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– Attached the following files – Week 1, Week 5, Week 6, Week 7, and Textbook

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

Introduction

Why Should a Manager Study Information Systems?

–After all, an entire department is in charge of IT.

• Nearly all decisions in organizations rely on information systems at some level.

• Personal devices are ubiquitous. • In 2014, 90% of US adults had a cell phone and 87% used the

Internet.

• Personal experience with technology helps but the corporate setting has many different requirements in the areas of: • Security, Privacy, Risks • Support • Architecture

• Firms use IT to enhance their business models or change entire industries.

• Managers need to know the basics.

3© 2016 John Wi ley & Sons, I nc.

Why Should you Participate in IT Decisions in your Firms?

• IT permeates almost every aspect of business

• IT enables change in how people work

• IT is at the heart of Internet-based solutions

• IT enables or inhibits opportunities/strategies

• IT combats competitors’ business challenges

• IT provides customers with a voice

• IT supports data-driven decision-making

• IT can help secure key assets

© 2016 John Wi ley & Sons, I nc. 4

A Business View of Critical Resources

• Spending is quite high: Worldwide $3.7 trillion in 2014

• Expenditures span 5 categories • Devices (e.g., PCs, tablets, mobile phones) • Data centers (e.g., servers, storage equipment)

• Enterprise (companywide) software • IT Services (e.g., support and consulting services) • Telecommunications (e.g., voice and data services)

• If these expenditures do not return value, they will dwindle over time

5© 2016 John Wi ley & Sons, I nc.

People and Technology Work Together

• Some of the most-used sites focus on Web 2.0 • In Web 2.0, significant content comes from users

• Information Sharing

• User-centered design

• Interoperability

• Collaboration

• Skilled business managers must balance: • The benefits of introducing new technology

• The costs associated with changing the existing behaviors of people in the workplace

• Does not require deep technical knowledge • Requires understanding the consequences of the choices made

© 2016 John Wi ley & Sons, I nc. 6

CTO of @Walmart Labs

• What did Jeremy King say in his blog (pg. 4)? • “Every company is a tech company”

• Do you believe this is true for most firms, or is Wal-Mart somehow different? Why?

• Can you name firms that do not receive key impacts or benefits from technology?

© 2016 John Wi ley & Sons, I nc. 7

Opportunities and New Strategies from IT

• New business opportunities spring up with little warning

• Managers must: • Frame the opportunities in an understandable way for

business leaders

• Evaluate them against business needs and choices • Pursue those that fit into an articulated business

strategy.

• The quality of available information will impact the quality of their decisions and their implementation

• Managers will therefore lead the changes driven by information systems

© 2016 John Wi ley & Sons, I nc. 8

Competitive Challenges

• Competitors spring up—sometimes unexpectedly

• General managers are in the best position to • See those threats • Attempt to combat them, using technology as a tool

• They need an understanding of • The capabilities of the organization • How those capabilities, together with IS, can

• Create competitive advantage

• Change the competitive landscape for an entire industry

© 2016 John Wi ley & Sons, I nc. 9

Managers Need to be Aware of the importance of:

• Customer pull • Customers now have power using social media • Entire business models sometimes need to be redesigned

• Data-driven decision making • Now available: more data than ever before

• From social media • From large data stores in firms

• Predictive analytics tools can help with analysis of that data

• Securing key assets • A balance is needed

• Too little security endangers assets of the firm and its customers • Too much reduces operational convenience

© 2016 John Wi ley & Sons, I nc. 10

What Happens if Management Does not Participate?

• Breakdown in servicing customers

• Sales decline

• Damaged reputation

• Poor spending: • Overspending and excess capacity, or • Underspending and restricted opportunity

• Inefficient business processes

© 2016 John Wi ley & Sons, I nc. 11

Failing to Consider IS Strategy

• Leads to: • IS that fail to support business goals (e.g., Victoria’s

Secret site overload) • IS that fail to support organizational systems (e.g.,

workers buying mobile devices but the IT department only supports desktop PCs)

• Misalignment between business goals and organizational systems

© 2016 John Wi ley & Sons, I nc. 12

Skills Managers Need for Their IT Decisions

• Visionary role • Creativity • Curiosity • Confidence • Focus on business

solutions • Flexibility

• Informational and Interpersonal • Communication • Listening • Information gathering • Interpersonal skills

