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Management Information Systems: Solving Business Problems with Information Technology Part Two: Business Integration Chapter Seven: Integration of Information: Model Integration Prof. Gerald V. Post Prof. David L. Anderson. Model. Specific Way of Looking at the World

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slide1

Management

Information

Systems:

Solving Business

Problems with

Information Technology

Part Two:

Business Integration

Chapter Seven:

Integration of

Information:

Model Integration

Prof. Gerald V. Post

Prof. David L. Anderson

model
Model
  • Specific Way of Looking at the World
    • specific and concrete
    • mathematical equations
    • subjective descriptions
    • financial models
    • consumer models
    • management models
  • Assist in Understanding More Complex Issues
    • enable comparison between model and actual results
  • Some Processes Defy Modeling
    • Too much variability or complexity
dangers of models
Dangers of Models
  • Number of Alternatives
  • Expense
  • Time
  • Difficulty to Mirror Reality
biases in decision making
Biases in Decision-Making
  • Acquisition (input)
  • Processing
  • Output
  • Feedback
re engineering
Re-Engineering
  • Analyze and Model the Entire Company
  • Make Major Changes to the Operation of the Business
  • Small Changes over Time can Actually cause a business to be misaligned with its Target
decision support systems
Decision Support Systems
  • Database
    • Collects
  • Model
    • Evaluates
    • Model should Directly Access Database
    • Different Brands of Software are Used for Each Component
  • Output
    • Produces
    • Graphs
input and output variables
Input and Output Variables
  • Input Variables
    • To Receive Data
    • Quantities of Raw Materials
    • Labor Hours
    • Money Invested in Capital Equipment
    • Identified by Statistical Techniques
  • Process Data
  • Output Variables
    • Profit
    • Quantity Produced
    • Quality Ratings
software and models
Software and Models
  • Generic Modeling Tools
  • SPSS or SAS
  • Decision Support System
  • Database Management System
  • Spreadsheets
enterprise wide decision support systems
Enterprise WideDecision Support Systems
  • Data Warehouse
    • focuses on single large server or mainframe that provides consolidation point for enterprise data from diverse production systems
    • architecture, usually based on relational database management system, used to maintain historical data that has been extracted from the operational data store
  • Data Mart
    • focuses exclusively on serving a distinct community of knowledge workers
steps to a data warehouse
Steps to a Data Warehouse
  • Determine needs of end users and model data that the data warehouse should contain
  • Identify necessary data sources from among the many corporate data sources
  • Analyze corporate data sources in depth, documenting functions and processes
  • Use information about corporate data sources to decide the transformation/integration logic
  • Develop the metadata, which identifies the source data, describes the transformation and integration, and defines the data model
  • Construct the physical data-warehouse database; populate Warehouse from various sources
  • Generate necessary end-user applications
data warehouse
Data Warehouse
  • Not Repositories for all Corporate Data
  • Not Separate, Read-Only Data Stores
  • Do not Require Relational Databases
  • Not always big
four processes for the delivery of decision support data
Four Processes for the Delivery of Decision Support Data
  • Extract all data relevant to the business decision-making processes of groups of knowledge workers for the specific production systems responsible for capturing that information.
  • Store the resulting data sets in one location: the data warehouse.
  • Develop a unique cut or series of cuts of the data warehouse for each knowledge worker community.
  • Supply the decision-support tools appropriate to the knowledge workers’ style of computing.
slide13

Management Processes

Feedback

  • Long feedback cycles
  • Limited understanding of relationships among measures
  • Sequential & functional
  • Incomplete feedback; limited to no feedforward

Results Control

Personnel Control

Action Control

  • Rigid contracts with suppliers
  • Rigid job descriptions, hiring criteria & standardized performance appraisals for employees
  • Process & job segmentation
  • Rigid procedures & policies
  • Direct supervision
  • Primarily financial
  • Internally oriented
  • Functional
slide14

