Managers And Information Technology

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MANAGERS AND INFORMATION TECHNOLOGY Introduction: No invention has ever influenced the human beings as computer has. In less than seven decades of its existence it has managed, materializing the concept of a global village. Technologies like Computational Intelligence, Neural Networks, Genetic Algorithms, Data Communication & Networks, Telecommunication, Databases, and Evolutionary Computing etc; collectively offer the business community a broad set of tools capable of addressing problems that are much harder or virtually impossible to solve using the more traditional techniques from statistics to operations research. Country running and putting it on the track of the development is very complex task and might require the decisions making on the basis of the country’s past experience and present situation which is obviously available in the form data. Today’s best technology to manage and process data is the Information Technology. IT must be seen as an investment and not an expense. IT is playing a vital and expanding role in business. It helps the manager to improve the efficiency and effectiveness of their business processes, managerial decision making, and workgroup collaboration, thus helping the managers to strengthen the positions of their company in a rapidly changing environment. IT has become a necessary ingredient for managers to succeed in today’s dynamic global environment.

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What is Information Technology and Information System? Information Technology (IT) is any system designed to gather, process, or distribute information. An Information System is an organized combination of people, hardware, software, communications networks, and data resources that collects, transforms, and disseminates information in an organization.

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Components of an Information System

Role of Information Technology and Information Systems:

Support Competitive Advantage Support Business Decision Making

Support of Business Processes and Operations

Information Technology is increasingly important in the competitive marketplace. Managers need all the help they can get. Information systems perform three vital roles in business: Support Business Operations. From accounting to tracking customers' orders, information systems provide management with support in

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day-to-day business operations. As quick response becomes more important, the ability of information systems to gather and integrate information across business functions is become crucial. Support Managerial Decision Making. Just as information systems can combine information to help run the business better, the same information can help managers identify trends and to evaluate the outcome of previous decisions. IS helps managers make better, quicker, and more informed decisions. Support Strategic Advantage. Information systems designed around the strategic objectives of the company help create competitive advantages in the marketplace. Competitive Advantage is created or maintained with the company succeeds in performing some activity of value to customers significantly better than does its competition. According to Porter, competitive advantage can be developed by following one or more of these strategies: Cost Strategies. Becoming a low-cost producer in the industry allows the company to lower prices to customers. Competitors with higher costs cannot afford to compete with the low-cost leader on price. Differentiation Strategies. Some companies create competitive advantage by distinguishing their products on one or more features important to their customers. Unique features or benefits may justify price differences and/or stimulate demand. Innovation Strategies. Unique products or services or changes in business processes can cause fundamental changes in the way an industry does business. Growth Strategies. Significantly expanding production capacity, entering new global markets, diversifying into new areas, or integrating related products or services can all be a springboard to strong company growth. Alliance Strategies. Establishing new business linkages and alliances with customers, suppliers, former competitors, consultants, and others can create competitive advantage

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History of the role of Information Systems 1950-1960

1960-1970

Data Processing

Management Reporting

Electronic Data Processing - TPS

Management Information Systems

1970-1980 Decision Support

Decision Support Systems - Ad hoc Reports

1980-1990

1990-2000

Strategic & End User

Electronic Commerce

End User Computing Exec Info Sys Expert Systems SIS

Electronic Business & Commerce -Internetworked E-Business & Commerce

Data Processing: 1950s - 1960’s: Electronic data processing systems. Transaction processing, record-keeping, and traditional accounting applications Management Reporting: 1960s - 1970’s: Management Information systems. Management reports of pre-specified information to support decision making. Decision Support: 1970s - 1980s: Decision Support systems. Interactive ad hoc support of the managerial decision-making process. Strategic and End User Support: 1980s - 1990’s: End User computing systems. Direct computing support for end user productivity and work group collaboration. Executive information systems. Critical information for top management Expert systems: Knowledge-based expert advice for end users Strategic Information Systems. Strategic products and services for competitive advantage Electronic Business and Commerce: 1990’s - 2000’s: Internetworked e-business and e-commerce Systems. Internet worked enterprise and global e-business operations and e-commerce on the Internet, intranets, extranets, and other networks.

