MCOM BUSINESS MANAGEMENT

INFORMATION MANAGEMENT SYSTEMS

INDIVIDUAL ASSIGNMENT

Title: Managing Information Technology: What

Managers Need to Know

Submitted: 24th August 2010

Name & Surname Student Number

Motshidisi Manzini 200823447
 Table of Content
Pages

Introduction………………………………………………………………..1
The role of Information Systems (IS) in business ………………….2

2.1 Management Support Systems (MIS)…………………………

2.2 Decision Support Systems (DSS) …………………………..

2.3 Executive Information System (EIS)…………………………

The use of Information Technology for Strategic advantage ……5

Managing of challenges of Information Systems…………………..8
Conclusion

Reference
1. Introduction

Information technology is becoming increasingly the key to national economic well

being, affecting virtually every industry and service. One would be hard-pressed to
name a business that does not depend on the effective use of information: to design
products and services, to track and respond to market demands, or to make well-
informed decisions. Information technology will change the world more permanently
and more profoundly than any technology so far seen in the history and will bring
about a transformation of civilization to match.

The impact of information technology on business operations has been enormous

and will increase substantially. There is no doubt that a shift from an industrial
economy to an information oriented service economy is under way; and no one
knows when the process will slow down.

In essence, scale and the conventional dimensions of time, space, and mass will no
longer be constraints on the products of the information age. Unlike the standardized
product created for the mass market of the industrial age, the electronic delivery of
banking services, for example, is scale-independent and intangible, provides
instantaneous service, and is not bound by the physical location of the bank.

Environmental trends like globalization and heightened international competition are

speeding the movement toward increased IT use by corporations. The exigencies of
worldwide coordination of operations and the need to react rapidly to global
competitive threats have emphasized the importance of IT in the current business
context. Dramatic technological developments in hardware, software, databases, and
telecommunications have simultaneously pushed the utilization of IT further along.

It is true that the sky is not the limit for IT. At the same time, several factors are
militating against the rapid deployment of IT. Among these are the still-slow
development of appropriate software, long-standing difficulties in quantifying IT
benefits (for justifying IT investment), issues of database integration, and the lack of
standards (for the purposes of inter-organizational connectivity).
2. The role of Information Systems on business

There is a general concern on the likely impact of information technologies on the

practice of strategic management. By adopting such a perspective, this reflects a
fundamental belief that information technologies can potentially influence the core of
organisation’s activities. This relates to amongst others the choices pertaining to
products, markets, and technologies (the corporate strategy level), as well as
competitive methods within each of the product-market segments (the business
strategy level).

At the same time the role of information technology is becoming broader than that of
the traditional Information Systems (IS) function, and is becoming a general
management concern and challenge.

There is need to consider the three linkages that interconnect three important
concepts -strategic management (SM), information technology (IT), and the
management information systems (IS) function.

With regards to link between Management Information Systems with Information

Technology, the traditional view holds that, IS is a service function (just as
accounting, human resources, or industrial relations) which is charged with the task
of efficient data processing and administration of the management reporting and
control systems. According to such views, systems are designed to cater to the
informational requirements of different managerial roles and are identified using
standard informational requirements assessment methodologies. In consequence,
systems are evaluated using criteria such as timeliness, format quality, and reliability,
reflecting the technical capability of the system. The implication is that the role of IT
was conceived largely as the technical core of the MIS function.

Basically the traditional approach reflects a view that the charter of the IS function
was derived directly from the informational resource assessment and had no explicit
linkages with strategic choices at the corporate and business levels. This view was
representative of the actual situation until the late 1960s and early 1970s, when the
need to tailor the design of MIS to the requirements of the organizational strategic
context gained currency. In 1968, McKinsey & Co. published a report titled Unlocking
the Computer’s Profit Potential that called for a formal link between the design and
implementation of MIS and the firms strategies and objectives. This publication urged
managers to visualize the role of computers in business organizations as something
beyond a data processing resource at the operational level of the organization and
more as a mechanism that supports their strategy.

Even before that McKinsey report, William King is reported to have proposed that the
“IS-strategy set (composed of IS objectives, IS constraints, and IS design strategies)
should be derived from the “organization’s strategy set” (composed of organizational
mission, objectives, and strategies).

2.1 Management Support Systems

While there is a concern within the Management Information Systems (MIS)

discipline to ensure that MIS is designed in accordance with the strategic contexts of
the firm, the link in the other direction, from the corporate strategic context to MIS, is
still largely ignored. But this is changing rapidly. Several authors have called
attention to the possibility of exploiting information and information systems for
strategic advantages. As William King noted in an editorial comment in the
Management Information Systems Quarterly,— Information (and IS) has the potential
to be a primary source of (competitive) advantage in the marketplace rather than
merely as a resource to be efficiently managed or a service that is periodically turned
on and off as needed.

