Information Systems

Management in the
Global Economy
Chapter 1
Importance of Information
Systems (IS) Management

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Outline & Objectives
 Introduction
 Themes of this Course
 Management of IS
 A Little History
 The Organizational Environment
 The External Business Environment
 The Internal Organizational Environment
 Goals of the New Work Environment

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Outline
 The Technology Environment
 Hardware Trends
 Software Trends
 Data Trends
 Communication Trends
 The Mission of IS Organizations
 A Simple Model
 IS Management

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Introduction
 Information technology (IT) is a pervasive
element of society today and has
revolutionized and restructured many aspects
of human endeavor, including work.
 This course emphasizes the use of IT in
managing and operating organizations.

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Themes of This Course
 Globalization
 Worldwide expansion of brands and the
emergence of global institutions after World War II
 American multinational enterprises’ foreign direct
investments in other countries
 IS organization must balance global IT enterprise
goals with local systems needs
 E-enablement
 Leveraging of IT to build relationships with
consumers and other enterprises in general

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Discussion Question
 What is a multinational Enterprise?
 How can IT/IS balance the global need with
the local in
 Creating multinational enterprises from Ethiopia?
 To adopt a multinational enterprises in Ethiopia?
 In terms of customizing products, establishing local
presence and adapt to cultural nuances

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Themes of This Course
 Business intelligence through knowledge
sharing and knowledge management
 Transfer of knowledge between people
 Elicit tacit knowledge that people possess

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Management of IS
 Governance of IT
 Collaborative effort between IS, the business and
their constituencies
 The Role of IS
 System integration and infrastructure development
 Outsourcing
 Development and management of relationships
with external service providers

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What is Governance of IT?
 IT governance is an element of corporate
governance, aimed at improving the overall
management of IT and deriving improved
value from investment in information and
technology.
 5 focuses of IT Governance
 Value Delivery
 Strategic Alignment
 Performance Management
 Resource Management
 Risk Management
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The role of IS in a Business
 Operational excellence
 New products, services, and business
models
 Customer and supplier intimacy
 Improved decision making
 Competitive advantage
 Survival

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A Little History
 1950s: Calculator
 Bookkeeping activities
 Texas Instrument invented first handheld calculator
 1960s: Mainframe
 Data-intensive business transactions and
accounting
 IBM mainframe

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A Little History cont’d
 1970s: Database management systems
 Operational efficiency
 Structured Query Language (SQL) first developed by
IBM
 Oracle and SAP emerged as key players
 1980s: Personal Computer (PC), decision
support systems
 Office automation (OA) and decision-making
 IBM released first PC (hardware) with Microsoft MS-
DOS operating system (software)

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A Little History cont’d
 1990s: Internet and Enterprise Resource
Planning
 Global communication and exponential growth in
use of computers for OA and networking
 Microsoft Windows and Office Suite
 Email, instant messaging, World Wide Web

 2000s: Internet and Social Fabric

 Global coordination and cooperation (strategic
partnerships) within and between businesses
 Web services, e-supply chains
 Social computing for business applications

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A Little History

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The Organizational
Environment
 How IT is used depends on the environment
surrounding the organization that uses it.
 External forces that cause IS executives to
re-examine how their firms compete and
internal structural forces that affect how
organizations operate or are managed.
 External business environment
 Internal organizational environment
 Goal of new work environment

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The External Business
Environment
 Internet economy
 IT underpins old and new ways of doing business
 Physical and electronic marketplace

 Global Marketplace
 Internet has accelerated firms’ internationalization process
 Born global firms
 Micro-markets
 Micro-commoditization and micro-consumption
 Digital microproducts
 iTunes, Amazon shorts, Disney short videos
 Business ecosystems
 Relationships and growth that are organic in nature

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The External Business
Environment cont’d
 Decapitalization
 Emphasis on intangible assets
 Faster business cycles
 First-mover advantage
 Instant gratification
 Accountability and transparency
 IT’s role in corporate governance
 Rising societal risks of IT
 Job losses due to technology substitution and outsourcing
 Information security

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Discussion Question
 What is instant gratification in a business?
 How can IT/IS enable instant gratification
 To improve customer satisfaction?
 In supply chain management
 In e-commerce

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 The Internal Business
Environment
 From supply-push to demand-pull
 Customer-centric philosophy
 Value co-creation with customer
 IT allows business to achieve this on a large scale
 Self-service
 Customer empowerment (through customization)
 Customers know what they want best

 Real-time working
 There is no noticeable delay between the action and its
effect or consequence
 Derive competitive advantage
 Team-based working
 For the duration of projects and tasks (ephemeral)

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The Internal Business
Environment cont’d
 Anytime, anyplace information work
 Tele-work, mobile computing
 Outsourcing and strategic alliances
 Use of IT to help manage work across the
extended enterprise
 Demise of hierarchy
 Flatter organization (employee empowerment)
 Use of IT to facilitate information exchange

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Business Strategies in the New
Work Environment
 Leverage knowledge globally
 Tap into intellectual capital across the entire enterprise
 Organize for complexity
 Interconnectivity and interdependence of businesses
 Work electronically
 Concept of the workspace
 Handle continuous and discontinuous change
 Built to change (innovation)
 Total quality management (continuous)
 Reengineering (discontinuous)

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The Technology Environment
 The technological (IT) environment has a
symbiotic relationship with organizational
structure (co-evolution)
 Hardware Trends
 Software trends
 Data trends
 Communication trends

