Session 1 to 5 MIS

Indian Institute of Management, Lucknow 1

Introduction to Management Information Systems

Amit AgrahariAsst Prof of Information Technology and Systems

Indian Institute of Management, Lucknow


Agenda and Key Take Away

• Agenda– Introduction to the course– It fails !– Management of Information Systems– IT’s productivity paradox

• Key Take Away– IT as a socio technical system– IT fails and may not increase firm’s productivity


Ground Rules

• MIS is about common sense.

• Manager’s perspective– Achieve business objectives using technology– Know what you don’t know

• Readings– Book and Polycopy

• Group of six students each (with two subgroups for case study) (CR?)

• Presentation and report on a topic of your choice (20 Marks).

• Submit a write up on case study before the class. (5 Marks Each * Four Case Studies) – Hard copy 3-4 pages

• Mid Term and End Term = 30 marks each


C'est le Début

• No Lingua Franca for business and IT– Why can’t you teach management to IT guys?

• Business should drive technology– Dot com?– Technology fails– IT capabilities and how to harness them – No IT abuse – Are you aware of IT failure examples at IIML?



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


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%


Contemporary approaches to IS

• Technical approach– Mathematical models to study IS, technology and its

capabilities– Computer science, Management science, Operations

research

• Behavioral approach– Strategic business integration, design, implementation,

utilization– Economics, Sociology, Psychology

• Sociotechnical approach– Because no single approach effectively captures the

reality of IS.


The Socio-Technical System

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


The Discipline of Information Systems

• Information Systems = Information Technology + Organizational Processes + People

• [IS is to CS] as [Pharmacy is to Chemistry]

• Pharmacists know Chemistry, but Pharmacists are interested in “applying” the science to the practical matter of fixing biochemical maladies. Similarly, IS is said to be an applied science that focuses on solving organizational problems, thus requiring a rich understanding of organizations and the interface between systems and organizations.


Definition: Information Systems

• Knowledge that aids in the productive application of information technology to human organizations and their management (ISR 2002)

• The information systems field examines more than just the technological system, or just the social system, or even the two side by side; in addition, it investigates the phenomena that emerge when the two interact. (MIS Quarterly 2001)



• Knowledge concerning both the management of information technology and the use of information technology for managerial and organizational purposes (Zmud 1997).

• The effective design, delivery, use and impact of Information technologies in organization and society (Avison and Fitzgerald, 2003) .



• We conclude that IS includes– Use of technology and NOT the technology

alone. – Design and Management of technology– Impact of technology in productivity

measures (ATM)

• It investigates the phenomenon that emerge when technological and social system interact


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

• Mckinsey’s 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 can’t bring any competitive

advantage


Information Systems and Firm’s 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


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 firm’s 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)


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


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


Does IT Matter?

• World spend on IT USD 2 Trillion per year

• Assumption : IT’s 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 commerce’s bureau of economic analysis


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


The Sprint to Commoditization


IT Doesn’t Matter

• IT offered competitive advantages during build out phase, which is coming to and end– It’s 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 don’t lead (Reduce risk) – Focus on vulnerabilities ( Cede control over IT and focus on

resulting vulnerabilities)


How to Move Beyond Technology?

In 1992 Max Hopper of American Airlines said that the era of competitive benefits from proprietary systems are over since computers are as ubiquitous as the telephone and any travel agency could replace CRS with in 30 days.

déjà vu ?


IT Enabled Business Transformation

J. C. Henderson, N. Venkatraman (1993) Strategic alignment: Leveraging information technology for transforming organizations http://proquest.umi.com/pqdweb?did=547750&sid=2&Fmt=3&clientId=43454&RQT=309&VName=PQD


