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Introduction to
Information Systems management & Business
Intelligence
Agenda
• BI - How do you align Business strategy and IT
for competitive advantage?
• Functional Areas and Business processes
• Strategic Information Systems
Stylianos Drakatos, PhD, PMP
Decision Sciences and Telecommunications professor at FIU
Senior partner with eTechnologies Associates
Basic BI Questions
• BI is a hot area in IT.
• Dashboard is an important element in BI.
• A BI system do
– Collecting, Correcting, Integrating, Sorting,
and Accessing
• An BI system has to be
– Accuracy, timeliness, usefulness.
• A Good UI Design can change people’s
perceptions and influence decisions
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Presentation content sources
• Content from my FIU/Barry and Intl. Courses
• Managing and Using IS: A strategic Approach, Keri
Pearlson & Carol Saunders
• Managing Issues of ERP, David L. Olson
• Concepts in ERP, Ellen Monk and Bert Wagner
• Information Technology for Management, Turban, et al.
• PMI South Florida Chapter
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Strategic Alignment Model
Business
Organization Information
Technology
Many CIOs are struggling in their quest of aligning IT with the corporate business strategies, objectives,
metrics and culture. CIOs need to become more involved in the development of strategic initiatives and
build an understanding of the corporate and line of business missions and goals if they seek to align IT with
the corporate directions. Moreover, CIOs need to interpret that knowledge into a flexible IT strategy if the
alignment is to succeed long-term.
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Business
Objective
Strategic
Imperative
Business
Initiative
Technology
Initiative
IT Project
Business
Initiative
Technology
Initiative
Technology
Initiative
Technology
Initiative
IT Project
IT Project
IT Project
IT Project
IT Project
IT Project
IT Project
Strategic
Imperative
Business
Initiative
Technology
Initiative
IT Project
Business
Initiative
Technology
Initiative
Technology
Initiative
Technology
Initiative
IT Project
IT Project
IT Project
IT Project
IT Project
IT Project
IT Project
Strategic Alignment – Aligning IT Projects with
Business Objectives
Establish customer intimacy through
direct relationships with the end users
Establish & build
direct customer
relationships to collect
customer data from
sale to service
Common customer
databases are required
for centralized reporting
and analysis
Establish a master
customer database
Select and implement a
CRM system
Innovative customer solutions & services
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Business Strategy (Understanding business strategy means asnwering the following questions:)
• What are the business goals or objectives
(the Vision)?
• What is the plan for achieving it?
(the Strategy)
• What is the role of IS in this plan?
• Who are the crucial competitors and partner?
What is required of a succesful player in this
value net?
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• What are the important structures and reporting
relationships within the organization?
• Who holds the decision rights to critical decisions?
• What are the characteristics, experiences, and skill
levels of the people within the organization?
• What are the key business processes?
• What is the culture of the organization?
Organization Strategy (Understanding organizational strategy means asnwering the following questions:)
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Key Functions of Today’s IT Organization
• Business Service Management
• IT Asset Management
• IT Portfolio Management
• Enterprise Architecture
• Project Governance
• Project Management and Program
Management
• IT Security Management
• IT Service Management
• Business Technology Optimization
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Information System Hierarchy
• Information systems are comprised of three
main elements:
– IT Technology
– People
– Process
• IT Technology components – (Hardware,
Software), (Data Management, Networking).
• Architecture – strategy implicit in these
components. (i.e., centralized, client-server)
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Data Information Knowledge
Definition Simple Observations
of the sate of the
world
Data endowed with
relevance and
purpose
Info from the
human mind
(includes
reflection, etc)
Characteristic •Easily structured
• “ captured
• “ transferred
•Often quantified
•Mere facts
•Requires unit of
analysis
•Data that has
been processed
•Human mediation
necessary
•Hard to structure
•Difficult to
capture on
machines
•Often tacit
•Hard to transfer
Example Daily inventory
reports of all
inventory items sent
to CEO of large
manufacturing
company
Daily inventory
report of items
below economic
order quality levels
sent to inventory
manager (IM)
IM knows which
items need to be
reordered in light
of related potential
problems
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Applications Architectures (Centralized, Three Tiers and Peer-to-Peer)
Database
Application
LogicData Storage
Presentation
Input/Output
of data to
users
Access to
DB to
Read/Write
data
Central DB
(stores all data and
application
programs)
DatabaseDatabase
Application
LogicData Storage
Presentation
Input/Output
of data to
users
Access to
DB to
Read/Write
data
Central DB
(stores all data and
application
programs)The three tiers distributed processing architecture
based on client-server technologies
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Agenda
• How do you align strategy and IT for competitive
advantage?
