Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders,

and Dennis Galletta

© Copyright 2016
John Wiley & Sons, Inc.
Introduction
 Why Should a Manager Study
Information Systems?
--After all, an entire department is in charge of IT.
• Nearly all decisions in organizations rely on information systems at
some level.
• Personal devices are ubiquitous.
• In 2014, 90% of US adults had a cell phone and 87% used the Internet.
• Personal experience with technology helps but the corporate
setting has many different requirements in the areas of:
• Security, Privacy, Risks
• Support
• Architecture
• Firms use IT to enhance their business models or change entire
industries.
• Managers need to know the basics.
© 2016 John Wiley & Sons, Inc. 3
 Why Should you Participate
in IT Decisions in your Firms?
• IT permeates almost every aspect of business
• IT enables change in how people work
• IT is at the heart of Internet-based solutions
• IT enables or inhibits opportunities/strategies
• IT combats competitors’ business challenges
• IT provides customers with a voice
• IT supports data-driven decision-making
• IT can help secure key assets

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 A Business View of Critical
Resources
• Spending is quite high: Worldwide $3.7 trillion in 2014
• Expenditures span 5 categories
• Devices (e.g., PCs, tablets, mobile phones)
• Data centers (e.g., servers, storage equipment)
• Enterprise (companywide) software
• IT Services (e.g., support and consulting services)
• Telecommunications (e.g., voice and data services)
• If these expenditures do not return value, they will
dwindle over time

© 2016 John Wiley & Sons, Inc. 5

 People and Technology
Work Together
• Some of the most-used sites focus on Web 2.0
• In Web 2.0, significant content comes from users
• Information Sharing
• User-centered design
• Interoperability
• Collaboration
• Skilled business managers must balance:
• The benefits of introducing new technology
• The costs associated with changing the existing behaviors of people in
the workplace
• Does not require deep technical knowledge
• Requires understanding the consequences of the choices made

© 2016 John Wiley & Sons, Inc. 6

 CTO of @Walmart Labs
• What did Jeremy King say in his blog (pg. 4)?
• “Every company is a tech company”
• Do you believe this is true for most firms, or
is Wal-Mart somehow different? Why?
• Can you name firms that do not receive key
impacts or benefits from technology?

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 Opportunities and New
Strategies from IT
• New business opportunities spring up with little
warning
• Managers must:
• Frame the opportunities in an understandable way for
business leaders
• Evaluate them against business needs and choices
• Pursue those that fit into an articulated business
strategy.
• The quality of available information will impact the
quality of their decisions and their implementation
• Managers will therefore lead the changes driven
by information systems
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 Competitive Challenges
• Competitors spring up—sometimes unexpectedly
• General managers are in the best position to
• See those threats
• Attempt to combat them, using technology as a tool
• They need an understanding of
• The capabilities of the organization
• How those capabilities, together with IS, can
• Create competitive advantage
• Change the competitive landscape for an entire
industry

© 2016 John Wiley & Sons, Inc. 9

 Managers Need to be
Aware of the importance
of:
• Customer pull
• Customers now have power using social media
• Entire business models sometimes need to be redesigned
• Data-driven decision making
• Now available: more data than ever before
• From social media
• From large data stores in firms
• Predictive analytics tools can help with analysis of that data
• Securing key assets
• A balance is needed
• Too little security endangers assets of the firm and its customers
• Too much reduces operational convenience

© 2016 John Wiley & Sons, Inc. 10

 What Happens if
Management Doesn’t
Participate?
• Breakdown in servicing customers
• Sales decline
• Damaged reputation
• Poor spending:
• Overspending and excess capacity, or
• Underspending and restricted opportunity
• Inefficient business processes

© 2016 John Wiley & Sons, Inc. 11

 Failing to Consider IS
Strategy
• Leads to:
• IS that fail to support business goals (e.g., Victoria’s
Secret site overload)
• IS that fail to support organizational systems (e.g.,
workers buying mobile devices but the IT
department only supports desktop PCs)
• Misalignment between business goals and
organizational systems