Classification of IT

Amit AgrahariAsst Prof of Information Technology and Systems Area



Different Types of Information Systems

• Can we categorize them?– IS categories are less useful as rigid

classifications – It helps us visualize potential application of

different approaches, strength and weakness of these approaches

• Heart of IS value proposition– Finding innovative ways to leverage existing IT

infrastructure


Data, Information and Knowledge


Three Fundamental Role of IT


The Four Major Types of Information Systems


Business Operations and Managerial Decision Making


Mastering Three World of IT

• GPT and complimentary assets – Better skilled workers, higher levels of

teamwork, redesigned processes, new decision rights

• Business executives should– Help select technologies– Nurture their adoption– Ensure their exploitation– Depending on IT capability, roles should be

tailored


Three Categories*

IT Category

Definition Characteristics Examples

Function IT IT that assists execution of a discrete function or task

Can be adopted without complementImpact increases when complements are in place

Simulators, Spreadsheets, CAD/CAM software, Statistical Software

Enterprise IT

IT that integrates multiple functions by imposing new work structures

Imposes complementsDefines tasks and sequenceMandates data formatsUse is mandatory

ERP, SCM, CRM, Procurement software

Network IT IT that integrates multiple functions without imposing new work structure

Let complements emergeDoesn’t specify task or sequenceAccepts data in many formatUse is optional

E-Mail, Instant messaging, Wikis

* McAfee, A. 2006. Mastering the three worlds of information technology. Harvard Business Review. 84(11).

Work Structure : Attributes of a business process (workflow, interdependencies, decision right allocation)


Capabilities

• Function IT– Increased experimentation capacity– Greater precision

• Enterprise IT– Define and deploy novel business process– Standardization of workflows, Can be replicated

easily– Monitoring of activities and events

• Network IT– Collaboration without mandating or predicting user

behavior– Allowing expression of judgment– Enabling self organization


Managing IT

• IT Selection– Rather focusing on IT, decide on what capability do

you need

• IT Adoption– Help create complements that will maximize IT’s value.– For NIT managers should refrain from intervening too

often or with too heavy a hand– Manager must intervene forcefully throughout EIT

adoption

• IT Exploitation– Exploit EIT by fine tuning complements– NIT exploitation needs continuous guidance to help

sustain and increase use– Exploiting EIT might need a FIT over it


The Dialogue

• FIT– Enable employees to do their job more

efficiently?– Are our function technologies outdated? If so,

why? What has charged.

• NIT– How do our people collaborate? Do we know

what technologies they are using?– Do we have ways of letting qualitative

information flow.– How do we know what our people are working

on and what they think hot topics are?


The Dialogue

• EIT– In what ways our current processes are not supporting

the business needs? Redesigning and scope redefinition.

– Are there best practices that should be embedded, so that they can be deployed widely?

– What should we monitor? If it isn’t monitored why? – What is the most important period that we could easily

analyze? On hour ago? Yesterday? Last month? Last quarter?

• ROI figures are nearly worthless. Smart companies keep track of spending and milestones and constantly check to see if they are on track to gain the IT based capabilities they desire.


Strategic Role of IS


Area



Agenda and Key Takeaway

• Agenda– Explore relationship between firm’s strategy IT

used– IT as a tool for competitive advantage– Complementary assets for sustainable

competitive advantage

• Key Takeaway– Appreciation for strategic role of IT– Using porter’s model to analyze competitive

advantage from IT


Analyzing IS as a Source of Competitive Advantage

Operational effectiveness: Performing the same task better

Strategic positioning: Performing different activities or same activities in different way


Is IT Source of Sustainable Competitive Advantage?

• Sustainable competitive advantages come from resources that are (RBV)– Valuable– Rare– Imperfectly imitable– Non substitutable

• Can IT offer sustainable competitive advantage?

• Generic information technology, technical skills of IT labor, and IT spending per se, are not likely to be source of competitive advantage


Generic Competitive Strategies

• Low cost leadership– Lower operational cost; POS at Wal-Mart is

linked with a central computer that collect and transmit purchase orders to supplier, thus continuous replenishment

• Product differentiation– Using IS to enable new products and services,

or greatly change the customer’s convenience in using existing products

– Apple iPod along with online unique music library


Generic Competitive Strategies

• Strengthen customer and supplier alliance– Switching costs– Amazon’s one click encourages return purchase by

making it easy. It stores buyer information including contact and credit card information, that can be access through one click.