There is no doubt that many mangers and executives see the link between strategic
management and IS today as a bi-directional, mutually interconnected link, implying
a strategic role for the IS function. In a transition toward a strategic role, the goals
and tasks of the management information systems function undergo an important
transformation. The systems are no longer viewed in terms of informational support
for operational decisions, but rather in terms of the realization of the organization’s
strategic objectives, especially the achievement of competitive superiority in the
marketplace.

Therefore, it is important for managers to note that information systems with a

charter to achieve competitive superiority are called “strategic information systems”
and are differentiated from the more operationally focused MIS. MIS has been
traditionally concerned with the operational control systems for relatively structured
decisions based on readily available, internal data. In contrast, strategic information
systems are designed to support relatively unstructured decisions, especially those
that are intricately tied to the activities of the market-place.

There is a demarcation between management information systems and strategic

information systems cannot always be made, the conceptual distinction is important
enough to be recognized just as the conceptual distinction between strategic and
operational decisions.

Strategic information systems achieve their objectives through several mechanisms,

but two deserve special attention. These are: (1) the reconfiguration of the
information flows within an organization to provide competitive advantages relative to
competition, and/or (2) development of inter-organizational systems that extend
beyond the traditional boundaries of a single focal organization.

Some examples of strategic information systems operating at real companies

include:

• American Airlines : SABRE reservation System -installed in most travel agents

for booking airline, hotel, and rental car reservations.
• American Hospital Supply Co.: ASAP-order entry system-installed in over 4500
medical establishments to order supplies on-line. The system is internally
interconnected to several supporting systems
• Citicorp: Extensive use of automated teller machines and global transaction
network. Several systems that support their strategies for electronic banking
services.
• McKesson Corp: Economost -order entry system that supports customers with
inventory control and analysis of sales.

• United Airlines: APOLLO-Travel agency reservation system with several

augmented services installed in about 7700 agencies.
Consequently, the important characteristics of this linkage were hardware and
software support for the information architecture, and flexibility of design to support
minor modifications in the information requirements or to respond to the fast-
changing technical core of the system’s hardware.

The strategic planning level, by virtue of its unstructured nature of decision making,
received minimal support from the traditional conceptualizations and role definitions
of IS.

With the availability of more and better source of data, decisions makers must begin
to systematically incorporate such information into decision process.

Focuses on the information technology resources (computers and microelectronics,

networks, software, data, and people) that organizations provide and alternative
approaches to managing them; the opportunities and pitfalls provided by these
technologies; and what the user-manager, and the systems professional, need to
know to make effective use of these technologies. Comes completely rewritten and
reorganized for greater clarity and a more focused plan of approach, with updated
and streamlined chapters, plus two new chapters on electronic commerce and the
social, ethical, and political issues surrounding the use of information technology.

Burton 1998, argues that failures in the implementation of management information

systems (MIS) can be attributed in part to alack of managerial ‘involvement” and
“appreciation.” A contributing factor in Burton’s opinion is the common assumption by
designers that a manager need not understand how information systems work, only
how to use it. The common mistaken assumption is that managerial (user)
understanding is separable from design understanding.

According to Burton, the implication of this assumptions are particularly interesting

for MIS’s of the file interrogation type, systems which rely upon. It is known fact that
managers cannot know everything about Information Systems and Decision Support
Systems. It is also know that Information Systems specialists and IS managers
cannot know everything about DSS, MIS and IS/IT either. So the question remains
what does a broad group of line and staff managers need to know about IS/IT, MIS
and DSS?
Ideally people and especially managers need three types of knowledge about
Information Technology, these are intellectual capabilities, fundamental concepts, and
contemporary skills.

Managers need to develop the ability to apply information technology in complex and
sustained situations and to understand the consequences of doing so. Some intellectual
capabilities needed include an ability to engage in sustained reasoning about IT
including defining a problem, formulating a solution, and planning, designing, executing,
and evaluating a solution. In addition manager needs to develop abilities to:

• “Debug” and cope when technological tools fail,

• Organize and navigate information structures and evaluate information,
• Collaborate on IT tasks,
• Use technology appropriately when communicating with others,
• Expect the unexpected,
• Anticipate changing technologies, and
• Think about information technology abstractly

• Manage complexity,

Managers need to learn the foundations on which information technology and

applications are built. Some key fundamental concepts include:

• Computers,
• Information and decision support systems,
• Networks,
• Digital representation of information,
• Information organization,
• Modeling and abstraction,
• Algorithmic thinking and programming,
• Universality (any computational task can be performed by any
computer),
• Limitations of information technology.
The competency skills that managers require refers to the ability to use particular
hardware or software resources to accomplish information processing tasks. Managers
need current or contemporary skills including:

