Management Information Systems Notes

East Africa University
Faculty of Information Science and Technology

Department of Computer Science
Management Information Systems

Notes
Abdisalam Issa-Salwe\
\
Lecture 1
Management Information
Systems Concept
Abdisalam Issa-Salwe

Learning aim
 Explain an approach that an organisation may follow
to formulate its strategic business objectives
 Discuss how information systems may be used to
assist in achieving these objectives
 Distinguish between a business strategy and an
information systems strategy
 Identify responsibility for the ownership of the IS
strategy
East Africa University, Faculty of Information Science and Technology, Department of Computer Science
2
1
Why Information Systems?
 Today it is widely recognized that information systems
knowledge is essential for managers because most
organizations need information systems to survive and
prosper.
 Information systems can help companies extend their
reach to faraway locations, offer new products and
services, reshape jobs and work flows, and perhaps
profoundly change the way they conduct business.
3
Changing Contemporary Business Environment
 Four powerful worldwide changes have altered

the business environment. The first change is
 Globalization
 Transformation of the Enterprise
 Transformation of Industrial Economies
 Emergence of the Digital Firm
4
2
Globalization
 Management and control in a global

marketplace
 Competition in world markets
 Global work groups
 Global delivery systems
5
Transformation of the Enterprise

 Flattening
 Decentralization
 Flexibility
 Location independence
 Low transaction and coordination costs
 Empowerment
 Collaborative work and teamwork
6
3
Transformation of Industrial Economies
 Knowledge- and information-based economies
 Productivity
 New products and services
 Knowledge: a central productive and strategic
asset
 Time-based competition
 Shorter product life
 Turbulent environment
 Limited employee knowledge base
7
Emergence of the Digital Firm

 Digitally enabled relationships with customers,
suppliers, and employees
 Core business processes accomplished via
digital networks
 Digital management of key corporate assets
 Rapid sensing and responding to environmental
changes
8
4
Globalization of world economy
 The success of firms today and in the

future depends on their ability to operate
globally.
 Today, information systems provide the
communication and analytic power that
firms need for conducting trade and
managing businesses on a global scale.
9
Globalization of world economy (cont…)
 Globalization and information technology

also bring new threats to domestic
business firms
 Global communication and management
systems, customers now can shop in a
worldwide marketplace, obtaining price
and quality information reliably 24 hours a
day
10
5
 The knowledge and information revolution
began at the turn of the twentieth century
and has gradually accelerated
 Knowledge and information are becoming
the foundation for many new services and
products.
 Knowledge- and information-intense
products such as computer games require
a great deal of knowledge to produce.
11
 In a knowledge- and information-based

economy, information technology and
systems take on great importance.
 Knowledge-based products and services
of great economic value, such as credit
cards, overnight package delivery, and
worldwide reservation systems, are based
on new information technologies.
12
6
Definition of Information Systems
 An organised method of transforming data into information that
can be used for decision making.
(wps.prenhall.com/ca_ph_ebert_busess_3/0,6518,224378-
,00.html)
 The general term for computer systems in an organisation that
provide information about its business operations.
(www.iib.qld.gov.au/itcareers/talk.asp)
 A structured, interacting, complex of persons, machines, and
procedures designed to produce information which is collected
from both internal and external sources for use as a basis for
decision-making in specific contract/procurement activities.
(www.projectauditors.com/Dictionary/I.html).
13
Definition of Information Systems (cont…)
 The function within a business organisation that

facilitates data processing and enables the resulting
information to be made available to employees who
need it. Also known as information technology.
(www.minnesotamutual.com/news/glossary_pages/glo
ssary_i.html)
 the entire infrastructure, organisation, personnel, and
components that collect, process, store, transmit,
display, disseminate, and act on information
(www.155.217.58.58/cgi-bin/atdl.dll/fm/100-
6/glossary.htm)
14
7
What is Information System (IS)?
 A system is a set of interacting components that
operate together to accomplish a purpose.
 A set of interrelated elements or components that
collect (input), manipulate (process), and disseminate
(output) data and information and provide a feedback
mechanism to meet an objective.
 Information Systems (IS) consist of technology tools
and systems that help to acquire, sustain, and
proliferate information.
15
What is Information System (IS)? (cont…)
 An information system can be defined

technically as a set of interrelated
components that collect (or retrieve),
process, store, and distribute information
to support decision making, coordination
and control in an organisation.
 IS support decision making, helps
managers to coordinate and control
organisation
16
8
Why IS is important to organizations?
 Understand the role and relevance of an

information system aids to decision
making.
 Identifying and evaluating appropriate
information systems.
 Managing the process of information
gathering, processing, storage and
retrieval
 Managers make decisions using the
information available to them at the time.
17
Why IS is important to organizations? (cont…)
 System emphasizing a fair degree of

integration view;
 Information stressing on processed data
which it is used by end users;
 Management focusing on the ultimate use
systems for managerial decision making.
18
9
MIS Concept
MIS Role: Increased Business & Management

Complexities
19
Increased Management Complexities

 Technological Revolution
 Research & Development
 Explosion of Information
 Management Science Technologies
 Decision-making
 Onset of Computers
20
10
Functional Uses of MIS
Enhance :
 Quality of our operations
 Quality of our services
We achieve :
 Efficiency
 Transparency
 Speedy Decision making
21
Information as Critical
 The information we have is not what we

want,
 The information we want is not the
information we need,
 The information we need is not available.
22
11
Strategic Uses of MIS
 Precise development of strategies,

planning, forecasting and monitoring
 Problem solving
 Decision-making
 Separate work from location
23
Life-blood of the organisation
24 East Africa University, Faculty of Information Science and Technology, Department of Computer Science
12
Life-blood of the organisation (cont…)
 To ensure effective and efficient decision

making leading to prosperity of the
Organisation.
 Information as Resource
• It is scarce
• It has a cost
• It has alternative uses
• There is an opportunity cost actor

involved if one does not process
information
25
Why MIS?
 Right Information
 To the right person
 At the right place
 At the right time
 In the right form
 At the right cost
26
13
Organisational Information Requirement
 Organisations require information for various
purposes:
 Information for planning
 Information for controlling
 Information for recording transactions
 Information for performance measurement
 Information for decision making
27
Organisational Information Requirement (cont…)

 Planning: Planning requires a knowledge of
the available resources, possible time-
scales and the likely outcome under
alternative scenarios.
 Controlling: Information is required to
assess whether it is proceeding as planned
or whether there is some unexpected
deviation from the plan. It may
consequently be necessary to take some
form of corrective action.
28
14
 Recording Transactions: Information about each

transaction or event is required, i.e. (a) for
documentation of transactions, (b) record
transactions, for example for accounting, audit
and Tax purposes, and (c) permit the necessary
controlling action to be taken.
 Performance measurement: Comparisons against
budget or the business plan are able to be
undertaken.
29
 Decision making: Just as decision making

can be analysed into three levels, so
information necessary to make decisions
within an organisation can be analysed in
the same way.
30
15
Classification through functional disciplines
Organisational Systems and MIS
32
16
Organisational Systems and MIS
33
IS and Business Strategy

 From a business perspective, an information system is
an organisational and management solution, based on
information technology, to a challenge posed by the
environment.
 To fully understand information systems, a manager
must understand the broader organisation,
management, and information technology dimensions
of systems and their power to provide solutions to
challenges and problems in the business environment.
34
17
IS and Business Strategy (cont…)
 Organisation has a limited set of resources (e.g.
time, people, money, physical resources) and
they must decide how to use those resources.
 Strategy is deciding what the organisation is
going to do and how it will use its resources
 A business system is a collection of people,
machines and methods organised to accomplish
a set of specific functions.
35
IS and Business Strategy (cont…)

 Contributing to the establishment of the organization's long
term business objectives e.g. identifying and evaluating
external factors which may impact on the organisation
 Identifying and appraising the organization's skills and
resources
 Identifying and defining business options; evaluating these
options, performing risk assessments and recommending
strategies for adoption
 Analyzing market and competitive developments in relation
to marketing strategy
 Advising managers on critical economic and financial
developments
(CIMA Practical Experience Guidelines from January 2003)
36
18
Major Business Functions
37
Definitions of information
 Data that has been interpreted, translated, or
transformed to reveal the underlying meaning;
(www.nrcan.gc.ca/cfs-
scf/science/prodserv/kmglossary_e.html)
 Data that have been processed and presented in a
form suitable for human interpretation, often with the
purpose of revealing trends or patterns.
(www.gtscompanies.com/glosscomp.html
38
19
Information and Data
 Information systems contain information

about significant people, places, and
things within the organisation or in the
environment surrounding it.
 By information we mean data that have
been shaped into a form that is meaningful
and useful to human beings
39
Information and Data (cont…)
 Data are streams of raw facts representing

events occurring in organisations or the
physical environment before they have
been organised and arranged into a form
that people can understand and use.
40
20
Information and Data (cont…)
 Three basic activities—input, processing, and output—
produce the information organisations need.
 Feedback is output returned to appropriate people or
activities in the organisation to evaluate and refine the
input.
 Environmental factors such as customers, suppliers,
competitors, stockholders, and regulatory agencies
interact with the organisation and its information
systems.
41
The making of information
42
21
Reference
 Laudon, K. & Laudon, J. (2006): Management
Information Systems: Managing the Digital Firm, 9th ed.
Prentice Hall
 BPP, Information Systems, Study Text, Paper 2.1, BPP
Professional Education, United Kingdom.
 Abdisalam Issa-Salwe, Lecture Notes, Thames Valley
University, 2008.
 Lachlan M. MacKinnon, Information: Types of
Information System Systems,
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/
types.ppt,
43
Group discussions
 Group 1:
 What are the forces leading today’s world economies?
 Explain the importance of information to organisations
 Group 2:
 What is the difference between information and data
 What is the role of information systems in today's competitive
business environment?
 Group 3:
 What do managers need to know about information systems?
 How is information systems transforming organisations and
management?
 Group 4:
 How has the Internet and Internet technology transformed
business?
 What are the major management challenges to building and
using information systems?
44
22
Lecture 2
Major Types of Systems in

Organizations

Topic list
 Types of information systems?
 Function of different types of system
 Transaction Processing Systems
Structure of a typical TPS
 Office automation system (OAS)
 Executive information system (EIS)
 Benefits of executive information systems
 The characteristics of a DSSComponents of a
DSS
1
Types of information systems
 Transaction processing system (TPS):

 Office automation system (OAS)
 Executive information system (EIS):
 Decision support system (DSS):
 Knowledge Work Systems (KWS):
Transaction processing system (TPS):

 A TPS collects and stores information about transactions, and
controls some aspects of transactions. A transaction is an event of
interest to the organisation. e.g. a sale at a store.
 It is a basic business system.
 serves the most elementary day-to-day activities of an

organisation;
 supports the operational level of the business;
 supplies data for higher-level management decisions.
 is often critical to survival of the organisation
 mostly for predefined, structured tasks
 can have strategic consequences (i.e. airline reservation

system)
 usually has high volumes of input and output
 provides data which is summarised into information by

systems used by higher levels of management
 need to be fault-tolerant.
2
Transaction Processing Systems
 The lowest level of information system and

Business system
 Used by businesses to record
“transaction” information
 Transactions include things like booking
airline tickets, purchasing goods or
services
 Provides raw data used in processing in
EIS and DSS
Transaction Processing Systems (cont…)
Systems that perform and record daily routine

transactions necessary for business
Operational-level Systems
Order Machine control Securities Payroll Compensa
tracking trading tion
Order Plant scheduling Cash Accounts Training

processing management payable and
developme
nt
Material Accounts Employee
movement and receivable records
control
Sales and Manufacturing Finance Accounting Human
Marketing Resource
East Africa University, Faculty of Information Science and Technology, Department of Computer Science s 6
3
Structure of a typical TPS
On-line data Transaction Keypunched Scanning
INPUTS
entry files cards devices
Transaction Processing System
- Record - Merge
TPS
- Perform - Sort
- List - Update
Data for
Products Documents OUTPUTS
other systems
4
Office automation system (OAS)
 OAS provides individuals effective ways to process
personal and organisational data, perform
calculations, and create documents.
e.g. word processing, spreadsheets, file managers,
personal calendars, presentation packages
 used for increasing personal productivity. They reduce
"paper warfare".
 OAS software tools are often integrated (e.g. Word
processor can import a graph from a spreadsheet) and
designed for easy operation.
Office automation system (cont…)

 An automation system is a precisely planned
change in a physical or administrative task
utilizing a new process, method, or machine
that increases productivity, quality, and profit
while providing methodological control and
analysis.
 The value of system automation is in its
ability to improve efficiency; reduce wasted
resources associated with rejects or errors;
increase consistency, quality, and customer
satisfaction; and maximize profit.
5
Office Automation Systems
Systems that are designed to increase the

productivity of data workers
Knowledge-level Systems
Word Document E-mail /
processing imaging electronic
calendars

