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Student Publications
Author: Anthony Oduori Solo
Title: Management Information Systems
Course
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MANAGEMENT INFORMATION SYSTEMS
Because there are different
interest, specialties and levels in
an organization, there are
different kinds of systems. No
single system can provide all the
information an
organization needs.
Kinds of Information Systems
Groups Served
Strategic level Senior
Managers/Directors
Management Level Middle Managers
Operational Level Operational
Managers
Production Sales
Finance Human Resource
Functional Areas
The above diagram illustrates one
way to depict the kinds of systems
found in an
organization.
In the above illustration the
organization is divided into
a) Strategic
b) Management
c) Operational
The above is further divided into
functional areas as indicated in the
figure hence this show
that systems are built to serve
different organizational interests.
a) Operational Level System
This supports operational managers
by keeping track of the elementary
activities and
transactions of the organization
i.e. cash deposits, payroll, credit
decisions sales, receipts
e.t.c
The principle purpose of systems at
this level is to answer routine
questions and track the
flow of transactions through the
organization.(Example of Operational
Level system is
record bank deposits from ATM and
One that tracks the number of hours
worked each day
by employees on a factory floor.
b) Management level systems
This serve's the monitoring,
controlling, decision-making and
administrative activities of
middle managers. The principle
question addressed by such systems
is (Are things working
well) Management level systems
typically provide periodic reports
rather than instant
information on operations. Mostly
this systems show wherever actual
costs exceed
budgets.
Some management level systems
support non-routine decision making.
They tend to focus
on less-structured decisions for
which information requirements are
not always clear. These
systems often answer "What-if"
questions thus answers to these
questions frequently
require new data from outside the
organization, as well as data from
inside that cannot be
easily drawn from existing
operational level systems.
c) Strategic �Level Systems
This system helps senior management
tackle and address strategic issues
and long-term
trends both in the firm and in the
external environment. Their
principle concern is matching
changes in the external environment
with existing organizational
capability.
ORGANIZATIONS, MANAGEMENT AND
NETWORKED ENTERPRISE
Why Information Systems?
Ask managers to describe their most
important resources and they'll list
a) Money b) Equipment
c) Materials c) People
It's very unusual for managers to
consider information an important
resource and yet it is.
We are in the midst of a swiftly
moving river of technology and
business innovation that is
transforming the global business
landscape. An entirely new internet
business culture is
emerging with profound implications
for the conduct of business. This
can be seen
everyday on how business people work
using the high-speed internet
connection for e-mail
and information gathering, portable
computers connected to wireless
networks, cellular
telephones connected to the internet
and computing power to an
increasingly mobile and
global workforce.
The emergence of internet business
culture has set expectations that we
all share. We
expect online services for
purchasing goods and services, we
expect friends and business
colleagues to be available by e-mail
and cell-phone, and we expect to be
able to
communicate with our vendors,
customers and employees anytime of
the day or night over
the internet.
Importance of Information
Technology
1) Capital Management
2) Foundation of Doing Business
3) Productivity
4) Strategic Opportunity and
advantage
1) Capital Management
Information Technology has become
the largest component of capital
investment for firms
globally.
Investment in information technology
has doubled as a percentage of total
business
investment and now accounts for more
capital investment in the world.
2) Foundation of doing business
In many industries survival and even
existence without extensive use of
Information
systems is inconceivable hence all
e-commerce is impossible without
substantial IT
investments hence firms like Google,
Amazon online universities i.e
Atlantic International
University simply wouldn't exist
Today firms like Insurance, Finance,
Real estate as well as personal
services such as travel
and education can not operate
without IT. Therefore Information
Technology is the
foundation of business in the
twentieth first century.
3) Productivity
IT is one of the most important
tools along with innovation in
organization and
management, infact these innovations
need to be linked together hence IT
plays a critical
role in increasing the productivity
of firms, entire nations and the
world.
In contemporary systems there is a
growing interdependence between a
firms information
systems and its business capability.
Changes un strategy, rules and
business processes
increasingly require changes in
hardware, software, databases and
telecommunications.
Often what the organization would
like to do depends on what its
systems will permit it to
do.
Organizations that invest wisely in
information technology experience
continued growth in
productivity and efficiency
Hardware
Business
Strategy
Software
Database
rules
process
Telecomm-
unication
ORGANISATION
INFORMATION SYSTEM
The above diagram show the
interdependence between an
organization information
systems and its business capability
4) Strategic Opportunity and
Advantage
If you want to take advantage of new
opportunities in markets, develop
new products and
create new services chances are
quite high you will need to make
substantial investment in
IT to realize the new business
opportunities. If you want to
achieve a strategic advantage
over your rivals, to differentiate
yourself from your competitors. IT
is one avenue for
achieving such advantages along with
changes in business practices and
management.
