Chapter TWO

Dimension of IS: Management,

Organisation and Technology,
Computer based IS

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 Session objectives
• At the end of the session student are expected
to explain:
– Dimension of IS
– Different types of information systems

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Decision types and Information requirement by Level of
Management

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Decision types and Information requirement by Level of
Management

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 Function based Systems
• Major types of systems in the organization are expected to
support different interests, specialties, and levels in an
organization. No single system can provide all the information
an organization needs.

Strategic

Middle Management
Operational Level
Functional
Areas
MKG Finance Product HRM R&D
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• Which one of the following is true
• Dimensions of information systems is
important for managers to put in place
relevant system for all stakeholders in the
company they are managing.

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 Information System for Strategic Management

⚫ IS for Strategic Planning

◦ Strategic planning involves setting organizational long-term
goals, strategies, policies and objectives.
⚫ IS for Strategic Control
◦ The strategic control is the process of getting external and
internal information to know if the organization is operating
according to the plan to achieve its strategic objectives
⚫ strategic management requires large volume of external and
internal information to:
1. Make strategic decisions
2. measure the overall performance of the organization.
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 Fundamental Competitive Strategies

Cost Leadership Strategy

Differentiation Strategy

Innovation Strategy

Growth Strategy

Alliance Strategy

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 Fundamental Competitive Strategies…

• Cost leadership Strategy : Becoming a low-cost producer in the

industry allows the company to lower prices to customers.
• Use IT to substantially reduce the cost of business processes.
• Use IT to lower the costs of customers or suppliers.
• Differentiation Strategy: Some companies create competitive
advantage by distinguishing their products on one or more features
important to their customers.
– Unique features or benefits may justify price differences and/or
stimulate demand.
• Develop new IT features to differentiate products and
services;
• Use IT features to focus products and services at selected
8:36 AM market niches. 9
 Fundamental Competitive Strategies…

⚫ Innovation Strategy: Unique products or services or changes in

business processes can cause fundamental changes in the way an
industry does business.
◦ Create new products and services that include IT components.
◦ Develop unique new markets or market niches with the help of IT.
◦ Make radical changes to business processes with IT that dramatically cut
costs; improve quality, efficiency, or customer service; or shorten time to
market.
⚫ Growth Strategy : Significantly expanding production capacity,
entering new global markets, diversifying into new areas, or
integrating related products or services can all be a springboard to
strong company growth.
◦ Use IT to manage regional and global business expansion.
◦ Use IT to diversify and integrate into other products and
services.
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 Fundamental Competitive Strategies…

• Alliance Strategy : Establishing new business linkages

and alliances with customers, suppliers, former
competitors, consultants, and others can create
competitive advantage
– Use of IT to create virtual organizations of business
partners.
– Develop inter-enterprise information systems linked
by the Internet and extranets that support strategic
business relationships with customers, suppliers,
subcontractors, and others.
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 Strategic roles for Information Systems

Improving Promote Locking in

Strategy Business Business Customers
Process Innovation and Suppliers

IT Role •Use IT to improve

Use IT to reduce Use IT to create quality of service
costs of doing new products and •Use IT to link
business e.g data services or business to
base processes e.g customers and

data mining suppliers e.g

software website

Create New Maintain Valuable

Outcome Enhance
Business Relationships with
Operational
Opportunities Customers and Suppliers
Efficiency
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 Strategic roles for Information Systems

Raise Build a Build a

Strategy Barriers Strategic IT Strategic
to Entry Platform Information Base

Leverage investment Use IT to provide

Increase amount of
in IS resources from information to
investment or
operational uses to support firm’s
IT Role complexity of IT
strategic uses e.g. competitive strategy
needed to compete
networks, databases, e.g. data warehouse
e.g BI systems
application systems

Create New Enhance

Outcome Increase
Business Organizational
8:36 AM Market Share 13
Opportunities Collaboration
 Business Intelligence
⚫ Which one of the following information
systems is/are relevant for executives/CEO
A. ERP B. EIS C. Knowledge management
Systems D. ALL