Management Processes

Feedback

  • Short feedback cycles
  • Relationships among measures preserved
  • Interactive & interfunctional

Process Control

  • Information-Enabled
  • Process & work integration
  • Real-time access to a broad set of process performance
  • Interfunctional & interorganizational measures
  • Boundaries and Values
  • Clearly defined and communicated
  • Consistently enforced
  • Early warning systems
  • Action control for high risk operations

Output Control

  • Broad set of internal & external measures
  • Benchmarking
  • Interfunctional & interorganizational

Feedforward

  • Improved understanding of relationships among inputs, process, and outputs
  • Predictive models/causal models
  • Interactive scenario planning
slide15

Management Processes

Feedback

  • Short feedback cycles
  • Relationships among measures preserved
  • Interactive & interfunctional

Input Control

(includes Personnel Control)

Process Control

  • Information-Enabled
  • Process & work integration
  • Real-time access to a broad set of process performance
  • Interfunctional & interorganizational measures
  • Boundaries and Values
  • Clearly defined and communicated
  • Consistently enforced
  • Early warning systems
  • Action control for high risk operations

Output Control

  • Supplier certification
  • Employee certification (advanced degrees, professional) & performance monitoring
  • Formal business intelligence systems
  • Broad set of internal & external measures
  • Benchmarking
  • Interfunctional & interorganizational

Feedforward

  • Improved understanding of relationships among inputs, process, and outputs
  • Predictive models/causal models
  • Interactive scenario planning
slide16

Defining Direction

Executing and Adapting

Sustaining Value

Units, groupings

  • Process Performance
  • Time
  • Quality
  • Cost
  • Flexibility
  • Innovation potential
  • Stakeholder Satisfaction
  • Employees/partners
  • Customers
  • Shareholders
  • Society
  • Benchmarks
  • Best of class
  • Best of breed
  • Reputation
  • Other
  • Sustainability
  • Resiliency
  • Flexibility

Environmental context and resources

Coordinating mechanisms

Incentives

Authority

Formal and informal power

Purpose, core values, and core competencies

Information

Strategy

Boundary systems

Operating processes

Control

Management processes

Organizational context, resources, and leadership

People

Values and Behavior

Work

Technology

slide17

Complex

?

Hierarchy

(Control)

Organization

Entrepreneurial

(Autonomy)

Simple

Stable Certain

Dynamic Uncertain

Environment

slide18

SCOPE OF CHANGE

Incremental Change to a Process or Function

Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture

Intrafunctional Interfunctional Interorganizational

LOW

Episode #3

1991-1993

Team-based Organization Redesign

Episode #1

1985-1988

Corporatewide Reorganization

Urgency of Stimulus

1988-1991

Business Process Redesign Within Plant

Episode #2

HIGH

slide19

SCOPE OF CHANGE

Incremental Change to a Process or Function

Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture

Intrafunctional Interfunctional Interorganizational

LOW

Episode #2

1988-1990

Quality Mgmt.

Urgency of Stimulus

Episode #3

1992-1993

Bus. Unit #1 Restructuring

1991-1992

Business Process Reengineering

1991-1992

SBU Restructuring

Episode # 1

1986-1988

Focused Redesign/Key Leveraged Areas

1985

Post-takeover Restructuring

HIGH

slide20

SCOPE OF CHANGE

Incremental Change to a Process or Function

Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture

Intrafunctional Interfunctional Interorganizational

LOW

1991-1992

EDI Initiatives

1990-1993

Area Business Team Reorganized

1978-1980

Ideal Sales Org. Study & Ideal Mfg. Org. Study

1983-1986

Redesign of Field Sales, Distribution & Mfg. (separate initiatives)