• Using a PC and basic operating system features,

• Using a word processor to create a text document,
• Using a graphics and/or artwork package to create illustrations, slides, or
other image-based expressions of ideas,
• Connecting a computer to a network,
• Using the Internet to find information and resources,
• Using a database system to set up and access useful information,
• Using a spreadsheet to model simple processes or financial tables,
• Using a computer to communicate with others.
2.2 Decision Support Systems (DSS)
Managers need to be fluent and proficient in the use of Information Technologies and
especially in capabilities, concepts and skills related to Decision Support Systems.

Characteristics of a decision support system

Decision support systems can help us build better decision support systems.

There identified three major characteristics of DSS:

• DSS are designed specifically to facilitate decision processes,

• DSS should support rather than automate decision making, and

• DSS should be able to respond quickly to the changing needs of decision

makers.

Information stored in computers can increase human rationality if it is accessible when it

is needed for the making of decisions. Specialization of decision-making functions is
largely dependent upon the possibility of developing adequate channels of
communication to and from decision centers.

Where a particular item of knowledge is needed repeatedly in making decisions, the

organization can anticipate this need and, by providing the individual with this knowledge
prior to decision, can extend his area of rationality. This is particularly important when
there are time limits on making decisions.

The key to the successful design of information systems lies in matching the technology
to the limits of the attentional resources... In general, an additional component (man or
machine) for an information-processing system will improve the system's performance
only if:

1. Its output is small in comparison with its input, so that it conserves attention
instead of making additional demands on attention;

2. It incorporates effective indexes of both passive and active kinds (active

indexes are processes that automatically select and filter information for
subsequent transmission);

2. 3. It incorporates analytic and synthetic models that are capable not merely of
storing and retrieving information, but of solving problems, evaluating solutions,
and making decisions.

In conclusion, computerized decision support is desirable and useful when the

system has a high likelihood of providing relevant, quality information to decision
makers when they need it and want it.

Most mangers might ask, how do you know a computerized system is a decision
support system (DSS)? This question is important because knowledge transfer is
more meaningful when we classify and categorize. Identifying characteristics,
distinguishable features, attributes or aspects of all DSS helps distinguish such
systems from other systems. Once accurate classification occurs, we are more likely
to identify patterns and generalizations. In general, information systems that provide
decision relevant information and results are decision support systems. DSS are
interactive computer-based systems and subsystems intended to help decision-
makers.
 The difference between knowledge management and decision support

Some might argue that managers and decision-makers bring their values,
experiences, knowledge and hopefully wisdom to the interaction with our decision
support and information systems.

Many people are expecting too much from technology and some people seem to
forget that knowledge management and decision support differs. Information Week
(June 25, 2001) called knowledge management “fuzzy” in an article on Lotus
Development's Discovery software. Another article suggested taxonomy is the
current watchword in knowledge management. Apparently, people are recognizing
that how “knowledge” is organized is perhaps more important than the “bells and
whistles” of the software.

Malhotra notes “Most of our knowledge management technology concentrates on

efficiency and creating a consensus-oriented view. The data archived in
technological ‘knowledge repositories’ is rational, static and without context and such
systems do not account for renewal of existing knowledge and creation of new
knowledge.” But Malhotra seems to think that knowledge management is still
somehow important.

“Knowledge management technologies” are an important delivery component in

calling document-driven DSS. This type of Decision Support System helps managers
use specific documents and “knowledge” to support specific decision tasks. A good
Document-Driven Decision Support System helps managers find relevant text-
oriented information quickly. Decision support is a much more modest and much less
grandiose concept that knowledge management. The scope of a document-driven
DSS should be limited and there should be a framework for organizing what will be
stored and collected. A document-driven DSS should not be a static repository rather
it should evolve and get better as it is used.

In the past knowledge was considered as a collection of information, or as an

activity, or as a potential. If we think of it as a collection of information, then the
analogy of a computer's memory is helpful, for we can say that knowledge about
something is like the storage of meaningful and true strings of symbols in a
computer.
2.3 Executive Information Systems

3. Using Information Technology for Strategic Advantage

There is no doubt that information technology is currently a major force with the
potential to affect a range of organizations in fundamental ways.

Combining IS/IT in business process improvement provides the opportunity to rethink

IS/IT strategy and reengineer legacy IS/IT systems in line with current business
needs resulting in the better strategic exploitation of IS/IT in the organisation.

Combining IS/IT in process improvement provides the opportunity to rethink IS/IT

strategy and reengineer legacy IS/IT systems in line with current business needs,
resulting in the better exploitation of IS/IT in the organisation.