 Refers to all tools and methods that are applied
to office activities
 Making possible to process written, visual,
and sound data in a computer-aided manner.
 Provides elements which make it possible to
simplify, improve, and automate the organization
of the activities of a company or a group of
people (management of administrative data,
synchronization of meetings, etc.).
6
 Office automation seems to proceeding more
rapidly and penetrate economic activities more
thoroughly than have other waves of automation
 World economy is driven by the incessant
demand for information as it is by the continuing
necessity of converting raw materials into
finished products
 Office work is rapidly being “automated, ” or
computerized
Executive information system (EIS)

 Also known as an Executive Support System
(ESS), it provides executives information in a
readily accessible, interactive format.
 An EIS/ESS usually allows summary over the
entire organisation and also allows drilling down
to specific levels of detail.
 Used by top level (strategic) management. They
are designed to the individual. They let the CEO
of an organisation tie in to all levels of the
organisation. They are very expensive to run
and require extensive staff support to operate.
7
Executive Information Systems
 Topmost systems
 High-level systems designed to provide Senior
Management with information on general trends
in business activities rather than the intimate
details
Executive Support Systems
Systems that support non-routine decision-making

through advanced graphics and communications
Strategic-level Systems
5-year sales 5-year operating 5-year budget Profit Personnel

trend plan forecasting planning planning
forecasting
Sales and Manufacturing Finance Account.. Human

Marketing Resources
8
General Properties of an EIS
 Used for strategic business planning
 Relatively long time-frame considered
 Unstructured and open-ended (many variables
can be considered)
 For accurate results EIS require information from
inside and outside the business
General Properties of an EIS

 Graphically oriented to provide readily
understandable views of complex data
 Tailored to suit an executive’s decision making
style
 provides rapid access to current information
and filters and tracks critical data
 Its major activity is information scanning and
evaluation, it deals mainly with the intelligence
phase of decision-making.
9
Benefits of executive information systems
 Improved financial and operational control
 Enhances business problem solving
 Helps in the identification of new opportunities
(e.g. tour operators use it to identify new holiday
destinations)
 Increases IT awareness among senior
management.
Decisions and information needs
 Characteristics of decisions and

information needs when ascending the
different business levels.
 Less structured problems and decisions
 Greater need for summarised information
 Greater need for external information
 Longer time horizon
10
Decision support system (DSS)
 Helps strategic management staff (often senior
managers) make decisions by providing information,
models, or analysis tools. For support of semi-
structured and unstructured decisions (structured
decisions can be automated). Used for analytical work,
rather than general office support.
 They are flexible, adaptable and quick. The user
controls inputs and outputs. They support the decision
process and often are sophisticated modelling tools so
managers can make simulations and predictions.
 Their inputs are aggregate data, and they produce
projections. An example job for a DSS would be a 5
year operating plan.
Decision-support Systems
Systems that combine data, models and analysis

tools for non-routine decision-making
Management-level Systems
Sales Production Cost Pricing / Contract

region scheduling analysis profitabilit cost
analysis y analysis analysis
Sales and Manufacturing Finance Accounting Human
Marketing Resources
11
Decision Support Systems
 Definition: A DSS is a coherent system of
computer based technology used by
managers as an aid to their decision making in
semi-structured tasks.
 DSS use sophisticated analysis and data
modelling tools to solve semi-structured
problems
The characteristics of a DSS

 Structured and semi-structured decisions
 Used by managers at different levels
 Used both by groups and individuals
 Supports a variety of decision styles and
processes
 It has adaptability and flexibility
 Ease of use
 Its based on effectiveness and not efficiency
12
Components of a DSS
 DSS Database - data from internal TPS such as

data from inventory, production, and accounting
sources
 Model Base - Analytical tools used by the DSS.
These include built-in spread sheeting, statistical
analysis, and simulation
Structure of a generic DSS

DSS
System
Software
Model Base
- Spreadsheets
- Statistical Analysis
- Simulation
DSS Database
- Sales Data
- Financial Data
- Production Data
Order Processing Materials Resource General Ledger

System Planning System System
13
Tools used in a DSS
 What-If analysis tools (found in most

spreadsheets)
 What-ifanalysis allows users of a system to
quickly calculate and display the results of
many combinations of input values in a
model.
Knowledge Work Systems

 KWS are used by technical staff.
 KWS use modelling functions to convert design
specifications into graphical designs.
 They may include computer-aided
design/manufacture (CAD/CAM). Knowledge workers
and knowledge work
 Requirements of knowledge work systems
 Examples of knowledge work systems
• CAD
• Virtual reality
• VRML
• Investment workstations
14
Knowledge Work Systems (cont…)
Systems that aid the creation and integration of new

knowledge into an organisation
Engineering Graphics workstations Managerial

workstations workstations

 Important dimensions of knowledge
 Organizational learning and knowledge management
 The knowledge management value chain

 Knowledge acquisition
 Knowledge storage
 Knowledge dissemination
 Knowledge application
 Building organizational and management capital:

Collaboration, communities of practice, and office
environments
 Types of knowledge management systems
15
 Structured knowledge systems
 Semi structured knowledge systems
 Organizing knowledge: Taxonomies and
tagging
 Knowledge network systems
 Supporting technologies: Portals, collaboration
tools, and learning management systems
Requirements of Knowledge Work Systems
Knowledge work systems

require strong links to
external knowledge bases in
addition to specialized
hardware and software.
32
16
Functional Examples
 Examples of IS by function:
 Sales and marketing
 Manufacturing and production
 Finance and accounting
 Human resources
Sales and Marketing

System Description Organisational
Level
Order processing Enter, process and Operational
track orders
Market analysis Identify customers Knowledge

and markets
Pricing analysis Determine prices Management
Sales trends Prepare 5 year Strategic

forecasts
34
17
Manufacturing and Production
Level
Machine control Control actions of Operational

equipment
Computer-aided Design new products Knowledge

design (CAD)
Production planning Decide number and Management

schedule of products
Facilities location Decide where to Strategic

locate facilities
35
Finance and Accounting

Level
Accounts receivable Track money owed Operational

to firm
Portfolio analysis Design firm’s Knowledge

investments
Budgeting Prepare short-term Management

budgets
Profit planning Plan long-term Strategic

profits
36
18
Human Resources
Level
Training and Track training, Operational

development skills and
appraisals
Career paths Design employee Knowledge
career paths
Compensation Monitor wages, Management

analysis salaries and
benefits
Human resources Plan long-term Strategic
planning workforce needs
37
Management Challenges
 Strategy of an organization is the roadmap towards
attainment of its long term goals and objectives.
 Effective operationalization of strategy enables
effective and efficient realization of organizational
goals.
 In the dynamic business environment of today,
information has emerged as one of the key drivers in
successfully steering the organizational strategy.
19
 Strategy of an organization is the roadmap
towards attainment of its long term goals and
objectives.
 Effective operationalization of strategy enables
effective and efficient realization of
organizational goals.
 In the dynamic business environment of today,
information has emerged as one of the key
drivers in successfully steering the
organizational strategy.
Management Challenges (cont…)

 What do managers need to know about organizations
in order to build and use information systems
successfully?
 What impact do information systems have on
organizations?
 How do information systems support the activities of
managers in organizations?
 How can businesses use information systems for
competitive advantage?
 Why is it so difficult to build successful information
systems, including systems that promote competitive
advantage?
20
 IS facilitate in leveraging information towards
organizational success.
 Sustainability of competitive advantage
 Fitting technology to the organization (or vice-
versa)
 Information technology (IT):
 Could change hierarchy of decision making
 Lower cost of information acquisition
 Broadens the distribution of information
Operational-level Systems
 Support operational managers by keeping track
of the elementary activities and transactions of
the organization.
 The principle purpose of systems at this level is
to answer routine questions and track the flow of
transactions through the organization.
 Covers things such as sales, receipts, cash
deposits, payroll, credit decisions, flow of
materials.
21
 Support knowledge and data workers in an
organisation.
 The purpose of these systems is to help the
organisation discover, organise and integrate
new and existing knowledge into the business,
and to help control the flow of paperwork.
 These systems, specially in the form of
collaboration tools, workstations, and office
systems, are the fastest growing applications in
business today.
Management-level Systems
 Designed to serve the monitoring, controlling,
decision-making, and administrative activities of
middle managers.
 Typically provide periodic reports rather than instant
information on operations. Some of these systems
support non-routine decision-making, focusing on less-
structured decisions for which information
requirements are not always clear.
 Often require information from out with the
organisation, as well as from normal operational-level
data.
22
Strategic-level Systems
 Help senior management tackle and address
strategic issues and long-term trends, both
within the organisation and in the external
environment.
 Principal concern is matching organisational
capability to changes, and opportunities,
occurring in the medium to long term (i.e. 5 - 10
years) in the external environment.
23
Reference
 Dave Chaffey, Paul Bocij, Andrew Greasley and Simon
Hickies (eds) (2003): Business Information Systems:
Technology, Development and Management, Pearson
Education Limited, London.
 Lachlan M. MacKinnon, Information: Types of
Information Systems,
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/
types.ppt,
University, 2008.
24
Group Discussions
 Group 1:
 Explain Transaction Processing Systems (TPS)?
 Give example where TPS is applied?
 Group 2:
 Which system collects and stores information about
transactions and why?
 Group 3:
 What is Executive Information System (EIS)?
 Group 4:
 What is Decision support system (DSS)?
 Group 5:
 Explain Knowledge Work Systems (KWS)?
 Group 6:
 What are the three levels of information requirement
25
Lecture 3
Contemporary Approaches to
Information Systems

Content
 Business problem and Solutions Perspective
 Management Challenges
 A Business Perspective on IS
 IS Support Business Functions
 People in the Organization
 Management in the Organization
 Approaches to IS
 The Interdependence Between Organizations and Information
Systems
 The Widening Scope of Information Systems
 Interdependence of IS and the Organization
 The Impact of the Internet
 Impact of IS on Organizational Design
 Internet-based technologies
1
Business problem and Solutions Perspective
 Problem: Tough competition and demanding

customers.
 Solutions: Redesigned order and production
processes reduce costs, increase revenue, and
improve customer service.
 Design competitive and effective system
 Understand system requirements of global
business environment
 Create information architecture that supports
organization’s goal
 Determine business value of information
systems
 Design systems people can control,
understand and use in a socially, ethically
responsible manner
2
A Business Perspective on IS
ORGANISATIONS TECHNOLOGY
Information
Systems
MANAGEMENT
IS Support Business Functions
 Sales & Marketing

 Manufacturing & Production
 Finance
 Accounting
 Human Resources
3
People in the Organization
 Managers
 Knowledge Workers
 Create knowledge for the organization
 Data Workers
 Process the organization’s paperwork
 Production & Service Workers
Management in the Organization
 Senior managers
 Long term strategic decisions
 Middle managers
 Carry out plans of senior management
 Operational managers
 Monitor organization’s daily activities
4
Approaches to IS
 Technical Approach
 Emphasizes mathematically based models to
study IS
 Behavioral Approach
 Emphasis on the use of the technology by
society
Approaches to IS (cont…)
TECHNICAL APPROACHES
COMPUTER
OPERATIONS
SCIENCE
RESEARCH
MANAGEMENT
SCIENCE INFORMATION SYSTEMS
SOCIOLOGY
PSYCHOLOGY ECONOMICS
BEHAVIOURAL APPROACHES
10
5
The Sociological Approach:
IS performance is optimized when both the

organization and the technology adjust to
each other, until a good fit is obtained
Socio-Technical Systems
Optimize systems performance:
 Technology and organization
 Organizations mutually adjust to one another until

fit is satisfactory
6
Socio-technical Systems
The Interdependence Between Organizations and

Information Systems
14
7
The Widening Scope of Information Systems
Interdependence of IS and the Organization
Business strategy software

hardware
Rules & procedures

database telecommunications
ORGANIZATION INFORMATION SYSTEM
8
The Impact of the Internet
Communicate & Collaborate Supply Information
Access Information Find Entertainment
Exchange Business
Participate in Discussions Transactions
Impact of IS on Organizational Design

 Flattening organizations
 Separating work from location
 Reorganizing workflows
 Increasing organizational flexibility
 Changing management process
 Redefining organizational boundaries
9
Internet-based technologies
 Intranet
 An internal network based on
Internet technologies
 Extranet
 Privateintranet that is accessible to
authorized outsiders
Reference
 Laudon, K. & Laudon, J. (2006): Management Information
Systems:Managing the Digital Firm, 9th ed. Prentice Hall
 Lachlan M. MacKinnon, Information: Types of Information
Systems,
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/t
ypes.ppt.
University, 2008.
10
Group discussion
 Group 1: How information systems support
business functions
 Group 2: Discuss different approaches to

information systems
 Group 3: Explain the interdependence

between organizations and information
systems
 Group 4: Discuss the impact of the internet

11
Lecture 4
Using Information Technology

for Competitive Advantage

Topic list
 Porter’s five forces model

 Value chain
 EDI
 Data warehousing
 Data mining
 Intelligent agents
 Value added networks
East Africa University, Faculty of Information Science and2Technology, Department of Computer Science
1
Strategic Advantage and IT
Important Managerial Questions:

 What is strategy?
 What is strategic advantage?
 Information Systems as a strategic
resource
 How do we use Information Systems to
achieve some form of strategic advantage
over competitors?
What is Strategy
Definition of strategy
 Early 1990s definition:
 “A well coordinated set of objectives, policies, and
plans aimed at securing a long-term competitive
advantage. A vision for the organization that is
implemented.”
 Webster’s Dictionary
 “a careful plan or method”
 “the art of devising or employing plans toward a goal”
 “the art and science of military command exercised to

meet the enemy in combat under advantageous
circumstances”
2
What is Strategy?
 Strategy
 Henry Mintzberg:
 Explicitly planned: “Intended Strategy”
 Realized: planned and succeed
 Unrealized: planned but fail
 Implicit, not explicitly planned yet executed:

“Emergent Strategy”
Planned Executed
Strategy Strategy
Failed Emergent
Strategy Strategy

Evolution of Strategy Concepts
Strategy
 Competitive Strategy Speeding Up
 Competitive Advantage
 Sustainable Competitive Advantage
 Temporary (Non-Sustainable)
Competitive Advantage
 Strategic Advantage
 Temporary Strategic Advantage
3
Evolution of Strategy Concepts
 Three eras of approaches for achieving strategic advantage
 Portfolio of Business (1970s)
 performance a result of businesses you pick to be in
 motivated by economies of scale
 Portfolio of Capabilities (mid 1980s)

 performance a result of internal processes and routines,
which provide distinctive capabilities
 motivated by economies of scale and scope
 Portfolio of Relationships (mid 1990s)

 performance a result of building a wide array of relationships
with external companies that possess hard-to-imitate
capabilities
 motivated by economies of scale, scope, and expertise
Information Systems as a Strategic

Resource

 Inwardly Strategic 
 Outwardly Strategic
 focused on internal


 aimed at direct
processes
competition
 lower costs

 increase employee


 beat competitors
productivity 
 new services
 improve teamwork
 
 new “knowledge”

 enhance that leads to new
communication services
4
IS as a Strategic Resource
 Hayes and Wheelwright (1985) - operations
effectiveness, applies equally well to ISD effectiveness
 Stage 1: Internally Neutral
 not seen as a source of process improvement
technology
 Minimize negative impact of functional area on
organization
 Top management “in control”; tells dept. what to
do
 Stage 2: Externally Neutral
 not seen as a source of external competitive
advantage
IS as a Strategic Resource (cont…)
 Stage 3: Internally Supportive

 source of internally focused competitive
advantages
 Stage 4: Externally Supportive
 viewed as competitive force in the
business
 function drives issues of top-
management strategy making
10Technology, Department of Computer Science

East Africa University, Faculty of Information Science and
5
IS as a Strategic Resource
Competitive Marketplace
Externally
Strategic
Company A
Internally Company B
Strategic Inter-Firm
Strategic
Focus
“Alliance”
Porter’s five forces model
 Professor Michael Porter of Harvard

University maintained that in every
industry, competition depends on the
collective strength of five basic forces
 Interacting with these forces are the
generic corporate strategies.
 IT can be a powerful agent to change the
balance of power in and between these
forces.

6
Porter’s five forces model (cont…)
 Michael Porter has identified five forces

that are widely used to assess the
structure of any industry. Porter’s five
forces are the:
 Bargaining power of suppliers,
 Bargaining power of buyers,
 Threat of new entrants,
 Threat of substitutes, and
 Rivalry among competitors.


7
 All organisations operate in one or more

industries.
 By the nature of their participation in an
industry, they are affected by existing or
potential uses of information technology


 New entrants can increase overall capacity in the industry,
thereby reducing prices and incumbents' cost advantages.
 Market is cornered with product, but success may inspire others
to enter the business and challenge position.
 The threat of new entrants is the possibility that new firms will
enter the industry.
 New entrants bring a desire to gain market share and often have
significant resources. Their presence may force prices down and
put pressure on profits.
 IT can help create or raise barriers to entry by increasing
mandatory investments in hardware and software, facilitating
control over databases, or locking in customers to existing
distribution channels.
 There are many types of barriers to entry:
 switching costs, economies of scale, high investment in IT,
economies of experience, access to distribution channels,
and government policy

8
 Intensity of industry rivalry depends on

factors beyond the control of the individual
firm,
 such as degree of concentration, diversity, or
dependency; rate of industry growth; or switching
costs.
 It is critical to understand the strategies of one's
rivals in detail.
 For instance, Ford's strategy depends on the
strategies of Toyota, Nissan, GM, and
Volkswagen, and vice versa.


 Threat of substitute products may arise from
products and services in other industries.
 Examples:
 The products of stock brokers and insurance
companies now compete against banks for the
investment dollar.
 The automobile eliminated the horse with
buggy, and the silicon chip eliminated
electromechanical adding machines. The life
cycle of products can be reduced through the
use of IT, such as Computer-Aided Design
(CAD). IT has also provided the basis for
creating new information-intensive products.
9
Bargaining power of buyers
 The power of buyers describes the effect that your
customers have on the profitability of your business.
The transaction between the seller and the buyer
creates value for both parties.
 Buyers drives prices down and the quality of products
up.
 Buyer power depends on the level of switching costs,
the competitive position of the buyer in the industry
(size, volume), whether the buyer can purchase a
commodity product, or whether the buyer poses a
serious threat of backward integration (i.e., buying out
or merging with its suppliers).
 Installing computer terminals at the buyers' site is one
way to raise the buyers' cost of switching to other
suppliers.

Bargaining power of suppliers
 Any business requires inputs—labor, parts, raw materials, and
services. The cost of your inputs can have a significant effect on
your company’s profitability. Whether
 It is in some ways the antithesis of buyer power.
 The threat of forward integration (i.e., buying out or merging with
its customers) is one determinant of supplier power.
 Influential suppliers drive prices up and reduce the quality and
quantity of products and services.
 Supplier power also depends on size, volume, and concentration
relative to other firms in the industry.

10
 Together, the strength of the five forces determines
the profit potential in an industry by influencing the
prices, costs, and required investments of
businesses—the elements of return on investment.
 Stronger forces are associated with a more
challenging business environment.
 To identify the important structural features of your
industry via the five forces, you conduct an industry
analysis that answers the question,
 “What are the key factors for competitive success?”

Value Chain Analysis

 The value chain is a systematic approach to
examining the development of competitive
advantage.
 The 'margin' depicted in the diagram is the same
as added value.
 The organization is split into 'primary activities'
and 'support activities

11
Value Chain Analysis (cont…)

 The value chain begins with the data resource.
 Information is developed from the data resource
to support the knowledge environment of an
intelligent learning organisation.
 Data is the raw material for information which
is the raw material for the knowledge
environment.
 Knowledge is the raw material for business
intelligence that supports business strategies.

12
Electronic Data Interchange (EDI)
 EDI was first developed by the automobile/transportation
industry in the 1970s.
 Today,
 it is widely used in a variety of industries, including
distribution, finance and accounting, health care,
manufacturing, purchasing, retail, tax form filing, and
shipping.
 Early,
 EDI packages used rather simple standard forms that
forced companies to convert data to fit the forms.
 Newer,
 EDI systems allow companies to create custom
systems using simple programming or authoring tools.

Electronic Data Interchange (EDI) (cont…)

 Electronic Data Interchange (EDI) is the electronic
exchange of routine business transactions.
 EDI defines the electronic exchange of structured business
data, such as purchase orders, invoices, and shipping
notices, typically between one organization and another.
 Typical transactions include such documents as
purchase orders, invoices, advance shipping
notification, payments, etc.
 Exchange of electronic data using inter-
organizational information systems
 Set of hardware, software, and standards that
accommodate the EDI process
 The relationship is usually between a vendor and
customer.
13
 It is important to differentiate between EDI and
electronic commerce (e-commerce).
 Electronic commerce encompasses all aspects
of electronic business exchanges, including
person-to-person interaction (collaboration),
money transfers, data sharing and exchange,
Web site merchant systems, and so on.
 EDI as a subset of electronic commerce that
encompasses the exchange of business
information in a standardized electronic form.

 EDI can reduce costs, workforce

requirements, and errors associated with
retyping orders, invoices, and other
documents.
 With EDI, computer data already entered
by one organization is made available to a
business partner.
 EDI is typically handled using store-and-
forward technologies similar to e-mail.

14
 Two approaches in the implementation of

EDI.
 Many large organizations acquire or build their
own proprietary systems, often in association with
their business partners.
 To work with a value added network provider,
which provides EDI transaction services, security,
document interchange assistance, standard
message formats, communication protocols, and
communication parameters for EDI.


15
Value Added Network (VAN)
 A (VAN) Value Added Network is a third
party who stores the data to be
communicated.
 Serves as a middle person, so neither
party can access the other’s private
network.
 The main key to a VAN is that the other
partner does not touch your network, as
business partners initiate the sending or
retrieving of the data from the VAN.

Value Added Network (VAN) (cont…)
 With the data being sent to or received

from the VAN by the business partners
initiating the communication, business
partners are insuring a safe method of
data transportation.
 The different ways of communicating to
the VAN include dialup as well as FTP
protocols.

16
Business intelligent agents

 Business intelligence represent a popular trend in
many public and private sector organizations.
 Ideally, any manager or knowledge worker should be
able to compose information requests without
programmer assistance and achieve answers at the
speed of thought.
 Follow-up questions should be immediately asked and
answered in order to maintain continuity of thought on
a particular topic of importance.

17
Business intelligent agents (cont…)
 Intelligent Agents execute tasks on behalf of a

business process, computer application, or an
individual.
 For example, corporate use of monitoring software
based on agents can be a key component in
cutting support costs and increase computer
efficiency.
 Intelligent agents have been written to search
through e-mail messages for certain keywords or
simple concepts (phrases).

Business intelligent agents (cont..)
 Knowledge-based expert systems, or

simply expert systems, use human
knowledge to solve problems that normally
would require human intelligence.
 These expert systems represent the
expertise knowledge as data or rules
within the computer.

18
Data warehouse, data marts
 Data warehouses are computer based information
systems that are home for "secondhand" data that
originated from either another application or from an
external system or source.
 Warehouses optimize database query and reporting
tools because of their ability to analyze data, often from
disparate databases and in interesting ways.
 They are a way for managers and decision makers to
extract information quickly and easily in order to answer
questions about their business.
 In other words, data warehouses are read-only,
integrated databases designed to answer comparative
and "what if" questions.

Data warehouse, data marts (cont…)

 Data Marts:
 Data in a data warehouse should be reasonably
current, but not necessarily up to the minute,
although developments in the data warehouse
industry have made frequent and incremental data
dumps more feasible.
 Data marts are smaller than data warehouses and
generally contain information from a single
department of a business or organization. The
current trend in data warehousing is to develop a
data warehouse with several smaller related data
marts for specific kinds of queries and reports.

19
A Data Warehouse Architecture

Data mining
 Data mining is primarily used today by companies with
a strong consumer focus - retail, financial,
communication, and marketing organizations.
 It enables these companies to determine relationships
among "internal" factors such as price, product
positioning, or staff skills, and "external" factors such
as economic indicators, competition, and customer
demographics.

20
Data mining
 Data mining, or knowledge discovery, is the
computer-assisted process of digging through and
analyzing enormous sets of data and then extracting
the meaning of the data.
 Data mining tools predict behaviors and future
trends, allowing businesses to make proactive,
knowledge-driven decisions.
 Data mining tools can answer business questions
that traditionally were too time consuming to resolve.
 They scour databases for hidden patterns, finding
predictive information that experts may miss
because it lies outside their expectations.

Data mining (cont…)
 With data mining, a retailer could use

point-of-sale records of customer
purchases to send targeted promotions
based on an individual's purchase history.
 By mining demographic data from
comment or warranty cards, the retailer
could develop products and promotions to
appeal to specific customer segments

21
Data mining (cont…)
 Data mining consists of five major

elements:
 Extract, transform, and load transaction data onto
the data warehouse system.
 Store and manage the data in a multidimensional
database system.
 Provide data access to business analysts and
information technology professionals.
 Analyze the data by application software.
 Present the data in a useful format, such as a

graph or table.