1987-1988

Business Process Redesign

Episode # 3

Urgency of Stimulus

Episode # 2

Episode # 1

HIGH

slide21

Strategic and IS Planning Process

IS Investment Plan

Strategic Business Planning

Strategic

IS Planning

CDS

Critical Success Factors

Strategic Goals

SDM

IS Products and Services

Strategy

VISION

VBP

CAS

Competitive Social Political

External Strategic Models

slide22

AGREEMENTS REACHED

WORK COMPLETIONS

REQUESTS COMPLETED

AGREEMENTS REACHED

slide23

Traditional organizations

Customer-driven organizations

Product and service planning

  • Short-term focus
  • Reactionary management
  • Management by objectives
  • Long-term focus
  • Prevention-based management
  • Customer-driven strategic planning process

Measure of performance

  • Bottom-line financial results
  • Quick returns on investment
  • Customer satisfaction
  • Market share
  • Long-term profitability
  • Quality orientation
  • Total productivity

Attitudes toward customers

  • Customers are irrational and a pain.
  • Customers are a bottleneck to profitability.
  • Voice of the customer is important
  • Professional treatment and attention to customers are required.

Quality of products and services

  • Provided according to organizational requirements
  • Provided according to customer requirements and needs

Marketing focus

  • Seller’s market
  • Careless about lost customers
  • Increased market share and financial growth achieved through customer satisfaction.

Process management approach

  • Focus on error and defect detection
  • Focus on error and defect prevention

Product and service delivery attitude

  • It is OK for customers to wait for products and services.
  • It is best to provide fast-time-to-market products and services

People orientation

  • People are the source of problems and are burdens on the organization.
  • People are an organization’s greatest resource.

Basis for decision making

  • Product-driven
  • Management by opinion
  • Customer-driven
  • Management by data

Attitudes toward customers

  • Hostile and careless
  • “Take it or leave it” attitude
  • Courteous and responsive
  • Empathic and respectful attitude

Improvement strategy

  • Crisis management
  • Management by fear and intimidation
  • Continuous process improvement
  • Total process management

Mode of

operation

  • Career-driven and independent work
  • Customers, suppliers, and process owners have nothing in common
  • Management-supported improvement
  • Teamwork between suppliers, process owners, and customers practiced.
slide24

Information Technology Development Effort

“Knowledge networks”

Scope of electronic integration

“Strategic alliances”

“Standard business contracts”

“EDI”

