MIS Mancosa Lectures

Management Management Information SystemsInformation Systems

MBA ProgrammeMBA Programme

MANCOSAMANCOSA

Management Management Information SystemsInformation Systems

MBA ProgrammeMBA Programme

MANCOSAMANCOSA

• In the emerging, fully digital firm– Significant business relationships are digitally

enabled and mediated– Core business processes are accomplished

through digital networks– Key corporate assets are managed digitally

• Digital firms offer greater flexibility in organization and management

The Role of Information Systems in Business Today

• Growing interdependence between ability to use information technology and ability to implement corporate strategies and achieve corporate goals

• Business firms invest heavily in information systems to achieve six strategic business objectives:

– Operational excellence– New products, services, and business models– Customer and supplier intimacy– Improved decision making– Competitive advantage– Survival



The Interdependence Between Organizations and The Interdependence Between Organizations and Information TechnologyInformation Technology

Perspectives on Information Systems

Functions of an Information SystemFunctions of an Information System


Levels in a FirmLevels in a Firm

• Management dimension of information system

– Managers set organizational strategy for responding to business challenges

– In addition, managers must act creatively:• Creation of new products and services• Occasionally re-creating the organization


• Examples of functional business processes– Manufacturing and production

• Assembling the product

– Sales and marketing• Identifying customers

– Finance and accounting• Creating financial statements

– Human resources• Hiring employees

Business Processes and Information Systems

Business Processes and Information Systems

• Information technology enhances business processes in two main ways:

• Increasing efficiency of existing processes• Automating steps that were manual

• Enabling entirely new processes that are capable of transforming the businesses• Change flow of information• Replace sequential steps with parallel steps• Eliminate delays in decision making

• Systems from a constituency perspective

– Transaction processing systems: supporting operational level employees

– Management information systems and decision-support systems: supporting managers

– Executive support systems: supporting executives

Types of Business Information Systems

• Transaction processing systems– Perform and record daily routine

transactions necessary to conduct business

• E.g. sales order entry, payroll, shipping

– Allow managers to monitor status of operations and relations with external environment


• Management information systems– Serve middle management

– Provide reports on firm’s current performance, based on data from TPS

– Provide answers to routine questions with predefined procedure for answering them

– Typically have little analytic capability


How Management Information Systems Obtain their How Management Information Systems Obtain their Data from the Organization’s TPSData from the Organization’s TPS


• Decision support systems– Serve middle management

– Support nonroutine decision making• E.g. What is impact on production schedule if

December sales doubled?

– Often use external information as well from TPS and MIS


• Executive support systems

– Support senior management– Address nonroutine decisions requiring

judgment, evaluation, and insight– E.g. ESS that provides minute-to-minute

view of firm’s financial performance as measured by working capital, accounts receivable, accounts payable, cash flow, and inventory.


Interrelationships Among SystemsInterrelationships Among Systems


Decision Making and Information Systems

• Types of decisions:

• Unstructured: Decision maker must provide judgment, evaluation, and insight to solve problem

• Structured: Repetitive and routine; involve definite procedure for handling so they do not have to be treated each time as new

• Semistructured: Only part of problem has clear-cut answer provided by accepted procedure

Information Requirements of Key Decision-Making Information Requirements of Key Decision-Making Groups in a FirmGroups in a Firm


Stages in Decision MakingStages in Decision Making


Systems for Decision Support

• Four kinds of systems for decision support

• Management information systems (MIS)

• Decision support systems (DSS)

• Executive support systems (ESS)

• Group decision support systems (GDSS)


• Management information systems (MIS)

• Help managers monitor and control business by providing information on firm’s performance and address structured problems

• Typically produce fixed, regularly scheduled reports based on data from TPS

• E.g. exception reports: Highlighting exceptional conditions, such as sales quotas below anticipated level

• E.g. California Pizza Kitchen MIS

• For each restaurant, compares amount of ingredients used per ordered menu item


• Decision-support systems (DSS)