22
Reference
 Laudon, K. & Laudon, J. (2006): Management Information Systems:
Managing the Digital Firm, 9th ed. Prentice Hall
 Abdisalam Issa-Salwe, Lecture Notes, Thames Valley University,
2008.
 Lachlan M. MacKinnon, Information: Types of Information Systems,
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/types.ppt,
 Dave Chaffey, Paul Bocij, Andrew Greasley and Simon Hickies
(eds) (2003): Business Information Systems: Technology,
Development and Management, Pearson Education Limited,
London.
 BPP, Information Systems, Study Text, Paper 2.1, BPP Professional
Education, United Kingdom.
45
Group Discussion
 Group 1: Discuss using Information
Technology for Competitive
Advantage
 Group 2: Porter’s five forces model
 Group 3: Discuss the concept of
Value chain (looking at the
systematic approach to examining
the development of competitive
advantage).
46
23
Lecture 5
Contemporary Approaches to
Information Systems

Topic list
 Different types of information systems?
 Function of different types of system
2
Department of Computer Science, Faculty of Information Science and Technology, East Africa University
1
Learning Objectives
 Analyze the role of IS in today’s competitive
 Looking at IS from both a technical and business
perspective
 Explain how IS are transforming organizations
and management
3
Business problem and Solutions Perspective

 Problem: Tough competition and demanding
customers.
 Solutions: Redesigned order and production
processes reduce costs, increase revenue, and
improve customer service.
4
2
 Design competitive and effective system

 Understand system requirements of global
 Create information architecture that supports
organization’s goal
 Determine business value of information
systems
 Design systems people can control,
understand and use in a socially, ethically
responsible manner
5
A Business Perspective on IS
ORGANISATIONS TECHNOLOGY
Information
Systems
MANAGEMENT
6
3
IS Support Business Functions
 Sales & Marketing
 Manufacturing & Production
 Finance
 Accounting
 Human Resources
7
People in the Organization

 Managers
 Knowledge Workers
 Create knowledge for the organization
 Data Workers
 Process the organization’s paperwork
 Production & Service Workers
8
4
Management in the Organization
 Senior managers
 Long term strategic decisions
 Middle managers
 Carry out plans of senior management
 Operational managers
 Monitor organization’s daily activities
9
Approaches to IS
 Technical Approach
 Emphasizes mathematically based models to
study IS
 Behavioral Approach
 Emphasis on the use of the technology by
society
10
5
Two Approaches to IS
TECHNICAL APPROACHES
COMPUTER
OPERATIONS
SCIENCE
RESEARCH
MANAGEMENT
SCIENCE INFORMATION SYSTEMS
SOCIOLOGY
PSYCHOLOGY ECONOMICS
BEHAVIOURAL APPROACHES
11
The Preferred Approach to IS
The Sociological Approach:

IS performance is optimized when
both the organization and the
technology adjust to each other,
until a good fit is obtained
12
6
Contemporary Approaches to IS
Optimize systems performance:
 Technology and organization
 Organizations mutually adjust to one another until fit

is satisfactory
13
Contemporary Approaches to IS (cont…)

Figure 1-7 SOURCE: Liker, et al, 1987

14
7
The Interdependence Between Organizations and
Information Systems
15
The Widening Scope of Information

Systems
16
8
Interdependence of IS and the Organization
Business strategy software

hardware
Rules & procedures

database telecommunications
ORGANIZATION INFORMATION SYSTEM
17
The Impact of the Internet
Communicate & Collaborate Supply Information
Access Information Find Entertainment
Exchange Business
Participate in Discussions
Transactions
18
9
Impact of IS on Organizational Design
 Flattening organizations
 Separating work from location
 Reorganizing workflows
 Increasing organizational flexibility
 Changing management process
 Redefining organizational boundaries
19
Internet-based technologies
 Intranet
 An internal network based on
Internet technologies
 Extranet
 Private intranet that is accessible
to authorized outsiders
20
10
Reference
 Dave Chaffey, Paul Bocij, Andrew Greasley and Simon Hickies (eds)
(2003): Business Information Systems: Technology, Development and
Management, Pearson Education Limited, London.
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/types.ppt.
2008.
21
Topic Questions
1. Group 1: Discuss the different approaches
to IS and how these approaches impact
organizations
2. Group 2: Why IS is needed by
organization? Think about the functionality
of IS.
3. Group 3: Imagine a modern organization
without IS: Consequence, Competitive
advantage, etc.
22
11
Lecture 6
IT Infrastructure:
Basics of computing
(Hardware & Software)

Topic list
 Hardware and Software
 Data processing environment
 Development in communications
 System architectures
 Manual and automation systems
 The Internet
2
1
Learning outcome
 Identify opportunities for the use of information
technology in organisations
 Understand how to set IS
 Evaluate user requirement
 Evaluate organisational IS
3
The Impact of IT(1)
4
2
Topic list
 Hardware
 Software
 System architectures
5
Manual vs. computerised systems

 In many situations manual systems are inferior to
computerised systems
 Manual systems still widely used
 E.g., some investment analysts manual draw charts and trend
lines to assist them in making investment decisions
 Computerized systems
 E.g., the above trends lines can be drawn by computer
 Evolution
 Many computerized system began as manual systems
 E.g., directory assistance
6
3
Manual vs. computerised systems (cont…)
Batch processing is an example of manual

system where transactions are accumulated
over a period of time and prepared for
processing as a single unit or batch
7
Source Data Automation

 Source data automation
 The process of capturing data at its source
with minimal manual effort
 Data are entered directly into the computer
8
4
Computer-based Information Systems (cont…)
 Consists of the shared information system (IS)

resources that form the foundation of the
information system
 Computer-based Information Systems
 Technology
 Data
 Telecommunications
 People
 Procedures
9
About Computer (cont…)

Based on Usage
 General Purpose
 Perform a wide variety of processing tasks
 These are the most common
 Dedicated or Special Purpose
 fundamentally the same as a general purpose
 programmed for a specific purpose
 advent of cheap microprocessors has lead to massive growth
in usage/market penetration
 used in a variety of consumer products, microwaves,
telephones, washing machines, etc.
10
5
Hardware
 The objects that you can actually touch, like disks,
disk drives, display screens, keyboards, printers,
boards, and chips.
 Computer equipment used to perform input,
processing, and output activities
11
About computer
 The word computer used to mean a person who
computes.
 In current language, a computer is any device used to
process information according to a well-defined
procedure.
 The word was originally used to describe people
employed to do arithmetic calculations, with or without
mechanical aids, but was transferred to the machines
themselves
12
6
About computer (cont…)
 Computer hardware components include input devices,
output devices, a system unit, storage devices, and
communications devices.
 An input device is any hardware component that allows a
user to enter data and instructions into a computer. Six
commonly used input devices are the keyboard, mouse,
microphone, scanner, digital camera, and PC camera.
 An output device is any hardware component that can
convey information to a user. Three commonly used
output devices are a printer, a monitor, and speakers.
13
About computer (cont…)

 The system unit is a box-like case made from metal or
plastic that protects the internal electronic components of
the computer from damage. The system unit contains the
central processing unit and memory.
 The central processing unit (CPU) is the electronic
device that interprets and carries out the basic
instructions that operate the computer.
 Memory is a temporary holding place for data and
instructions.
 A storage device records and retrieves data to and from
a storage medium. Six common storage devices are a
floppy disk drive, a Zip drive, a hard disk drive, a CD-
ROM drive, a CD-RW drive, a DVD-ROM drive, and a
DVD+RW drive.
14
7
15
16
8
Memory
 In this system, memory is a sequence of
numbered "cells" or "pigeon holes," each
containing a small piece of information.
 The information may be an instruction to tell the
computer what to do.
 The cell may contain data that the computer
needs to perform the instruction.
 Any slot may contain either, and indeed what is
at one time data might be instructions later.
17
Processing
 The Arithmetic and Logical Unit, or ALU, is the
device that performs elementary operations such
as arithmetic operations (addition, subtraction,
and so on), logical operations (AND, OR, NOT),
and comparison operations (for example,
comparing the contents of two "slots" for equality).
This unit is where the "real work" is done.
18
9
Processing (cont…)
 The control unit keeps track of which slot
contains the current instruction that the
computer is performing, telling the ALU what
operation to perform and retrieving the
information (from the memory) that it needs to
perform it, and transfers the result back to the
appropriate memory location.
 Once that occurs, the control unit goes to the
next instruction (typically located in the next
slot, unless the instruction is a jump
instruction informing the computer that the
next instruction is located in another location).
19
Input and Output

 The I/O allows the computer to obtain information
from the outside world, and send the results of its
work back there. There are incredibly broad range
of I/O devices, from the familiar keyboards,
monitors and floppy disk drives, to the more
unusual such as webcams.
20
10
Types of computers
 Supercomputers
 Mainframes
 Minicomputers
 Microcomputer (or PC)
21
Supercomputers
 Unlike mainframes and minicomputers. Super
computers are used for the heavy stuff like
weather maps, construction of atom bombs,
finding oil, earthquake prediction, and sciences
where a lot of calculations have to be done.
 They also are used to help governments
eavesdrop on anything there is passing through
telephone, data lines, e-mail, radiowaves.
 A supercomputer is a computer that leads the
world in terms of processing capacity, particularly
speed of calculation, at the time of its
introduction.
22
11
Supercomputers (cont…)
 Sophisticated, expensive computers, using state-of-the-
art technology;
 Provide processing speeds, many times that of powerful
workstations;
 Often used for scientific or statistical purposes. They are
particularly utilised in the simulation and modeling of
complex systems
 Often the technology developed for supercomputers will
find its way to more general purpose computers.
23
Mainframes
 Mainframes are large, powerful, and expensive
computers used mainly by large companies for
bulk data processing (such as bank transaction
processing).
 The term arose during the early 1970s with the
introduction of smaller computers, which became
known as minicomputers, so users coined the term
"mainframe" to describe larger, earlier types.
 Mainframe is an industry term for a large
computer. The name comes from the way the
machine is build up: all units (processing,
communication etc.) were hung into a frame. Thus
the maincomputer is build into a frame, therefore:
Mainframe.
24
12
25
Minicomputer
 Minicomputers are a largely obsolete class of
multi-user computers which made up the middle
range of the computing spectrum, in between the
largest multi-user systems (mainframe computers)
and the smallest single-user systems
(microcomputers or personal computers)
26
13
Microcomputers
 Microcomputers, or PC's as they are often called,
are abundant on our desks, tables, offices,
suitcases, everywhere.
 This is the most visible form of computers in the
present world and comes in all forms and breeds.
 There are many generations of particular design
and technical specifications from the start of this
particular design.
27
Types of Computer Systems - Based on Function
 Centralised Computing systems - Services several

users simultaneously
 Stand-alone Computers - Have no sharing of
resources, e.g. a self-contained PC
 Distributed Computing Systems
 each user has access to the computing power of
the machine they are on, however certain
resources and peripherals are shared (e.g. file
store and printing)
 Users can usually obtain further computing
facilities and power by connecting to other
computers (nodes) on the network
28
14
Network
 A group of two or more computer systems linked together.
 Can be defined as a computer based communication and
data exchange system;
 It is created by the physical connection between two or
more computers;
 It is capable of supporting computers providing special
services.
 Used to connect computers and computer equipment in a
building, around the country, across the world, to enable
electronic communications.
 Computer which do not connect are called stand-alone
computers.
29
Development in communication
 Communicating with a computer is becoming the
standard today for both business and personal
use.
 The communications channels are constantly
being upgraded in order to send information
faster.
 Communications technologies have changed the
way people interact through the use of e-mail,
videoconferencing, and the Internet.
30
15
Communication Technology
 ISDN
 Integrated Services Digital Network (1984)
 Goal: Fully digital telephone network for voice and non-voice
services
 Digital Subscriber Line (DSL)
 A subscriber line is a telephone line leased to a customer.
 Our standard telephone lines are analog subscriber lines.
They are leased lines that provide analog service.
 A digital subscriber line is simply a leased line that provides
digital service.
 The phone companies’ digital network is the ISDN network.
The phone companies typically provide their ADSL services
via their ISDN network.
31
Communication Technology (cont…)
 Asymmetric Digital Subscriber Line (ADSL)

 Asymmetric Digital Subscriber Line, is a non-
ISDN technology that allows digital an analog
services to co-exist on the same network.
 ADSL was designed to support video-on-
demand. As a result, it supports a higher down-
stream bit rate (typically 8Mbps) than upstream
bit rate (typically 1Mbps).
32
16
Broadband
 High speed communications transmitting large
amounts of data, such as work files, videos,
music, photos, graphics, x-rays, etc, over an array
of networks (including the Internet) and using
multiple technologies.
 Delivered through ‘pipes’ such as cable,copper,
fiber optics, and wireless.
33
Broadband
 Broadband: Digital data transmission in which a
wire or cable carries multiple simultaneous
signals. In contrast, baseband transmission
carries only one signal.
 A collection of wires through which data are
transmitted from one part of a computer to
another.
34
17
The Impact of IT(2)
35
Topic list
 Development in communications
 Data processing environment
 Manual and automation systems
 The Internet
36
18
Software
 Computer programs that govern/determine/control
the operation of the computer
 Computer instructions or data
37
Software (cont…)
Software is often divided into two categories.
 Systems software includes the operating system
and all the utilities that enable the computer to
function.
 Applications software includes programs that do
real work for users. For example, word
processors, spreadsheets, and database
management systems fall under the category of
applications software.
38
19
Software (cont…)
 Operating systems: provide interface between
machine and user
 Utilities: designed to perform a task related
activity
 Programming tools: designed to help programmer
to create computer instructions
 Off-the-shelf applications: software produced by
software house in a form of ready to use
 Bespoke applications: tailor made to met the
needs of an organisation
39
Data Processing Activities