• Structural • Project management • Analytical • Organizational • Planning • Leading • Controlling

© 2016 John Wi ley & Sons, I nc. 13

Upcoming Material

1. Information Systems Strategy Triangle: Alignment of IT and the business

2. Links between IS and business strategy 3. Links between IS and organizational strategy 4. Collaboration and individual work 5. Business processes 6. Architecture and infrastructure 7. Participating in decisions about IS security 8. The business of IS 9. Governance of IS resources 10. Sourcing 11. Project and change management 12. Business intelligence 13. Ethical use of information

© 2016 John Wi ley & Sons, I nc. 14

© 2016 John Wi ley & Sons, I nc.

Assumptions

15

Assumptions About Management

• Interpersonal • Figurehead • Leader • Liaison

• Informational • Monitor • Disseminator • Spokesperson

• Decisional • Entrepreneur • Disturbance Handler • Resource Allocator • Negotiator

© 2016 John Wi ley & Sons, I nc. 16

Assumptions About Business – Functional View

© 2016 John Wi ley & Sons, I nc. 17

Process View

© 2016 John Wi ley & Sons, I nc. 18

Assumptions about the Nature of Information

• Data – simple observations

• Information – data + relevance + purpose

• Knowledge – information + context + synthesis + reflection

© 2016 John Wi ley & Sons, I nc. 19

Data, Information, and Knowledge

Data Information Knowledge Definition Simple observations of

the state of the world Data endowed with relevance and purpose

Information from the human mind (includes reflection, synthesis, context)

Characteristics • Easily structured

• Easily captured on machines

• Often quantified

• Easily transferred

• Mere facts

• Requires unit of analysis

• Data that have been processed

• Human mediation necessary

• Hard to structure

• Difficult to capture on machines

• Often tacit

• Hard to transfer

Example Daily inventory report of all items

Daily inventory report of items with low levels of stock

Report of which items need to be reordered after considering inventory levels, anticipated labor strikes, and a flood affecting a supplier

© 2016 John Wi ley & Sons, I nc. 20

Characteristics of Information Across Levels

Top Management Middle Management Supervisory and Lower-Level Management

Time Horizon Long: years Medium: weeks, months, years

Short: day to day

Level of Detail Highly aggregated

Less accurate

More predictive

Summarized

Integrated

Often financial

Very detailed

Very accurate

Often nonfinancial

Source Primarily external Primarily internal with limited external

Internal

Decision Extremely judgmental

Uses creativity and analytical skills

Relatively judgmental Heavy reliance on rules

© 2016 John Wi ley & Sons, I nc. 21

Economics of Information vs Things

Things Information Wear out Does not wear out but can become

obsolete or untrue

Are replicated at the expense of the manufacturer

Is replicated at almost zero cost without limit

Exist in a tangible location Does not physically exist

When sold, possession changes hands

When sold, seller may still possess and sell again

Price based on production costs Price based on value to consumer

© 2016 John Wi ley & Sons, I nc. 22

Internet of Things (IoT) • Combine information and things = IoT • From the 1970s: Coke machine at Carnegie Mellon

University • From the 1980s: Elevators that call for service without

people knowing there is a problem • Today:

• Self-driving cars • Internet-connected (and controllable) thermostats, stoves,

alarm systems • Pets that are trackable online • Heart monitors that alert doctors or hospitals of a problem • Digital video recorders that can be controlled around the

world • Quad-copters (drones) that can

• Record video marked with location data • Return to the point of origin if it goes out of range of the “pilot” • Notify regarding its location and avoid objects in a database

© 2016 John Wi ley & Sons, I nc. 23

The Term “Information Systems”

Composed of: • Technology

• People • Processes

Information Technology vs Information Systems

• The term “IT” tends to be more fashionable • But IT actually refers to just the technology

• Many people interchange the terms

© 2016 John Wi ley & Sons, I nc. 24

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

,

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

Chapter 5 IT and Business Transformation

Sloan Valve

•What was wrong with their Product Development Process?

•What did Sloan do? What is NPD?

•Did it help?

•Are all enterprise system implementations this successful?