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 Business Intelligence
⚫ A term primarily used in industry that incorporates a range of
analytical and decision support applications in business to
utilize the vast amount of information in the organization
⚫ it is a system to extract useful information from large data
store in the form of patterns, trends and present it to decision
makers in more understandable way
⚫ Focuses to provide timely information at a strategic level
⚫ Provide indirect support for particular decisions rather than
decision specific orientation of decision support system

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Business Intelligence Applications

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 Decision Support Systems
⚫ Are computer based information systems that provide
interactive information support to managers during the
decisions making process
⚫ Decision support systems use the following to support the
making of semi-structured business decisions
◦ Analytical models
◦ Specialized databases
◦ A decision-maker’s own insights and judgments
◦ An interactive, computer-based modeling process
◦ Support of what if analysis
⚫ DSS systems are designed to be ad hoc,
quick-response systems for decision maker
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Online Analytical Processing (OLAP)

• It is integration of large scale data and data

processing models.

• Enables managers and analysts to examine and

manipulate large amounts of detailed and
consolidated data from many perspectives

• Done interactively, in real time, with rapid response to

queries

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 Cont….
⚫ OLAP involves analyzing complex relationships among
thousands or even millions of data items stored in
data marts, data warehouses, and other
multidimensional databases to discover patterns,
trends, and exception conditions.

⚫ Data marts are data ware house for one department

⚫ OLAP use data cube data structure

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20
 Online Analytical Operations
⚫ Consolidation
◦ Aggregation of data
◦ Example: For example, data about sales offices
can be rolled up to the district level, and the
district-level data can be rolled up to provide a
regional-level perspective.
⚫ Drill-Down
◦ Display underlying detail data
◦ Example: sales figures by individual product
◦ For example, the sales by individual products or
sales reps that make up a region’s sales totals
could be easily accessed.

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 Cont..
• Slicing and Dicing
– Viewing database from different viewpoints

– Often performed along a time axis

– E.g. one slice of the sales database might show all sales
of a product type within regions.
– Another slice might show all sales by sales channel
within each product type.

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 Data Mining
• Provides decision support through
knowledge discovery
– Analyzes vast stores of historical business data
– Looks for patterns, trends, and correlations
– Goal is to improve business performance
• Types of analysis
– Regression
– Decision tree (if-else-if)
– Neural network
– Cluster detection
– Market basket analysis

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Market Basket Analysis (MBA)
• One of the most common uses for data mining
– Determines what products customers purchase together
with other products
• Results affect how companies
– Market products
– Place merchandise in the store
– Lay out catalogs and order forms
– Customize solicitation phone calls
– Determine what new products to offer

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 The Executive Information System (EIS)
• EIS can be said MIS tailored to serve the strategic information
need of the top management.
• “The goal of EIS is to provide top management with immediate
and easy access to selective information about key factors that
are critical to accomplishing a firms strategic objective."
• EIS helps the executive to have immediate access to internal and
external databases:
– to monitor organizational performance.
– To track activities of competitors
– Spot problems
– To identify opportunities and,
– Forecast trends

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 Expert Systems
• An Expert System (ES)
– Are systems to represent experts
– A knowledge-based information system
– Contain knowledge about a specific, complex
application area
– Acts as an expert consultant to end users

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 Benefits of Expert Systems
⚫ Captures the expertise of an expert or group of experts
in a computer-based information system
◦ Faster and more consistent than an expert
◦ Can contain knowledge of multiple experts
◦ Does not get tired or distracted
◦ Cannot be overworked or stressed
◦ Helps preserve and reproduce the knowledge of human
experts

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 Limitations of Expert Systems
• Limited focus
• Inability to learn
• Maintenance problems
• Development cost
• Can only solve specific types of problems in a
limited domain of knowledge

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 Discussion question
• Information systems have considerable
potential in terms of connecting different
stakeholders along the supply chain
management. Based on these premises,
briefly discuss how we can realize integration
by considering information systems for
functional areas and ERP.

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 End of Session

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