Management Information Systems

1. 1 Management Information Systems The MIS Function and Information Systems Planning Jerry Fjermestad Copyright 1998-1999

2. 2 The MIS Function and Information Systems Planning Organization of the MIS Function MIS Specialists Establishing Organizational MIS Requirements Evaluating the Relative Worth of MIS Applications Linking Business and systems planning

3. 3 The MIS Function and Information Systems Planning Cost-Benefit Analysis Methods of Acquiring IS The MIS Development Process Agents Involved in an MIS Project Who Initiates A Project?

4. 4 Organization of the MIS Function MIS is responsible for providing and coordinating computer-base information services: developing operating maintaining facilitating the acquisition adaptation of software & hardware

5. 5 Organization of the MIS Function A distributed MIS organization FIGURE 17.1 Corporate MIS: Responsible for: infrastructure- telecommunications networks, corporate data center corporate STANDARDS interacting with vendors to gain discounts & for scanning

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8. 8 Establishing Organizational MIS Requirements To be effective competitor: a vision a model a framework

9. 9 Establishing Organizational MIS Requirements A. Contents of an MIS Master Plan First MIS is a major corporate asset provides benefits uses resources- Money The planning process provides support for business objects the planning process allocates resources based upon priorities in THEORY the MIS plan should be aligned with the Corporate business strategy

10. 10 Establishing Organizational MIS Requirements A. Contents of an MIS Master Plan (con�t) A long term Plan Coordination of MIS Plan with business plans Content Timing Personnel

11. 11 Establishing Organizational MIS Requirements A linkage between MIS & Business Plans has: the corporate business plan states the informational needs the MIS plan refers to the requirements of the business plan the MIS plan is checked against the business plan non-MIS managers participate in the MIS planning process MIS managers participate in the business planning process Corporate and MIS calendars are in sink with each other

12. 12 Establishing Organizational MIS Requirements The MIS plan is reviewed periodically The conceptual contents o the plan

13. 13 Establishing Organizational MIS Requirements B. Derivation of the MIS Requirements Derived directly from the business plan

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15. 15 Establishing Organizational MIS Requirements C. The Strategic Cube the cube provides a framework basic questions: Will it face increasing customer power? Are there fewer customer who are larger? Is the firm to pursue a differentiating strategy? Does the firm have a track record for innovation?

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17. 17 Establishing Organizational MIS Requirements D. Strategy Set Transformations 1. Identify the organizational stakeholder customers employees suppliers 2. Develop goals, strategies, objectives to fit each group of stakeholder

18. 18 Establishing Organizational MIS Requirements D. Strategy Set Transformations (con�t) 3. Determine the needed informational requirements for the strategies Example from text: Stakeholder: Customer Strategy: improve service Innovation: Confirm orders within one hour

19. 19 Establishing Organizational MIS Requirements E. Approaches to Planning 1. Overview: There are several different approaches to systems planning Some look at assimilation of IT in organizations Some focus on defining informational needs Some discuss categorizing applications

20. 20 Establishing Organizational MIS Requirements E. Approaches to Planning (con�t) 2. The basic set of approaches: Business Systems Planning (BSP) Critical Success Factors (CSF) Investment strategy analysis Scenario approach Linkage analysis planning Creative problem solving Enterprise Analysis The Architecture approach The crystal Ball Approach

21. 21 17.3 Establishing Organizational MIS Requirements BSP developed by IBM Philosophy: Data is a corporate resource (Enterprise data) Goal: discover a stable information architecture that supports all processes of the business. Objective: to assure the data necessary to support the business plan are available and that a stable information system architecture is developed.

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23. 23 Establishing Organizational MIS Requirements BSP (con�t) 1. Defining the business process identify the activities identify the decisions identify the systems, processes, flows 2. Defining Business data classes of data (customers, employees, places, objects) determine data usage Example: Inventory record- SKU, Name, quantity on hand, lead time

24. 24 Establishing Organizational MIS Requirements BSP (con�t) 3. Define information architecture Creating processes Using processes

25. 25 17.3 Establishing Organizational MIS Requirements Critical Success Factors (Rockart, 1979) A method for defining executive information needs. They are key areas or activities that must work right in order for the organization to be successful. They are time dependent and therefore must be measured .

