Download Types of Management Information Systems

chapter eighteen
Using Advanced Information
Technology to Increase
Performance
McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
• Differentiate between data and information,
and list the attributes of useful information
• Describe three reasons why managers must
have access to information to perform their
tasks and roles effectively.
• Describe the computer hardware and software
innovations that have created the IT
revolution.
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Learning Objectives
• Differentiate among seven different kinds of
management information systems.
• Explain why managers are using IT to build
strategic alliances and network structures to
increase efficiency and effectiveness
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Information and the Manager’s Job
• Data
– Raw, unsummarized, and unanalyzed facts.
• Information
– Data that are organized in a meaningful
fashion
18-5
Attributes of Useful Information
Attributes
Quality
The accuracy and reliability of available
information affects the quality of decisions that
managers make using the information.
Timelessness
The availability of real-time information that
reflects current conditions allows managers to
maximize the effectiveness of their decisions.
Completeness
Complete information allows managers to
consider all relevant factors when making
decisions.
Relevance
Having information specific to a situation assists
managers in making better decisions.
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Factors Affecting the Usefulness of
Information
Figure 18.1
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What is Information Technology?
• Information Technology – set of
methods or techniques for acquiring,
organizing, storing,
manipulating, and
transmitting
information
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What is Information Technology?
Management Information System –
specific form of IT that managers utilize
to generate the specific, detailed
information they need to perform their
roles effectively
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What is Information Technology?
Managers need information for three
reasons:
1. To make effective decisions
2. To control the activities of the organization
3. To coordinate the activities of the
organization
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Information and Decisions
• Most of management is about making
decisions
• To make effective decisions, managers
need information, both from inside and
outside the organization
18-11
Information and Control
Managers achieve control by:
1. Establishing measurable goals
2. Measuring actual performance
3. Comparing actual performance with
goals
4. Taking any corrective action
18-12
Information and Coordination
• Coordination problems that managers
face in managing global supply chains
are increasing
• Managers have adopted sophisticated IT
that helps them coordinate the flow of
materials, semifinished goods, and
finished goods throughout the world
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The Effects of Advancing IT
• IT revolution began with the
development of the first computers
• Modern computers can read, process,
and store billions of instructions per
second
• This power forms the foundation of the
ongoing IT revolution
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The Effects of Advancing IT
• Products resulting from advancing IT
– Powerful microprocessors and PCs, highbandwidth wireless smart phones,
sophisticated word-processing software,
expanding computer networks, inexpensive
digital cameras, useful online information
and retailing services
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The Effects of Advancing IT
• IT helps create new product
opportunities that managers and their
organizations can take advantage of
• IT creates new and improved products
that reduce or destroy demand for older,
established products
18-16
IT and the Product Life Cycle
• Product Life Cycle
– Refers to the way in which the demand for a
product changes in a predictable way over
time
18-17
A Product Life Cycle
Figure 18.2
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A Product Life Cycle
• Embryonic stage
– Product has yet to gain widespread
acceptance
– Customers are unsure what a product has
to offer
• Growth stage
– Many consumers are buying the product for
the first time
– Demand increases rapidly
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A Product Life Cycle
• Mature stage
– Market peaks because most customers
have already bought the product
– Demand is typically replacement demand
• Decline stage
– Advancing IT leads to the development of a
more advanced product making the old one
obsolete
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A Product Life Cycle
• Advances in IT are one of the most
important determinants of the length of a
product’s life cycle
• The shorter the length of a product’s life
cycle because of advancing IT the more
important it is to innovate products
quickly and continuously
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Types of Management Information
Systems
• Computer Networks
– Networking
• The exchange of information through a group or
network of interlinked computers
• Servers are powerful computers that relay
information to client computers connected on a
Local Area Network (LAN).
• Mainframes are large computers processing vast
amounts of information .
• The Internet is a world wide network of
computers.
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A Typical
Four-Tier
Information
System
Figure 18.3
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Types of Management Information
Systems
• Operating system software
– software that tells computer hardware how
to run
• Applications software
– software designed for a specific task or use
18-24
Six Computer-Based Management
Information Systems
Figure 18.4
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The Organizational Hierarchy
Traditionally, managers have used the
organizational hierarchy as the main
system for gathering information
necessary to make decisions and
coordinate and control activities
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The Organizational Hierarchy
Drawbacks
• Can reduce timeliness of information
• Reduces quality of information
• Tall structure can make for an expensive
information system
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Types of Information Systems
• Transaction Processing Systems
– Systems designed to handle large volumes
of routine transactions.