Little transparency between business process models & IS models resulting in

various levels of compatibility between Legacy systems and reengineered business
processes

Manager should guard against the problems brought about by different BPR and
IS/IT teams working in Isolation from each other. This has a potential to result in lack
of communication and loss of purpose. In addition when different frameworks,
methodologies and tools are used for BPR and IS/IT, this may result in incompatible
process and IS models. Therefore, it is imperative that there is a proper alignment
between IS/IT with business processes and any plans for change in the future.

The role of IS reengineering should be considered as an integral part of BPR. Ideally

the main technical elements of BPR should be a combination of process modelling
and IS development work. It remains the responsibility a team work effort to make
the BPR exercise a joint effort between BPR practitioners (i.e. business analyst,
process modellers, strategic management etc.) and IS practitioners (i.e.
business/systems analyst, analyst programmers, programmers etc.)

It is therefore important to ensure that the approach that is used is capable of

simultaneous BP and IS reengineering as this will help to considerably reduce the
 gaps and incompatibilities between the reengineered business processes and
information systems.

Lack of management commitment, employee resistance to change, cultural and

political factors are some of the challenges that mangers should guard against,
which have the potential to erode initiative in improving business processes. In
addition there are barriers which may hamper the effort to business reengineering,
these includes:

• Non-alignment of business and IS/IT strategy;

• Poor levels of management commitment;
• Constraints imposed by legacy systems;
• Risks associated with business and IS/IT change;
• Limited scope for team work between business and IS/IT people;
• Negative employee attitude;
• Red tape and bureaucracy within functionally oriented organisations;
• Lack of frameworks for integrating BP&ISR

3. Managing Challenges of Information Systems

When talking about the vast field of Information Systems there is not just one
pressing issue, there are three: Accuracy, Usability, and Time. Without the
combination of these three factors a business would go under in the matter of
months.

The first of these three and probably the most important of these is the
accuracy of the information. The information that you provide someone with
in order to make vital decisions must be precisely accurate. If one piece of
data is incorrect it could mean the difference between life and death, literally.
For example, if a doctor receives false information about a patient’s allergies
he may give that patient medicine that could eventually kill them. Another
recent instance where inaccurate information caused a catastrophe is with
Enron. They falsified financial information causing the company to collapse. If
a news station were to give a report that was invalid, they would lose their
credibility and respect from the people. Accuracy is a must when it comes to
information that is provided to make decisions of any kind. Another major
issue involving information systems is the information’s usability. If the
business uses software to access the information it has to be easy to use and
understand for the end-user as well as the executives. The information needs
to be easily accessible from the hardware where it is stored. Also, if the
information is generated into a report form of some kind, the report must be
made so that it can be interpreted effortlessly in order to make precise
decisions. The information provided should have value to the decisions at
hand.

The final of the three most significant challenges of the field of Information
Systems is the time factor. As time progresses everything is built bigger and
faster and people seem to be always operating at a faster pace, therefore
information needs to be received at a faster rate. If a person or business does
not get the information in time to make a prompt decision they could lose out
on many opportunities. This concept all started when the phone was
introduced and people could be connected to each other in an instant, instead
of waiting a week for a letter in the mail. Now as the internet has evolved,
people and businesses can send documents and other information to one
another in matter of seconds, causing decision-making times to decrease
dramatically.

A good example of this high information transfer rate is a cash register.

During an ordinary transaction, within one minute the computer can check on
the member’s status, scan the items decreasing the inventory, calculate the
total, send the transaction to the database, verify the member’s credit card,
check, or debit card, and even connect to a bank and pre-approve them for
another credit card. As people remain to progressively become more
frantically fast paced the challenge of information getting to them will need
also to become faster.
These three aspects of Information Systems must be used in conjunction with
one another. Information may be received quickly and easy to use, but if it is
inaccurate it is worthless. Just the same if the information is either too slow or
incomprehensible it is useless as well. “Being an information services
provider, we especially understand the importance of speed, accuracy,
flexibility, technology and the highest level of customer service as being key
components of a successful marketing strategy in a competitive
environment,” states Berkshire Information Systems Inc. The biggest
challenge of these three issues is combining them together in an efficient
effective manner.

5. Conclusion

The changes in the business landscape, economic slowdown and competitive

pressure are some of the factors forcing many firms to rethink their business and
IS/IT strategy. Most organisations have realised that the differentiation in this climate
requires going back to the drawing board…consideration of the fundamental of
business process reengineering.

References.

http://dssresources.com/faq/index.
O’Brien, James A. Marakas George M. (2008) Management Information Systems:
Irwin McGraw-Hill, Berkshire Information Systems Inc.