LESSON 1
INFORMATION SYSTEMS MANAGEMENT Aims and outcomes
Aims

The aim of this session is to introduce and re-affirm your basic understanding of data, information and information systems. The discussions will lead you to develop an understanding of the concept of an organisation as a system. Further, you will examine the flows of decision-making and the sources of data used to make those decisions. Finally, we will consider the types of IS/IT required to support organisations at three different levels of decision-making - operational, tactical and strategic. This session provides the foundation for the remainder of the sessions. Learning Outcomes By the end of this lesson you will:
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Understand the use of data and decision-making at the different levels of a conceptual organisation. Understand the concepts of systems thinking to support business operations. Familiarize yourself with the vocabulary of strategy. Understand the importance of IT/IS as a strategic tool.

Required Reading Chapter One – Foundations of Information Systems in Business Read through Chapter One Section 1 of the text book Read the Real World case study 2 – Lufthansa: Taking Mobile Computing to the Skies While Keeping the Mobile Workforce Connected. Student Activity Answer the questions at the end of the case study Post your answers onto the discussion board.

Background Reading
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Here is the web address for a series of articles addressing knowledge and information management: http://www.brint.com/Peterold.htm Whilst in the context of higher education, you may find this paper of interest as an introduction to data, information and information systems. http://informationr.net/ir/9-2/paper172.html

1. INFORMATION SYSTEMS MANAGEMENT

1.1 Preparation
Throughout this unit, and in preparation for your in-course assessment, you are required to identify an organisation that you wish to research. This must be an organisation known to you (if you are working you may use your own organisation) or an organisation that you will have access to, to research relevant information. You must have this organisation approved by your tutor BEFORE you start your research. You will draw on this organisation to provide material throughout the lessons for your contribution to the cyber discussions. These contributions will form the basis of your in-course assessment.

1.2 Systems

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A system is a collection of parts Working together For a common objective

A business system is a group of components working together that manage inputs, processes, data, storage, control and outputs. The aim is to turn data into information that can be used to support business functions such as sales, marketing, planning, forecasting, decision making, and all operational activities of a business. This may or may not include the use of IS/IT.

What is a business information system?
A business information system uses technology to support or improve the business system. This can include computers, files, databases, spreadsheets, networks, telecommunication systems, printers, faxes Student Activity From your experience give an example of each of the above Post your answers onto the discussion board.

An Organisational System

Feedback Informs Inputs Feedback Informs Processes

Feedback fr Customers

The control function provides management with a reactive control to ensure that the output achieved is monitored and compared to the desired output and corrective action is taken if a deviation exists.

1.3 Information Systems and Organisations
1.3.1 How IS supports different levels of business • Information Systems (IS) that support processes or operations can help the business by providing data to the decision making process. Information gained from decision making will then affect the operations of the business. Data from operations and intelligence from decision making will give a company strategic and competitive advantage.

1.3.2 Operational Support Systems Operational systems include: • • •
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Transaction Processing Process Control Systems Enterprise Collaboration Systems
These are systems that help the day to day operation of the business such as: – Customer sales – Transactions – Inventory – Accounting – Payroll Operational systems manage and control processes such as: – Power generation – Car building – Petroleum refining Operational systems may be office automation systems such as:

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Email Chat Videoconferencing

All the operational systems support the core functions of the business but often there are many different separate systems in a company each for a particular task. Trying to make business decisions from the information in operational systems is not easy as there are a lot of data often in different formats in systems that are not linked together.

1.3.3 Management Information Systems
These are systems designed to take the information from the operational systems and produce reports or displays to support business decision making. MIS may include systems such as: – – – Sales analysis Production performance Cost trend reporting

High level data that allows the executives to plan for strategic and competitive advantage over its rivals. Often this will come from condensed versions of the MIS.

1.3.4 Strategic Information Systems

1.4 Levels of Decision Making
The decisions taken at each of these levels have different characteristics, require different data and carry different levels of risk The Strategic Level - The Executives
• The decisions for the future direction of the organisation are taken at this level. The time horizon is 2 - 3 years although the strategic plan is monitored on a frequent basis to ensure that the organisation remains competitive. The data required is in a consolidated format, showing only high-level statistics and financial information. Data are drawn mostly from external sources and compared to internal performance data. The risk of decisions is very high at this level as the outcomes affect a large number of resources. The decisions for the medium term planning, project management, staffing levels, team leadership are taken at this level. They require a greater level of detail than the executives to make their decisions which cover a time frame of 6 to 18 months. Data are drawn equally from internal and external sources. The risk of the decision-making at this level is less than for the executives as they affect fewer resources. The decisions taken at this level affect the day-to-day running of individual activities within the organisation.