Why IT?
A combination of information
technology innovations and a
changing domestic and global
environment makes the role of IT in
business even more important than a
few years year
ago.
There are five factors to consider
when assessing the growing impact of
IT in business
organizations.
a) Internet growth and technology
convergence
b) Transformation of the business
enterprise
c) Growth of a globally connected
economy
d) Growth of knowledge and
information based economies
e) Emergence of the digital firm
Internet and Technology
Convergence
The internet is bringing about a
convergence of technologies, roiling
markets, entire
industries and firms in the
processes. Traditional boundaries
and business relationships are
breaking down.
Telephone networks are merging into
the internet and cellular phones are
becoming
internet access devices. The
internet connected personal computer
moving towards a role as
a home entertainment control center.
Traditional networking and the
internet are nearly synonymous with
doing business. Firms'
relationship with customers,
employees, suppliers and logistic
partners are becoming
digital relationships i.e. as a
consumer you will increasingly
interact with sellers in digital
environment, as an employer you will
be interacting more electronically
with your
employees and giving them new
digital tools to accomplish their
work.
Electronic Business/E-Business-
it's the designate use of the
internet and digital
technology to execute all of the
activities in an enterprise. It
includes activities for the
internal management of the firm and
coordination with suppliers and
other business
partners.
Electronic Commerce/ E-Commerce
� It's the part of e-business that
deals with buying
and selling of goods and services
electronically with computerized
business transaction
using the internet, networks and
other digital technologies. It also
includes activities
supporting those market transactions
such as advertising, marketing,
customer support,
delivery and payment.
Electronic
Governments/E-Government � it's
the application of the internet and
related
technologies to digitally enable
government and public sector
agencies relationships with
citizens, businesses and other
government arms. E-government can
make government
operations more efficient and also
empower citizens by giving them
easier access to
information.
Transformation of the Business
Enterprise
Along with rapid changes in markets
and competitive advantage are
changes in firms. The
internet and new markets are
changing the cost and revenue
structure of traditional firms
and are hastening the demise of
traditional business models.
The internet and related
technologies make it possible to
conduct business across firm's
boundaries almost as efficiently and
effectively as it is to conduct
business within the firm.
This means that organizations are no
longer limited by traditional
boundaries or physical
locations in how they design,
develop and produce goods and
services. It's possible to
maintain close relationship with
supplier and other business partners
at a great distance and
also outsource work that
organizations formerly did
themselves to other companies' i.e
Cisco
Growth of a Globally Connected
Economy
The success of firms today and in
the future depends on their ability
to operate globally.
Today information systems provide
the communication and analytical
power that
organizations need to conduct trade
and manage business global scale.
Controlling the far-
flung global corporation-
communicating with distributors and
suppliers, operating 24hours
a day in different national
environments, coordinating global
work teams and servicing
local and international reporting
needs is a major challenge that
requires powerful
information systems
Globalization and IT bring new
threats to domestic businesses
because of global
communication and management
systems, customers now can shop in a
worldwide market
place obtaining price and quality
information 24 hours a day. To
become competitive
participant in international markets
organizations need powerful
information and
communication systems.
Growth of Knowledge and
Information Based Economies
In knowledge and information based
economies the market value of firms
is based largely
on intangible assets i.e.
information, brands, unique business
methods e.t.c.
Knowledge and information provide
the foundation for valuable new
products and services
such as worldwide reservations
systems, credit cards. Knowledge and
information intense
products i.e. computer games require
a great deal of knowledge to produce
and knowledge
is used more intensively in the
production of traditional products
as well.
Emergence of the Digital Firm
A Digital firm is one in which
nearly all of the organizations
significant business
relationships with customers,
employees and suppliers are
digitally enabled hence the core
business processes are accomplished
through digital networks spanning
the entire
organization.
Business processes refer to the set
of logically related tasks and
behaviors that an
organization develops over time to
produce specific business results
and the unique manner
in which these activities are
organized and coordinated. Examples
of business processes are
Generating and fulfilling an order,
developing a new product, creating
marketing plan,
hiring an employee.
The way an organization manages
accomplishes their business
processes can be a source of
competitive strength.
Digital firms sense and respond to
their environment far more rapidly
than traditional
firms, giving the more flexibility
to survive in turbulent times. They
do offer extraordinary
opportunities for more global
organization and management. By
digitally enabling and
streaming their work, digital firms
have the potential to achieve
unprecedented levels of
profitability and competitiveness. A
full digital firm is still a vision
than a reality to most
companies though this vision is
driving them (companies) towards
digital integration.
