MIS 503Intro - Fall 2006 - Lecture

Management Information Systems : 

Management Information Systems MIS 503 MBA Program

What is MIS? : 

What is MIS?

MIS: An Amalgamation of Disciplines : 

MIS: An Amalgamation of Disciplines Information Science

Major MIS Constituents : 

Major MIS Constituents Organization Technology People

Slide 5: 

A Framework for Managing Information Technology Vision for the Organization and Information Technology IT and Organization Structure Corporate Strategic Plan Alliances & Partnerships Ongoing IT Operations Integration of IT and Decision Making Strategy IT Initiatives IT Infrastructure

Today’s IT Landscape : 

Today’s IT Landscape How IT flattened the competitive landscape…

10 Flatteners : 

10 Flatteners Fall of the Berlin Wall Netscape IPO Work flow software Open-sourcing Outsourcing Offshoring Supply-chaining Insourcing In-forming Wireless

This NEW Paradigm Affects Organizations in Myriad Ways : 

This NEW Paradigm Affects Organizations in Myriad Ways New Business Environment Open, Competitive, Dynamic Marketplace New Enterprise Open, Networked, Information-based Organization New Geopolitical Order Open, Volatile, Multipolar World New Technology New Goals of IT Open, User-centered, Networked Computing New Competition Your competition is no longer only the firm across the street

Business Environment Changes Creating New Challenges and Opportunities : 

Business Environment Changes Creating New Challenges and Opportunities Worker Productivity Quality Emphasis Responsiveness to the Marketplace Globalization Outsourcing Communication Fluidity and Ubiquity Offshoring Partnering Social and Environmental Responsibility

The New Enterprise : 

The New Enterprise Hierarchical Structure is out Problems with Hierarchies Hierarchies seek to separate governed from governors Middle managers act as a communication channel between top and bottom Information Technology has supplanted ‘human relays’, which has resulted in … Flatter, Leaner Organizations

Hierarchical vs. Open-Networked Organizations : 

Hierarchical vs. Open-Networked Organizations

Slide 12: 

A Framework for IT: An IT Value Chain

Slide 13: 

Three Types of Information Systems

Slide 16: 

IT-Enabled Organizational Forms

Three Shifts in the Application of IT : 

Three Shifts in the Application of IT From Personal to Work-Group Computing From Systems Islands to Integrated Systems Management and control of physical assets and facilities Financial management and control systems Technologies to manage and support human resources From Internal to Inter-organizational Computing

Slide 18: 

Enabling Technology The Promise The Change High-Performance Team Workgroup Computing Business Process Redesign

Slide 19: 

Integrated Systems Integrated Organization High-Performance Team Enabling Technology The Promise The Change Workgroup Computing Organizational Transformation Business Process Redesign

Slide 20: 

Workgroup Computing Integrated Systems Interenterprise Computing Extended Enterprise Integrated Organization High-Performance Team Recasting External Relationships Organizational Transformation Business Process Redesign Enabling Technology The Promise The Change

Summary of Work-Group Computing Shifts : 

Summary of Work-Group Computing Shifts Organizational Hierarchy Business Team Organization Personal Computing Work-Group Computing Emphasis on the individual Emphasis on the group Designing Technology Redesigning the entire system Taylorism The new work reengineering Technical Users Direct support of all personnel Installing Technology Leadership for evolving work

Islands of Technology : 

Islands of Technology Technology is implemented to manage three resources: Physical Assets Human Resources Financial Assets What if they are not speaking to one another???

Problems With Enterprises that aren’t speaking… : 

Problems With Enterprises that aren’t speaking… Redundancy of Functionality Miscommunications due to lack of integration Poor quality customer service Operational inefficiencies due to miscommunications and redundant processing Internal Focus

Problems With Enterprises that aren’t speaking… : 

Problems With Enterprises that aren’t speaking… Systems are perpetuated in order to treat operational symptoms without recognizing fundamental problems Organizational conflict and ‘turf’ battles erupt due to the historical creation of data processing developing financial solutions, engineering developing physical assets, and administrative groups to manage human resources

What happens when an enterprise shifts to integration : 

What happens when an enterprise shifts to integration Technology Applications Organizational Restructuring System Islands Integrated Systems Separate Systems Integrated Environments Single-form Systems Integrated data, voice, & image Cost Reduction Enterprise Effectiveness

What happens when an enterprise shifts to integration : 

What happens when an enterprise shifts to integration Value Chain Value Network Simple Market Combat Competition via Cooperation Manual Communications Electronic Communication Enterprise Technology Interorganizational Computing Purchaser of Information Information Purchaser/Vendor

Determining IT Value : 

Determining IT Value Models and Implications

Slide 28: 

Page 598 INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Measuring Benefits No simple way to measure value added benefits of IT Can track IS performance measures over time

What is Value? : 

What is Value? The most common meaning of value is monetary worth It is difficult to determine the value of IT investments because such value can come from traditional (measurable) monetary returns indirect returns that may be hard to measure prevention of negative return from not investing in IT (such as loss of market share)