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27. 27 Establishing Organizational MIS Requirements 1. Sources for the CSF's industry: the company the environment social legal technological economic political Temporal: areas of the organization which do not normally need concern, but are currently unacceptable (The open can of worms).

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30. 30 Other Methods Investment Strategy Analysis A strategy based upon portfolio planning and investment analysis. Four major types of systems for the 1990's 1. Institutional procedures- the processing of internal transactions, as represented by many of today's mainline systems 2. Professional support system- engineering support (CAD) Managerial decision-making support (DSS, GSS) 3. Physical automation

31. 31 Other Methods 4. Systems that serve users outside the company, i.e. customers and suppliers. EDI, Voice mail, 800 numbers, Fax 5. Basic infrastructure telecommunications networking data base office automation & DSS

32. 32 Other Methods Alpha Company 1. Renovate existing manufacturing systems around data base technology 2. Invest heavily in increasing the productivity of engineers 3. Foster innovation among the professional staff 4. Invest heavily in CAD/CAM Beta Company 1. Create new systems only when old ones fail 2. BE A FOLLOWER 3. Invest only when IT has a bottom line impact

33. 33 Other Methods Scenario Planning (WHAT IF) The scenarios help identify problems and manage assumptions. They also provide flexibility in the plans and a means of escape if necessary.

34. 34 Other Methods 1. Elements of a scenario the business environment the effects of deregulation shifting towards a service economy ; away from MASS production Mergers and acquisitions increased foreign competition National budget deficits Interest rates (not in 1992) Changes in the strength of the US dollar unemployment corporate down sizing

35. 35 Other Methods Government & society information accuracy privacy (see Scientific American August, 1992) access to information property rights people changes Financial considerations ROI TECHNOLOGY speed of change quick obsolescence

36. 36 Other Methods 2. Creating Scenarios a. deterministic : spreadsheet what if analysis Lotus 123 b. Cross-impact analysis: a model of major events and trends. Data can come from Delphi studies.

37. 37 Other methods Creative problem Solving Couger's Method; a 1992 Working paper the 5 phases 1. fact finding 2. problem finding 3. idea finding 4. solution finding 5. acceptance finding

38. 38 Other Methods Creative problem Solving (con�t) divergence-convergence activities recursiveness (iterative) and non-linearity using creativity techniques in each phase EBS alternative selection

39. 39 Other Methods The Architecture Building Approach The blue print for the information technology infrastructure. 1. support communications flows the flow of formal authority - financial consolidations of profit and loss centers via a computer flows of regulated activities- online banking systems informal communication flows- E-mail, voice mail work constellations- expert systems ad hoc decision processes- document retrieval

40. 40 Other Methods The Architecture Building Approach (con�t) 2. help people communicate provide different types of views of the same thing 3. support organizational decision making help executives rethink how the business should be what kind of structure is needed ?

41. 41 Establishing Organizational MIS Requirements SUMMARY Successful strategy has two main ingredients: 1. Look to the future 2. link system plans to business plans

42. 42 Establishing Organizational MIS Requirements SUMMARY The 3 Stages of developing a plan: 1. Understand the business use a model or framework to help USE THE RIGHT MODEL OR FRAMEWORK 2. Identify the firms INFORMATION needs 3. Rank the opportunities presented by information technology in terms of their relative importance and the relative VALUE added to the business.

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44. 44 Evaluating the Relative Worth of MIS Applications strategic: IS activities critical to the current competitive strategy and to future strategic decisions. IS applications are part of new strategic direction Factory: IS applications are vital to the successful functioning of well-defined, well accepted activities. Not part of future strategic operations

45. 45 Evaluating the Relative Worth of MIS Applications Support: IS applications are useful in supporting activities. not vital to critical operations and not included as part of future strategic direction. Turnaround: IS in transition- from support to strategic. Vital to strategic success. How does this relate to the Daft Weick Model? What about Uncertainty/Equivocality?