© 2016 John Wi ley & Sons, I nc. 3

© 2016 John Wi ley & Sons, I nc.

SILO PERSPECTIVE VERSUS

BUSINESS PROCESS PERSPECTIVE

4

Silo (Functional) Perspective

• Specialized functions (sales, accounting, production, etc.

• Advantages: • Allows optimization of expertise. • Group like functions together for transfer of knowledge.

• Disadvantages: • Sub-optimization (reinvent wheel; gaps in communication;

bureaucracy) • Tend to lose sight of overall organizational objectives.

Executive Offices CEO

President

Operations Marketing Accounting Finance Administration

© 2016 John Wi ley & Sons, I nc. 5

The Process Perspective

• Examples of processes: • Fulfill customer orders • Manufacturing, planning, execution • Procurement (see below)

• Processes have: • Beginning and an end

• Inputs and outputs • A process to convert inputs into outputs • Metrics to measure effectiveness

• They cross functions

Receive Requirement for Goods/Services

Create and Send Purchase Order

Receive Goods Verify Invoice Pay Vendor

© 2016 John Wi ley & Sons, I nc. 6

Cross-Functional Nature of Business Processes

© 2016 John Wi ley & Sons, I nc. 7

How to Manage a Process

• Identify the customers of processes (who receives the output?)

• Identify the customers’ requirements (how do we judge success?)

• Clarify the value each process adds to the organizational goals

• Share this perspective so the organization itself becomes more process focused

© 2016 John Wi ley & Sons, I nc. 8

Comparison of Silo Perspective and Business Process Perspective

Silo Perspective Business Process

Perspective

Definition Self-contained functional units such as marketing, operations,

finance

Interrelated, sequential set of

activities and tasks that turns

inputs into outputs

Focus Functional Cross-functional

Goal

Accomplishment

Optimizes on functional goals,

which might be suboptimal for

the organization

Optimizes on organizational

goals, or the “big picture”

Benefits Highlighting and developing core competencies; functional

efficiencies

Avoiding work duplication and

cross-functional communication

gaps; organizational

effectiveness

Problems Redundancy of information throughout the organization;

cross-functional inefficiencies;

communication problems

Difficult to find knowledgeable

generalists; sophisticated

software is needed

What do you do when things change?

•Dynamic and agile processes

•Examples: • Agile: Autos are built with wires and space for

options • Dynamic: Call centers route incoming or even

outgoing calls to available locations and agents • Software defined architectures (see chapter 6)

•IT is required to pull this off well

© 2016 John Wi ley & Sons, I nc. 10

Techniques to Transform a Static Process

•Radical process redesign • Also known as business process reengineering

•Incremental, continuous process improvement • Including total quality management (TQM) and

Six Sigma

© 2016 John Wi ley & Sons, I nc. 11

Incremental Change • Total Quality Management

• Often results in favorable reactions from personnel • Improvements are owned and controlled • Less threatening change

• Six-Sigma is one popular approach to TQM • Developed at Motorola • Institutionalized at GE for “near-perfect products”

• Generally regarded as 3.4 defects per million opportunities for defect (6 std dev from mean)

Time

Improve- ment

© 2016 John Wi ley & Sons, I nc. 12

Radical Change

• Business Process Reengineering (BPR)

• Sets aggressive improvement goals.

• Goal is to make a rapid, breakthrough impact on key metrics in a short amount of time.

• Greater resistance by personnel.

• Use only when radical change is needed.

Time

Improve- ment

© 2016 John Wi ley & Sons, I nc. 13

Comparing the Two

Improve- ment

© 2016 John Wi ley & Sons, I nc. 14

Key Aspects of Radical Change Approaches

• Need for quick, major change

• Thinking from a cross-functional process perspective

• Challenge to old assumptions

• Networked (cross-functional organization)

• Empowerment of individuals in the process

• Measurement of success via metrics tied to business goals and effectiveness of new processes

© 2016 John Wi ley & Sons, I nc. 15

Workflow and Mapping Processes

• Workflow diagrams show a picture of the sequence and detail of each process step

• Objective is to understand and communicate the dimensions of the process

• Over 200 products are available to do this

• High-level overview chart plus detailed flow diagram of the process

© 2016 John Wi ley & Sons, I nc. 16

BPM

• Information systems tools used to enable information flow within and between processes.

