Dr.
Susmi Routray
sroutray@imt.edu
Room No. 1
Information Technology
IT affects all aspects of human endeavor
Managing and operating organizations
Business enterprises
Government organizations
Social and charitable organizations
Operating Environment
Due to the growth and pervasiveness of IT
organizations are operating in a different
environment :
Globalization
E-enablement
Knowledge Sharing and Knowledge Management
Major trends that impacts IT
Management
Who makes which
IT decision
Governance of IT
Shifting from being handled
exclusively by IS executives to
being collaborative effort between
IS and the business
How IT is being managed in leading-
edge enterprises?
• Industrial Era
1957 • Information Era
• Information Workers
surpassed workers in
1980 all other sectors
combined
Information Age
To perform manual information work more quickly
and more efficiently
To manage work better
Makes pervasive changes in the:
structure and the operation of work
business practices
organizations
industries
global economies
How IT is being used?
Management
philosophies
Characteristic
s of Principal Economic
resources conditions
Organization
Environment
Others…
How IT is being used?
Technological
Advances
Does technology drives changes in the organization
OR
merely supports it ???
IT and its use management
The Organizational Environment
The external business environment
How their firm competes?
Turbulent business world includes shorter and shorter
product cycles
The internal organizational Environment
How organization operates or are managed.
The external business environment
The internet economy
B2C
B2B
Encompassing old ways and new ways of operating with
IT as an interface
Global marketplace
Mergers
Internet allows companies to work globally (Three main
operating arenas)
What difference it makes to the world economy, if global
operations become much less expensive?
Why a digital firm is more likely to benefit from
globalization than a traditional firm?
Significant business relationships are digitally enabled and
mediated; Core business processes are accomplished through
digital networks; Key corporate assets are managed digitally
The external business environment
Business ecosystems
Ecosystem – is a web of relationships surrounding one or few
companies.
Wintel ecosystem
PC ecosystem, Internet ecosystem, Wireless ecosystem
Relationships and co-evolutions require a different mindset from
the command-and-control mindset of the past
Decapitalization
Tangible : capital, equipment, and buildings
Intangible : ideas, intellectual capital, and knowledge
Managing talent has become as important as managing finance
The external business environment
Faster business cycles
Speed has become the essence
To accelerate “time to market” or reduce “cycle time” often
depend on innovative use of IT
Accountability and Transparency
Greater transparency of corporate operations
Greater accountability of corporate officers
IT – play a role in allowing transparency and even perhaps
fostering accountability
Government regulations
The internal organizational
Environment
From supply-Push to Demand-Pull
IT – creating the demand that pulls a specific product
Suppliers and customers co-creating products and
services
Ex: Amazon.com
Self-Service
Ex: ATMs
Indian railways website
Real-Time Working
The internal organizational
Environment
Team-Based Working
Anytime, Anyplace Information Work
Communication capabilities more important than
computing capabilities
Outsourcing and Startegic Alliances
Extended enterprises
Demise of Hierarchy – team based organizational
structure
Goals of the new work
Environment
Leverage knowledge globally
Tacit knowledge
Knowledge-based strategies
Ex: Knowledge transfer + Downsizing
Foster sharing and support the sharing with IT
Organize for complexity
Alliances and specialization increase complexity
Work electronically
Handle continuous and discontinuous change
Innovate continually
Quality management & process re-engineering
The Technology Environment
Hardware Trends
Software Trends
Data Trends
Communication Trends
Business Pressures and Organizational
Responses
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 Role of Information Systems in
Business Today
Operational excellence:
Improvement of efficiency to attain higher profitability
Information systems, technology an important tool in
achieving greater efficiency and productivity
Wal-Mart’s RetailLink system links suppliers to stores
for superior replenishment system
Does customers recognize operational excellence? Does
it make a difference for customer purchasing?
The Role of Information Systems in
Business Today
New products, services, and business
models:
Business model: describes how company produces,
delivers, and sells product or service to create wealth
Information systems and technology a major enabling
tool for new products, services, business models
Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s Internet-
based DVD rentals
Digital product innovation?
The Role of Information Systems in
Business Today
Customer and supplier intimacy:
Serving customers well leads to customers returning,
which raises revenues and profits
Example: High-end hotels that use computers to track
customer preferences and use to monitor and customize
environment
Intimacy with suppliers allows them to provide vital
inputs, which lowers costs
Example: J.C.Penney’s information system which links sales
records to contract manufacturer
The Role of Information Systems in
Business Today
Improved decision making
Without accurate information:
Managers must use forecasts, best guesses, luck
Leads to:
Overproduction, underproduction of goods and services
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers
Example: Verizon’s Web-based digital dashboard to provide
managers with real-time data on customer complaints, network
performance, line outages, etc.
Have you ever been recipients of exceptional service from a company ,
made possible by improved decision-making and whether or not
information systems contributed to that level of service?