• Were the first computer-based
information systems handling billing,
payroll, and supplier payments.
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Types of Information Systems
• Operations Information Systems
– Systems that gather, organize, and
summarize comprehensive data in a form of
value to managers.
• Can help managers with non-routine
decisions such as customer service and
productivity.
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Types of Information Systems
• Decision Support Systems
– Provides computer-built models that help
managers make better nonprogrammed
decisions.
– New productive capacity, new product
development, launch a new promotional
campaign, enter a new market or expand
internationally
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Types of Information Systems
• Executive Support System
– Sophisticated version of a decision support
system designed to meet the needs of top
managers
• Group Decision Support System
– An executive support system that links top
managers so that they can function as a
team.
18-31
Expert Systems and
Artificial Intelligence
• Artificial Intelligence
– Behavior by a machine that, if performed by
a human being, would be called “intelligent”
– Already possible to write programs that can
solve problems and perform simple tasks
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Expert Systems and
Artificial Intelligence
• Expert Systems
– Most advanced management information
systems available
– System that employs human knowledge,
embedded in computer software, to solve
problems that ordinarily require human
expertise
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Enterprise Resource Planning
Systems
• Enterprise Resource Planning
Systems
– multi-module application software packages
that allow a company to link and coordinate
the entire set of functional activities and
operations necessary to move products
from the initial product design stage to the
final customer stage
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Enterprise Resource Planning
Systems
1. Help each individual function improve
its functional-level skills
2. Improve integration among all functions
so that they work together to build a
competitive advantage for the company
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Types of Information Systems
• E-Commerce Systems
– Trade that takes place between companies,
and between companies and individual
customers, using IT and
the Internet
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Types of E-Commerce
Figure 18.5
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E-Commerce Systems
• Business-to-business (B2B)
– trade that takes place between companies
using IT and the Internet to link and
coordinate the value chains of different
companies
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E-Commerce Systems
• B2B marketplace
– Internet-based trading platform set up to
connect buyers and sellers in an industry
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Types of E-Commerce
• Business-tocustomer (B2C)
– trade that takes
place between a
company and
individual
customers using
IT and the Internet
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Strategic Alliances, B2B Network
Structures, and IT
• Strategic Alliances
– formal agreement that commits two or more
companies to exchange or share their
resources in order to produce and market a
product
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Strategic Alliances, B2B Network
Structures, and IT
• B2B network structure
– formal series of global strategic alliances
that one or several organizations create with
suppliers, manufacturers, and/or distributors
to produce and market a product
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How Computer-Based Information Systems
Affect the Organizational Hierarchy
Figure 18.6
18-43
The Impact and Limitations
of Information Systems
• Horizontal Information Flows
– Information networks can bridge functional
departments which allows information to
flow horizontally between departments,
leading to much higher productivity, quality,
and innovation.
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Communication Flows at
Tel Co. and Soft Co.
Figure 18.7
18-45
Boundaryless Organization
• Boundaryless Organization
– composed of people linked by IT who rarely
see one another face-to-face
– functional experts who form an alliance with
an organization
18-46
Boundaryless Organization
• Knowledge management system
– company-specific virtual information system
that systematizes the knowledge of its
employees and facilitates the sharing and
integrating of expertise within and between
functions and divisions through real-time,
interconnected IT
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Limitations of Information Systems
• Loss of the Human Element
– Information systems cannot present all
kinds of information accurately.
• Thick information, which is rich in
meaning and not quantifiable, is best
suited to human analysis.
• Information systems should support faceto-face communication, and not be
expected to replace it
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Limitations of Information Systems
• Causes of Difficult Implementations
– Information systems can be hard to develop
and put into service.
– Consistent standards for systems do not
exist.
• Makers of hardware use different
standards which makes it hard to share
information between systems.
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Limitations of Information Systems
• To avoid problems:
– List major organization goals and the
information types require measure those goals.
– Audit the current system to verify that
information collected is accurate, reliable,
timely, and relevant.
– Investigate other sources of information
– Build support for the system with workers.
– Create formal training programs.
– Emphasize that face-to-face contact is
important.
18-50