Management Information Systems. Data versus Information. Yummy B’day Cake. Raw ingredients. Information. Data. Information is raw data combined with knowledge of the business climate and processes to produce actionable information and recommendations. .
Data versus Information Yummy B’day Cake Raw ingredients Information Data Information is raw data combined with knowledge of the business climate and processes to produce actionable information and recommendations.
IT Data IS Business Process People INFORMATION SYSTEMS Set of interrelated components Collects, stores and distributes information Supports decision making and control in an organization Key elements:
ENVIRONMENT Suppliers Customers ORGANIZATION PROCESSING Classify Arrange Calculate OUTPUT INPUT Feedback Competitors Regulatory Agencies Stockholders INFORMATION SYSTEM
INFORMATION SYSTEMS COMPONENTS • Inputs: raw data • May be physical, electronic or conceptual • May use a manual or automated process • Processing: conversion of inputs to outputs • May be comprised of computations, data storage, choosing alternatives • May be a manual or automated process • Outputs: information used to make decisions • May be delivered in paper form or electronically • Outputs of one system may be inputs to another system • Feedback/assessment: outputs used to improve system performance • Can flag for incorrect processing • Cue for managerial interventions • Supply estimates of future input values (forecasting)
NEED FOR INFORMATION SYSTEMS • Globalization opportunities • Emergence of the internet • Emerging Digital Firm • digital firm – one in which all significant business relationships are digitally enabled and core business processes are accomplished through digital networks. • any information available anytime anywhere • responds rapidly to environments • flexibility • time shifting 24x7 work culture • space shifting global workshop
Toyota views IT as an indispensable tool Toyota uses Oracle-based Vehicle Order Management System
Vehicle Order Management System Manufacturing plants Inventories Factories Data • From customer • Dealer Identification # • Model • Color INFORMATION SYSTEM • Shipping instructions • Invoices • Production reports Information
OBJECTIVES OF INFORMATION SYSTEMS IMPROVED DECISION MAKING OPERATIONAL EXCELLENCE INFORMATION SYSTEMS CUSTOMER- SUPPLIER INTIMACY COMPETITIVE ADVANTAGE SURVIVAL NEW PRODUCTS, SERVICES & BUSINESS MODELS
OBJECTIVES OF INFORMATION SYSTEMS - 1 OPERATIONAL EXCELLENCE IMPROVE EFFICIENCY HIGH PRODUCTIVITY
The Wal Mart Example • It is the world's largest public corporation by revenue, • according to the 2008 Fortune Global 500 • largest private employer in the United States • and the largest grocery retailer in the United States
Information Systems + Brilliant business practices + Supportive management = Success Wal Mart uses RetailLink System
Supplier 1 Supplier n Supplier 2 Informs about the purchase RetailLink System Replacement shipped Wal Mart 5289 Wal Mart 3 Wal Mart 1 Wal Mart 2 One of the most efficient retail store in the industry.
OBJECTIVES OF INFORMATION SYSTEMS - 2 NEW PRODUCTS, SERVICES & BUSINESS MODELS A SAMPLE BUSINESS MODEL ENABLING TOOL TO CREATE NEW PRODUCTS, SERVICES & BUSINESS MODELS
The Apple Example CD NANO
iTunes Video player iTunes Music Service iPod nano The iPod business model iPod original
CUSTOMER- SUPPLIER INTIMACY OBJECTIVES OF INFORMATION SYSTEMS - 3 Revenue & Profits up KNOW YOUR CUSTOMER Good service Cost down KNOW YOUR SUPPLIER Engaging suppliers
TAL Apparel, a shirt maker in Hong Kong (China), + retail giant JC Penney in the United States = Power Synchronization The JCPenney Example
TAL (Hong Kong) Point of sales data JCPenney Store 2 JCPenney Store 1 JCPenney Store n
Analyse this relation called VENDOR-MANAGED-INVENTORY JCPenney cedes functions to TAL TAL responds directly to customer-demand Manufacturer-customer link is strong TAL analyses sales of a new design in JCPenney Stores TAL, not JCPenney, decides how many more of the new design to manufacture Sales forecasting was now done by TAL and not JCPenney • Advantages: • Saves time • Saves money • Hurdles: • Suitable only for big firms because it requires high investments.
IMPROVED DECISION MAKING OBJECTIVES OF INFORMATION SYSTEMS - 4 Over Production forecast Under Production Lack of Information best guesses luck Misallocation of resources Poor response times
COMPETITIVE ADVANTAGE OBJECTIVES OF INFORMATION SYSTEMS - 5 CUSTOMER- SUPPLIER INTIMACY Charging less for superior products Responding to customers and suppliers in real time IMPROVED DECISION MAKING COMPETITIVE ADVANTAGE NEW PRODUCTS, SERVICES & BUSINESS MODELS Higher sales Higher profits OPERATIONAL EXCELLENCE
THE DELL EXAMPLE
Dell Computer has changed the competitive landscape by: • Offering customized products directly to customers on demand without premiums in either price or lead time • Minimizing inventory to unthinkable levels • Being agile—quickly responding to the market/technology changes • Eliminating the cost and risk of finished goods inventory • Successfully executing a mass customization strategy quarter after quarter, year after year Mass customization is the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization.