• Support unstructured and semistructured decisions

• Model-driven DSS

• Earliest DSS were heavily model-driven

• Data-driven DSS

• Some contemporary DSS are data-driven

• Use OLAP and data mining to analyze large pools of data


• Components of DSS

• Database used for query and analysis

• Current or historical data from number of applications or groups

• May be small database or large data warehouse

• User interface

• Often has Web interface

• Software system with models, data mining, and other analytical tools


• Model:

• Abstract representation that illustrates components or relationships of phenomenon; may be physical, mathematical, or verbal model

• Statistical models

• Optimization models

• Forecasting models

• Sensitivity analysis models

A Pivot Table that Determines Regional Distribution of CustomersA Pivot Table that Determines Regional Distribution of Customers


Executive Support Systems (ESS)

• Executive support systems (ESS)• Integrate data from different functional systems for firmwide

view

• Incorporate external data, e.g. stock market news, competitor information, industry trends, legislative action

• Include tools for modeling and analysis

• Facilities for detecting signals of problems, threats, or strategic opportunities

• Able to drill down from summary information to lower levels of detail

• What Is a GDSS?

• Interactive, computer-based system used to facilitate solution of unstructured problems by set of decision makers working together as group

• Designed to improve quality and effectiveness of decision-making meetings

• Make meetings more productive by providing tools to facilitate:• Planning, generating, organizing, and evaluating ideas

• Establishing priorities

• Documenting meeting proceedings for others in firm

Group Decision-Support Systems (GDSS)

• Components of GDSS

• Hardware

• Facility: Appropriate facility, furniture, layout

• Electronic hardware: Audiovisual, computer, networking equipment

• Software

• Electronic questionnaires, electronic brainstorming tools, idea organizers

• Tools for voting or setting priorities, stakeholder identification and analysis tools, policy formation tools,

• Group dictionaries

• People

• Participants and trained facilitator, support staff


• Overview of GDSS meeting

• Each attendee has workstation, networked to facilitator’s workstation and meeting’s file server

• Whiteboards on either side of projection screen

• Seating arrangements typically semicircular, tiered

• Facilitator controls use of tools during meeting

• All input saved to server, kept confidential

• After meeting, full record (raw material and final output) assembled and distributed


Group System ToolsGroup System Tools


• Why do some firms become leaders within their industry?

• Michael Porter’s competitive forces model• Provides general view of firm, its competitors, and

environment• Five competitive forces shape fate of firm

Using Information Systems to Achieve Competitive Advantage

Porter’s Competitive Forces ModelPorter’s Competitive Forces Model


• Traditional competitors• All firms share market space with competitors who

are continuously devising new products, services, efficiencies, switching costs

• New market entrants • Some industries have high barriers to entry, e.g.

computer chip business• New companies have new equipment, younger

workers, but little brand recognition


• Substitute products and services• Substitutes customers might use if your prices

become too high, e.g. iTunes substitutes for CDs

• Customers • Can customers easily switch to competitor’s

products? Can they force businesses to compete on price alone in transparent marketplace?

• Suppliers• Market power of suppliers when firm cannot raise

prices as fast as suppliers


• Four generic strategies for dealing with competitive forces, enabled by using IT

• Low-cost leadership

• Product differentiation

• Focus on market niche

• Strengthen customer and supplier intimacy


• Low-cost leadership• produce products and services at a lower price than

competitors while enhancing quality and level of service.

• Product differentiation• Enable new products or services, greatly change

customer convenience and experience


• Focus on market niche

• Use information systems to enable a focused strategy on a single market niche; specialize.

• Strengthen customer and supplier intimacy’

• Use information systems to develop strong ties and loyalty with customers and suppliers


Understanding Ethical and Social Issues Related to Systems

• Five moral dimensions of information age

• Major issues raised by information systems include:

• Information rights and obligations

• Property rights and obligations

• Accountability and control

• System quality

• Quality of life

• Health risks:• Repetitive stress injury (RSI)

• Largest source is computer keyboards

• Carpal Tunnel Syndrome (CTS)

• Computer vision syndrome (CVS)

• Technostress

• Role of radiation, screen emissions, low-level electromagnetic fields

The Moral Dimensions of Information Systems

The Data HierarchyThe Data Hierarchy

Organizing Data in a Traditional File Environment

Organizing Data in a Traditional File Environment

• Problems with the traditional file processing (files maintained separately by different departments)• Data redundancy and inconsistency