Firms are continuing to invest
heavily in information systems that
integrate internal
business processes and build closer
link with suppliers and customers.
What Is an Information System?
(It's a set of interrelated
components that collect (or
retrieve), process, store and
distribute
information to support decision
making and control.
Most of us think only of hardware
and software when we think of an
Information System.
There is another component of the
triangle that should be considered,
and that's the people
side, or "persware." Think of it
this way:
input, processing, output and
feedback processes. Most important
is the feedback process;
unfortunately it's the one most
often overlooked. Just as in the
triangle above, the hardware
(input and output) and the software
(processing) receive the most
attention. With those two
alone, you have computer literacy.
But if you don't use the "persware"
side of the triangle
to complete the feedback loop, you
don't accomplish much. Add the
"persware" angle with
good feedback and you have the
beginnings of information literacy.
Information systems contain
information about significant
people, places and things within
the organization or the environment
surrounding it.
Information � is data that have been
shaped into a form that is
meaningful and useful to
human beings.
Data � are streams of raw facts
representing events occurring in
organizations or its
physical environment before they
have been organized and arranged
into a form that can be
understood by people and used.
Business Perspective of
information Systems
Business firms invest in information
technology and systems because they
provide real
economic value to the business. The
decision to build /maintain an
information system
assumes that the returns on this
investment will be superior to other
investments in
buildings, machines or other assets.
These superior returns will be
expressed as increase in
productivity, increase in revenues
or perhaps a superior long term
strategic positioning of
the firm in certain markets.
In some cases, firms are required to
invest in information systems simply
because such
investments are required to stay in
business. For instance some small
banks may be forced
to invest in automatic teller
machines (ATM) networks or offer
complex banking services
requiring large technology
investments simply because it is a
cost of doing business hence
its assumed that most information
systems investments will be
justified by favorable
results.
Every business has an information
value chain, in which raw
information is systematically
acquired and then transformed
through various stages that add
value to the that
information. The value of an
information system to a business as
well as the decision to
invest in any new information system
is I large part determined by the
extent to which the
system will lead to better
management decision, more efficient
business processes and a
higher firm profitability. Although
there are other reasons why systems
are built their
primary objective is to contribute
to corporate value.
Dimensions of Information Systems
There are three dimensions of
information systems namely
a) organization
b) Management
c) Information technology
a) Organization
Information systems are an integral
part of organizations. The key
elements of an
organization are its :
(i)
People
(ii)
Structure
(iii)
Business processes
(iv)
Politics
(v)
Culture
Organizations are composed of
different levels and specialties.
Their structures reveal a
clear-cut division of labor. Experts
are employed and trained for
different functions. The
major business functions or
specialized tasks performed by
business organization consist
of:
(i)
Sales and marketing
(ii)
Manufacturing and production
(iii)
Finance and accounting
(iv)
Human resources
An organization coordinates work
through a structured hierarchy and
through its business
processes. The hierarchy arranges
people in a pyramid structure of
rising authority and
responsibility. The upper levels of
the hierarchy consist of
(i)
Managerial
(ii)
Professionals
(iii)
Technical employees
Whereas the lower levels consist of
(i) Operational Personnel
FUNCTIONS
PURPOSE
i
Sales and marketing
Selling the organization's products
and
services
ii
Manufacturing and production
Producing products and services
ii
Finance and Accounting
Managing the organization's
financial
assets and maintaining the
organization's financial records
iv
Human resource
Attracting, developing and
maintaining
the organization's labor force,
maintaining employee records
Most organizations business
processes include formal rules that
have been developed over
a long time for accomplishing tasks.
These rule guide employees in a
variety of procedures
from writing an invoice to
responding to customer complaints
thus some of these
procedures have been formalized and
written down but others are informal
work practices
such as a requirement to return a
telephone call from co-workers or
customers these are
normally not documented
b) Management
Management's job is to make sense
out of the many situations faced by
organization's
make decisions and formulate action
plans to solve organizations
problems. The
Management perceives business
challenges in the environment, they
set the organization
strategy for responding to those
challenges and allocate human and
financial resources to
coordinate the work and achieve
success. Throughout they must
exercise responsible
leadership
The management must do more than
manage what already exists hence
they must also
create new products and services and
even re-create the organization from
time to time. A
substantial part of management
responsibility is creative work
driven by new knowledge
and information. Information
technology can play a powerful role
in re-directing and re-
designing the organization.
Its important to note that
managerial roles and decision vary
at different levels of the
organization. Senior managers
make long-range strategic decisions
about what products
and services to produce. While
Middle managers carry out the
programs and plans of
senior management. Operational
managers are responsible for
monitoring the firms daily
activities. All levels of management
are expected to be creative, to
develop novel solutions
to a broad range of problems thus
each level of management has
different information
needs and information system
requirements.
c) Technology
Information Technology is one of
many tools that managers use to cope
with change.