• Comprehensive, enterprise software packages.

• Most frequently discussed: • ERP (Enterprise Resource Planning), • CRM (Customer Relationship Management), • SCM (Supply Chain Management)

• Designed to manage the potentially hundreds of systems throughout a large organization.

• SAP, Oracle, Peoplesoft are the most widely used ERP software packages in large organizations.

© 2016 John Wi ley & Sons, I nc. 17

BPM Architecture

© 2016 John Wi ley & Sons, I nc. 18

Standardization vs Integration

Business Process Standardization

Low High

B u

si n

e ss

P ro

ce ss

In

te g

ra ti

o n

High Single face to customers and suppliers but standards not enforced internally

High needs for reliability, predictability, and sharing; single view of process

Low Decentralized design; business units decide how to meet customer needs

Tasks are done the same way across units, but there is little need for business units to interact

Source: J. Ross “Forget Strategy: Focus IT on your Operating Model,” MIT Center for Information Systems Research Briefing (December 2005)

© 2016 John Wi ley & Sons, I nc. 19

Enterprise Systems (Enterprise Resource Planning or ERP)

• Seamlessly integrate information flows throughout the company.

• Reflect industry “best” practices.

• Need to be integrated with existing hardware, OSs, databases, and telecommunications.

• Some assembly (customization) is required

• The systems evolve to fit the needs of the diverse marketplace.

© 2016 John Wi ley & Sons, I nc. 20

ERP Advantages and Disadvantages

Advantages Disadvantages • Represent “best practices”

• Modules throughout the organization communicate with each other

• Enable centralized decision-making

• Eliminate redundant data entry

• Enable standardized procedures in different locations

• Enormous amount of work

• Require redesign of business practices for maximum benefit

• Require customization if special features are needed

• Very high cost

• Sold as a suite, not individual modules

• Requires extensive training

• High risk of failure

© 2016 John Wi ley & Sons, I nc. 21

ERP II

• Makes information available to external stakeholders too

• Enables e-business applications

• Integrates into the cloud

• Includes ERP plus other functions (see Figure 5.8)

© 2016 John Wi ley & Sons, I nc. 22

ERP and ERP II Functions

© 2016 John Wi ley & Sons, I nc. 23

Customer Relationship Management

• Customer Relationship Management (CRM) is a natural extension of applying the value chain model to customers.

• CRM includes many management activities performed to

• obtain, • enhance relationships with, and • retain customers.

• CRM can lead to better customer service, which leads to competitive advantage for the business.

24© 2016 John Wi ley & Sons, I nc.

CRM

•Common systems are: • Oracle • SAP • Salesforce.com (web-based cloud system)

•Oracle and SAP integrate into their ERP systems

© 2016 John Wi ley & Sons, I nc. 25

Supply Chain Management (SCM)

• An enterprise system that manages the integrated supply chain

• Translation: processes are linked across companies

• The single network optimizes costs and opportunities for all companies in the supply chain

• Every part of the supply chain has the latest information about sales expected and inventories from source materials at all stages

• Bullwhip effect occurs when the supplier at each stage adds a small “buffer” for it’s suppliers in case demand is higher than expected

© 2016 John Wi ley & Sons, I nc. 26

Difficulties in Integrated Supply Chains

• Information integration requires agreement of what information to share, how to share it, and the authority to view it.

• Trust must be established

• Planning must be synchronized carefully

• Workflow must be coordinated between partners to determine what to do with the information they obtain

© 2016 John Wi ley & Sons, I nc. 27

Advantages and Disadvantages of Enterprise Systems

© 2016 John Wi ley & Sons, I nc. 28

The Adoption Decision

• The enterprise system sometimes should drive business process redesign when:

• Just starting out.

• Organizational processes are not relied upon for strategic advantage.

• Current systems are in crisis.

• It is inappropriate for the enterprise system to drive business process redesign when:

• Changing an organization’s processes that are relied upon for strategic advantage.

• The package does not fit the organization. • There is a lack of top management support.