• Data redundancy: Presence of duplicate data in multiple files

• Data inconsistency: Same attribute has different values

• Program-data dependence:• When changes in program requires changes to data accessed by

program

• Lack of flexibility• Poor security• Lack of data sharing and availability

• Database: • Collection of data organized to serve many applications by

centralizing data and controlling redundant data

• Database management system: • Interfaces between application programs and physical data files

• Separates logical and physical views of data

• Solves problems of traditional file environment• Controls redundancy

• Eliminated inconsistency

• Uncouples programs and data

• Enables central management and security

The Database Approach to Data Management


Human Resources Database with Multiple ViewsHuman Resources Database with Multiple Views

• Relational DBMS• Represent data as two-dimensional tables called relations or files

• Each table contains data on entity and attributes

• Table: Grid of columns and rows• Rows (tuples): Records for different entities

• Fields (columns): Represents attribute for entity

• Key field: Field used to uniquely identify each record

• Primary key: Field in table used for key fields

• Foreign key: Primary key used in second table as look-up field to identify records from original table



Relational Database TablesRelational Database Tables


Relational Database Tables (cont.)Relational Database Tables (cont.)

Components of a Data WarehouseComponents of a Data Warehouse

Using Databases to Improve Business Performance and Decision Making

Using Databases to Improve Business Performance and Decision Making

• Business Intelligence: • Tools for consolidating, analyzing, and providing access

to vast amounts of data to help users make better business decisions

Managing Data Resources

• Managing data resources:• Establishing an information policy

• Information policy: Specifies firm’s rules, procedures, roles for sharing, standardizing data

• Data administration: Responsible for specific policies and procedures; data governance

• Database administration: Database design and management group responsible for defining, organizing, implementing, maintaining database

Communications Networks

• Signals: digital vs. analog• Analog: Represented by continuous waveform

• Digital: Discrete, binary waveform

• Data as strings of two states: one bit, zero bits / on-off electrical pulses

• Modem needed to translate between analog and digital

• Types of networks (geographic scope)• Local area network (LAN)

• Campus area network (CAN)

• Metropolitan area network (MAN)

• Wide area network (WAN)

Functions of the ModemFunctions of the Modem


Network TopologiesNetwork Topologies



• Physical transmission media

• Twisted wire• Pairs of twisted copper wire

• Older type of transmission medium

• Most common LAN cabling: Cat5 cable

• Coaxial cable• Single, thickly insulated copper wire

• Used for longer runs


• Physical transmission media

• Fiber optics and optical networks

• Strands of clear glass fiber

• Used for Internet backbone

• Optical networks can boost capacity by using multiplexing -

using different wave lengths to carry separate streams of data

over same strand


• Wireless transmission media

• Microwave systems

• High-frequency radio signals that follow straight line and require

transmission stations or satellites to act as relay

• Cellular telephones

• Radio towers placed in adjacent geographic areas (cells)


• Transmission speed

• Bits per second (bps): Used to measure total amount

of data that can be transmitted

• Hertz (cycles per second): Frequency of medium,

affects transmission capacity

• Bandwidth: Difference between highest and lowest

frequencies that can be accommodated on channel

The Internet

• What is the Internet?

• World’s most extensive public communication system, rivaling

global telephone system

• World’s largest implementation of:

• Client/server network

• Internetworking

• Internet service provider:

• Commercial organization with permanent connection to Internet

• Sells temporary connections to retail subscribers

The Internet

• Internet addressing

• IP address

• Assigned to each computer on Internet

• 32-bit number: four strings of numbers ranging from 0 to 255

separated by periods

• E.g. 207.46.250.119

• Messages decomposed into packets, each carrying

destination IP address

The Internet

• Domain Name System• Converts IP addresses to domain names

• DNS servers maintain database of domain names mapped to IP

addresses

• Domains: E.g. www.google.com

• Root domain (“.”)

• Top-level domain (.gov, .com, .edu, etc.)