 A transaction processing cycle
 Data collection
 Data editing
 Data correction
 Data manipulation
 Data storage
 Document production
40
20
Batch and On-Line Input and Processing
Batch processing
 A system whereby business transactions are
accumulated over a period of time and prepared for
processing as a single unit or batch
On-line processing
 A system whereby each transaction is processed
immediately, without the delay of accumulating
transactions into a batch
41
A Comparison of Batch and On-line Processing
42
21
Terminal
Terminal Terminal
Output
Immediate
Terminal processing
of each
transaction
Terminal
Terminal
43
Data entry
Input
of accumulated Output
transactions
(batched)
44
22
Buying Over the Internet
Access
Prepare list of Browse
Log on to supplier’s
items needed supplier’s
internet home
catalog
page
Input sent to Review Fill out

supplier’s response to request
Place order request for for Pick items
order entry quotation
system quotation form
45
Point-of-Sale Transaction Processing System
Customer’s
receipt Management Exception
Inventory information report
database system
Point-of-sale quantity
transaction
Scanner
Quantity, processing
Date, system Item, quantity,
time date, time, price
UPC Price Purchases

database
Item
database
46
23
Development in communication
 Communication is key to any business success!
Unless potential clients and customers are aware
of your business, they will not have the
information to contact you or to purchase your
products.
 When they are aware of your business, they must
be able to contact it easily.
47
Development in communication (cont…)

 External communication reaches out to the customer to make
them aware of your product or service and to give them a
reason to buy.
 This type of communication includes your brochures, various
forms of advertising, contact letters, telephone calls, web
sites and anything else that makes the public aware of what
you do.
 Internal communication is essential to attracting and retaining a
talented staff.
 You must provide the direction for the company by
consistently communicating that message; you must
motivate your staff through various forms of communication,
which can include awards, newsletters, meetings, telephone
calls and formal and informal discussions.
48
24
Internet and Intranet
 The Internet has become a very important business tool!
It can be used at a basic level for email and for research
and it can be used at a more comprehensive level as a
channel for selling your products and services.
 Internet: the world’s largest telecommunications network
 A network of networks
 Free exchange of information
 A global network connecting millions of computers
 Intranet: A network that uses Internet technology within

an organization
 A network belonging to an organization
49
Reference
 Dave Chaffey, Paul Bocij, Andrew Greasley and Simon Hickies (eds)
(2003): Business Information Systems: Technology, Development and
Management, Pearson Education Limited, London.
2008.
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/types.ppt,
50
25
Topic Questions
1. Group 1: Discuss the difference between
Hardware and Software.
2. Group 2: Discuss Data processing
environment and how data is handled in
organizations
3. Group 3: Discuss the impact of the
Development in communications on
organizations. Focus on the Internet and
how this technology has impacted on
organizations
51
26
Lecture 7
Business-Level Strategy and

the Value Chain Model

Topic list
 Business-Level Strategy
 About Value Chain Model
 Primary activities & support activities
2
1
3
Business level of strategy

 At the business level of strategy, the key question is,
"How can we compete effectively in this particular
market?" The market might be light bulbs, utility vehicles,
or cable television.
 The most common generic strategies at this level are:
(1) to become the low-cost producer,
(2) to differentiate your product or service, and/or
(3) to change the scope of competition by either enlarging the
market to include global markets or narrowing the market by
focusing on small niches not well served by your competitors.
4
2
Business level of strategy (cont…)
 Digital firms provide new capabilities for
supporting business-level strategy
 by managing the supply chain, building
efficient customer "sense and response"
systems, and
 participating in "value webs" to deliver new
products and services to market.
5

 At the business level the most common analytical tool is
value chain analysis.
 The value chain model highlights specific activities in
the business where competitive strategies can be best
applied (Porter, 1985) and where information systems
are most likely to have a strategic impact.
 The value chain model identifies specific, critical
leverage points where a firm can use information
technology most effectively to enhance its competitive
position.
3
 Exactly where can it obtain the greatest benefit
from strategic information systems—
 Example, what specific activities can be used to
create new products and services, enhance
market penetration, lock in customers and
suppliers, and lower operational costs?
 The firm as a series or "chain" of basic activities
that add a margin of value to a firm's products or
services.
7
Primary activities & support activities

 These activities can be categorised as either primary
activities or support activities.
 Primary activities are most directly related to the
production and distribution of the firm's products and
services that create value for the customer.
 Primary activities include inbound logistics,
operations, outbound logistics, sales and
marketing, and service.
1. Inbound logistics include receiving and
storing materials for distribution to production.
2. Operations transforms inputs into finished
products.
8
4
Primary activities & support activities (cont…)
3. Outbound logistics entail storing and distributing

finished products.
4. Sales and marketing includes promoting and
selling the firm's products.
5. The service activity includes maintenance and
repair of the firm's goods and services.
9
Primary activities & support activities (cont…)

 Support activities make the delivery of the primary
activities possible and consist of organisation
 infrastructure (administration and management),
 human resources (employee recruiting, hiring,
and training),
 technology (improving products and the
production process), and
 procurement (purchasing input).
10
5
11
Explaining the diagram

 The diagram illustrated various examples of
strategic information systems for the primary and
support activities of a firm and of its value
partners that would add a margin of value to a
firm's products or services.
12
6
Organisations have competitive when…
 Organisations have competitive advantage when they
provide more value to their customers or when they
provide the same value to customers at a lower price.
 An information system could have a strategic impact if it
helped the firm provide products or services at a lower
cost than competitors or if it provided products and
services at the same cost as competitors but with
greater value
13
Web value
 Internet technology has made it possible to extend the
value chain so that it ties together all the firm's suppliers,
business partners, and customers into a value web
 A value web is a collection of independent firms who
use information technology to coordinate their value
chains to collectively produce a product or service for a
market
 It is more customer-driven and operates in less linear
fashion than the traditional value chain
14
7
15
Web value chain (cont…)

 Previous figure shows that this value web functions like
a dynamic business ecosystem, synchronizing the
business processes of customers, suppliers, and trading
partners among different companies in an industry or
related industries.
 These value webs are flexible and adaptive to changes
in supply and demand.
 Relationships can be bundled or unbundled in response
to changing market conditions.
8
The value web (cont…)
 The value web is a networked business
ecosystem that can synchronise the value
chains of business partners within an
industry to rapidly respond to changes in
supply and demand.
 Businesses should try to develop strategic
information systems for both the internal
value chain activities and the external
value activities that add the most value
17

 A strategic analysis might, for example, identify sales and
marketing activities where information systems could provide the
greatest boost.
 The analysis might recommend a system to reduce marketing
costs by targeting marketing campaigns more efficiently or by
providing information for developing products more finely attuned
to a firm's target market.
 A series of systems, including some linked to systems of other
value partners, might be required to create a strategic advantage.
 The Window on Technology describes how NextCard developed
systems for such purposes.
9
 A company can use this value web to maintain long-
standing relationships with many customers over long
periods or to respond immediately to individual
customer transactions
 Firms can accelerate time to market and to customers
by optimising their value web relationships to make
quick decisions on who can deliver the required
products or services at the right price and location
19
IS Products and Services
 Firms can use information systems to create

unique new products and services that can
be easily distinguished from those of
competitors.
 Strategic information systems for product
differentiation can prevent the competition
from responding in kind so that firms with
these differentiated products and services
no longer have to compete on the basis of
cost
20
10
IS Products and Services (cont…)
 Many of these information technology-based

products and services have been created by
financial institutions. Citibank developed
automatic teller machines (ATMs) and bank
debit cards in 1977.
 Citibank became at one time the largest
bank in the United States. Citibank ATMs
were so successful that Citibank's
competitors were forced to counter-strike
with their own ATM systems
21
IS Products and Services (cont…)

 Manufacturers and retailers are starting to use information
systems to create products and services that are custom-tailored
to fit the precise specifications of individual customers.
 Dell Computer Corporation sells directly to customers using
assemble-to-order manufacturing.
 Individuals, businesses, and government agencies can buy
computers directly from Dell, customized with exactly the
features and components they need.
 They can place their orders directly using a toll-free telephone
number or Dell's Web site.
 Once Dell's production control receives an order, it directs an
assembly plant to assemble the computer based on the
configuration specified by the customer using components from
an on-site warehouse.
22
11
 Information technology provides tools for
managers to carry out both their traditional and
newer roles, allowing them to monitor, plan, and
forecast with more precision and speed than ever
before and to respond more rapidly to the
changing business environment.
 Finding ways to use information technology to
achieve competitive advantage at the business,
firm, and industry level is a key management
responsibility.
23

 In addition to identifying the business processes,
core competencies, and the relationships with
others in the industry that can be enhanced with
information technology, managers need to
oversee the socio-technical changes required to
implement strategic systems.
 Each organization has a unique constellation of
information systems that result from its interaction
with information technology
24
12
 Contemporary information technology can lead to
major organizational changes -and efficiencies -
by reducing transaction and agency costs and
can also be a source of competitive advantage.
 Developing meaningful strategic systems
generally requires extensive changes in
organizational structure, culture, and business
processes that often encounter resistance.
25

 Information technology offers new ways of
organizing work and using information that can
promote organizational survival and prosperity.
 Technology can be used to differentiate existing
products, create new products and services,
nurture core competencies, and reduce
operational costs.
 Selecting an appropriate technology for the firm's
competitive strategy is a key decision.
26
13
 Managers need to understand certain essential
features of organizations in order to build and use
information systems successfully.
 All modern organizations are hierarchical,
specialized, and impartial.
 They use explicit standard operating procedures
to maximize efficiency.
27

 All organizations have their own cultures and
politics arising from differences in interest groups.
 Organizations differ in goals, groups served,
social roles, leadership styles, incentives,
surrounding environments, and types of tasks
performed.
 These differences create varying types of
organizational structures and they also help
explain differences in organizations' use of
28
14
 Information systems and the organizations in
which they are used interact with and influence
each other.
 The introduction of a new information system will
affect organizational structure, goals, work
design, values, competition between interest
groups, decision making, and day-to-day behavior
29

 The information systems department is the formal
organizational unit that is responsible for the
organization's information systems function.
 Organizational characteristics and managerial
decisions determine the role this group will
actually play.
30
15
 At the same time, information systems must be
designed to serve the needs of important
organizational groups and will be shaped by the
organization's structure, tasks, goals, culture,
politics, and management.
 Information technology can reduce transaction
and agency costs, and such changes have been
accentuated in organizations using the Internet
31
Reference
Systems: Managing the Digital Firm, 9th ed. Prentice Hall
University,UK, 2008.
 Dave Chaffey, Paul Bocij,F Andrew Greasley and Simon
16
Tutorial Question
 What is Business-Level Strategy?
 When Value Chain Model is used and why?
 How many parts the activities within value chain
can be categorized?
 Explain Outbound logistics and it entails?
 Can you explain the commercialization of the
Internet?
 What is technological innovation?
 Explain the diagram next slide: Name the different
part?
33
Explain the diagram below: Name and

defint the different part of the chain.
17
Topic Questions
1. Group 1: Discuss the impact of
Business-Level Strategy on the
organizations
2. Group 2: Discuss Value Chain Model
and it works within the organizations
3. Group 3: Discuss the Primary
activities & support activities of the
Value Chain Model within an
organization.
35
18
Lecture 8
Information Systems and

Strategy Planning

Topic list
 Strategic planning
 Vision and Business needs
 Earl’s grid
 McFarlan’s application portfolio
 Business Process Reengineering (BPR)
2
1
Strategic planning
 Entrepreneurs and business managers are often
so preoccupied with immediate issues that they
lose sight of their ultimate objectives.
 That's why a business review or preparation of a
strategic plan is a virtual necessity.
 This may not be a recipe for success, but without
it a business is much more likely to fail.
3
Strategic planning (cont…)

 A sound plan should:
 Serve as a framework for decisions or for
securing support/approval.
 Provide a basis for more detailed planning.
 Explain the business to others in order to
inform, motivate & involve.
 Assist benchmarking & performance
monitoring.
 Stimulate change and become building block
for next plan.
4
2
 A strategic plan should not be confused with a
business plan.
 The former is likely to be a (very) short
document whereas a business plan is usually a
much more substantial and detailed document.
 A strategic plan can provide the foundation
and frame work for a business plan.
5

 A strategic plan is not the same thing as an operational
plan.
 The former should be visionary, conceptual and
directional in contrast to an operational plan which is
likely to be shorter term, tactical, focused,
implementable and measurable.
 As an example, compare the process of planning a vacation
(where, when, duration, budget, who goes, how travel are all
strategic issues) with the final preparations (tasks, deadlines,
funding, weather, packing, transport and so on are all
operational matters).
6
3
 Basic Approach to Strategic Planning
 A critical review of past performance by the
owners and management of a business and the
preparation of a plan beyond normal budgetary
horizons require a certain attitude of mind and
predisposition.
 Some essential points which should to be
observed during the review
7
The Vision
 The preparation of a strategic plan is a multi-step
process covering vision, mission, objectives,
values, strategies, goals and programs.
 The first step is to develop a realistic Vision for
the business.
 This should be presented as a pen picture of the
business in three or more years time in terms of its
likely physical appearance, size, activities etc.
 Answer the question: "if someone from Mars visited the
business, what would they see (or sense)?"
8
4
McFarlan’s Application Portfolio
 The Application Portfolio Matrix: The

application portfolio concept means
bringing together existing, planned and
potential information systems and
assessing their business contribution.
 Applications need to be planned and
managed according to their lifetime and
future contribution to the business.
9
McFarlan’s Application Portfolio (cont…)

