It For Management

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Management Information Systems - 37A021 Fall 2004

Part I: IT in the Organization Introduction Chapter 1: Information Technology in the Digital Economy Chapter 2: Information Technologies: Concepts and Management Virpi Kristiina Tuunainen & Matti Rossi e-mail: [tuunaine|mrossi]@hkkk.fi

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Grading Policy The grade for the course is divided into: Exam Part I (30 %) – Turban, Mclean & Wetherbe: Information Technology for Management: Transforming Business in the Digital Economy, Chapters 1-2, Technology guides T3-T4

Exam Part II (70 %) – Turban, Mclean & Wetherbe: Information Technology for Management: Transforming Business in the Digital Economy, Chapters 3 – 16.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Course material

Turban, Mclean & Wetherbe: Information Technology for Management: Transforming Business in the Digital Economy, John Wiley & Sons, Inc, 2002. 3rd Edition Lecture slides (http://www.hkkk.fi/iss/37A021)

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Contents Part I: IT in the Organization

Part V: Implementing and Managing IT

Information Technology in the Digital Economy

IT Economics

Information Technologies: Concepts and Management

Building Information Systems

Strategic Information Systems for Competitive Advantage

Managing Information Resources and Security

Part II: The Web Revolution Network Computing: Discovery, Communication, and Collaboration Electronic Commerce Supply Chain Management and ERP

Part III: Organizational Applications Transaction Processing, Innovative Functional Systems, CRM, and Integration IT Planning and BPR Knowledge Management

Part IV: Managerial and Decision Support Systems Supporting Management and Decision Making Data Management: Warehousing, Analyzing, Mining and Visualization Intelligent Support Systems

The Impacts of IT on Organizations, Individuals, and Society

Technology Guides Hardware Software Data and Databases Telecommunications The Internet and the Web

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

New to this edition • New Chapter—Supply Chain Management • New Chapter—Knowledge Management • New Appendix on Ethics • New Theme—"Transforming Business in the Digital Economy" integrated into every chapter • More integration of E-Commerce throughout the text • "Lessons Learned" from IT failures added to every chapter • Expanded and more interactive Virtual Company cases

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

The Digital Economy The digital economy refers to an economy that is based on digital technologies, including digital communication networks, computers, and software. The digital economy is also sometimes called the Internet economy, the New economy, or the Web economy.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Old vs. “New” Economy: Photography Old Economy You buy film at the store, insert it into your camera & take pictures. Once you complete the film, sometimes weeks or months after you began the roll, you take it to the store for processing. Go back to the store and pay for enlargements and duplications. Send photos to family and friends.

“New Economy” Use a digital camera that can also take videos. No film is needed, and no processing required. You can see the results immediately & enlarge & print photos quickly. If your digital camera is connected to a wireless device (such as a palmtop computer or a cell phone) take pictures and see them within a few seconds.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Digital Economy Business Models Name-Your-Own-Price. Pioneered by Priceline.com, this model allows customers to state a price they are willing to pay for a product or service. Dynamic Brokering. In the digital age customers can specify requirements for a service or a product. These specifications are broadcast over the Internet (“Webcasted”) to service providers in an automatic invitation to submit bids. Reverse Auctions. Electronic reverse auctions are fast, they reduce administrative costs by as much as 85 %, & products’ prices can be 5 - 20 % lower.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Digital Economy Business Models (cont.) Affiliate marketing is an arrangement in which marketing partners place a banner of a company, such as Amazon.com, on their Web site. Group Purchasing. Anyone can pay less per unit when buying more units. Discounts are usually available for quantity purchases. E-marketplaces and Exchanges. Since 1999, thousands of electronic marketplaces, of different varieties, have sprung up.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

The New World of Business Business pressures Organizations and their Responses Information Technology (IT)

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Major Business Pressures/Drivers Market pressures Technological pressures Societal pressures

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Market Pressures Global Economy & Strong Competition.

Powerful Customers.

Global competition is intensified as Consumer sophistication & governments become involved through the expectations increase as use of subsidies, tax policies, customers become more import/export regulations & incentives. knowledgeable about the availability and quality of products Rapid and inexpensive communication and services. and transportation modes increase the magnitude of international trade even further. Changing Nature of the Workforce. The workforce is becoming more diversified, with more females, single parents, minorities, and handicapped persons working in all types of positions.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Technology Pressures Technological Innovation & Obsolescence. Some of today’s state-of-the-art products may be obsolete tomorrow. Thus, technology accelerates the competitive forces.

Information Overload. The amount of information available on the Internet more than doubles every year. The management of information is critical.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Societal Pressures Social Responsibility. Issues range from the environment to education.

Government Deregulation. Deregulation can be a blessing to one company but a curse to another company.

Government Regulations. Regulation issues involve health, safety, environmental control, and equal opportunity.

Ethical Issues. Business ethics relates to standards of right and wrong in business practices.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Organizational Framework

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Organizations and Their Responses Strategic systems Continuous improvement efforts Business Process Reengineering (BPR) Business alliances Electronic commerce

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

What Is an Information System? Information systems (IS) collect, process, store, analyze, and disseminate information for a specific purpose.