The Role of Information Systems in
Business Today
Operational excellence:
Improvement of efficiency to attain higher profitability
New products, services, and business models:
Enabled by technology
Customer and supplier intimacy:
Serving customers raises revenues and profits
Better communication with suppliers lowers costs
Improved decision making
More accurate data leads to better decisions
The Role of Information Systems in
Business Today
Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and suppliers in real time
Example: Toyota and TPS (Toyota Production System)
enjoy a considerable advantage over competitors –
information systems are critical to the implementation
of TPS
The Role of Information Systems in
Business Today
Survival
Information technologies as necessity of business
May be:
Industry-level changes, e.g. Citibank’s introduction of ATMs
Governmental regulations requiring record-keeping
Examples: Toxic Substances Control Act, Sarbanes-Oxley
Act
The Sarbanes-Oxley Act requires that public firms keep all
data, including e-mail, on record for 5 years.
There is a growing interdependence between a firm’s information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly
require changes in hardware, software, databases, and telecommunications.
The ability of a firm to use IT is becoming intertwined with the firm's ability to
implement corporate strategy
Businesses shape their information systems and information systems shape
businesses.
Data, Information, and Knowledge
Data: raw facts
Information: collection of facts organized in such a
way that they have value beyond the facts themselves
Knowledge: awareness and understanding of a set of
information and ways that information can be made
useful to support a specific task or reach a decision
Generating Information
A process:
Is manipulation of data
Usually produces information
May produce more data and often useless
A piece of information in one context may be
considered data in another context
Data processing
Data processing involves:
• collecting data
• processing data (classifying, sorting,
aggregating, calculating, selecting,
retrieving)
• making data available (communicate)
Generating Information (continued)
Input-process-output
Information in Context
Not all information is useful
Useful information is:
Relevant
Complete
Accurate
Current
Obtained economically (in business)
Information in Context
Figure 1.2: Characteristics of useful information
The Value of Information
Value of information is directly linked to how it helps
decision makers achieve their organization’s goals
For example, value of information might be measured
in:
Time required to make a decision
Increased profits to company
What Is a System?
System: array of components that work together to
achieve a goal or goals
A system:
Accepts input
Processes input
Produces output
What Is a System? (continued)
A system may:
Have multiple goals
Contain subsystems
Subsystems:
Have sub-goals that meet the main goal
Transfer output to other subsystems
What Is a System? (continued)
Closed system: has no connections with other
systems (does not interact with environment)
Open system: interfaces and interacts with other
systems (interacts with the environment)
Often a subsystem of a bigger system
Information system: processes data and produces
information
System concepts:
Decomposition
Modularity
Coupling
Cohesion
People
Technologies
Information
Systems
IS
Organizational
Processes mechanisms
The Benefits of Human-Computer
Synergy
Humans are relatively slow and make mistakes
Computers cannot make decisions
Synergy: combining resources to produce greater
output
The Benefits of Human-Computer
Synergy (continued)
Qualities of humans and computers that contribute to synergy
Information Systems in
Organizations
Computer-based information system: system with
a computer at its center
Certain trends have made information systems
important in business
Organizations lag behind if they do not use
information systems
Information System Perspectives
Imperative to understand information systems from
both:
Technical perspective, and
Business perspective
Technical Perspective
System Information
A set of interrelated components that collect (or
retrieve), process, store, and distribute information to
support decision making and control in an
organization
Technical Perspective
Data
Employee Sales
Amy $20,000
John $15,000
Shaun $10,000
Brett $12,000
Information
Average sales/employee $14,250
Business Perspective
Information systems are more than just information
technology
Businesses invest in IS in order to create value and
increase profitability
Business Perspective
Information systems are an organizational and
management solution to business challenges that arise
from the business environment
IS create value primarily by changing business
processes and management decision making
Business Perspective
So what is an information system?
At the heart is the technical perspective
But a broader perspective is the business perspective
Why the Benefits of IT are Not
Achieved
Lack of knowledge about IT and IT
management
Incompatible hardware and software
Inefficiencies in work processes
Incompatible organizational cultures and
climates
Managers need to know how to manage
and use information
Executive Roles in Information Technology
• Manages External
Stakeholder Relationships
• Sets Strategic Direction CEO
Chief Executive
• Defines High Level IT
Officer
Needs for the Future
COO CFO CIO
Chief Operations Chief Financial Chief Information
Officer Officer Officer
• Manages Operations • Manages Accounting & Finance
• Allocates Resources • Forecasts Needs and Secures Financial
• Primary Consumer of IT Resources
within the Organization • Allocates Budget for IT Expenditures
Executive Roles in Information Technology
CEO
Chief Executive
Officer
COO CFO CIO
Chief Operations Chief Financial Chief Information
Officer Officer Officer
• Manages IT Organization and Operations
• Forecasts IT Needs from Business Strategy
• Sets Direction for IT Architecture and Organization
• Plans, Designs and Delivers IT throughout the firm
How system can help your
business?