SURVIVAL OBJECTIVES OF INFORMATION SYSTEMS - 6
END OF SESSION - 1 September 7, 2009 - Section A September 8, 2009 - Section B
DIMENSIONS OF INFORMATION SYSTEMS Effective understanding of organization, management & IT Technology Organizations Information Systems Management
Organizations • Key elements • People • Structure • Business Process • Politics • Culture
Organizations • People • Executives • Knowledge workers • Data workers • Production workers • Service workers
Structure Organizations Ad Hoc Unscheduled Summarized Infrequent Forward Looking External Wide scope Strategic Management Unstructured Information Decisions Semi-structured Tactical Management Pre-specified Scheduled Detailed Frequent Historical Internal Narrow Focus Operational Management Structured
President/ Vice President/ CEO/ Directors Strategic Level • Requires even less detailed • information • Overall branch performance • To open/ close a branch • Strategies Branch Manager Tactical Level • Requires less detailed • information & more general • information • How much stock to order? • How much floor space • required? • Dollar value of sales Operational Level Supervisor • Requires detailed information • How many items available? • How many items on order? illustration
BUSINESS PROCESS FUNCTIONAL AREA Manufacturing & Production Assembling the product • checking for quality • Producing bills of materials Sales & Marketing Identifying customers • making customers aware of the product • selling the product Finance & Accounting Paying creditors • creating financial statements • managing cash accounts Human Resources Hiring Employees • Evaluating employees’ job performance • Enrolling employees in benefit plans • Business Process Organizations • Manner in which work is organized, coordinated, focused to produce a valuable product or service • These processes can be decomposed into several sub-processes, which have their own attributes. • All these sub-processes contribute towards achieving of the major goal.
SALES Generate order Submit order ACCOUNTING Check audit Approve credit Generate invoice MANUFACTURING & PRODUCTION Ship product Assemble product A sample business process
Politics Organizations • Political Behavior • Activities that are not required as part of one’s formal • role in the organization • But influence, or attempt to influence, the distribution • of advantages or disadvantages within the organization resources about Conflict Different people Different view points rewards punishment
Culture Organizations • Bedrock, unassailable, unquestioned assumptions that define goals and products • What the organization should produce? • How the organization should produce the products? • Rarely publicly spoken • Powerful unifying force • Restrains political conflict • Promotes common understanding, agreement on procedures & common practices • Powerful Restraint on change • Resists change to any basic assumptions
MANAGER Management ? • BERATE ANYONE WHO’S SLIGHTLY LATE • UNNECESSARY MEETING • PROMOTE THE UNQUALIFIED • DUCK OUT AT 3:00 PM TO PLAY GOLF
Management • Manager must • perceive business challenges in the environment • set organizational strategy to address these challenges • allocate human and financial resources to coordinate work • exercise responsible leadership • create new products and services • be creative Success
Technology • Computer Hardware • physical equipments • Computer Software • preprogrammed instructions • Data Management Technology • software concerning storage of data on physical storage media • Networking and Telecommunications Technology • physical devices and software to link various systems for data transfer • networks - internet/ intranet/ extranet
INFORMATION SYSTEMS Vs INFORMATION TECHNOLOGY Technology Payroll System INFORMATION TECHNOLOGY Hardware Software Databases Networks Other related components Inventory System is used to build INFORMATION SYSTEMS Marketing System Customer Service System
INTERDEPENDENCE BETWEEN ORGANIZATIONS AND INFORMATION SYSTEMS Hardware Business Strategic Objectives Business Processes Software Data Management Tele- communications Business Firm Information System
A BUSINESS PERSPECTIVE ON INFORMATION SYSTEMS support of business operations • automation of business process • simplification of business processes • reengineering of business processes support of managerial decision making • Improved co-ordination among various functional areas • Dynamic scheduling among the different functional areas support of strategic competitive advantage • Shortening of response time • Up-to-date information on revenues, budget performance • E-business opportunities
The Indian Railways Passenger Reservation System example • Largest and busiest rail networks in the world • 18 million passengers and more than 2 million tonnes of freight daily • 6,909 stations over a total route length of more than 63,327 kilometers
3,269,681 e-tickets 1,093,961 e-tickets 295, 062 e-tickets 299 e-tickets Aug 2007 Aug 2008 Aug 2006 Aug 2005 Impact of Information Systems • Reduction in cost of labor • Reduction in transaction cost for customers, suppliers, distributors • Faster decision support resulting in customer satisfaction • Higher productivity and performance Speaks of ecommerce viability in India
Sociology Operations Research MIS Economics Computer Science Psychology Management Science CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS TECHNICAL APPROACH BEHAVIORAL APPROACH
TECHNICAL APPROACH • Features: • Use of mathematical models to study IS • Physical technology & Formal capabilities of IS OPERATIONS RESEARCH MANAGEMENT SCIENCE COMPUTER SCIENCE Mathematical Techniques Decision-making models Management practices Theories of computability Methods of computation Methods of efficient data storage
BEHAVIORAL APPROACH Features: • Does not ignore technology • Development and Maintenance of IS SOCIOLOGY ECONOMICS PSYCHOLOGY Studies dynamics of digital markets and how IS can affect cost and structures within a firm Studies how decision-makers use information Studies how Groups, Organizations Individuals influence system development and vice versa
HOW BUSINESSES USE INFORMATION SYSTEMS BUSINESS PROCESSES AND INFORMATION SYSTEMS • What is a business process? • Unique ways of workflows • A business is a collection of business processes • Source of competitive strength if they enable the organization to innovate • Liability if based on outdated ways • Tied to a specific functional area • May cross different functional areas
HOW DO INFORMATION SYSTEMS ENHANCE BUSINESS PROCESSES ? • Increasing the efficiency of existing processes • Automating business processes • Enabling entirely new processes that are capable of transforming the business • Changing flow of information • Simultaneous access to information • Eliminates delay in decision-making • Examples: iTunes Amazon