Management Information Systems

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Management Information Systems

• MIS 503
• MBA Program

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What is MIS?
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MIS An Amalgamation of Disciplines
Information Science
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Major MIS Constituents
Technology
Organization
People
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A Framework for Managing Information Technology
Vision for the Organization and Information
Technology
IT and Organization Structure
Corporate Strategic Plan
Integration of IT and Decision Making
Strategy
Ongoing IT Operations
Alliances Partnerships
IT Initiatives
IT Infrastructure
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Todays IT Landscape

• How IT flattened the competitive landscape

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10 Flatteners

• Fall of the Berlin Wall
• Netscape IPO
• Work flow software
• Open-sourcing
• Outsourcing

• Offshoring
• Supply-chaining
• Insourcing
• In-forming
• Wireless

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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

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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

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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

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Hierarchical vs. Open-Networked Organizations
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A Framework for IT An IT Value Chain
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Three Types of Information Systems
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IT-Enabled Organizational Forms
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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

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

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Problems With Enterprises that arent speaking

• Redundancy of Functionality
• Miscommunications due to lack of integration
• Poor quality customer service
• Operational inefficiencies due to
  miscommunications and redundant processing
• Internal Focus

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Problems With Enterprises that arent 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

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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
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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
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Determining IT Value

• Models and Implications

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INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

• Measuring Benefits
• No simple way to measure value added benefits of
  IT
• Can track IS performance measures over time

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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)

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But Value is not always easy to measure

• Its 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

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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
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INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES
5. Designing an Equitable Financing System

• 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

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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

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IT Investment Equation
P(Success/Return) P(Return on Investment Type)
x P(Conversion Success)
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Examples of IT Investment Equation
Estimate of Probability of Successful Conversion
Overall Probability of a Return the SR Index
Estimate of Return Probability Based on Type of
Project
Type of Investment
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Stock Options and IT Projects
Lucas, 1999
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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

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Barriers to Estimating IT Value

• Moores Law
• Evolving Organizational Use of Computing
• Managements Aversion to IT
• Pace of Change in Business is Exacerbating our
  ability to accurately value IT

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

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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

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IT value comes in many forms
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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

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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

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

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MANAGING THE ASSETS IN AN IS ORGANIZATON
Possible IS Management Positions
Figure 15.1 Selected IS Management Positions
(1 of 3)
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MANAGING THE ASSETS IN AN IS ORGANIZATON
Possible IS Management Positions
Figure 15.1 Selected IS Management Positions
(1 of 3)
Page 584-585
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MANAGING THE ASSETS IN AN IS ORGANIZATON
Possible IS Management Positions
Figure 15.1 Selected IS Management Positions
(1 of 3)
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INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES
2. Selecting Effective IS Leadership

• 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 units role and position
• Guiding systems development by business managers
• Managing organizational data as an asset
• Measuring IS effectiveness
• Integrating information technologies
• Developing systems personnel

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INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES
3. Creating an Active Partnership with Business
Managers

• 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

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Questions?