Why Managers Must Understand IT

• Managers play a key role– Frame opportunities and threats so others can

understand them– Evaluate and prioritize problems and solutions– Lead the effort to pursue IT policies that best meet

organizational needs

• Gains in productivity – Require innovations to business practices – Automating these improved processes to take

advantage of IT capabilities

Information Technology for Managers 1

What is Information Technology?

• Information technology (IT) – Includes all tools that capture, store, process,

exchange, and use information

• Field of IT includes:– Computer hardware– Software– Networks and related equipment– Databases

Information Technology for Managers 2

What is Information Technology? (continued)

• IT infrastructure– Organization’s defined set of IT hardware, software,

and networks

• IT support organization– Staff to plan, implement, operate, and support IT

• Information systems– Enable a firm to meet fundamental objectives– Types: function IT, network IT, and enterprise IT

Information Technology for Managers 3

Information Technology for Managers 4

Function IT

• Includes information systems that improve the productivity of individual users in performing stand-alone tasks

• Examples – Computer-aided design (CAD) software– Word processors– Spreadsheet software– Decision support systems– e-learning systems

Information Technology for Managers 5

Function IT (continued)

• Decision support system (DSS) – Employs models and analytic tools – Helps users:

• Gain insights into data

• Draw conclusions from the data

• Make recommendations

• E-learning systems – Encompass a number of computer-enhanced

learning techniques

Information Technology for Managers 6

Network IT

• Information systems that improve communications and support collaboration among members of a workgroup

• Examples – Web conferencing– Wikis– Electronic corporate directories

Information Technology for Managers 7

Network IT (continued)

• Web conferencing – Conduct meetings or presentations in which

participants are connected via the Internet

• Wiki – Web site that allows users to edit and change its

content easily and rapidly

• Electronic corporate directories– Used in large organizations to find the right person

with whom to collaborate on an issue or opportunity

Information Technology for Managers 8

Enterprise IT

• Information systems used to define interactions among employees and/or with external customers, suppliers, and other business partners

• Examples – Transaction processing– Enterprise resource planning– Interorganizational systems

Information Technology for Managers 9

Enterprise IT (continued)

• Transaction processing system (TPS) – Captures data for company transactions– Updates the firm’s records, which are maintained in

electronic files or databases

• Enterprise resource planning system (ERP)– Group of computer programs with a common

database – Used by firms to plan, manage, and control their

routine business operations

Information Technology for Managers 10

Information Technology for Managers 11

Information Technology for Managers 12

Enterprise IT (continued)

• Interorganizational information systems – Support the flow of data among organizations to

achieve shared goals

Information Technology for Managers 13

Enterprise IT (continued)

• Electronic data interchange (EDI)– Supports the direct transfer of information in the form

of predefined electronic documents– Standards

• United Nations/EDI for Administration, Commerce, and Transport (UN/EDIFACT)

• ANSI ASC X12

Information Technology for Managers 14

Information Technology for Managers 15

The Role of Managers Vis-À-Vis IT

• Managers have a crucial role in leading the successful introduction and adoption of IT

• Critical responsibilities – Identifying appropriate opportunities to apply IT– Smoothing the way for its successful introduction

and adoption– Mitigating its associated risks

Information Technology for Managers 16

Identifying Appropriate IT Opportunities

• Management must ensure a good return on the investment– IT-related expenses in many organizations can

account for 50 percent or more of capital spending– Great variation exists in IT-related spending

Information Technology for Managers 17

Information Technology for Managers 18

Information Technology for Managers 19

Smooth Introduction and Adoption of IT

• Managers must overcome resistance – So that the new IT system is accepted and used throughout the organization

–

Information Technology for Managers 20

Smooth Introduction and Adoption of IT (continued)

• Three major theories on organizational change management– Change Management Continuum Model– Unified Theory of Acceptance and Use of Technology – Three Worlds of IT

Information Technology for Managers 21

Smooth Introduction and Adoption of IT (continued)

• Change Management Continuum Model– Seven stages of commitment grouped into three

major phases: • Inform

• Educate

• Commit

Information Technology for Managers 22

Information Technology for Managers 23

Information Technology for Managers 24

Smooth Introduction and Adoption of IT (continued)

• Unified Theory of Acceptance and Use of Technology – Identifies four key factors that directly determine a

user’s acceptance and usage of IT

Information Technology for Managers 25

Smooth Introduction and Adoption of IT (continued)

• Three Worlds of IT– Three types of IT require different types of organizational change

– Four organizational complements allow improvements with IT• Better-skilled workers• Higher levels of teamwork• Redesigned processes• New decision rights

Information Technology for Managers 26

Information Technology for Managers 27

Smooth Introduction and Adoption of IT (continued)

• Successful enterprise IT system requires: – Top-down imposition of standards and procedures

Information Technology for Managers 28

A Manager Takes Charge

• Toys “R” Us EDI System Rescued

• Tim Meester: director of vendor partnerships

• Errors in EDI data made it difficult for the vendors to get paid

• Biggest challenge– Change the Toys “R” Us culture – Make employees realize that less than 100 percent

accuracy was unacceptable

Information Technology for Managers 29

A Manager Takes Charge (continued)

• Team had to: – Develop corrective actions– Address recurring problems both at Toys “R” Us and

the vendor sites– Provide consistent advice to each vendor

• Toys “R” Us implemented an extranet to link itself with all 1300 of its vendors

Information Technology for Managers 30

Ensuring that IT Risks Are Mitigated

• Special measures are needed to ensure that the information and its control mechanisms stand up to intense scrutiny– Laws mandate stringent control requirements and

accurate record keeping for publicly held corporations

• Managers are responsible for ensuring that physical IT assets are protected against loss or damage

Information Technology for Managers 31

Information Technology for Managers 32

What if Managers Do Not Participate in IT?

• Failed IT projects can lead to lowered returns on investment and missed opportunities

• Managers at 80 percent of surveyed firms believe that their operational and financial data is not as effective as it should be for developing strategies and planning

Information Technology for Managers 33

Information Technology for Managers 34

Summary

• Managers have three critical responsibilities when it comes to IT– Identifying appropriate opportunities to apply IT– Smoothing the way for its successful introduction

and adoption– Mitigating its associated risks

• Most effective users of IT obtain maximum value from IT investments that: – Align with the organization’s strategic needs– Are well managed and executed

Information Technology for Managers 35

Summary (continued)

• Successfully implementing the three types of IT (function, network, and enterprise) requires different types of organizational change

• Four organizational compliments allow IT to improve performance– Better-skilled workers– Higher levels of teamwork– Redesigned processes– New decision rights

Information Technology for Managers 36