Tightly coupled

Expertise

Collaborative advantage

Business network redesign

Process

linkages

Business governance

Inventory triggers

Electronic infrastructure

Competitive advantage

Loosely coupled

Transactions

Common role

Unique role

IT governance

slide25

Conventional and IT Design Variables

Class of variable

Conventional and design variables

Source

IT design variables

Definition of organizational subunits

Determining purpose, output of subunits

Reporting mechanisms

Linking mechanisms

Control mechanisms

Staffing

Tasks

Workflows

Dependencies

Output of processes

Buffers

Formal channels

Informal communications/

collaboration

Make versus buy decision

Exchange of materials

Communications mechanisms

Nadler and Tushman; Galbraith; Thompson

Nadler and Tushman; Galbraith; Thompson

Nadler and Tushman; Mintzberg

Galbraith; Nadler and Tushman

Nadler and Tushman

Mintzberg

Nadler & Tushman

Nadler & Tushman

Thompson

Galbraith

Mintzberg

Mintzberg

Mintzberg

Virtual components

Electronic linking

Technological leveling

Production automation

Virtual components

Electronic communications

Technological metrixing

Electronic customer/ supplier relationships

Electronic customer/supplier relationships

Electronic linking

Structural

Work process

Communications

Interorganizational relations

slide26

IT Design Variables and Four Prototypical Organizations

Vertically integrated conglomerates

Negotiated organizations

Virtual

Traditional

Virtual components

Electronic linking and communications

Technological matrixing

Technological leveling

Electronic workflows

Production automation

Electronic customer/ supplier links

Substitute electronic for physical components

Essential part

Participate in matrixed group

Use to supervise remote workers and groups

Crucial part of strategy

NA

Used extensively

Substitute electronic for physical components

Essential part

Use for coordination

NA

Crucial part of strategy

Communicate designs

Used extensively

Use to replace isolated components

Optional

Use for various groups

Use to reduce layers of management

Use where applicable to restructure work

Use where applicable

Potentially important

Force components into electronic subsidiary

Essential part

Use for coordination and task forces

Use to reduce layers of management

Key to coordinating work units

Coordinate production among work units

Key to operations

slide27

Three Generic Strategies

Strategic Advantage

Uniqueness Perceived by the Customer

Low Cost Position

OVERALL COST LEADERSHIP

Industrywide

DIFFERENTIATION

Strategic Target

Particular Segment Only

FOCUS

slide28

Focus Elements of a Customer- and Market-Driven Enterprise

Design and product quality

Commitment to customer satisfaction

Human resource development

Total quality care

Error prevention philosophy

Total quality solution

Competitive market-driven enterprise

Market-driven quality and productivity technologies for continuous improvement

Quality management and supervision

Quality services

Personal quality

Productivity efficiency and effectiveness

slide29

1

2

Convince top management of benefits of becoming market driven.

Communicate and demonstrate management’s commitment.

10

Success factors

Top management leadership and commitment

Continuous improvement focus

Continuous education and training

Continuous recognition and reward

Participative management and employee empowerment

3

Establish focal point and recruit other qualified individuals.

Monitor progress toward objectives.

9

4

Develop customer commitment throughout enterprise.

Increase amount of customer-oriented interdepartmental teamwork.

8

Develop new improvement programs with customer-oriented professionals.

5

Introduce market-driven strategic planning process.

7

6

Create and use market-based performance measures.

Apply tools of market research, auditing, marketing training, and consulting.

Steps to Becoming a Customer- and Market-Driven Enterprise

slide30

The Wheel of Competitive Strategy

Target Markets

Product Line

GOALS

Definition of how the business is going to compete

Objectives for profitability growth, market share, social responsiveness, etc.

Finance and Control

Marketing

Research & Development

Sales

Distribution

Purchasing

Labor

Manufacturing

slide31

Context for Competitive Strategy

Company Strengths/Weaknesses

Industry Opportunities/ Threats

External Factors

Internal Factors

Competitive Strategy

Personal Values

Societal Expectations

slide32

Cost leadership

  • Differentiation
  • Innovation
  • Linkage

Corporate Strategy Development

  • expectations
  • goals
  • rivalry

Business Strategies

and Priorities

monitor rivals

  • strengths
  • weaknesses
  • opportunities
  • critical success factors
  • Re-engineering
  • Organization
  • Decentralization

Process Changes

Data Needs

IS Changes

  • Performance Measures
  • ROA
  • EPS
  • Subjective
  • ROI
  • Growth

System

Development

& Implementation

  • Market Measures
  • Market share
  • Concentration
  • Growth
  • Profitability

Business Operations & Rules

Existing Data and IS

Developing Strategies. Market measures and firm performance are used to highlight problems and opportunities. Corporate straightedges are developed from process improvements and innovations. Potential strategies are evaluated and prioritized. Processes are re-engineered and new systems are designed and implemented.

slide33

Formulation

(Deciding what to do.)

Implementation

(Achieving results.)

1. Organization structure and relationships.

Division of work.

Coordination of divided responsibility.

Information systems.

1. Identification of opportunity and risk.

Corporate Strategy

Pattern of

purposes and

policies

defining the

company and

its business

2. Determining the company’s material, technical, financial, and human resources.

2. Organizational processes and behavior.

Standards and management.

Motivation and incentive systems.

Control systems.

Recruitment and development of managers.

3. Personal values and aspirations.

3. Top leadership.

Strategic.

4. Acknowledgment of noneconomic responsibility to society.

Organizational.

Personal.

Strategy analysis. Strategy determines the identity of a firm. Formulating strategies is only the first step. As an effective manager, you must also be able to implement strategies.