Computer hardware is the
physical equipment used for input,
processing and output
activities in an information system.
It consists of the following:
a) The Computer processing unit
b) various input, output and storage
devices
c) Physical media to link these
devices together
Computer Software consists of
the detailed, preprogrammed
instructions that control and
coordinate the computer components
in an information system.
Storage technology includes
both physical media for storing
data, such as magnetic disk,
optical disc or tape and the
software governing the organization
of the data on these
physical media.
Communication technology
consists of both physical devices
and software, links the
various pieces of hardware and
transfers data fro one physical
location to another.
Computers and communications
equipment can be connected in
networks for sharing
voice, data, images, sound or even
video hence a network links two or
more computers to
share data or resources e.g. printer
The world's largest and most widely
used network is the internet. The
internet is an
international network of networks
that are both commercial and
publicly owned.
The internet has created a new
"universal" technology platform on
which to build all sorts
of new products, services,
strategies and business models. This
technology platform has
internal uses, providing the
connectivity to link different
systems and networks within the
form. Internal corporate networks
based on internet technology are
called Intranets and
private intranets extended to
authorize users outside the
organization are called extranets
and organizations use such networks
to coordinate their activities with
other firms for
making purchases, collaborating on
design and other
inter-organizational work.
The internet services (World Wide
Web) is of special interest to
organizations. The World
Wide Web is a system with
universally accepted standards for
storing, retrieving,
formatting and displaying
information in a networked
environment. All web pages
maintained by
organizations/individuals are called
Web site.
INFORMATION TECHNOLOGY
INFRASTRUCTURE
IT infrastructure is a set of
physical devices and software
applications that are required to
operate the entire enterprise.
Business
Strategy
IT Services
Customer Services
IT
and
Supplier Services
Strategy
Infrastructure
Enterprise Services
Information
Technology
The services a firm is capable of
providing to its customers,
suppliers and employees are a
direct function of its IT
infrastructure. This infrastructure
should support the firm's
business and information system
strategy. New information
technologies have a powerful
impact on business and IT strategies
as well as the services that can be
provided to
customers
Levels of IT Infrastructure
Firm infrastructure is organized at
three major levels
a) Public unit
b) Enterprise unit
c) Business unit
All firms are dependent on public IT
infrastructure, which include the
Internet, the Public
switches telephone network, Industry
�operated networks and other IT
support facilities
such as Cable systems and cellular
networks.
Enterprise � wide infrastructure
includes services such as e-mail, a
central corporate Web
site, corporate-wide intranets and
an increasing array of
enterprise-wide software
applications.
Business units also have their own
infrastructure that s uniquely
suited to their line of
business such as specialized
production software and systems,
customer and vendor
systems
INFRUSTRUCTURE COMPONENTS
IT infrastructure is composed of
seven major components i.e.
Databases Management and Storage
Consultants and systems integrators
Networking/Telecommunications
Enterprise Software Applications
Operating Systems Platforms
Computer Hardware Platform
Internet Platforms
The above mentioned components must
be coordinated to provide the firm
with a coherent
IT infrastructure.
ORGANIZATIONAL AND MANAGEMENT
SUPPORT SYSTEMS FOR THE
DIGITAL FIRM
ENTERPRISE SYSTEMS
"Enterprise System also known as
Enterprise Resource Planning
System provide a single
information system for
organization-wide coordination and
integration of key business
processes. It collects data from
various business processes in
manufacturing and
production, finance and accounting,
sales and marketing, human
resources; and store the
data in a single ample data
respiratory which help other part of
business by providing
required information." An Enterprise
Information System would typically
be operated by
professional
system administrators and be
deployed on dedicated
servers. It would typically
offer network connectivity and
provide services that supported the
operations carried out
by the enterprise.
Both the value and the challenge of
enterprise systems can be found in
the integration they
force on the firm's information and
business processes. Enterprise
software consist of a set
interdependent software modules that
support basic internal business
processes for finance
and accounting, human resources,
production and sales and marketing.
The software enables data to be used
by multiple functions and business
processes for
precise organizational coordination
and control
Finance and
Accounting
Human
Sales and
Centralized
Resources
Database
Marketing
Manufacture &
Production
Enterprise systems feature a set of
integrated software modules and a
central database that
enable data to be shared by many
different business processes and
functional areas
throughout the enterprise.