• Second-level domain (e.g. “google”)

• Third-level domains/hosts (“www”)

• World Wide Web: Most popular Internet service

• Web pages: Formatted using Hypertext Markup Language

(HTML) with embedded links that connect documents to one

another and that also link pages to other objects, such as sound,

video, or animation files

• Hypertext Transfer Protocol (HTTP): Communications

standard used to transfer pages on Web

• Uniform resource locator (URL): Full address of web page,

including protocol, domain name, directory path, and file name

• E.g.: http://www.megacorp.com/content/features/082602.html

The Internet

• Web servers: Software for locating and managing stored Web pages, typically run on dedicated computers

• Web site: Collection of Web pages linked to home page

• Webmaster: Person in charge of organization’s Web site

• Search engines: Allow finding information on Web of 50 billion+ pages nearly instantly

The Internet

• Intranets: Private networks using Internet standards

• Protected from public visits by firewalls

• Extranets: Limited area of intranet designed for access by authorized vendors and customers

• Technologies and tools for communication and e-business• E-mail• Chat, instant messaging• Electronic discussions• Groupware• Electronic conferencing

The Internet

• Internet telephony:

• Telephone voice transmission over Internet or private networks

• Voice over IP (VoIP): Uses Internet Protocol (IP) to deliver voice

information using packet switching, avoiding tolls charged by local

and long-distance telephone networks

• Can reduce communication and network management costs by 20

to 30 percent

• Flexible technology: Phones can be added or moved to different

offices without rewiring or reconfiguring network

The Internet

Systems Vulnerability and Abuse

• Security

• Policies, procedures, and technical measures used to prevent unauthorized access, alteration, theft, or physical damage to information systems

• Controls

• Methods, policies, and organizational procedures that ensure:

• Safety of organization’s assets

• Accuracy and reliability of accounting records

• Operational adherence to management standards


• Why systems are vulnerable

• Electronic data vulnerable to more types of threats than manual data

• Networks

• Potential for unauthorized access, abuse, or fraud is not limited to single location but can occur at any access point in network

• Vulnerabilities exist at each layer and between layers

• E.g. user error, viruses, hackers, radiation, hardware or software failure, theft


• Malicious software (malware)• Computer virus

• Rogue software program that attaches to other programs or data files

• Payload may be relatively benign or highly destructive

• Worm:

• Independent program that copies itself over network

• Viruses and worms spread via:• Downloaded software files

• E-mail attachments

• Infected e-mail messages or instant messages

• Infected disks or machines


• Trojan horse• Software program that appears to be benign but then does

something other than expected

• Does not replicate but often is way for viruses or malicious code to enter computer system

• Spyware • Small programs installed surreptitiously on computers to monitor

user Web surfing activity and serve advertising

• Key loggers• Record and transmit every keystroke on computer

• Steal serial numbers, passwords


• Hacker • Individual who intends to gain unauthorized access to

computer system

• Cybervandalism• Intentional disruption, defacement, or destruction of Web

site or corporate information system

• Sniffer:• Eavesdropping program that monitors information

traveling over network


• Denial-of-service (DoS) attack:

• Flooding network or Web server with thousands of false

requests so as to crash or slow network


• Computer crime

• Computer as target of crime

• Accessing computer without authority

• Breaching confidentiality of protected computerized data

• Computer as instrument of crime

• Theft of trade secrets and unauthorized copying of software or copyrighted intellectual property

• Using e-mail for threats or harassment

• Most economically damaging computer crimes

• DoS attacks and viruses

• Theft of service and disruption of computer systems


• Identity theft• Using key pieces of personal information (social security

numbers, driver’s license numbers, or credit card numbers) to impersonate someone else

• Phishing• Setting up fake Web sites or sending e-mail messages that look

like those of legitimate businesses to ask users for confidential personal data


• Internal threats: Employees• Company insiders pose serious security problems

• Access to inside information– like security codes and passwords

• May leave little trace

• User lack of knowledge: Single greatest cause of network security breaches• Compromised passwords

• Social engineering

• Errors introduced into software by:• Faulty data entry, misuse of system

• Mistakes in programming, system design

• Security policy• Statements ranking information risks, identifying acceptable

security goals, and identifying mechanisms for achieving these goals

• Chief Security Officer (CSO)• Heads security group in larger firms• Responsible for enforcing security policy

• Security group • Educates and trains users• Keeps management aware of security threats and

breakdowns• Maintains tools chosen to implement security

Technologies and Tools for Security

• Disaster recovery planning• Restoring computing and communication services after

earthquake, flood, etc.