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• The Tactical Level - The Managers
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• The Operational Level - The Workers
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Often the decisions are taken based on a set of rules that the worker follows and requires little thought or individual initiative. Data are drawn from internal sources. The risk of the decision-making at this level is very low.

HIGH RISK

LONG TE

LOW RISK

SH TER

Decision Making - Executives
• Competition - Executives need to be aware of the competition they face. This will affect their market share and their profit margins. They need to find a way of growing their customer base and retaining it by supplying goods and services that are price competitive and of an appropriate quality superior to competitors. Executives also need to be aware of any potential new entrants to their market space. Suppliers - Executives need to be aware of their existing suppliers and new suppliers that enter the market to ensure that they can source their products and raw materials at a competitive price. Substitute products - Executives need to be aware of any new products that would be a substitute for the products or services they offer. Any substitutes could affect their sales and thus their profit margins. Internal processes - executives need to ensure that all of the functions within their organisation are adding value to the products and services the organisation produces.

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Decision Making - Tactical
• • Skills base - Tactical managers need to be aware of the current and future skills that exist within the organisation and that are available externally to ensure that they have a productive workforce. Technology - Tactical managers need to be aware of hardware and software developments that could be employed to ensure that the data capture, manipulation and storage are conducted with maximum effect. They also need to ensure that the technology supports the business functions.

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Project management - Tactical managers will use project management tools to ensure that they have the appropriate human and physical resources to produce the products and services within budget, on time and at the appropriate level of quality to meet the organisations strategic aims. Software - Tactical managers make use a range of software to manage budgets, manage human resources, manage stock control, and manage marketing functions such as public relations and advertising.

Decision Making - Operational
• At the operational end of the business - sales people will be looking at stock control, pricing, special offers, customer records, marketing data. They will be looking at ways to increase the turnover, ensure goods are available, arrange deliveries, ensure payment is made and customer accounts updated

Student Activity – In Preparation for your cyber discussion with your tutor Examine your chosen organisation. For each of the levels defined in the conceptual triangle (Strategic, Tactical, Operational) identify the types of decision that might be taken. What information will be required to address each of the questions? What data will be required to provide the information? Where will that data come from?
• Note you may find it easier to conduct this exercise by completing a grid such as the example below. Level Decision Information Data

Executive

Is it time to expand to become a global organisation? Can I complete this customer order?

Competitor Information Customer Information How many orders are in the pipeline?

Collated Statistics

Operational

Product quantity in stock

Student Activity Answer the following: • What operational process can you think of in relation to the business you are investigating?

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What are the inputs and outputs of this business? What feedback and control measures exist? What Tactical decisions should the management be making?

1.5 Information Technology to support Information Systems
So far we have looked at data, information, systems and decision-making at different levels of the organisation. Now we need to examine the types of hardware and software that can be employed to support the information system at the different levels of the organisation.

EIS

MIS

MIS Management Information System TP Transaction Processing

EIS Executive Information System

Executive Information Systems These systems provide executives with summary data. The summary data provides an overview of the organisation. This may be sales data, financial data, people data, comparative data, logistical data, asset data. The data will often be provided with comparisons from previous periods of time. This enables executives to perform trend analysis. They can see how the performance compares to previous timeframes and also how performance compares to the

expectations set. From this analysis, strategic decisions are taken to determine the future of the organisation. Management Information Systems These systems allow middle managers to manage projects, allocate and schedule staff, manage budgets, manage stock; schedule production runs, schedule distribution. The data provided informs the managers of current positions and enables them to take tactical decisions in order to ensure their targets (set by the executives) are met. Transaction Processing The people who work at the operational level of the organisation use these systems. These systems may support clerical functions, manual operations such as in factories, customer support functions, designer functions (for example: fashion design, automobile design, architectural planning). Of course there are software packages that are used at all levels of the organisation such as the Microsoft Office Suite or Lotus Notes. Entries to the databases are generally created and maintained at the operational level of the organisation. However, the data is processed to provide information to all levels of the organisation. There are also a number of software packages that can support all of the functionality of the organisation (such as SAP). However, all of the rules that we have discussed regarding the input of the raw data, and the use of the data at the different levels of the organisation still apply. These packages, expensive and requiring considerable information technology to support them, provide a total integration of the data for the different functional area of the organisation. We will be looking at this further in later lessons on this unit.