The software is built around
thousands of predefined business
processes
If the enterprise software does not
support the way the organization
does business,
companies can rewrite some of the
software to support the way their
business processes
work. However enterprise software is
usually complex and extensive
customization may
degrade system performance,
comprising the information and
process integration that are
the main benefits of the systems
Business Value of Enterprise
Systems
Enterprise systems promise to
integrate diverse internal business
processes of a firm into a
single information architecture and
that integration can have a very
large payback if a a
company installs and use enterprise
software correctly. Enterprise
systems can produce
value both by increasing
organizational efficiency and by
providing firm wide information
to help Management make better
decisions.
A More uniform organization
Companies can use enterprise systems
to support organizational structure
that were not
previously possible or to create a
more disciplined organizational
culture i.e Firms can
use enterprise systems to integrate
the corporation across geographical
or business unit
boundaries or create a more uniform
organizational culture in which
every one uses
similar processes and information.
An enterprise enables organizations
to do business
the same way worldwide.
More efficient operations and
customer-driven business processes
Enterprise systems can help create
the foundation for a more
customer-driven organization.
By integrating discrete business in
sales, production, finance and
logistics the entire
organization more efficiently
responds to customers request for
products or information,
forecast new products and build and
deliver them as demand requires.
Manufacturing is better informed
about producing only what customers
have ordered
procuring exactly the right amount
of components or raw materials to
fill actual orders,
staging production and minimizing
the time that components/finished
productions are in
inventory.
Firm wide information for
improved decision making
In addition to monitoring
operational activities such as
tracking the status of orders and
inventory levels, enterprise systems
also improve organization-wide
reporting and decision
making. Enterprise systems create a
single, integrated repository of
data for the entire firm.
The data have common, standardized
definitions and formats that are
accepted by the entire
organization.
Performance figures mean the same
thing across the company and can be
provided
automatically without human
intervention. Senior management can
more easily find out at
any moment how a particular
organizational unit is performing
i.e enterprise systems might
help senior management immediately
determine which products are most or
least
profitable.
Enterprise system includes a variety
of software's i.e. Supply chain
Management Systems,
Customer Relationship Management
systems
ENTEPRISE INTERGRATION TRENDS
Businesses are now pursuing even
greater degrees of cross-functional
process integration
than that supplied by the
traditional enterprise applications.
They want to make customer
relationship management, Supply
chain management and enterprise
systems work closely
together with each other and they
want to link these systems tightly
with those of
customers, suppliers and business
partners. Businesses also want to
obtain more value from
enterprise applications, web
services and other integration
technologies by using them as
platforms for new enterprise wide
services.
Enterprise software has become more
flexible and capable of integration
with other
systems. The major enterprise
software vendors have developed
Web-enabled software for
customer relationship management,
supply chain management, decision
support, enterprise
portals and other business
functional that integrate with the
enterprise software.
MANAGEMENT OPPORTUNITIES,
CHALLENGES AND SOLUTIONS
Implementation of an enterprise
application is above all a business
decision rather than a
technology decision. Companies need
to be sure that they are defining a
problem that a
customer relationship management,
Supply Chain Management or
enterprise system can
solve. It's critical for an
organization to know how much
integration they want and what
the organization will look and feel
like when it is achieved.
Management Opportunities
Both the peril and promise of
enterprise applications lie in their
power to fundamental
change the way the organization
works.
Overtime most firms obtain
extraordinary business value from
enterprise applications
because of their power to improve
process coordination and management
decision making.
Promises of dramatic reductions in
inventory costs, order to delivery
time, as well as more
efficient customer response and
higher product and customer
profitability make these
applications very alluring.
Management Challenges
High Total Cost of Ownership
Enterprise systems, Supply chain
management and Customer relationship
management
systems are very expensive to
purchase and implement. The total
implementation cost,
including hardware, software,
database tools, consulting fees,
personnel costs and training
are usually very high (costly).Cost
run even higher for organizations
with global
operations, which must manage
organizational and technology
changes in many different
languages, time zones, currencies
and regulatory environments.
Organizational Change
Requirements
Enterprise applications require not
only deep-seated technological
changes but also
fundamental changes in the way the
business operates. Business
processes change
dramatically as do organizational
structure and culture. Organizations
that do not
understand the need for these
changes or that are unable to make
them will have problems
implementing enterprise applications
and using them effectively.
Employees must accept new job
functions and responsibilities. They
will have to learn how
to perform a new set of processes
and understand how the information
they enter into the
system can affect other parts of the
company. New organizational learning
is required for
organizational embers to acquire
complex new knowledge about new
business rules and
business processes.
Organizations embracing CRM
(Customer Relationship Management)
systems need to
transform their focus from a product
centric view to a customer centric
view in which
retaining a customer is a priority.