But Value is not always easy to measure… : 

But Value is not always easy to measure… It’s hard to measure directly In the short term, benefits may not be realized Benefits may happen after development costs occur No relationship to benefits included in measures This has led to…

Slide 31: 

Page 598 INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES A common way to assign value (i.e., allocate costs) is using chargeback systems IS chargeback process – places control of IS spending with business managers, and is used to better understand true costs

Slide 32: 

5. Designing an Equitable Financing System Page 598 INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Why use a chargeback system? Assign costs to those who consume Control wasteful use of IT resources Overcome belief that IT costs unnecessarily high Provide incentives using subsidy Change IS to be more business driven Encourage managers to be knowledgeable consumers

Slide 33: 

Page 598 INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Typical measures used to track IT costs: Total IT budget as percentage of total organization revenues or income Total IT budget as percentage of total organization budget IS personnel costs as percentage of total organization professional personnel salaries and wages Ratio of hardware and software costs to IS personnel costs Costs for IT hardware and software per managerial or knowledge worker

IT Investment Equation : 

IT Investment Equation P(Success/Return) = P(Return on Investment Type) x P(Conversion Success)

Examples of IT Investment Equation : 

Examples of IT Investment Equation Type of Investment Estimate of Return Probability Based on Type of Project Estimate of Probability of Successful Conversion Overall Probability of a Return: the SR Index

Stock Options and IT Projects : 

Stock Options and IT Projects Lucas, 1999

The Productivity Paradox : 

The Productivity Paradox Organizational IT investments have not shown a significant impact on a variety of productivity statistics Possible explanations are: Results of IT spending occur locally and cannot be expected to show up in national statistics Many firms may yet have to undergo significant restructuring or cost cutting for the benefits of IT to become evident The measurements showing the lack of such a relationship may be flawed

Barriers to Estimating IT Value : 

Barriers to Estimating IT Value Moore’s Law Evolving Organizational Use of Computing Management’s Aversion to IT Pace of Change in Business is Exacerbating our ability to accurately value IT

Perceptions of IT : 

Perceptions of IT Lucas, 1999 Issue IT a Cost/Liability IT an Asset

Three Types of IT Measurement : 

Three Types of IT Measurement Metrics to Manage IT Internally Network uptime Metrics for Business Unit Managers Detailed IT Usage Report Metrics for Senior Managers Balanced Scorecard

IT Measurement Methods : 

IT Measurement Methods Applied Information Economics Scientific and Mathematical method www.hubbardresearch.com Balanced Scorecard Traditional financial measures with KPIs, customer perspectives and org growth, and learning and innovation www.bscol.com Economic Value Added EVA = Net Operating Profit (after tax) - [ Capital x Cost of Capital ] www.sternsteward.com Economic Value Sourced Incorporates risk and time into valuation equation www.metagroup.com Portfolio Management www.metricnet.com, www.metagroup.com Real Option Valuation (ROV) Incorporates calculations for corporate ‘flexibility’ - Black & Scholes Model

IT value comes in many forms : 

IT value comes in many forms

Contributions of IT : 

Contributions of IT New ways to design organizations and new organization structures New relationships between customers and suppliers Opportunities for electronic commerce Efficiencies through EDI Changed basis of competition and industry structure Groupware

Contributions of IT : 

Contributions of IT Knowledge capture and accessibility Increased productivity and flexibility of knowledge workers Electronic alternatives for communications and supervision Improved opportunities of competition among nations

So, if you can find value, how do you mange IT? : 

So, if you can find value, how do you mange IT?

The Role of the Manager : 

The Role of the Manager Management and not technology determines return on IT investments Successful organizations have strong IT leadership Key management decisions related to IT Strategy Value of IT Investing in infrastructure Deciding on applications The role of knowledge E-business Options for service Change management Managing value nets

Slide 47: 

MANAGING THE ASSETS IN AN IS ORGANIZATON Page 584-585 Figure 15.1 Selected IS Management Positions (1 of 3) Possible IS Management Positions

Slide 48: 

MANAGING THE ASSETS IN AN IS ORGANIZATON Page 584-585 Figure 15.1 Selected IS Management Positions (1 of 3) Possible IS Management Positions

Slide 49: 

MANAGING THE ASSETS IN AN IS ORGANIZATON Page 584-585 Figure 15.1 Selected IS Management Positions (1 of 3) Possible IS Management Positions

Slide 50: 

Senior IS Management Issues: Improving data and IT planning, especially linking IS to the business Gaining business value through IT Facilitating organizational learning about and through IT Refining the IS unit’s role and position Guiding systems development by business managers Managing organizational data as an asset Measuring IS effectiveness Integrating information technologies Developing systems personnel 2. Selecting Effective IS Leadership Page 594-595 INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Slide 51: 

IS steering committee or advisory board used to: Ensure frequent interaction Set priorities Check progress Allocate scarce resources Communicate concerns Provide education Develop shared responsibility 3. Creating an Active Partnership with Business Managers Page 595 INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Questions? : 

Questions?