 The earliest and most famous application portfolio
model was developed by Gibson and Nolan (1974)
during the 1970’s.
 This model in turn used a hierarchical application
portfolio model.
 The model structured applications of three
management activities:
 planning
 control
 operational.
10
5
 In 1984, McFarlan and McKenneys developed a
model that considered the relationship with business
success.
 The model proposes an analysis of all existing and
planned information systems into four categories
based on current and future business importance.
 The model has two dimensions:
 the strategic meaning of existing information systems
 the strategic meaning of planned information systems
11

 The model proposes an analysis of all existing, planned
and potential applications into four categories based on
assessment of the current and future business
importance of applications.
 Depending on its current or expected contribution to the
business success, an application can be defined as
 high potential,
 strategic,
 key operational or
 support,
12
6
13

 High potential includes applications that can be very
important to reach future success. These applications
are characterised by a rapid prototyping development
with a power to refuse failures before spending a lot of
resources.
 Strategic applications are critical for the activity and of
highest potential value. These are applications that the
company strategically trusts on to reach future success.
14
7
 The key operational applications are those the
organisation is dependent on in the present-day
situation to reach success. The key operational
applications are important for the primary process and
increase their value.
 The support includes applications that support the
activity but are not in strategically valuable. The support
systems are not critical for the organisation’s future if
they are not wasteful with valuable resources or if the
market share is being changed.
15
16
8
 Organisation:
 the organisation of the IS function including the processes
for formulating and implementing IS policies. This does
not include the broader organisational implications
associated with the implementation of new systems.
These are addressed in the Organisational issues beyond
the IS function and Networked organisations in a post-
industrial world modules;
 Data:
 the data architecture required to support the required
applications;
 Technology:
 the technology architecture required to deliver the
required applications;
17
Earl's Audit Grid

 From an examination of McFarlan & McKenney’s
Grid, it should be obvious why a company should
have an IT strategy.
 If a company is on either the turnaround or strategic
quadrants of McFarlan’s Grid, then obviously a
company should have the appropriate strategy to
enable it to plan for future developments.
 Even if it is in the factory quadrant, IT systems are
mission critical and the company should have a
strategy as to
 (a) how to maximise the benefits arising from its
deployment of IT, and
 (b) how to cope in the event of a systems failure
(i.e. have a back-up or recovery plan).
18
9
19
Earl's Audit Grid (cont…)

 Earl’s nine reasons:
 IT involves high costs.
 IT is critical to the success of many organisations.
 IT is now used as part of the commercial strategy in the battle for
competitive advantage.
 IT is required by the economic context (from a macro-economic
point of view).
 IT affects all levels of management.
 IT has meant a revolution in the way information is created and
presented to management.
 IT involves many stakeholders, not just management, and not just
within the organisation.
 The detailed technical issues in IT are important.
 IT requires effective management, as this can make a real
difference to successful IT use.
20
10
Business Process Redesign
 Business Process Redesign is
 "the analysis and design of workflows and
processes within and between organisations"
(Davenport & Short 1990).
 Teng et al. (1994) define BPR as
 "the critical analysis and radical redesign of
existing business processes to achieve
breakthrough improvements in performance
measures."
21
Business Process Redesign (cont…)

 Reengineering is the fundamental rethinking and
redesign of business processes to achieve
dramatic improvements in critical, contemporary
measures of performance, such as cost, quality,
service and speed.
(Hammer & Champy, 1993)
22
11
Business Process Redesign (cont…)
 BPR generally approaches the problem
from the point of view of the customer and
of the process.
 Customer views are required to ensure that the
eventual design actually satisfies them.
 Process views are required to try to remove the
in-tray problem, and to focus activity within it on
the goal of the process not the function, so that
unneeded or irrelevant activity is removed.
23
BPR Versus Process Simplification
Process Simplification Process Reengineering
Incremental Change Radical Transformation

Process-Led Vision-Led
Assume Attitudes & Behaviors Change Attitudes & Behaviors
Management-Led Director-Led
Various Simultaneous Projects Limited Number of Initiatives
24
12
Why Re-engineer?
 Customers
 Demanding
 Sophistication
 Changing Needs
 Competition
 Local
 Global
 Change
 Technology
 Customer Preferences
25
Why Organisations Don’t Reengineer?

 Complacency
 Political Resistance
 New Developments
 Fear of Unknown and Failure
26
13
Key Steps
Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan
27
Reference
University, 2008.
28
14
Topic Questions
1. Group 1: Discuss Strategic planning,
Vision and Business needs of an
organization
2. Group 2: Discuss Earl’s grid and how
applications are used strategically
using McFarlan’s application portfolio
3. Group 3: Discuss Business Process
Reengineering (BPR) what it means to
a company when applied this concept
29
15
Lecture 9
The Impact of IT on
Management Decision Making

Topic list
 IT Infrastructure and IT Services
 Explain the contribution of information
management of adopting specific technologies.
 Role of Managers in Organizations
 The Process of Decision Making
 Strategic planning tools
 Value of information in decision making
2
1
IT Infrastructure and IT Services
 One way that organizations can influence how

information technology will be used is through
decisions about the technical and organizational
configuration of systems.
 In the ever-widening role of information systems
in organizations, supporting the widening role
have been changes in information technology (IT)
infrastructure
3
IT Infrastructure and IT Services (cont…)
 Decision making is often a manager's most

challenging role.
 Information systems have helped managers
communicate and distribute information;
 However, they have provided only limited
assistance for management decision making.
 Because decision making is an area that system
designers have sought most of all to affect (with
mixed success), we now turn our attention to this
issue.
4
2
 Each organization determines exactly how its
infrastructure will be configured.
 Another way that organizations have affected
information technology is through decisions about
who will design, build and maintain the organization's
IT infrastructure.
 These decisions determine how information
technology services will be delivered
 The formal organizational unit or function responsible
for technology services is called the information
systems department.
 The information systems department is responsible
for maintaining the hardware, software, data storage,
and networks that comprise the firm's IT
infrastructure.
5
 The information systems department consists of

specialists, such as programmers, systems
analysts, project leaders, and information
systems managers (see Figure below).
 Programmers are highly trained technical
specialists who write the software instructions for
the computer.
 Systems analysts constitute the principal liaisons
between the information systems groups and the
rest of the organization
6
3
 It is the systems analyst's job to translate

business problems and requirements into
information requirements and systems.
 Information systems managers are leaders of
teams of programmers and analysts, project
managers, physical facility managers,
telecommunications managers, and heads of
office system groups.
 They are also managers of computer operations
and data entry staff.
7
 Many types of specialists and groups are

responsible for the design and management of
the organization's information technology (IT)
infrastructure.
4
 Also external specialists, such as hardware

vendors and manufacturers, software firms, and
consultants frequently participate in the day-to-
day operations and long-term planning of
 In many companies, the information systems
department is headed by a chief information
officer (CIO).
 The CIO is a senior management position that
oversees the use of information technology in the
firm.
9
Role of Managers in Organizations
 To determine how information systems can

benefit managers, we must first examine what
managers do and what information they need for
decision making and other functions.
 We must also understand how decisions are
made and what kinds of decisions can be
supported by formal information systems
10
5
Role of Managers in Organizations (cont…)
 Managers play a key role in organizations. Their

responsibilities range from making decisions, to
writing reports, to attending meetings, etc.
 We can better understand managerial functions
and roles by examining classical and
contemporary models of managerial behavior.
11

 Observers find that managerial behavior actually has five
attributes that differ greatly from the classical description:
 First, managers perform a great deal of work at an
unrelenting.
 Second, managerial activities are fragmented;
 Third, managers prefer speculation, hearsay, gossip.
 Fourth, they prefer oral forms of communication to
written forms because oral media provide greater
flexibility
 Fifth, managers give high priority to maintaining a
diverse and complex web of contacts that acts as an
informal information system and helps them execute
their personal agendas and short- and long-term goals.
12
6
Interpersonal Roles
 Managers act as figureheads for the organization
when they represent their companies to the
outside world and perform symbolic duties such
as giving out employee awards.
 Managers act as leaders, attempting to motivate,
counsel, and support subordinates
13
Informational Roles
 Managers act as the nerve centers of their
organization, receiving the most concrete, up-to-
date information and redistributing it to those who
need to be aware of it.
 Managers are therefore information
disseminators and spokespersons for their
organizations
14
7
Decisional Roles
 Managers make decisions.
 They act as entrepreneurs by initiating new kinds
of activities; they handle disturbances arising in
the organization; they allocate resources to staff
members who need them; and they negotiate
conflicts and mediate between conflicting groups
in the organization
15
Support
Role Behavior
Systems
Interpersonal Roles
Figurehead None exist
Leader Interpersonal None exist
Electronic
Liaison communication
systems
16
8
Informational Roles
Management
Nerve Center information
systems, ESS
Mail, office
Disseminator Information
systems
Office and
professional
Spokesperson processing
systems,
workstations
17
Decisional Roles
Entrepreneur None exist
Disturbance
Decision None exist
handler
Resource
making
allocator
Negotiator None exist
18
9
The Process of Decision Making
 Decision making can be classified by

organizational level, corresponding to the
strategic, management, knowledge, and
operational levels of the organization.
 Within each of these levels of decision making,
researchers classify decisions as structured,
unstructured or semi-structured.
 Strategic decision making determines the
objectives, resources, and policies of the
organization.
19
The Process of Decision Making (cont…)

 Management Control decision is principally concerned with
how efficiently and effectively resources are used and how
well operational units are performing.
 It is to monitor the effectiveness or efficient usage of
resources and performance of operational units
 Operational control decision making determines how to carry
out the specific tasks set forth by strategic and middle-
management decision makers.
 Knowledge-level decision making deals with evaluating new
ideas for products and services, ways to communicate new
knowledge, and ways to distribute information throughout
the organization.
20
10
 Structured decisions are repetitive and routine,

and they involve a definite procedure for handling
them so that they do not have to be treated each
time as if they were new.
 Some decisions are semi-structured; in such
cases, only part of the problem has a clear-cut
answer provided by an accepted procedure.
 They are based on both type.
21

 Unstructured decisions are those in which the
decision maker must provide judgment, evaluation,
and insights into the problem definition.
 Judgement, insight and evaluation is necessary to
deal with them
 Each of these decisions is novel, important, and
non-routine, and there is no well-understood or
agreed-on procedure for making them (Gorry and
Scott-Morton, 1971).
22
11
 In general, operational control personnel face

fairly well structured problems. In contrast,
strategic planners tackle highly unstructured
problems.
 Many of the problems knowledge workers
encounter are fairly unstructured as well.
Nevertheless, each level of the organization
contains both structured and unstructured
problems
23
Different kinds of information systems at the various

organization levels support different types of decisions.
24
12
SWOT Analysis Tool
 SWOT analysis is an important tool for
auditing the overall strategic position of a
business and its environment.
 SWOT is an abbreviation for Strengths,
Weaknesses, Opportunities and Threats
25
SWOT Analysis (Cont…)

 Strengths and weaknesses are Internal factors:
 For example, a strength could be your specialist
marketing expertise. A weakness could be the lack
of a new product.
 Opportunities and threats are external factors.
 For example, an opportunity could be a developing
distribution channel such as the Internet, or
changing consumer lifestyles that potentially
increase demand for a company's products. A threat
could be a new competitor in an important existing
market or a technological change that makes
existing products potentially obsolete
26
13
27
SWOT Analysis (cont…)

Strength
 your specialist marketing expertise.
 a new, innovative product or service
 location of your business
 quality processes and procedures
 any other aspect of your business that adds value to
your product or service.
28
14
Weakness could be:
 lack of marketing expertise
 undifferentiated products and service (i.e. in relation to
your competitors)
 location of your business
 poor quality goods or services
 damaged reputation
29

Opportunity could be:
 a developing market such as the Internet.
 mergers, joint ventures or strategic alliances
 moving into new market segments that offer improved
profits
 a new international market
 a market vacated by an ineffective competitor
30
15
Threat could be:
 a new competitor in your home market
 price wars with competitors
 a competitor has a new, innovative product or service
 competitors have superior access to channels of
distribution
 taxation is introduced on your product or service
31
Critical Success Factors (CSF)

 A small number of easily identifiable operational
goals
 Shaped by industry, manager, environment
 Believed to assure firm’s success
 Used to determine organization’s information
requirements
32
16
CSF example
Example Goals CSF
Profit concern Earnings per share Automotive industry:

Return on styling
investment quality dealer system
Market share cost control
New product Energy standards
Not for profit Excellent health care Regional integration