These changes require more
interdepartmental
cooperation. If a firm's sales,
marketing, support systems, back
office systems and data
warehouses exist in isolation, the
cross- functional information
sharing, integration and
business intelligence to optimize
the customer experience cannot occur
Supply Chain Management raises
implementation hurdles because it
extends beyond the
walls of the company. Business
managers have accustomed to thinking
about their firms ,
the best interests of their firms
and business process improvements
that benefit the entire
firm
Unless enterprise application
investments are accompanied by
improvements in the firms
business processes they are unlikely
to improve the flow of information
and goods.
Realizing Strategic Value
Companies may fail to achieve
strategic benefits from enterprise
applications if the generic
processes that had been sources of
advantage over competitors.
Enterprise systems promote
centralized organizational
coordination and decision making,
which may not be the best for
some firms to operate.
Management Solution Guidelines
Successful implementation of
enterprise applications requires
knowledge of how the
business works today as well as how
it wants to work tomorrow it takes a
lot of work to get
enterprise applications to work
properly. Everyone in the
organization must be involved.
Look at Business objectives
A customer relationship management,
Supply Chain Management or
enterprise systems
isn't merely a technology change it
represents a fundamental change in
the way the
company conducts its business. Any
Company contemplating such systems
focus too much
on the technology and not enough on
business goals. The management must
understand the
business objectives they want to
achieve with enterprise applications
before buying any
software. They must determine
whether an enterprise application
will actually help the
company meet these objectives.
Identify the key business processes
the company is trying
to improve and how much these
processes must change with an
enterprise application
should always.
Attention to data and data
management
Enterprise applications require that
information that was previously
maintained in different
systems and different departments
and functional areas be integrated
and made available to
the company as a whole. Companies'
implementing enterprise applications
must develop
organization-wide definitions of
data. Understanding how the
organization uses its data and
how the data would be handled in a
customer relationship management,
supply chain
management or enterprise systems.
Senior Management Commitment and
Employee Support
Support and backing from the CEO is
critical for ensuring that all
changes required by
enterprise applications will be
adopted by the entire company.
Employees/People are much
more willing to take on different
job responsibilities or change the
way they work if senior
management is firmly behind the
effort. Support for the system can
be encouraged by
clearly demonstrating the business
value that comes with the enterprise
application project
and how all can contribute to its
success
Education and Training
Education and training are always
essential for successful information
system
implementation, but even more so for
enterprise applications. Managers
must learn how the
system can change key processes,
organizational structure and
information they use.
Employees will need to learn exactly
how the system supports the work
they perform and
how it affects the broader
organization each time its used.
BUILDING AND MANAGEMENT
INFORMATION SYSTEMS
Systems as Planned Organizational
Change
Building a new information system is
one kind of planned organizational
change. The
introduction of a new information
system involves much more than new
hardware and
software. It also includes changes
in jobs, skills, management and
organization. When we
design a new information system, we
are re-designing the organization.
Linking Information Systems to
the Business Plan
Deciding which new systems to build
be an essential part of the
organization planning
process. Organizations need to
develop an information systems plan
that supports their
overall business plan and in which
strategic systems are incorporated
into top-level
planning. Once specific projects
have been selected within the
overall context of a strategic
plan for the business and the
systems are, an Information systems
plan can be developed.
The plan serves as a road map
indicating the direction of systems
development (the purpose
of the plan), the rational, current
systems/situation, new developments
to consider, the
management strategy, the
implementation plan and the budget.
The plan contains a statement of
corporate goals and specifies how
information technology
will support the attainment of those
goals. The report shows how general
goals will be
achieved by specific systems
projects. It identifies specific
target dates and milestones that
can be used later to evaluate the
plan's progress in terms of how many
objectives were
actually attained in the time frame
specified in the plan. The plan
indicates the key
management decisions concerning
hardware acquisition,
telecommunications,
centralization/decentralization of
authority, data and hardware, and
required organizational
change. Organizational changes are
also usually described, including
management and
employee training requirements,
recruiting efforts, changes in
business processes and
changes in authority, structure or
management practices.
Establishing Organizational
Information Requirements
To develop an effective information
system plan , the organization must
have clear
understanding of both its long and
short term information requirements.
Two principal
methodologies for establishing the
essential information requirements
of the organization
as a whole are:
Enterprise Analysis
Critical Success factors
ENTERPRISE ANALYSIS/BUSINESS
SYSTEMS PLANNING
Enterprise Analysis: The firm's
information requirements can be
understood only by
examining the entire organization in
terms of organization units,
functions, processes and
data elements. Enterprise analysis
can help identify the key entities
and attributes of the
organization's data i.e.