Information Systems are comprised of; inputs (data, instructions), outputs (reports, calculations), feedback mechanisms that controls the operation and an environment that it works within.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Components of Information Systems Hardware is a set of devices such as processor, monitor, keyboard, and printer. Software is a set of programs that enable the hardware to process data. Database is a collection of related files, tables, relations, and so on, that stores data.

Network is a connecting system that permits the sharing of resources between computers. Procedures are the set of instructions about how to combine the above components. People are those individuals who work with the system or use its output.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

General Technological Trends General trends within computing systems include the following: Cost Performance Ratio Object-Oriented Environment & Document Management. Networked Computing Mobile Commerce Integrated Home Computing. The Internet Intranets and Extranets Corporate Portals The Networked Enterprise Optical Networks

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Moore’s Law

(Turban et al, 1999)

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Characteristics of Information Systems Several different information systems can exist in one organization. A particular information system may be composed of several separate information systems. Information systems are connected by means of electronic networks.

Interorganizational information systems involve information flow in two or more organizations. An enterprisewide system or interorganizational information system is composed of large & small computers & hardware connected by different types of networks.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Data, Information & Knowledge One of the primary goals of Information Systems is to economically process data into information or knowledge.

Data items refer to an elementary description of things, events, activities, and transactions that are recorded, classified, and stored, but not organized to convey any specific meaning. Information is data that have been organized so that they have meaning and value to the recipient. Knowledge consists of data or information that have been organized and processed to convey understanding, experience, accumulated learning, and expertise.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Classification of Information Systems Organizational structure

Support provided

Departmental information systems

Transaction Processing System (TPS)

Enterprise information systems

Knowledge Management Systems (KMS)

Interorganizational systems

Office Automation System (OAS)

Functional area

Accounting Finance Manufacturing Marketing Human Resources … Activity Supported

Operational Managerial Strategic

Management Information System (MIS)

Decision Support System (DSS) Enterprise Information System (EIS) Group Support System (GSS) Intelligent Support System System architecture

A mainframe-based system. A standalone personal computer (PC). A distributed or a networked computing system (several variations exist).

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

of w

or

k

Phasing of IS Utilization D or evel g a op n i in za g tio al n a so l d i nt ist er r ib ut io n

Service strategies -separation of service channels and customers’ service needs and their efficient integration

De or vel g a op n i in za g ito th ni e nt er na lly

on

ly

Customer centric -IT in customer relationships -strategic applications

User centric - DSS - office automation and PCs

Information centric -data bases and MIS -integration of subsystems

Routine and task centric - production systems - administrative IS

1960

1970

1980 (Hannus, 1993)

1990

2000

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Interrelated Support Systems

Transaction Transaction Processes Processes

MIS MIS

DSS DSS

External External Information Information

Data Data Warehouse Warehouse

EIS EIS

The TPS collects information that is used to build the DSS and EIS. The information in the data warehouse and DSS can be used as an input to EIS.

Non Non Computer Computer Support Support

Internet, Internet, other other Computer Support Computer Support

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Functional MISs Sales forecast by region generated by marketing MIS.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Information Infrastructure and Architecture Information Infrastructure:

An information infrastructure consists of the physical facilities, services, and management that support all shared computing resources in an organization. There are five major components of the infrastructure: computer hardware, development software, networks and communication facilities (including the Internet and intranets), databases, and information management personnel.

Information Architecture: An information architecture is a high level map or plan of the information requirements in an organization. It is a guide for current operations and a blueprint for future directions. It asssures us that the organization’s IT meets the strategic business needs of the corporation.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Managing Information Resources Major categories of Resources: Hardware Software Databases Networks Procedures Security facilities

The responsibility for the management of information resources is divided between two organizational entities: The information systems department (ISD) - a corporate entity. The end-users - who are scattered throughout the organization.

Physical buildings

The responsibility for managing these resources depends on many things: the size/ nature of the organization, the amount/ type of IT resources, etc. Generally speaking, the ISD is responsible for corporate-level and shared resources, while the end users are responsible for departmental resources

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

What is the Role of the ISD? The role of the ISD is changing from purely technical to more managerial and strategic. As a result, the position of the ISD within the organization tends to be elevated from a unit reporting to a functional department, to a unit reporting to a senior vice president of administration or to the CEO. The role of the director of the ISD is changing from a technical manager to a senior executive. The ISD can be centralized or decentralized or a combination of the two. The ISD must work closely with external organizations such as vendors, business partners, etc.

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Managerial Issues The transition to networked computing. Converting the IT in organizations to networked computing may be a complicated process. Legacy systems. Whether and when to move from the legacy systems to a client/server enterprisewide architecture is an important issue. The role of the ISD. The role of the ISD can be extremely important, yet top management frequently mistreats it.

How much infrastructure? Justifying information system applications is not an easy job due to the intangible benefits and rapid changes in technologies. The role of end users. End users play an important role in IT development and management. The end users know best what their information needs are and to what degree they are fulfilled. Ethical Issues. IS systems may invade the privacy of the users or create advantages to certain individuals at the expense of others.