Improved monitoring of
regulations
Efficient use of resources
33
Group Exercise
 Form into three groups.
 You are directors of three companies trying to
decide how IT can be used to help achieve your
competitive strategy.
 You are free to decide the industry/activities of
your individual company.
 (Note how IT is organised to complement the company’s strategy).
34
17
Reference
 Laudon, K. & Laudon, J. (2006)

Management Information Systems:
Managing the Digital Firm, 9th ed.
Prentice Hall
 Abdisalam Issa-Salwe, Lecture Notes,
Thames Valley University, 2008.
35
Topic Questions
 Group 1: IT Infrastructure and IT
Services
 Group 2: Explain the contribution of
information management of adopting
specific technologies.
 Group 3: The Process of Decision
Making and how Strategic planning
tools can with be used to evaluate
information in decision making
36
18
Lecture 10
The Formal Organization

Topic list
 Organisational Design
 Organisational Structure, type and Structural
Characteristics
 Organizations and its Environments
 Information Systems impact
2
1
Organisational Design
 An Organization is a stable, formal, social structure that
takes resources from the environment and processes
them to produce outputs.
 This technical definition focuses on capital and labour as
are primary production factors provided by the
environment.
 The Organization (the firm) transforms these inputs into
products and services in a production function.
2
Organisational Design (cont…)
 The products and services are consumed by
environments in return for supply inputs.
 An organization is more stable than an informal group
(such as a group of friends that meets every Friday for
lunch) in terms of longevity and routineness.
 Organizations are formal legal entities, with internal rules
and procedures, that must abide by laws.
 Organizations are also social structures because they
are a collection of social elements, much as a machine
has a structure—a particular arrangement of valves,
cams, shafts, and other parts.
3
Organisational Design (cont…)
 A more realistic behavioural definition of an
Organization is that it is a collection of rights,
privileges, obligations, and responsibilities that are
delicately balanced over a period of time through
conflict and conflict resolution.
 People who work in Organizations develop
customary ways of working;
 they gain attachments to existing relationships;
 they make arrangements with subordinates and
superiors about how work will be done, how much
work will be done, and under what conditions.
 You might not think that Golis, Amal Bank and Macruuf
Supermarket have much in common, but they do.
 In some respects, all modern Organizations are alike
because they share some basic characteristics.
Structural Characteristics of All Organizations

Clear division of labor
Hierarchy
Explicit rules and procedures
Impartial judgments
Technical qualifications for positions
Maximum organizational efficiency
4
Structural Characteristics (cont…)
 All modern bureaucracies have a clear-cut division
of labour and specialisation.
 Organizations arrange specialists in a hierarchy of
authority in which everyone is accountable to
someone and authority is limited to specific
actions.
 Authority and action are further limited by abstract
rules or procedures (standard operating
procedures, or SOPs) that are interpreted and
applied to specific cases

 These rules create a system of impartial and universal
decision making; everyone is treated equally.
 Organizations try to hire and promote employees on the
basis of technical qualifications and professionalism (not
personal connections). The organization is devoted to
the principle of efficiency: maximizing output using
limited inputs.
 Bureaucracies are prevalent because they are the most
efficient form of organization.
 All Organizations develop standard operating
procedures, politics, and cultures.
5
 Organizations that survive over time become very
efficient, producing a limited number of products
and services by following standard routines.
 These standard routines become codified into
reasonably precise rules, procedures, and
practices called standard operating procedures
(SOPs) that are developed to cope with virtually all
expected situations.
 Some of these rules and procedures are written,
formal procedures.

 Business processes are based on standard
operating procedures.
 These standard operating procedures have a
great deal to do with the efficiency that modern
Organizations attain.
 Any change in SOPs requires an enormous
Organizational effort.
 The organization may need to halt the entire
production process before the old SOPs can be
retired.
6
 Technological change requires changes in who owns
and controls information, who has the right to access and
update that information, and who makes decisions about
whom, when, and how.
 The technical and behavioural definitions of
Organizations are not contradictory.
 They complement each other: The technical definition
tells us how thousands of firms in competitive markets
combine capital, labour, and information technology,
whereas the behavioural model takes us inside the
individual firm to see how that technology affects the
Organization's inner workings.
Organizational Types
 One important way in which organizations differ is
in their structure or shape.
 The differences among organizational structures
are characterized in many ways.
 Organizations reside in environments from which
they draw resources and to which they supply
goods and services.
 Organizations and environments have a reciprocal
relationship.
 Organizations are open to, and dependent on, the
social and physical environment that surrounds
them.
7
Organizational
Type Description Example
Entrepreneurial Young, small firm in a fast- Small start-up
structure changing environment. It business
has a simple structure and is
managed by an entrepreneur
serving as its single chief
executive officer.
Machine Large bureaucracy existing Midsize
bureaucracy in a slowly changing manufacturing
environment, producing firm
standard products. It is
dominated by a centralized
management team and
centralized decision
making.
Divisionalized Combination of multiple Fortune 500
bureaucracy machine bureaucracies, firms such as
each producing a different General Motors
product or service, all
topped by one central
headquarters.
Professional Knowledge-based organization where Law firms,

bureaucracy goods and services depend on the school systems,
expertise and knowledge of professionals. hospitals
Dominated by department heads with
weak centralized authority.
Adhocracy "Task force" organization that must Consulting firms
respond to rapidly changing environments. such as the Rand
Consists of large groups of specialists Corporation
organized into short-lived
multidisciplinary teams and has weak
central management
8
 The two-way relationship between Organizations and
information technology
This complex two-way relationship is mediated by many
factors, not the least of which are the decisions made—or
not made—by managers.
 Other factors mediating the relationship include the
organizational culture, bureaucracy, politics, business
processes, and pure chance.
Organizations & its Environment
 Organizations reside in environments from which they

draw resources and to which they supply goods and
services.
 Organizations and environments have a reciprocal
relationship.
 Organizations are open to, and dependent on, the social
and physical environment that surrounds them. Without
financial and human resources—people willing to work
reliably and consistently for a set wage or revenue from
customers—Organizations could not exist.
 Organizations must respond to legislative and other
requirements imposed by government, as well as the
actions of customers and competitors
9
Organizations & its Environment (cont…)
 Organizations form alliances with others to
influence the political process
 They advertise to influence customer
acceptance of their products.
 Information systems are key instruments for
environmental scanning, helping managers
identify external changes that might require
an organizational response.
 Environments shape what organisations can do, but

organisations can influence their environments and decide to
change environments altogether.
 Information technology plays a critical role in helping
organisations perceive environmental change, and in helping
organisations act on their environment.
 Information systems act as a filter between organisations
and their environments.
10
 Environments generally change much faster than
Organizations.
 The main reasons for Organizational failure are an
inability to adapt to a rapidly changing environment and a
lack of resources—particularly among young firms—to
sustain even short periods of troubled times (Freeman et
al., 1983).
 New technologies, new products, and changing public
tastes and values (many of which result in new
government regulations) put strains on any
Organization's culture, politics, and people. Most
Organizations do not cope well with large environmental
shifts.

 Economic Theories
 From an economic standpoint, information system
technology can be viewed as a factor of production
that can be freely substituted for capital and labor.
 As the cost of information system technology falls, it
is substituted for labor, which historically has been a
rising cost.
 Information technology should result in a decline in
the number of middle managers and clerical
workers as information technology substitutes for
their labor.
11
 Behavioral Theories
 Although economic theories try to explain how large
numbers of firms act in the marketplace, behavioral
theories from sociology, psychology, and political
science are more useful for describing the behavior
of individual firms.
 Behavioral research has found little evidence that
information systems automatically transform
organizations, although the systems may be
instrumental in accomplishing this goal once senior
management decides to pursue this end.

 Information technology could change the hierarchy
of decision making in organizations by lowering the
costs of information acquisition and broadening the
distribution of information (Malone, 1997).
 Information technology could bring information
directly from operating units to senior managers,
thereby eliminating middle managers and their
clerical support workers
12
Information Systems impact (cont…)
 Information technology could permit senior
managers to contact lower-level operating units
directly by using networked telecommunications
and computers, eliminating middle management
intermediaries.
 Information technology could also distribute
information directly to lower-level workers, who
could then make their own decisions based on
their own knowledge and information without any
management intervention.
13
Information Systems impact (cont…)
 Leavitt (1965) used a diamond shape to illustrate the
interrelated and mutually adjusting character of
technology and organization.
 Here, changes in technology are absorbed, deflected,
and defeated by organizational task arrangements,
structures, and people.
 In this model, the only way to bring about change is to
change the technology, tasks, structure, and people
simultaneously.
 Other authors have spoken about the need to "unfreeze"
organizations before introducing an innovation, quickly
implementing it, and "refreezing" or institutionalizing the
change (Kolb, 1970; Alter and Ginzberg, 1978).
14
Information Systems Impact (cont…)
 Organizational resistance and the mutually adjusting

relationship between technology and the organization
 According to this model, in order to implement change, all
four components must be changed simultaneously.
Reference
 Laudon, K. & Laudon, J. (2006)
Management Information Systems:
Managing the Digital Firm, 9th ed.
Prentice Hall
15
Topic Questions
All Groups:
Discuss what Golis, Amal Bank, and
Macruuf Supermarket have in common
as organizations.
Note: In some respects, all modern
Organizations are alike because they
share some basic characteristics.
31
16
Lecture 11
Information Systems Ethics,

Computer Crime, and Security

Topic list
 Understand how computer ethics affects IS

 Understand information privacy, accuracy,
property, and accessibility
 Understand types of computer crime
 Understand the terms virus, worm, Trojan
horse, and logic or time bomb
 Understand computer security
2
1
What?
 How systems technology pose challenges to the

protection of individual privacy and intellectual
property?
 How have information systems affected everyday
life?
 How can organisations develop corporate
policies for ethical conduct?
3
Importance of IS Security (cont…)

 It emerges that IS security management is a
complex task that poses a number of
challenges for maintaining the integrity of
information handling activities in an
organization.
 In a climate where incidents of computer crime,
information security problems, and IS enabled
frauds have been on the increase, any attempt
to deal with the problem demands an adequate
understanding of the challenges that
organizations must confront.
4
2
Risks Associated with MIS
 Risk reflects the potential, the likelihood, or the
expectation of events that could adversely affect
earnings or capital.
 Management uses MIS to help in the assessment of
risk within an institution.
 Management decisions based upon ineffective,
inaccurate, or incomplete MIS may increase risk in a
number of areas such as credit quality, liquidity,
market/pricing, interest rate, or foreign currency.
 A flawed MIS causes operational risks and can
adversely affect an organization's monitoring of its
fiduciary, consumer, fair lending, Bank Secrecy Act, or
other compliance-related activities.
5
Importance of IS Security
 The consolidation of IS security as an important
topic in today‟s business world results from the
interaction of several technological and social
factors.
 For organizations, information and
communication technologies are not only a major
component of basic operational systems and an
enabler of productivity improvements, but also a
means for gaining competitive advantage,
developing new businesses, and promoting new
management practices.
6
3
 Resulting from the exploitation of information and
communication technologies‟ capabilities in the
business arena, the whole business model for many
organizations has been transformed.
 Developments such as global scale interconnectivity,
distributed processing, explosive growth of the
Internet, open architectures, liberalization of
telecommunication markets, and e-commerce
diffusion have dramatically changed the business
landscape.
7
 The achievement of many of the organizational

goals through IT raises significant difficulties for
organizations because they may be conflicting.
 An organization must be closed to intrusions,
fraud, and other security breaches, and at the
same time it needs to remain open in order to
share information with its partners and customers
8
4
 It requires organizations to:

 Establish security policies and procedures
that adequately reflect the organizational
context and new business processes.
 Establish correct structures of responsibility,
given the complex structuring of organizations
and information processing activities.
 Establish appropriate contingency plans.
9
 At an internal organizational level, there is a

problem with respect to establishing security
policies.
 This problem stems directly from a general lack
of awareness within organizations that such a
need exists.
 One of the reasons is the lack of commitment
from top management in the security policy
formulation process.
 The other reason is that security policies are
conceived in a formal-rational manner.
10
5
 The solution to the pressing problems of managing
information security lies in shifting emphasis from
technology to organizational and social process.
 Although this orientation has been defended by
many, in practice the design of over-formalized,
many solutions don‟t fit, because there is
inadequate consideration of information security
issues.
 Although there is no magic solution to solve IS
security challenges, there are a set of fundamental
principles necessary for managing current
information security issues.
11

Principles for Managing the Technical Aspects
 It should be apparent that the security of the technical
infrastructure is a function of the effectiveness of formal
and informal organizational arrangements.
 Exclusive reliance on technical controls will not be
enough to create a secure environment.
 Traditionally organizations have been conceived as
purposeful systems, where security has not been
considered part of the „useful system‟ designed for the
purposeful activities.
 IS security management has always been considered
as an activity that aims to warranty that the useful
activities of an organization will continue to be
performed and harmful incidents avoided
12
6
Ethical and Societal Issues
 Questions posed by ethical issue:

