its problems Term coined are Global Information System A system that consists of network hat cross national boundaries. Constraints of GIS Politically Imposed Constraints IT infrastructure in owned by governmental authorities, Differencebetween governmental national policies for dataprocessing, Crossing boundaries barriers for goods, productlicensing , Taxes and customs etc. Cultural and Communication Barriers Business practices, development of cross culturalproducts, Language differences, value differences, Colordifferences, racial differences, Various religious aspects. Restriction on hardware/Software purchase and Import In case of foreign import and equipment may cause problem ofinteroperability / incompatibility. 108. Cont. Restrictions on data Processing and communication Data and information dissemination across the world arises the issue ofIPR, Privacy and confidentiality, data protection and security issues etc.Maintenance of TDF (Transborder data flow) Technological problems Poor Information technology infrastructure, software copy right andpiracy are used in certain countries. Lack of Support from Subsidiary Managers Managers of subsidiary think that they can run their offices on their ownwithout help of parent company, Similarly foreign office managersconsider that the GIS is surveillance. Middle managers are having fear tobe by passed in they will be completely dependent on GIS.So they avoidsupport and feed back to the parent company. NOTE : However such problems can be minimized byimplementation of Good KM and SPIR (Making strategy forenterprise) 109. What can we do with the stored data? Online analytical processing (OLAP) Analytical Processing - the activity of analyzingaccumulated/aggregated data. It involves the storage of the data in amultidimensional form to facilitate the presentationof an almost infinite number of data views. 110. Features of OLAP Analysis by end users from theirdesktop, online, using tools like spreadsheets. Analyze the complex relationships betweenmany types of business elements (Large datasets) Compare aggregated data over hierarchical timeperiods (monthly, quarterly, annually) Present data in different perspectives(Retrospective) Involve complex calculations between dataelements. Respond quickly to users requests 111. What can we do with the storeddata? Data mining intelligent search of data stored in data marts or warehouses Find predictive information Discover unknown patterns End users perform mining tasks with very powerfultools Mining tools apply advanced computing techniques(learning, intelligence) Data warehousing 112. Moores Law The term moors Law was coined by one of the founderof Intel in 1960. It states the power of computer doubles about everyyear with the same cost ,which was increased to 18months latter on. 18 months =1.5 years 15 years=15/1.5=10 210=1024 113. Moors Law Application By same law after 30 years Comparison of salariesthe power of computerpurchased will beYear Friend You30/1.5=201 $40,000 $5000 220=1024*1024=10485763 $57,600 $20,000with same cost and so on6 $99,533 $80,000 Your friend hired at9$171,993 $320,000$40,000 with 20% increaseevery year 12$297,203 $1280,000 15$513,567 $5120,000 You hired at $5000 withdouble salary every 1.5years. 114. Role of information in problem solving anddecision making A problem is a condition or an event that is harmful or potentially harmful to a firm or that is beneficial or potentially beneficial for the firm. Problem solving A process of problem identification of causes and then repetitively analyzing and choosing different alternatives and finally to make some decision to solve the problem. 115. Classification of problems A structured problem is a problem if it consists ofelements and relationships among the elementswhich are understood by the problem solver. A Semi-structured problem is a problem if itconsists some of its elements and relation shipsamong the elements which are understood by theproblem solver and some that are not understoodby the problem solver. An un-structured problem is a problem if itconsists of elements and relation ships among theelements which are not understood by theproblem solver. 116. Solving Structured and Unstructuredproblems Structured problems lend themselves to programmeddecisions Unstructured problems require un-programmeddecisions 117. Problem solving Activities Identification of problem (where is problem ,what isproblem, Definition of problem, Data gathered on scope, Constraintsidentified. 1-Internal constraints e.g. limited resources 2-Environmental constraints eg pressures to restrict resource flow Classification of problem into a standard category Causes evaluation Intelligence activity (brain storming, criticalthinking, creative, thinking, reasoning, argumentation, logic, analysis, forecasting and judgments) Design Activity Invent ,develop a most plausible course of actiontowards problem solving). Construct a standard mathematical modele.g. selecting a model Choice activity (Involves the selection of best alternative that actuallysolves the faced problem. Find potential solutions Reviewing the selected choice for further refinement andrecommendation of the solution. 118. States of problem Process of problem solvingInternal Constraints Current State Desired State EnvironmentalConstraints 119. Elements of Problem Solving Process PROBLEM Desired Alternative STANDARDSState SolutionsProblem Solver INFORMATION Constraints CurrentStateSolution 120. Problem Identify InformationIntelligenceDesign InformationChoice Information SolutionInformation Review 121. Thinking about decisions A Framework for Computerized DecisionSupport Problem Structure Decision making processes fall along a continuum that rangesfrom highly structured to highly unstructured decisions Nature of Decisions Strategic planning decisions - the long-range goals andpolicies for resource allocation. Management control decisions - the acquisition and efficientutilization of resources in the accomplishment oforganizational goals. Operational control decisions - the efficient and effectiveexecution of specific tasks. 122. Decision Support Framework 123. Thinking about decisions Structured decisions have long been supported bycomputers Classes of structured decisions have been addressedmathematically with Management Science models Types of decisions Programmed decisions: Usuallyrepetitive and routine decisions, alsocan be automated Non-Programmed Decisions :Are noveland unstructured, unusuallyconsequential. 124. Decision Levels DecisionDescription Example Type of InformationLevelStrategicCompetitiveNew productExternal events, advantage, become athat will change rivals, sales, costs market leader. Long- the industry.quality, trends. term outlook.Tactical Improving operations New tools toExpenses, schedules, without restructuring cut costs or sales, models, the company.improveforecasts. efficiency.Operations Day-to-day actions to Scheduling Transactions, keep the companyemployees, accounting, human functioning.ordering resource supplies.management,inventory. 125. Decision Making Process REALITYExaminationValidation of Intelligence Phasethe Model Design PhaseVerification, Testing of Proposed Solution Choice PhaseSUCCESS Implementationof Solution FAILURE 126. Thank You