• Functional Areas and Business processes
• Strategic Information Systems
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Functional Areas of Operation
• Most companies have four main functional areas:
– Marketing and Sales (M/S)
– Supply Chain Management (SCM)
– Accounting and Finance (A/F)
– Human Resources (HR)
• Each main functional area consists of a number of
narrower business functions specific to the
functional area.
• Historically, businesses have organized themselves
according to business functions.
• Business Schools continue to be similarly
organized.
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Functional Areas of Operation
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Functional View • Functional View of the business
– Based on the functions people perform.
– Information flows vertically in the organization.
– Sometimes information flows across the organization.
– Accounting, Operations, Marketing, Sales and Support.
– Executive Management receives the information and distributes as need arrives.
– See Figure I.5
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Figure I.5 Hierarchical View of the firm.
The Functional View of Business
Burst mode communication mode instead of online
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Business Processes • A business process is a collection of activities that
takes one or more inputs and creates an output that
is of value to the customer
• The customer may be the traditional external
customer who buys the product or service, or an
internal customer (a colleague in another
department)
The business process view is the customer’s
perspective.
• The customer does not care that different functions
are involved in processing their order, and will not
tolerate mistakes and delays caused by poor
coordination of business functions
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Process View of Business
Sa
les
Fu
nc
tio
n
Ac
co
un
tin
g
Fu
nc
tio
n
Pu
rch
as
ing
Fu
ncti
on
Pro
du
cti
on
Fu
nc
tio
n
Lo
gis
tic
s
Fu
nc
tio
n
Material Order Process
Customer Order Process
Online mode of communications – a number of platforms integration
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The Value System
• These Internet-based EDI systems offer strategic benefits
– Faster business cycle (PO to Receiving)
– Automation of business procedures (Automated Replenishment)
– Reduced operational costs
– Greater advantage in a fierce competitive environment
A firm’s value chain is part of a larger stream of
activities, which Porter calls a value system. A value
system includes the suppliers that provide the inputs
necessary to the firm and their value chains. This also is
the basis for the supply chain management concept.
Many of these alliances (Strategic Alliances) and
business partnerships are based on Internet connectivity
(Inter-organizational information systems (IOSs))
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The Value Chain
• Primary activities are those activities in which materials are purchased, processed into products, and delivered to customers. Each adds value to the product or service hence the value chain.
– Inbound logistics (inputs)
– Operations (manufacturing and testing)
– Outbound logistics (storage and distribution)
– Marketing and sales
– Service
According to the value chain model (Porter, 1985), the activities
conducted in any organization can be divided into two parts: primary
activities and support activities.
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The Value Chain (Continued)
• Unlike the primary activities, which directly add value to the product or service, the support activities are operations that support the creation of value (primary activities)
– The firm’s infrastructure (accounting, finance, management)
– Human resources management
– Technology development (R&D)
– Procurement
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The Value Chain (Continued)
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E-commerce and Industry Value
Chains
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Agenda
• How do you align strategy and IT for competitive
advantage?
• Functional Areas and Business processes
• Strategic Information Systems
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Integration of Business Functions
• Sharing data efficiently and effectively
within and between functional areas leads to
more efficient business processes
• Integrated Information systems that share
data between functional areas are called
Strategic Information Systems or Strategic
Applications Systems
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Sustaining a Strategic
Information System (SIS)
• These Internet-based EDI systems offer strategic benefits.
Strategic information systems are designed to establish a
profitable and sustainable position against the
competitive forces in an industry. Due to advances in
systems development it has become increasingly difficult
to sustain an advantage for an extended period.
Experience also indicates that information systems, by
themselves, can rarely provide a sustainable competitive
advantage. Therefore, the major problem that companies
now face is how to sustain their competitive advantage.
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ERP Overview
• Enterprise Resource Planning (ERP) programs are
software (SIS) used by companies to manage
information in every area of the business.
• ERP programs help manage company-wide
business processes using a common database and
shared management reporting tools.
• ERP software supports the efficient operation of
business processes by integrating activities
throughout a business.
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C O N T R O L L I N G
R E S O U R C E S
Purchasing
Manufacturing
Sales/Distribution
Procurement
market
Sales
market
Balance sheet Finance Capital Costs
Machines Operating resources Human resources
SAP R/3 Integration
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SAP R/3 Integration
R/3
Client Server
FI
CO
AM
PS
WF
IS
MM
HR
SD
PP
QM
PM
BPPs shared
across
application
modules
Business Process Procedures
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Questions
Class Logistics
About professor
• Education Background
• Work experiences
• Current Project
• Communication Methods
About yourself
• Briefly tell us the following in class
– Name
– Career plan for the next five years.
– The dream of your life
Form your project Group
• Every Group should have 3-4 members.
• The best group composition should have
members from diverse background.
• First deliverable: You need to give us a short
presentation making the business case for
your project.
Collaboration Methods
• Social Network?
• Wiki?
• Blog?
• Blackboard only?