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47. 47 Linking Businessand systems planning Using Steering Committees 1. Can consist of upper management from all divisions and functions Department management from all divisions and functions Technical management from all divisions and functions IS, IE, Eng

48. 48 Linking Businessand systems planning 2. There job is to: "steer" direct, push, pull, etc. the Organization investments in the direction that benefits the company the most; the STRATEGIC direction. 3. How do they do that? Information scanning

49. 49 Linking Businessand systems planning 4. Advantages of steering committees from Drury (1984) 1. Increases the attention of top management to computing 2. Users become more involved with the system 3. The system departments are more aware of user needs 4. There is better long range planning for IS

50. 50 Linking Businessand systems planning Other approaches IS mgrs. and analysts User-group Multi-department, IS, executive mgmt Combination

51. 51 Cost-Benefit Analysis A technique for estimating the payoff to be expected from an information system. A. Cost benefit Analysis a quantitative support $ Table 17.6 p 693

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53. 53 Cost-Benefit Analysis B. Basic Stages of Cost benefit analysis Identification of costs fixed costs operational costs (variable costs) Identify Benefits Tangible $ cost savings Cost avoidance revenue increases

54. 54 Cost-Benefit Analysis B. Basic Stages of Cost benefit analysis (cont�) Intangible not $ Table 17.7 page 694 Compare and analyze NVP IRR ROI Then PRAY

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56. 56 Methods of Acquiring IS 1. Internal Development Pros and Cons Discussion Techniques SDLC Prototyping SAD

57. 57 Methods of Acquiring IS 2. Purchase Canned vs Custom Discussion 3. External Systems integrator 4. Outsourcing 5. A combination approach

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63. 63 Agents Involved inan MIS Project A. The Actors Z-1992 Figure 17.10 p 704 B. The theories From Markus C. The Roles: The users are interested in system performance Yes/NO Management controls the resources Yes/no MIS implements a system that SATISFIES the users' needs as well as the constraints and objectives from MGT.

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65. 65 Agents Involved inan MIS Project D. Problems Encountered: Actors have their own agendas Users generally do not KNOW what they want/need COMMUNICATION can be a problem cognitive style

66. 66 Who Initiates A Project? Managing The Application Development Portfolio I. How System Projects are begun A. Reasons for Projects 1. Solve a problem 2. Capitalize on an opportunity 3. Respond to a directive

67. 67 Who Initiates A Project? Capability: Efficiency improve processing speed Point of sale systems, Bar coding ability to handle increased volume PC vs. manual methods, more PC's, LAN faster retrieval of information Bigger, faster data storage, SQL-based DBMS Canned-software (Order entry, Manufacturing, etc.)

68. 68 Who Initiates A Project? Control: Efficiency/Effectiveness Improved accuracy and consistency automating the process to reduce human error Computer prompting, error detection, field value checks Provide better security Need to know screens Password protection

69. 69 Who Initiates A Project? Communication: Effectiveness Enhance communication Credit card systems, brokerage systems, E-Mail Integration of business areas: Coordination CIM, LAN communication, Manufacturing systems (ACCOUNTING, MATERIALS MGMT & MANUFACTURING)

70. 70 Who Initiates A Project? Cost: Effectiveness Monitor Costs Tracking cost through a system (manufacturing LED-CS) Reducing costs automatic calculation-retrieval systems PTOS

71. 71 Who Initiates A Project? Competitive Advantage: Effectiveness: a strategic weapon Lock in customers by offering a better price by providing a unique service by presenting distinctive products Examples: American Hospital Supply, Eaasy Saber System, MAC Lock out competitors This happens when one locks in customers