1.6 Communication Technology
Required Reading: Chapter One Section II We must also consider the implications of the advances in communications technology as this also impacts on our management of information within the organisation and between the organisation, it's customers and it's suppliers. (We will be talking more about this in later lessons when we cover Supply Chain Management and Customer Relationship Management.)

Student Activity List as many technologies as you can think of that are required by a BIS and say how they may be used together to support a business enterprise.

Post your answers onto the discussion board.

Local Area Networks (LANs) enable communications between individual people and functional areas. They provide a mechanism for sharing data, peripherals and dissemination of corporate information (such as internal memos). These are often small intranets where documents are stored, the database accessed and allow group working. Wide Area Networks (WANs) enable communications across the globe to national and international sites of the organisation, and to communicate with customers and suppliers. The technology also facilitates access to the Internet. This may include a company web site, online ordering, emails This has had a huge impact on how we manage our information. The following table shows the impact of the Internet on the business, and the value to the organisation. Business Impact Business Value Efficiency Compression of Time Accelerate Processes Overcoming Geographic Restrictions Gain Economies of Scale Add Global Control Develop New Markets Restructuring Relationships Bypass Intermediaries Replicate Scarce Knowledge Build Networks

Effectiveness Reduce Float Time Innovation Product Service Excellence

Source: Managing Information Across the Enterprise, Wysocki and DeMicheill, 1997, p7 We will now take a closer look at what each of the cells represents: Efficiency - Compression of Time Technology= Electronic Data Interchange Speeding the internal processes of receiving and processing customer orders can improve the level of customer service and satisfaction. As a consequence, the organisation receives a greater reputation and the cash flow is improved.

Efficiency - Overcoming Geographical Restrictions The network facilitates the choice of operating in a centralised or decentralised mode. This decision will be variable and based on the nature of the organisation and local processing needs. Efficiency - Restructuring Relationships The thinning of organisations has empowered workers at lower levels with decisionmaking authority and created opportunities for direct contact with the customer without needing to go through intermediaries. Organisational flattening has a direct favourable impact on customer service not only in the quality, but also in the efficiency of the operations. On-demand access by the worker to data and information makes this possible. Effectiveness - Compression of Time Data and information are immediately available. Customers can have direct access to the status of their order. Managers have immediate access to the current position of all areas of corporate data. Effectiveness - Overcoming Geographical Restrictions Global networks and global positioning satellites have streamlined the communications interface. Information is available any time and any place. Effectiveness - Restructuring Relationships With a flatter organisational hierarchy, knowledge is shared more easily throughout the organisation making a more effective workforce. Innovation - Compression of Time The advances of technology have developed innovative ways of communicating with customers. On-line shopping, Voice-over-IP, direct customer interfaces contribute to enhancing the customer relationship and reducing response times. Remember that when we speak of customers, we do not only mean the external customer. As internal functional areas operate, they require input from other functional areas and provide output to other functional areas. Thus, these functional areas become customers of each other. Innovation - Overcoming Geographical Restrictions The cost of operating under traditional modes of communication (such as the snail mail i.e. letters) can be dramatically reduced using electronic communications. Whilst the telephone is quick, there is no formal record of the enquiry or transaction. Electronic communications can speed the process, and also reach wider markets at no additional cost. Further, electronic communications provides an audit trail of all discussions, Innovation - Restructuring Relationships

Tying customers electronically to a company has been demonstrated over the years. For example the American Hospital Supply case when the company installed computer terminals on the desks of their customers so that they could place their orders electronically when supplies ran low. This became a barrier to entry for other suppliers in the same market sector. Barriers to switching into the electronic mode continue to occur over the Internet and other value-added networks. We will be returning to many of these issues during the later lessons.

1.7 Preparation for the Chat Room Discussion
Based on the research you have done so far on the company of your choice, prepare the following for your contribution to the discussion: 1. 2. 3. 4. 5. 6. 7. 8. What type of company have you chosen and why? What size is the company? Is it local, national or international? What type of information will the executives require to make their decisions? What external data might the executives need access to and why? What type of activities will the tactical managers perform? What are the functional areas at the operational level? What type of software is employed at the different levels of the organisation? What type of Information Technology does the organisation use to support its information system? 9. Does the organisation use an Intranet? An Extranet? The Internet? You will also require the information you have prepared so far in this lesson. This information and that you have worked on in the student activities should form part of the learning journal that will contribute towards your coursework assessment.