© 2016 John Wiley & Sons, Inc. 12

 Skills Managers Need
for Their IT Decisions
• Visionary role • Structural
• Creativity • Project management
• Curiosity
• Analytical
• Confidence
• Focus on business solutions • Organizational
• Flexibility • Planning
• Informational and • Leading
Interpersonal • Controlling
• Communication
• Listening
• Information gathering
• Interpersonal skills

© 2016 John Wiley & Sons, Inc. 13

 Upcoming Material
1. Information Systems Strategy Triangle: Alignment of IT and the business
2. Links between IS and business strategy
3. Links between IS and organizational strategy
4. Collaboration and individual work
5. Business processes
6. Architecture and infrastructure
7. Participating in decisions about IS security
8. The business of IS
9. Governance of IS resources
10.Sourcing
11.Project and change management
12.Business intelligence
13.Ethical use of information

© 2016 John Wiley & Sons, Inc. 14

Assumptions

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 Assumptions About
Management

• Interpersonal • Decisional
• Figurehead • Entrepreneur
• Leader • Disturbance Handler
• Liaison • Resource Allocator
• Informational • Negotiator
• Monitor
• Disseminator
• Spokesperson

© 2016 John Wiley & Sons, Inc. 16

Assumptions About
Business –
Functional View

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Process View

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 Assumptions about the
Nature of Information

• Data – simple observations

• Information – data + relevance + purpose
• Knowledge – information + context + synthesis +
reflection

© 2016 John Wiley & Sons, Inc. 19

 Data, Information, and
Knowledge
  Data Information Knowledge
Definition Simple observations of Data endowed with Information from the human
the state of the world relevance and purpose mind (includes reflection,
synthesis, context)
Characteristics  Easily structured  Requires unit of  Hard to structure
 Easily captured on analysis  Difficult to capture on
machines  Data that have machines
 Often quantified been processed  Often tacit
 Easily transferred  Human mediation  Hard to transfer
necessary
 Mere facts
Example Daily inventory report Daily inventory report Report of which items need
of all items of items with low levels to be reordered after
of stock considering inventory levels,
anticipated labor strikes, and
a flood affecting a supplier

© 2016 John Wiley & Sons, Inc. 20

 Characteristics of
Information Across Levels
  Top Management Middle Management Supervisory and
Lower-Level
Management
Time Horizon Long: years Medium: weeks, Short: day to day
months, years

Level of Detail Highly aggregated Summarized Very detailed

Less accurate Integrated Very accurate
More predictive Often financial Often nonfinancial

Source Primarily external Primarily internal with Internal

limited external

Decision Extremely judgmental Relatively judgmental Heavy reliance on

Uses creativity and rules
analytical skills

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Economics of Information
vs Things
Things Information
Wear out Doesn’t wear out but can become
obsolete or untrue

Are replicated at the expense of Is replicated at almost zero cost

the manufacturer without limit

Exist in a tangible location Does not physically exist

When sold, possession changes When sold, seller may still possess
hands and sell again

Price based on production costs Price based on value to consumer

© 2016 John Wiley & Sons, Inc. 22

 Internet of Things (IoT)
• Combine information and things = IoT
• From the 1970s: Coke machine at Carnegie Mellon University
• From the 1980s: Elevators that call for service without people
knowing there is a problem
• Today:
• Self-driving cars
• Internet-connected (and controllable) thermostats, stoves, alarm
systems
• Pets that are trackable online
• Heart monitors that alert doctors or hospitals of a problem
• Digital video recorders that can be controlled around the world
• Quad-copters (drones) that can
• Record video marked with location data
• Return to the point of origin if it goes out of range of the “pilot”
• Notify regarding its location and avoid objects in a database
© 2016 John Wiley & Sons, Inc. 23
 The Term “Information
Systems”
Composed of:
• Technology
• People
• Processes

Information Technology vs Information Systems

• The term “IT” tends to be more fashionable
• But IT actually refers to just the technology
• Many people interchange the terms
© 2016 John Wiley & Sons, Inc. 24
Managing and Using Information Systems:
A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders,

and Dennis Galletta

© Copyright 2016
John Wiley & Sons, Inc.