Indian Institute of Management, Lucknow

Introduction to Management Information Systems

Amit Agrahari Asst Prof of Information Technology and Systems

Indian Institute of Management, Lucknow

Indian Institute of Management, Lucknow

Agenda and Key Take Away

Agenda Introduction to the course It fails ! Management of Information Systems ITs productivity paradox

Key Take Away IT as a socio technical system IT fails and may not increase firms productivity

Indian Institute of Management, Lucknow

Indian Institute of Management, Lucknow

Robert N. Charette (2005) Why Software Fails http://spectrum.ieee.org/computing/software/why-software-fails/0

Indian Institute of Management, Lucknow

Information Systems and Firms Productivity

Source: Based on Erik Brynjolfsson and Lorin M. Hitt, Beyond Computation: Information Technology, Organizational Transformation and Business Performance. Journal of Economic Perspectives 14, no. 4 (Fall 2000).

Lo

Hi

Lo Hi

Indian Institute of Management, Lucknow

The Socio-Technical System

Can Blogs and Wiki be used for knowledge management in GOI departments?

Indian Institute of Management, Lucknow

IT Productivity Competitive Advantage

Steven Roach, Chief economist, Morgan Stanly, (1987) IT stock has no impact on Productivity

Robert Solow (1987) We see the computer age everywhere except in productivity

statistics

Mckinseys study on US productivity growth 1995-2000 found negligible impact of IT on productivity improvement in 53 sectors(70% of the economy)

Nic Carr (2003) IT is a commodity, it cant bring any competitive advantage

Indian Institute of Management, Lucknow

Productivity Paradox Explanations

Measurement Systematic bias in conventional productivity measurement that prevent

accurate assessment

Lags due to learning and adjustments It usually takes 2 to 3 years before the benefits are realised Managers should rationally account for lags

Redistribution IT rearranges the shares of pie without making it any bigger One firms gain comes entirely on other firms expense (Auction)

Mismanagement IT might increase organizational slack instead of output or profit Should we readjust people or fire them? (Can you fire them) Benefits are passed on to customers (Railways online reservation)

Indian Institute of Management, Lucknow

Productivity Paradox

Eric Brynjolfsson (1993) Cracking productivity paradox. Around half of IT value is due to unique characteristics

of firm Other half is shared generally by all firms

IT

Decentralization

Low

High

High

Low

0.0161

-0.03660

0.0455

Erik Brynjolfsson and Lorin M Hill (1998) Beyond the productivity paradox http://ebusiness.mit.edu/erik/bpp.pdf

Indian Institute of Management, Lucknow

Complimentary assets

Assets required to derive value from a primary investment. Business Model Processes Decentralized and distributed decision making Organizational culture (Does culture affect IS or IS

affect culture) Training Collaborative work environment Standards

Indian Institute of Management, Lucknow

Indian Institute of Management, Lucknow

Does IT Matter?

World spend on IT USD 2 Trillion per year

Assumption : ITs potency and ubiquity have increased, so too has its strategic value

Scarcity and not ubiquity offers competitive advantage

Processors, data storage, & networks are available to all. IT is a commodity

Year % of Capital exp of American Firms

1965 5%

1980 15%

1990 30%

2000 50%

US dept of commerces bureau of economic analysis

Indian Institute of Management, Lucknow

Does IT Matter ?

Proprietary v/s infrastructure technologies

IT as commodity IT is a transport mechanism, so more valuable when

shared IT is highly replicable endlessly and perfectly

reproducible at no virtually no cost. Combined with standardization it dooms most infrastructure technology

Internet accelerate commoditization Lower cost of computing

Indian Institute of Management, Lucknow

The Sprint to Commoditization

Indian Institute of Management, Lucknow

IT Doesnt Matter

IT offered competitive advantages during build out phase, which is coming to and end Its power is outstripping most of the business needs it fulfills Price has dropped to a point where everyone can afford it Data transfer capacity is more than demand IT vendors are positioning themselves as utility suppliers Investment bubble

Can infrastructure technologies bring competitive advantage Does IT bring more value as infrastructure technology (ATM)

Today, no company builds its business strategy around electricity usage Spend less (IT is a commodity) Follow dont lead (Reduce risk) Focus on vulnerabilities ( Cede control over IT and focus on resulting

vulnerabilities)

Indian Institute of Management, Lucknow

The CHAOS Report 2009 on IT Project Failure

Year 2009

Year 2006

Year 2004

Year 2002

Year 2000

Year 1998

Year 1996

Year 1994

Successful 32% 35% 29% 34% 28% 26% 27% 16%

Challenged 44% 19% 53% 15% 23% 28% 40% 31%

Failed 24% 46% 18% 51% 49% 46% 33% 53%