• Can be outsourced to disaster recovery firms

• Business continuity planning• Restoring business operations after disaster

• Identifies critical business processes and determines how to handle them if systems go down

• Business impact analysis • Use to identify most critical systems and impact system outage

has on business


• Access control• Policies and procedures used to prevent improper access to

systems by unauthorized insiders and outsiders

• Users must be authorized and authenticated

• Authentication: • Typically established by password systems

• New authentication technologies:• Tokens

• Smart cards

• Biometric authentication


• Firewalls:

• Hardware and software controlling flow of incoming and outgoing network traffic

• Prevents unauthorized access

• Screening technologies


• Intrusion detection systems:

• Full-time, real-time monitoring tools

• Placed at most vulnerable points of corporate networks to detect and deter intruders

• Scanning software looks for patterns such as bad passwords, removal of important files, and notifies administrators


• Antivirus software, antispyware software

• Antivirus software:

• Checks computer systems and drives for presence of computer viruses

• To remain effective, antivirus software must be continually updated

• Antispyware software tools:

• Many leading antivirus software vendors include protection against spyware


• Three major e-commerce categories• Business-to-consumer (B2C)

• E.g. Barnesandnoble.com

• Business-to-business (B2B)• E.g. ChemConnect.com

• Consumer-to-consumer (C2C)• E.g. eBay.com

• M-commerce• Use of handheld wireless devices for purchasing goods

and services from any location

Electronic Commerce

The Growth of International Information Systems

• Strategy when building international systems

• Understand global environment

• Business drivers pushing your industry toward global competition

• Inhibitors creating management challenges

• Develop corporate strategy for competition

• How firm should respond to global competition


• Strategy when building international systems (cont.)

• Develop organization structure and division of labor

• Where will production, marketing, sales, etc. be located

• Consider management issues

• Design of business procedures, reengineering

• Consider technology platform

International Information Systems ArchitectureInternational Information Systems Architecture



• Challenges and obstacles to global business systems

• General, cultural challenges

• Cultural particularism

• Regionalism, nationalism, language differences

• Social expectations:

• Brand-name expectations, work hours

• Political laws

• Transborder data flow

• Transborder data and privacy laws, commercial regulations


• Specific challenges

• Standards

• Different EDI, e-mail, telecommunication standards

• Reliability

• Phone networks not uniformly reliable

• Speed

• Different data transfer speeds, many slower than U.S.

• Personnel

• Shortages of skilled consultants

Managing Global Systems

• Principle management problems posed by developing international systems

• Agreeing on common user requirements

• Introducing changes in business processes

• Coordinating application development

• Coordinating software releases

• Encouraging local users to support global systems


1. Define core business processes

2. Identify core systems to coordinate centrally

3. Choose an approach• Grand design approaches tend to fail

• Evolve transnational applications incrementally from existing applications

4. Make benefits clear• Global flexibility

• Gains in efficiency

• Global markets

• Optimizing corporate funds over much larger capital base


• The management solution

• Agreeing on common user requirements

• Introducing changes in business processes

• Coordinating applications development

• Coordinating software releases

• Encouraging local users to support global systems

• Technology challenges of global systems

• Computing platforms and systems integration

• How new core systems will fit in with existing suite of applications developed around globe by different divisions

• Standardization: Data standards, interfaces, software, etc.

• Connectivity

• Internet does not guarantee any level of service

• Many firms use private networks and VPNs

• Low penetration of PCs, outdated infrastructures

Technology Issues and Opportunities for Global Value Chains

• Technology challenges of global systems (cont.)

• Software

• Integrating new systems with old

• Human interface design issues, languages,

• Standardizing business processes

• Software applications that enhance productivity of international work teams

• Solutions include

• EDI, SCM systems

• Groupware, e-mail, videoconferencing

• Internet-based tools

Technology Issues and Opportunities for Global Value Chains

Documents

MIS Mancosa Lectures