1. Purpose of the plan
Overview of plan contents
Current business organization and
future organization
Key business processes
Management strategy
2. Strategic Business Plan Rationale
Current situation
Current business organization
Changing environments
Major goals of the business plan
Firm's strategic plan
3. Current Systems
Major systems supporting business
functions and processes
Current Infrastructure capabilities
Hardware
Software
Database
Telecommunications and internet
Difficulties meeting business
requirements
Anticipated future demands
4. New Developments
New system projects
Project description
Business rationale
Applications role in strategy
New infrastructure capabilities
required
Hardware
Software
Database
Telecommunications and internet
5. Management Strategy
Acquisition plans
Milestones and timing
Organizational realignment
Management controls
Major training initiatives
Personnel strategy
6. Implementation Plan
Anticipated difficulties in
implementation
Progress reports
7. Budget requirements
Requirements
Potential savings
Financing
Acquisition cycle
STRATEGIC ANALYSIS OR SUCCESS
FACTORS
The strategic analysis/critical
success factor approach is an
organizations information
requirements are determined by a
small number of critical success
factors of managers. If
these goals can be attained, success
of the firm or organization is
assured. Critical success
factor's (CSF's) are shaped
by the industry, the firm, the
manager and the broader
environment. New information systems
should focus on providing
information that helps
the firm meet these goals.
The principle method used in CSF
analysis is personal interviews-
three/four with a number
of top managers identifying their
goals and the resulting CSF's. These
personal CSF's are
aggregated to develop a picture of
the firms CSF's. Then systems are
built to deliver
information on these CSF's.
The strength of the CSF method is
that it produces less data to
analyze than does enterprise
analysis. Only top managers are
interviewed and the questions focus
on a small number of
CSF's rather than requiring a broad
inquiry into what information is
used in the
organization. This method explicitly
asks managers to examine their
environments and
consider how their analyses of them
shapes their information needs. It
is especially suitable
for top management and for the
development of decision-support
systems (DSS) and
executive support systems (ESS)
unlike enterprise analysis; the CSF
method focuses
organizational attention on how
information should be handled.
The methods primary weakness is that
the aggregation process and the
analysis of the data
are art forms. There is no
particular rigorous way in which
individual CSF's can be
aggregated into a clear company
pattern.
Systems Development and
Organizational Change
Information technology can promote
various degrees of organizational
change, ranging
from incremental to far-reaching.
The listed below shows four kinds of
structural
organizational change that are
enabled by information technology.
1) Automation
2) Rationalization
3) Re-engineering
4) Paradigm shifts
Each carries different rewards and
risks
The most common form of IT-enable
organizational change is automation.
The first
applications of information
technology involved assisting
employees with performing their
tasks more efficiently and
effectively. Calculating paychecks
and payroll registers, giving
bank tellers instant access to
customers deposit records this are
all examples of automation.
A deeper form of organizational
change one that follows quickly from
early automation is
rationalization of procedures.
Automation frequently reveals new
bottlenecks in production
and makes the existing arrangement
of procedures and structures
painfully cumbersome.
Rationalization of procedures is the
streamlining of standard procedures.
A more powerful type of
organizational change is business
process reengineering, in which
business processes are analyzed,
simplified and redesigned. Using
information technology,
organizations can rethink and
streamline their business processes
to improve speed, service
and quality. Business reengineering
reorganizes work flows, combining
steps to cut waste
and eliminating repetitive, paper
intensive tasks. Its usually much
more ambitious thank
rationalization of procedures,
requiring a new vision of how the
process is to be organized.
Rationalizing procedures and
redesigning business processes are
limited to specific parts of
a business. New information systems
can ultimately affect the design of
the entire
organization by transforming how the
organization carries out its
business or even the
nature of the business.
A more radical form of business
change is called paradigm shift.
Paradigm shift involves
rethinking the nature of the
business and the nature of the
organization.
In many instances firms seeking
paradigm shift and pursuing
reengineering strategies
achieve stunning, order or magnitude
increases in their returns on
investment
Business Process Reengineering
and Process Improvement
Many companies today are focusing on
building new information systems
that will
improve their business processes.
Some of these systems projects
represent radical
restructuring of business processes,
whereas others entail more
incremental process change.
Business process Reengineering
If organizations rethink and
radically redesign their business
processes before applying
computer power, thy can potentially
obtain very large payoffs from
investments in
information technology.
Work flow management
It's a process of stream lining
business procedures so that
documents can be moved easily
and efficiently.
Work flow and document management
software automates processes such as
routing
documents to different locations,
securing approvals, scheduling and
generating reports.
Two or more people can work on a
document simultaneously, allowing
much quicker
completion time. Work need not to be
delayed because a file is out or
document is in
transit. With a properly designed
indexing system, users will be able
to retrieve files in
many different ways, based on the
content of the document.