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Types of Information Systems Information Systems

Operations

Management

Support

Support

Systems

Systems

Transaction

Process

Enterprise

Management

Decision

Executive

Processing

Control

Collaboration

Information

Support

Information

Systems

Systems

Systems

Systems

Systems

Systems

Information Systems can be classified by the type of the support they provide an organization. •

Operations support systems process data generated by and used in business operations. They produce a variety of information products for internal and external use. Operations support systems do not emphasize producing the specific information products that can best be used by managers. Further processing by management information systems is usually required. The role of a business firm’s operations support systems is to: 1. Effectively process business transactions 2. Control industrial processes 3. Support enterprise communications and collaboration 4. Update corporate databases.

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Management support systems assist managers in decision making. Providing information and support for decision making by all types of managers and business professionals is a complex task. Conceptually, several major types of information systems support a variety of decision-making responsibilities. 1. Management information systems - provide information in the form of reports and displays to managers and many business professionals.

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2. Decision support systems - give direct computer support to managers during the decision-making process. 3. Executive information systems - provide critical information from a wide variety of internal and external sources in easy-touse displays to executives and managers. Management Challenges of the IT: •IS Human Resources •IS Development

•IT Infrastructure •IS Performance

•Organization Structure •and Culture •User Acceptance

•Business Strategies •Business Processes •Business Needs

•Customer Relationships •Business Partners •Suppliers •Business Customers

Ethical Considerations Potential Risks? Potential Laws? Possible Responses?

Prospective managers and business professionals should become aware of the problems and opportunities presented by the use of information technology and learn how to effectively confront such managerial challenges. Information systems can be mismanaged and misapplied so that they create both technological and business failure.

Top Five Reasons for Success

Top Five Reasons for Failure

User involvement

Lack of user input

Executive management support

Proper planning

Incomplete requirements and specifications Changing requirements and specifications Lack of executive support

Realistic expectations

Technological incompetence

Clear statement of requirements

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IT TOOLS AND TECHNOLOGIES FOR MANAGERS: Customer-Focused e-Business A key strategy by managers for becoming a successful e-business is to maximize customer value. This strategic focus on customer value recognizes that quality rather than price becomes the primary determinant in a customer’s perception of value. A Customer-Focused e-business, then, is one that uses Internet technologies to keep customer loyal by anticipating their future needs, responding to concerns, and providing top quality customer service. Such technologies like intranets, the Internet, and extranet websites create new channels for interactive communications within a company, with customers, and with suppliers, business partners, and others in the external business environment. Thereby, encouraging cross-functional collaboration with customers in product development, marketing, delivery, service and technical support. A successful Customer-Focused e-business attempts to ‘own’ the customer's total business experience through such approaches as: • Letting the customer place orders directly, and through distribution partners • Building a customer database that captures customers' preferences and profitability, and allowing all employees access to a complete view of each customer. • Letting customers check order, history and delivery status • Nurturing an online community of customers, employees, and business partners. Let customers place orders directly Let customers check order history and delivery status Build a community of customers, employees, and partners

Customer Database Give all employees a complete view of customers

Let customers place orders thru distribution partners Transaction Database Link Employees and distribution partners

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The Customer- Focused Agile Competitor Agility in competitive performance is the ability of a business to prosper in rapidly changing, continually fragmenting global markets for high-quality, high-performance, customer-configured products and services. Agile companies depend heavily on information technology to support and manage business processes. The four fundamental strategies of agile competition are: Enrich Customers. Agile companies enrich customers with solutions to their problems. Long term value-added products and services succeed when they solve problems based on customer needs. As conditions change, the agile competitor establishes a relationship based on the ability and willingness to change to meet new customer problem situations. Cooperate. Agile companies cooperate to enhance competitiveness. This means internal cooperation and, where necessary, cooperation with competitors in order to bring products and services to market more quickly. Organize. Agile companies organize to master change and uncertainty. This is a key component of agile competition because it seeks development of the anticipation and rapid response to changing conditions, not an attempt to stifle change itself. Leverage People and Information. Agile companies leverage the impact of people and information by nurturing an entrepreneurial spirit and providing incentives to employees to exercise responsibility, adaptability, and innovation. The Free.Perfect.Now model developed by AVNET Marshall embodies these principles into a succinct model for serving its customers in the most agile and responsive way. Free Dimension. Emphasizes that most customers want the lower cost for value received, but are willing to pay more for a value-added service. Perfect Dimension. Emphasizes that products and services should not only be defect free, but should be enhanced by customization, added features and should further anticipate future customer needs. Now Dimension. Emphasizes that customers want 24x7 accessibility to products and services, short delivery times, and consideration of the time-tomarket for their own products.