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Hardware Trends
 Movement of central administration to distributed
computing
 1950s and 1960s (mainframe)
 batch-processing,
 1970s (minicomputer)
 back-end data centers
 Some autonomy at the department level
 1980s and early 1990s (personal computer)
 PCs greatly accelerated process of decentralization
 Client-server model
 Late 1990s and 2000s (Web, networks and
mobile/handheld)
 Centralized computing via networks and the Internet

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Software Trends
1. Transaction processing application development
 Emphasis on improving productivity of programmers
2. Life cycle development methodology
 Focus on rigorous project management techniques
3. Purchased software vs. in-house development
 “Programming” shifted to end-users
 Point-and-click applications

4. Open systems software vs. proprietary software

5. Enterprise resource planning (ERP) systems
6. Web services—service oriented architecture (SOA)
 Network centric and loosely coupled applications to
support business process requirements

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Data Trends
 1970s: Technical solutions for managing data
 Database management systems (DBMS)
 Centralized environment for first 20 years
 1990s: Shift toward managing information resources
 Concepts/ideas as a function of raw data
 Voice, video, graphics, animation
 Decentralized environment of information access and
exchange (end-user level)
 Require data warehousing and data mining technologies

 2000s: Web content management

 Standardize formats of and make interoperable huge
amounts of data on Web sites
 e.g., Extensible Markup Language (XML)

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Communications Trends
 1980s: Enterprise networking
 Local area networks (LAN) within organization site
 Wide area networks (WAN) between organization sites
 Private leased lines

 1990s onwards: Internet (convergence of

telecommunications and information systems)
 Invention of modulator/demodulator (MODEM)
 Dialup, ISDN and other broadband technologies to solve
problem of last mile
 Internet protocols (TCP/IP) became de facto standard for
LANs and WANs
 Voice over IP
 Wireless technologies

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The Mission of IS
Organizations
 Transaction processing systems (TPS) in the
early days
 “Paper factories”
 MIS era
 Producing reports for all levels of management
 Today’s context
 “To improve the performance and
innovativeness of people in organizations
through the use of IT”
 Business results as a metric for IS performance

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A Simple Model
 IS functions in organizations
 Figure 1-2 represents the process of applying IT
to accomplish useful work
 Figure 1-3 describes the increasing power and
complexity of IT
 More specialization required of IS professionals
 Figure 1-4 depicts the increasing IT sophistication
and efficacy of users

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A Simple Model cont’d

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A Simple Model cont’d

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A Simple Model cont’d

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A Better Model
 An expanded model with four principal
elements to describe IS function
1. A set of technologies that represent the IT
infrastructure installed and managed by the IS
department
 Web services, mobile applications, integration of
multimedia and consumer electronics
2. A set of users who need to use IT to improve
their job performance (Figure 1-5)
 Support procedure-based activities
 Support knowledge-based activities

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A Better Model
3. A delivery mechanism for developing,
delivering, and installing applications
4. Executive leadership to manage the entire
process of applying the technology to achieve
organizational objectives and goals

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A Better Model: A Dichotomy of
Information Work

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Dichotomy of information Work
 The most important benefit of this dichotomy
is that it reveals how much of a firm’s
information processing efforts have been
devoted to procedure-based activities, which
is understandable because computers are
process engines that naturally support
process-driven activities.

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Dichotomy of information Work
 As important as they are, though, it is clear
that procedure-based activities are no longer
sufficient to sustain competitiveness.
 The wave of the future is applying IT to
knowledge-based activities. For the task “pay
employees” or “bill customers,” the system
analyst can identify the best sequence of
steps.

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IS Management
 IT leadership comes from a chief information
officer (CIO) who must be high enough in the
enterprise to influence organizational goals
and have enough credibility to lead the
harnessing of the technology to pursue those
goals.
 However, the CIO, as the top technology
executive, does not perform the leadership
role alone, because IT has become too
important to enterprise success to be left to
one individual.
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IS Management
 Thus, CIOs work with their business peers,
C-level executives—CEO, COO, CFO—and
the heads of major functional areas and
business units.
 The technology is becoming so fundamental
and enabling that this executive team must
work together to govern and leverage it well.

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IS Function Components
IS function has four major components:
1. The technology, which provides the enabling
electronic and information infrastructure for the
enterprise
2. Information workers in organizations, who
use IT to accomplish their work goals

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IS Function Components
3. The system development and delivery
function, which brings the technology and users
together.
4. The management of the IS function, with the
overall responsibility of harnessing IT to
improve the performance of the people and the
organization

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A framework for IS Management

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 Case Study...For Extension
Classes Only
 MEADWESTVACO CORPORATION
• Briefly explain the business.
• Explain in detail the IT based business Model
• Explain how IT is strategically used in the business in terms of
• Customer satisfaction
• Profitability
• Saving costs
• Encouraging innovation
• More…
• The lesson learnt from that business to apply it in our context.

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Summary Question
1. What changes are taking place in the external business
environment?
2. What changes are occurring in the internal organizational
environment?
3. What are the goals of the new work environment?
4. Give two or three characteristics of the technology trends in
hardware, software, data, and communications.
5. What is the mission for the IS organization recommended by the
authors? How does it differ from earlier perceptions of the
purpose and objectives of information systems?
6. Summarize the four main components of the model of the IS
function (Figure 6).
7. List several attributes of procedure-based and knowledge-based
information activities. Which do you think are most important?
Why?

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Thank You
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