– Why can’t it be replicated

• Innovation and growth– Find niche market and serve this narrow target

better than competitors– Use IS to innovate and expand into new markets– Hilton employees can scan through 180 million

records during check in and find out customer’s preference and his profitability


Two Bank’s Strategies

HSBC Citigroup

Decentralized management approach to allow regional IT services to meet local needs … “The world’s local bank”

Centralized management approach to provide common and standard technological platform for easy system integration and global expansion … “Under one umbrella”

Acquires and uses external resources, mainly through strategic alliances and off shoring

Acquires and uses external resources mainly through mergers and acquisition

Aims to provide customer with multiple communication channels to make it easy to do business with the bank

Aims to provide customers with a unified group wide, standard technological platform to make it easy to do business with the bank


Understanding IT Strategy

• Strategic objectives are supported by IS. – For example one of HSBC’s strategic priority “aim to

expand business by focusing on deposit taking and risk management” is supported by HSBC Direct which is an online only bank account.

• IT infrastructure can impose a constraint on the organization. – For example HSBC while following its decentralized

approach could meet local needs well, it also created incompatible information systems, restraining HSBC’s ability to offer account aggregation benefits to its customers.


HSBC’ Security Failure

http://blogs.zdnet.com/projectfailures/?p=687


Citi’s ATM failure

http://www.boingboing.net/2006/03/05/citibank-under-fraud.html


IS @ Zara

• Tripled in size between 1996 and 2000, then skyrocketed from $2.43 billion in 2001 to $13.6 billion in 2007. By August 2008, sales edged ahead of Gap, making Inditex the world’s largest fashion retailer

• Zaraʼs IT expenditure is less than one-fourth the fashion industry average”


IS Planning and Development




IS Planning 101

• Course correction

• IT success depends upon manager’s involvement – Shared business IT understanding

• Planning and lack of planning


Pre RFP Requirements - During Consulting

• Process definitions are at a very high level (i.e.) 10,000 feet view of processes– To define scope of work– Which set of processes will be handled

electronically using software; strategic decision taken by customer’s managerial staff

• Process information sources– Secondary sources, End-users– iterative process

• Customer wants to see results and the software being deployed


Pre RFP Requirement - During Consulting

• Deliverables of the exercise– AS IS process document– TO BE process document

• The bidding and delivery teams will rely on the process documentation and continuously refer to the document during the course of the project – So, do justice – Be careful not to miss-out on key processes – If key processes are missed out, scope creep

discussions will happen during the delivery stage


Business Processes

• Strategy -> KPI -> Processes -> IT

• Business Process– Set of activities performed in coordination– To realize a business goal

• Traditional V/S Process oriented organizations

• Tasks of Business Process Management, can be divided into – Process Identification– Process Modelling– Process Analysis – Process Management


Process Modeling

• Process modelling is a method for enabling an enterprise to document its processes and to recognize the resources required by each process– Understand the nature of various processes– Recognize the resources necessary for the

execution of each process (people, machine etc)

– Rearrange the system of processes and resources (i.e. process orientation)

– To permanently improve processes


BPMN: Categories of Elements


Exercise

• To open an account at I-bank, a customer has to fill up and submit account opening form to the front end clerk, who verifies the form and documents. If the form is not complete he returns it to the customer. If the form is correct it goes to the back office where customer’s eligibility for opening an account is checked. If found unfit customer is informed about the rejection, otherwise it moves on to another member of back office who opens an account in the system and associate debit card, PIN, cheque book, phone banking PIN, Internet banking id and password with the account. Next the account is activated and physical deliverables are send to the dispatch department. Dispatch department send these items to the customer. For security reasons these documents have to be dispatched separately.

Customer

Front end clerk

Back Office Member 1

Back Office Member 2

Dispatch

Fill up and submit a/c

opening form

Verify completeness of form and document

Complete Y/N

No

Verify eligibility for account opening

Eligible?Inform customer about rejection

Open an account in the system

Associate Debit card, Cheque book no, phone banking PIN, internet banking id

and password

Activate account

Send Physical deliverables to the dispatch

Send debit card

Send PIN

Send cheque book

Send phone banking no

Send internet banking id

Send internet banking pwd

Receive documents


Fulfilling your IT Requirements

• Request for proposal (RFP)

• Proposal submission, Bidding and Win

• Contract formation and Statement of work (SOW)

• Project initiation / Kickoff, Planning

• Requirements workshop (Requirement gathering)

• Gap / Fitment analysis

• Design

• Build

• Test

• Cut over and deploy / Go live

• Post go live support

Documents

Session 1 to 5 MIS