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Business Reengineering and Quality Management One of the most important competitive strategies today is business process reengineering (BPR) most often simply called reengineering. Reengineering is more than automating business processes to make modest improvements in the efficiency of business operations. Reengineering is a fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, speed, and service. BPR combines a strategy of promoting business innovation with a strategy of making major improvements to business processes so that a company can become a much stronger and more successful competitor in the marketplace. However, while many companies have reported impressive gains, many others have failed to achieve the major improvements they sought through reengineering projects. Business quality improvement is a less dramatic approach to enhancing business success. One important strategic thrust in this area is called Total Quality Management (TQM). TQM emphasizes quality improvement that focuses on the customer requirements and expectations of products and services. This may involve many features and attributes, such as performance, reliability, durability, responsiveness etc. TQM uses a variety of tools and methods to provide: • More appealing, less-variable quality of products or services • Quicker less-variable turnaround from design to production and distribution

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• Greater flexibility in adjusting to customer buying habits and preferences • Lower costs through rework reductions, and non-value-adding waste elimination. Business Business Quality Quality Improvement Improvement

Definition Definition Target Target Potential Potential Payback Payback Risk Risk What What Changes? Changes? Primary Primary Enablers Enablers

Business Business Reengineering Reengineering

Incrementally Incrementally Improving Improving Existing Existing Processes Processes

Radically Radically Redesigning Redesigning Business Business Systems Systems

Any Any Process Process

Strategic Strategic Business Business Processes Processes

10%-50% 10%-50% Improvements Improvements

10-Fold 10-Fold Improvements Improvements

Low Low

High High

Same Same Jobs Jobs -- More More Efficient Efficient Big Big Job Job Cuts; Cuts; New New Jobs; Jobs; Major Major Job Job Redesign Redesign IT IT and and Work Work Simplification Simplification

IT IT and and Organizational Organizational Redesign Redesign

Knowledge Management Systems Knowledge Management has become one of the major strategic uses of information technology. Knowledge Management Systems (KMS) are systems that are used to manage organizational learning and business knowhow. The goal of knowledge management systems is to help knowledge workers create, organize, and make available important business knowledge, whenever, and wherever its needed. Such knowledge may include explicit knowledge like reference works, formulas, and processes, or tacit knowledge like “best practices”, and fixes. Internet and intranet technologies, along with such other technologies like GroupWare, data mining, and online discussion groups are used by KMS to collect, edit, evaluate and disseminate knowledge within the organization. Knowledge management systems are sometimes called adaptive learning systems, because they create cycles of organizational learning called adaptive learning loops, which allow the knowledge company to continually build and integrate knowledge into business processes, products, and

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services. Thereby, helping the company to become a more innovative, agile provider of goods and services. Solution Knowledge

Technical Support Staff

Customers Development Engineers

Intranet

Product Managers

The Internet

Other Vendors

Enterprise Resource Planning Enterprise resource planning (ERP) is a cross-functional enterprise system that serves as a framework to integrate and automate many of the business processes that must be accomplished within the manufacturing, logistics, distribution, accounting, finance, human resource functions of a business. ERP software is a family of software modules that supports the business activities involved in these vital back office processes. ERP is being recognized as a necessary ingredient for the efficiency, agility, and responsiveness to customers and suppliers that an e-business enterprise needs to succeed in the dynamic world of e-commerce. Companies are finding major business value in installing ERP software in two major ways: 1. ERP creates a framework for integrating and improving their back-office systems that results in major improvements in customer service, production, and distribution efficiency.

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2. ERP provides vital cross-functional business processes and supplier and customer information flows supported by ERO systems. Online Analytical Processing Online Analytical Processing (OLAP) is a capability of management, decision support, and executive information systems that enables managers and analysts to interactively examine and manipulate large amounts of detailed and consolidated data from many perspectives. Basic analytical operations include: Consolidation. This involves the aggregation of data. It can be simple rollups or complex groupings involving interrelated data. For example, sales offices can be rolled up to districts and districts rolled up to regions. Drill-Down. OLAP can go in the reverse direction and automatically display detailed data that comprises consolidated data. For example, the sales by individual products or sales reps that make up a region's sales can be accessed easily. Slicing and Dicing. This refers to the ability to look at the database from different viewpoints. For example, one slice of a database might show all sales of a product within regions. Another slice might show all sales by sales channel. By allowing rapid alternative perspectives, slicing and dicing allows managers to isolate the information of interest for decision making. Data is retrieved from corporate databases and staged in an OLAP multi-dimensional database Corporate Databases