Steps in Effective Reengineering
One of the most important strategic
decisions that a firm can make is
not deciding how to
use computers to improve business
processes but rather understanding
what business
processes need improvement.
When systems are used to strengthen
the wrong business model or business
processes the
business can become more efficient
at doing what it should not do thus
the company
becomes vulnerable to competitors.
Management must understand and
measure the performance of existing
processes as a
baseline. If, for example the
objective of the process redesign is
to reduce time and cost in
developing a new product or filling
an order, the organization needs to
measure the time
and cost consumed by the unchanged
process.
The conventional method of designing
systems establishes the information
requirements of
a business function/process and then
determines how they can be supported
by information
technology. However information
technology can create new design
options for various
processes because it can be used to
challenge long standing assumptions
about work
arrangements that used to inhibit
organizations.
Acc. Purity Kebs 14193661 Meter
71998
Today's digital firm environment
involves much closer coordination of
a firms business
processes with those of customers,
suppliers and other business
partners than in the past.
Organizations are required to make
business process changes that span
organizational
boundaries. These
interorganizational processes such
as those for supplying chain
management not only need to be
streamlined but also coordinated and
integrated with those
of other business partners
Process Improvement: Business
Process Management, Total Quality
Management and
Six Sigma
Business process reengineering is
primarily a one time effort,
focusing on identifying one
or two strategic business processes
that need radical change. Business
process
reengineering projects tend to be
expensive and organizationally
disruptive. Organizations
usually have many business processes
and supportive processes that must
be constantly
revised to keep the business
competitive. Business process
management and quality
improvement programs provide
opportunities for more incremental
and ongoing types of
business process change.
Business Process Management
Mergers and acquisitions, changes in
business models, new industry
requirements and
changing customer expectations all
pose multiple process-related
problems that continually
confront organizations. Business
process management (BPM) enables
organizations to
manage incremental process changes
that are required simultaneously in
many areas of the
business. It provides a methodology
and tools for dealing with the
organizations ongoing
need to revise and ideally optimize
its numerous internal business
processes and processes
shared with other organizations. It
enables organizations to make
continual improvement to
many business processes
simultaneously and to use processes
as the fundamental building
blocks of corporate information
systems.
Business Process Management (BPM)
includes work flow management,
Business process
modeling, quality management, change
management and tools for recasting
the firm's
business processes into a
standardized form where they can be
continually manipulated.
Companies practicing business
process management use process
mapping tools to identify
and document existing processes and
to create models of improved
processes that can then
be translated into software systems.
The process models might require
entirely new systems
or could be based on existing
systems and data. BPM software tools
automatically manage
processes across the business,
extract data from various sources
and databases, and
generate transactions in multiple
related systems.
BPM also include process monitoring
and analytics. Organizations must be
able to verify
that process performance has been
improved and measure the impact of
process changes on
key business performance indicators
Total Quality Management and Six
Sigma
Quality management is another area
of continuous process improvement.
In addition to
increasing organizational
efficiency, companies must fine tune
their business processes to
improve the quality in their
products, services and operations.
Many are using the concept
of total quality management (TQM) to
make quality the responsibility of
all people and
functions within an organization.
TQM holds that the achievement of
quality control is an
end in itself. Everyone is expected
to contribute to the overall
improvement of quality.
Another quality concept that is
being implemented today is six
sigma. Six sigma is a
specific measure of quality,
representing 3.4 defects per million
opportunities. Most
companies cannot achieve this level
of quality but use six sigma as a
goal to implement a
set of methodologies and techniques
for improving quality and reducing
costs. Quality
improvements not only raise the
level of product and service quality
but they can also
lower costs.
HOW INFORMATION SYSTEMS SUPPORT
QUALITY IMPROVEMENT
TQM and six sigma are considered to
be more incremental than business
process
reengineering. TQM typically focuses
on making a series of continuous
improvements
rather than dramatic bursts of
change. Six sigma uses statistical
analysis tools to detect
flaws in the execution of an
existing process and make minor
adjustments. Sometimes,
however processes may have to be
fully reengineered to achieve a
specified level of
quality. Information systems
can/will help firms achieve their
quality goals by helping
them simplify products or processes
make improvements based on customer
demands,
reduce cycle time, improve the
quality and precision of design and
production and meet
benchmarking standards
Benchmarking consist of setting
strict standards for products,
services and other activities
and then measuring performance
against those standards.
REFERENCE
Graphins College International -
Nairobi
Management Information Systems �
Franklin Ochieng
Information Systems � Melvin Mallony
Management System � Mark Mackey
Management Information Systems �
Peter C. Maxin
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