© 2016 John Wi ley & Sons, I nc. 29

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

,

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

Chapter 6 Architecture and

Infrastructure

Mohawk Paper

•What did Mohawk paper see as an opportunity?

•What did they do?

•What was the result?

© 2016 John Wi ley & Sons, Inc. 3

From Vision to Implementation •Architecture translates strategy into infrastructure

•Home architect develops a blueprint of a proposed house—based on customer

•Business architect develops a blueprint of a company’s proposed systems—based on strategy

•This “blueprint” is used for translating business strategy into a plan for IS.

•The IT infrastructure is everything that supports the flow and processing of information (hardware, software, data, and networks).

© 2016 John Wi ley & Sons, Inc. 4

From abstract to concrete – building vs. IT

Abstract Concrete

Owner’s

Vision

Architect’s

Plans

Builder’s

Implementation

Strategy Architecture Infrastructure

Information

Technology

Building

The Manager’s Role

•Must understand what to expect from IT architecture and infrastructure.

•Must clearly communicate business vision.

•May need to modify the plans if IT cannot realistically support them.

•Manager MUST be involved in the decision making process.

© 2016 John Wi ley & Sons, Inc. 6

From Strategy to Architecture

•Manager starts out with a strategy.

•Strategy is used to develop more specific goals

•Business requirements must be determined for each goal so the architect knows what IS must accomplish.

© 2016 John Wi ley & Sons, Inc. 7

Example

•Strategy: Be a customer-oriented company •Goal: 30-day money back guarantee

• Business Requirement: ability to track purchases

• Business Requirement: ability to track problems

•Goal: Answer email questions within 6 hours • Business Requirement: Ability to handle the volume

© 2016 John Wi ley & Sons, Inc. 8

From Business Requirements to Architecture

© 2016 John Wi ley & Sons, Inc. 9

The Example Continues

•Business Requirement: Ability to track purchases •Architectural Requirement:

• Database that can handle all details of more than a 30-day history

© 2016 John Wi ley & Sons, Inc. 10

From Architecture to Infrastructure

•Adds more detail to the architectural plan. • actual hardware, software, data, and networking

•Components need coherent combination

© 2016 John Wi ley & Sons, Inc. 11

From Architecture to Infrastructure

© 2016 John Wi ley & Sons, Inc. 12

The Example Continues

 Architectural Requirement: Database that can handle all details of more than a 30-day history  Functional Specification: be able to hold 150,000

customer records, 30 fields; be able to insert 200 records per hour  Hardware specification: 3 gigaherz Core 2 Duo Server

 Hardware specification: half terabyte RAID level 3 hard drive array

 Software specification: Apache operating system

 Software specification: My SQL database  Data protocol: IP (internet protocol)

© 2016 John Wi ley & Sons, Inc. 13

A Framework for the Translation

•Considerations for moving from strategy to architecture to infrastructure: • Hardware – physical components • Software – programs • Network – software and hardware

• Data – utmost concern: data quantity & format

•What-who-where is a useful framework

© 2016 John Wi ley & Sons, Inc. 14

Component What Who Where

Hardware What hardware does the organization have?

Who manages it?

Who uses it?

Who owns it?

Where is it

located? Where is

it used?

Software What software does the organization have?

Who manages it?

Who uses it?

Who owns it?

Where is it

located? Where is

it used?

Network What networking does the organization have?

Who manages it?

Who uses it?

Who owns it?

Where is it

located? Where is

it used?

Data What data does the organization have?

Who manages it?

Who uses it?

Who owns it?

Where is it

located? Where is

it used?

Information systems analysis framework.

Figure 6.3 Infrastructure and architecture analysis framework with sample questions.

Common IT Architecture Configurations

•Centralized architecture – All purchases, support, and management from data center

•Decentralized architecture – uses multiple servers perhaps in different locations

•Service-Oriented architecture – uses small chunks of functionality to build applications quickly. • Example: e-commerce shopping cart

•Software-Defined architecture – instantly reconfigures under load or surplus

© 2016 John Wi ley & Sons, Inc. 17

Software-Defined Architecture

•Birdbath example: Thanks to the Oprah Winfrey show, sales went from 10 per month to 80,000. • Increased sales seen as an attack with static system • Adaptive system warns other parts of sales fluctuations,

preventing lost sales