Client PC OLAP OLAP Server Server

Web-enabled OLAP Software

Multi•Operational DB dimensional •Data Marts database •Data Warehouse

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Intelligent Agents An Intelligent Agent (IA) is a software surrogate that fulfills a stated need or activity. The IA uses built-in and learned knowledge about how an end user behaves or in answer to posed questions, to implement a software solution -such as the design of a presentation template or spreadsheet -- to solve a specific problem of interest to the end user. IAs can be grouped into two categories for business computing: User Interface Agents. • Interface Tutors. These observe computer operations, correct user mistakes, and provide hints and advice on efficient software use. • Presentation Agents. These show information in a variety of reporting and presentation forms and media based on user preferences. • Network Navigation Agents. These discover paths to information and provide ways to view information that are preferred by a user. • Role-Playing Agents. These play what-if games and other roles to help users understand information and make better decisions. Information Management Agents. • Search Agents. These help users find files and databases, search for desired information, and suggest and find new types of information products, media, and resources. • Information Brokers. These provide commercial services to discover and develop information resources that fit the business or personal needs of a user. • Information Filters. These receive, find, filter, discard, save, forward, and notify users about products received or desired, including E-mail, voice mail, and all other information media. Interface Interface Tutors Tutors

Presentation Presentation Agents Agents

Search Search Agents Agents

User Interface Agents

Information Management Agents

Information Information Brokers Brokers

Network Network Navigation Navigation Agents Agents

RoleRolePlaying Playing Agents Agents

Information Information Filters Filters

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Expert Systems An Expert System (ES) is a knowledge-based information system that uses its knowledge about a specific, complex application area to act as an expert consultant to end users. The components of an ES include: Knowledge Base. A knowledge base contains knowledge needed to implement the task. There are two basic types of knowledge: Factual knowledge. Facts, or descriptive information, about a specific subject area. Heuristics. A rule of thumb for applying facts and/or making inferences, usually expressed as rules. Inference Engine. An inference engine provides the ES with its reasoning capabilities. The inference engine processes the knowledge related to a specific problem. It then makes associations and inferences resulting in recommended courses of action. User Interface. This is the means for user interactions. To create an expert system a knowledge engineer acquires the task knowledge from the human expert using knowledge acquisition tools. Using an expert system shell, which contains the user interface and inference engine software modules, the KE then encodes the knowledge into the knowledge base. A reiterative approach is used to test and refine the expert system's knowledge base until it is deemed complete. Decision DecisionManagement Management Diagnostic/Troubleshooting Diagnostic/Troubleshooting Maintenance/Scheduling Maintenance/Scheduling

Design/Configuration Design/Configuration

Major Application Categories of Expert Systems

Selection/Classification Selection/Classification

Process ProcessMonitoring/Control Monitoring/Control

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Managing the IS Function The IT organization structure has radically changed in the last few years. The shift towards decentralized IS teams and decentralized IS management, evident in the 1980’s and 90’s, has recently been replaced with a return to centralized control and management of IS resources. This has resulted in the development of hybrid organization structures with both centralized and decentralized elements. Some companies have spun-off their IS organizations into subsidiaries or business units. Others have relied on outsourcing IS functions to either application service providers or system integrators. Regardless of these organizational changes, the IS organization function still involves three major components: • Application Development Management. Involves managing activities such as systems analysis and design, project management, application programming and systems maintenance for all major ebusiness IT development projects. • IT Operations Management. Involves the management of hardware and software, network resources. Operational activities that must be managed include computer system operations, network management, production control, and production support. Many of these management activities are automated. For example, system performance monitors monitor the processing of computer jobs and in some cases actually control operations at large data centers. Most system performance monitors supply information needed by chargeback systems. These are systems that allocate costs to users based on the information services rendered. • Human Resource Management. Involves recruiting, training, and retaining qualified IS personnel. Such personnel may include managerial, technical, as well as clerical support staff.

Application Development •Systems Analysis •Systems Design •Programming •System Maintenance

Human Resource Management •IS Recruiting •Training •Retainment Programs •Support Staff

IT Operations Management •Network Management •Production Control •Product Support •Systems Performance