72. 72 Who Initiates A Project? Competitive Advantage: Effectiveness: a strategic weapon (con�t) Improve arrangement with suppliers EDI, long term contracts, the Japanese way, JIT Quality programs, Shared Data Bases Form a basis for new products the value of information, commercial data bases on anything, mailing lists, Market Research, Shop Rite Price Plus, Prodigy, CompuServe. INNOVATION

73. 73 Who Initiates A Project? B. Sources of Project Requests 1.Department Managers: Improve control, Power Form processing systems, QC 2. Senior executives: Strategic, competitive advantage EIS, DSS, Market Research , E-Mail, Big systems 3. Systems analysts: Efficiency Speed accuracy, upgrades 4. Outside Groups: Regulatory Special accounting systems, OSA control

74. 74 Who Initiates A Project? C. Managing the portfolio direction There are limited resources (money, manpower, material, etc) In a rational organization classify impact of project can the project be redesigned to support multiple business functions or fewer ensure funding judge fit, function, form, recommend development strategy SDLC, SA, Prototyping ask 5 C's

75. 75 Who Initiates A Project? C. Managing the portfolio direction (con�t) In other organizations Power Political Favored son Fear

76. 76 Who Initiates A Project? D. Integration Application should be integrated (yes & no) Horizontal- (marketing, Manufacturing, accounting) Vertical- upper level to lower level mgmt Distributed- separate system in different plants different hardware, software Integration- External-Internal EDI

77. 77 Who Initiates A Project? II The Project A. Project request WHAT IS THE PROBLEM DETAILS of THE PROBLEM IMPACT OF THE PROBLEM (how significant is it) PROPOSED SOLUTION JUSTIFICATION (5 C's) BENEFITS (5 C's) Who else knows Intangibles

78. 78 Who Initiates A Project? B. Preliminary Investigation (Fig 2.6, 75) by the team- SA, IE, Mgrs., etc 1. Scope of the study Clarify and understand the project request Determine size Assess cost/benefits Determine feasibility - Technical, operational, economic Report findings with recommendations

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80. 80 Who Initiates A Project? 2. Conducting the investigation Reviewing organizational documents Conducting interviews Observations Questionnaires Do the work Experiment Plant site visits Vendor demonstrations Seminar

81. 81 Who Initiates A Project? 2. Conducting the investigation (con�t) Conferences Workshops literature: trade/academic Personal contacts KEY: Learn, Understand, Listen, Integrate

82. 82 Who Initiates A Project? 3. Testing Project Feasibility Operational Is there support/resistance; from or by who Are current business methods acceptable? If not a change may be welcomed Have the user's been involved? If not get them involved Will the system cause harm?

83. 83 Who Initiates A Project? 3. Testing Project Feasibility (con�t) Technical Does the necessary tech exist? Can it be acquired? Does the proposed equipment have the right capacity for the data? Remember Tracks System Does the propose have the right: response time, interface, Can the system be expanded? Are the accuracy, reliability, ease of use, ease of access, security ok?

84. 84 Who Initiates A Project? 3. Testing Project Feasibility (con�t) Economic include cost to conduct full systems integration cost of hardware/software/ other benefits in terms of reduced costs opportunity costs

85. 85 Who Initiates A Project? III. Selecting the Project Development Strategy (Table 2.2, 81) 1. Institutional Vs End user Organizational systems (i.e. MRP, CIM) vs. End-user (PC- lotus, Dbase)

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87. 87 Who Initiates A Project? 2. End-User development approach specification of information requirements in conjunction with a specific task or decision Querying a data base with special software HP-Access to lotus development of an application with a package

88. 88 Who Initiates A Project? 3. Suitable end-user developments One-time Inquires Simple reports Minor changes Presentations What if analysis

89. 89 Who Initiates A Project? 4. What should not be handled High volume transactions Use of traditional programming languages (Basic, FORTRAN, etc.) Yeah right!! Changing data values in a Org DB Applications spanning several departments Applications requiring formal documentation Major long-term applications (the New Post office) Applications requiring formal spec's In time as hardware/software changes these will also change.