 What ethical, social, and political issues are
raised by information systems?
 Are there specific principles for conduct that
can be used to guide decisions about ethical
dilemmas?
13
14
7
Ethical and Societal Issues (cont…)
 Ethics deals with placing a “value” on acts
according to whether they are “good” or “bad”.
 Every society has its rules about whether certain
acts are ethical or not.
 These rules have been established as a result of
consensus in society and are often written into
laws.
15

10 Commandments for Computer Ethics
1. Not to use a computer to harm other people.

2. Not to interfere with other people's computer
work.
3. Not to snoop around in other people's files.
4. Not to use a computer to steal.
5. Not to use a computer to bear false witness.
16
8
6. Not to use or copy software for which you
have not paid.
7. Not to use other people's computer resources
without authorization.
8. Not to appropriate other people's intellectual
output.
9. Think about the social consequences of the
program you write.
10. Use a computer in ways that show
consideration and respect.
17
Computer Crime (cont…)
 There are three major classes of criminal activity

with computers:
1. Unauthorized use of a computer, which might
involve stealing a username and password, or
might involve accessing the victim's computer
via the Internet through a backdoor operated by
a Trojan Horse program.
2. Creating or releasing a malicious computer
program (e.g., computer virus, worm, Trojan
Horse).
3. Harassment and stalking in cyberspace
18
9
 Unauthorized use of computers tends generally takes the
following forms:
1. Computer voyeur: The criminal reads (or copies)
confidential or proprietary information, but data is neither
deleted nor changed.
2. Changing data: For example, change a grade on a school
transcript, add "money" to a checking account, etc.
Unauthorized changing of data is generally a fraudulent
act.
3. Deleting data: Deleting entire files could be an act of
vandalism or sabotage.
4. Denying service to authorized users: On a modern time-
sharing computer, any user takes some time and disk
space, which is then not available to other users
19

 Who commits computer crime?
20
10
 Publishes and comments on leaked
documents alleging government and
corporate misconduct.
Wikileaks source
 WikiLeaks is an international new media non-profit
organization that publishes submissions of otherwise
unavailable documents from anonymous news sources
and leaks.
 Its website, launched in 2006, is run by The Sunshine
Press.
 Within a year of its launch, the site claimed a database
that had grown to more than 1.2 million documents.
 The organization has described itself as having been
founded by Chinese dissidents, as well as journalists,
mathematicians, and start-up company technologists from
the United States, Taiwan, Europe, Australia, and South
Africa.
11
Wikileaks source (cont…)
 In April 2010, WikiLeaks posted video from a 2007
incident in which Iraqi civilians and journalists were killed
by U.S. forces, on a website called Collateral Murder.
 In July of the same year, WikiLeaks released Afghan War
Diary, a compilation of more than 76,900 documents about
the War in Afghanistan not previously available for public
review.
 In October, the group released a package of almost
400,000 documents called the Iraq War Logs in
coordination with major commercial media organisations.
 In November 2010, WikiLeaks began releasing U.S. State
department diplomatic cables.

Types of computer crime
 Data diddling: modifying data
 Salami slicing: skimming small amounts of money
 Phreaking: making free long distance calls
 Cloning: cellular phone fraud using scanners
 Carding: stealing credit card numbers online
 Piggybacking: stealing credit card numbers by spying
 Social engineering: tricking employees to gain access
 Dumpster diving: finding private info in garbage cans
 Spoofing: stealing passwords through a false login
page
24
12
 Computer viruses and destructive code
 Virus – a destructive program that disrupts the
normal functioning of computer systems
 Types:
 Worm: usually does not destroy files; copies
itself
 Trojan horses: Activates without being
detected; does not copy itself
 Logic or time bombs: A type of Trojan horse
that stays dormant for a period of time
before activating
25
Computer Security (cont…)

 Recommended Safeguards
 Implement a security plan to prevent break
ins
 Have a plan if break ins do occur
 Make backups!
 Only allow access to key employees
 Change passwords frequently
 Keep stored information secure
 Use antivirus software
 Use biometrics for access to computing
resources
 Hire trustworthy employees
26
13
Ethics Obligations
 MIS entry-level personnel are generally
responsible.
 Responsibilities of MIS staff may need to be
clearly delineated to other functional areas.
 Contributions of MIS personnel should be
explicitly recognised. MIS personnel may
undervalue work.
 MIS entry-level personnel may feel conflicts
regarding the amount of work that should be
performed. Policies outlining acceptable levels of
service should be provided.
27
Ethics Opportunities
 System loopholes may be sought, but exploitation of
them is unacceptable.
 Policies for reporting and fixing security problems
should be clear.
 MIS management may need to emphasise to staff that
keeping unauthorised software is a crime.
 All entry-level staff overwhelmingly reject any
behaviour that is disruptive.
 Very few MIS entry-level staff would take advantage of
their privileged access to systems.
28
14
Ethical Intent
 MIS management needs to clearly state policies

regarding personal use of corporate facilities.
 MIS entry-level personnel may use corporate
resources for personal profit.
 MIS entry-level personnel may not realise implication of
unauthorised software copying. Corporate position
needs to be explicit.
 Destructive behaviour is unacceptable, nuisance
behaviour is questionable.
 Corporate policies need to be clear.
29
Reference
 Laudon, K. & Laudon, J. (2006): Management
Information Systems: Managing the Digital Firm,
9th ed. Prentice Hall
 Watson Richard T. (2007): Information Systems,
Global Text Project.
 Standler Ronald B. (2002) Computer Crime,
http://www.rbs2.com/ccrime.htm.
30
15
Topic discussion
 Groups 1: Why information security
is important to organizations?
 Group 2: What are implication of
having weak information security
policy?
 Group 3: What is computer ethics?
 Group 4: What is computer crime?
31
16
Revision 1
Management information
System Functions

Topic Questions
1. Group 1: Discuss the different approaches
to IS and how these approaches impact
organizations
2. Group 2: Why IS is needed by
organization? Think about the functionality
of IS.
3. Group 3: Imagine a modern organization
without IS: Consequence, Competitive
advantage, etc.
2
1
Topic list
 Sources of MIS
 Characteristics of a MIS
 MIS for Competitive Advantage
 MIS and Web Technology
3
Why
Management Information Systems?
4
2
Definition
 Management Information Systems (MIS) is the
term given to the discipline focused on the
integration of computer systems with the aims and
objectives on an organisation
 MIS and business systems are especially useful
in the collation of business data and the
production of reports to be used as tools for
decision making.
5
What
MIS are Applied for?
6
3
About MIS
 MIS is basically concerned with processing
data into information
 Then communicated to the various
Departments in an organization for appropriate
decision-making
About MIS (cont…)

 MIS systems can be used to transform data into
information useful for decision making.
• Computers can provide financial statements and performance
reports to assist in the planning, monitoring and implementation
of strategy.
 MIS systems provide a valuable function in that they can
collate into coherent reports unmanageable volumes
data that would otherwise be broadly useless to
decision makers
8
4
About MIS (cont…)
 For instance, MIS systems can provide
predictions about the effect on sales that an
alteration in price would have on a product
 These Decision Support Systems (DSS) enable
more informed decision making within an
enterprise than would be impossible without MIS
systems
9
About MIS (cont…)

 MIS systems allow for the collation of vast amounts of
business data
 They also provide a valuable time saving benefit to the
workforce
 Past business information had to be manually
processed for filing and analysis it can now be entered
quickly and easily onto a computer by a data processor,
allowing for faster decision making and quicker reflexes
for the enterprise as a whole
10
5
MIS for Competitive Advantage
 Provides support to managers as they work to

achieve corporate goals
 Enables managers to compare results to
established company goals and identify problem
areas and opportunities for improvement
11
What
are the Benefits of using MIS?
12
6
Benefits of MIS
 The field of MIS can deliver a great many benefits
to enterprises in every industry.
 MIS systems provide the tools necessary to gain
a better understanding of the market as well as a
better understanding of the enterprise itself
13
Benefits of MIS (cont…)

 Enhance Supply Chain Management
 Improved reporting of business processes
leads inevitably to a more streamlined
production process
 With better information on the production
process comes the ability to improve the
management of the supply chain, including
everything from the sourcing of materials to the
manufacturing and distribution of the finished
product
14
7
Benefits of MIS (cont…)
 Management information system (MIS)

 MIS provides managers with information and
support for effective decision making, and
provides feedback on daily operations
 Output, or reports, are usually generated through
accumulation of transaction processing data
 Each MIS is an integrated collection of
subsystems, which are typically organized along
functional lines within an organization
15
Sources of Employees
Management Corporate
databases
Databases Corporate
of intranet
Information of
internal
external
data
data Decision
support
systems
Transaction Databases Management Executive

Business processing of information Application support
transactions systems valid systems databases systems
transactions
Drill-down reports Expert

Exception reports systems
Demand reports
Operational Key-indicator reports
databases
Input and Scheduled
error list reports
16
8
What
are the characteristics of a MIS?
17
Characteristics of a MIS
 Provides reports with fixed and standard formats

 Hard-copy and soft-copy reports
 Uses internal data stored in the computer system
 End users can develop custom reports
 Requires formal requests from users
18
9
MIS and Web Technology
 Data may be made available from management
information systems on a company’s intranet
 Employees can use browsers and their PC to
gain access to the data
19
What
are the Functional Aspects?
20
10
Functional Aspects
 MIS is an integrated collection of functional
information systems, each supporting particular
functional areas.
21
Internet An Organization’s
MIS
Financial
MIS
Business
transactions
Drill down reports

Accounting
Transaction Databases MIS Exception reports
processing of
Demand reports
systems valid
transactions Key-indicator reports
Marketing
MIS Scheduled reports
Business
transactions
Databases Human
of
Resources Etc.
external
data MIS
Extranet
Etc.
22
11
Inputs to the Financial Information System
 Strategic plan or corporate policies
 Contains major financial objectives and often projects
financial needs.
 Transaction processing system (TPS)
 Important financial information collected from almost
every TPS - payroll, inventory control, order
processing, accounts payable, accounts receivable,
general ledger.
 External sources
 Annual reports and financial statements of competitors
and general news items.
23
Financial MIS Subsystems and Outputs

 Financial subsystems
 Profit/loss and cost systems
 Auditing
 Internal auditing
 External auditing
 Uses and management of funds
24
12
Inputs to the Manufacturing MIS
 Strategic plan or corporate policies.

 The TPS:
 Order processing
 Inventory data
 Receiving and inspecting data
 Personnel data
 Production process
 External sources
25
Manufacturing MIS Subsystems and

Outputs
 Design and engineering
 Master production scheduling
 Inventory control
 Manufacturing resource planning
 Just-in-time inventory and manufacturing
 Process control
 Computer-integrated manufacturing (CIM)
 Quality control and testing
26
13
Inputs to Marketing MIS
 Strategic plan and corporate policies
 The TPS
 External sources:
 The competition
 The market
27
Marketing MIS Subsystems and Outputs
 Marketing research
 Product development
 Promotion and advertising
 Product pricing
28
14
Inputs to the Human Resource MIS
 Strategic plan or corporate policies

 The TPS:
 Payroll data
 Order processing data
 Personnel data
 External sources
29
Human Resource MIS Subsystems and

Outputs
 Human resource planning
 Personnel selection and recruiting
 Training and skills inventory
 Scheduling and job placement
 Wage and salary administration
30
15
Other MISs
 Accounting MISs
 Provides aggregated information on
accounts payable, accounts receivable,
payroll, and other applications.
 Geographic information systems (GISs)
 Enables managers to pair pre-drawn maps
or map outlines with tabular data to
describe aspects of a particular geographic
region.
31
16

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Management Information Systems Notes

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East Africa University

Faculty of Information Science and Technology

Management Information Systems

Department of Computer Science

Changing Contemporary Business Environment

 Four powerful worldwide changes have altered

 Transformation of the Enterprise

 Transformation of Industrial Economies

 Emergence of the Digital Firm

 Management and control in a global

Transformation of the Enterprise

Emergence of the Digital Firm

 The success of firms today and in the

Globalization of world economy (cont…)

 Globalization and information technology

Globalization of world economy (cont…)

 In a knowledge- and information-based

Definition of Information Systems (cont…)

 The function within a business organisation that

What is Information System (IS)? (cont…)

 An information system can be defined

 Understand the role and relevance of an

Why IS is important to organizations? (cont…)

 System emphasizing a fair degree of

MIS Role: Increased Business & Management

Increased Management Complexities

 The information we have is not what we

 Precise development of strategies,

Life-blood of the organisation

 To ensure effective and efficient decision

• It has alternative uses

• There is an opportunity cost actor

Organisational Information Requirement (cont…)

 Recording Transactions: Information about each

Organisational Information Requirement (cont…)

 Decision making: Just as decision making

Organisational Systems and MIS

IS and Business Strategy

IS and Business Strategy (cont…)

 Information systems contain information

Information and Data (cont…)

 Data are streams of raw facts representing

The making of information

Major Types of Systems in

Department of Computer Science

 Transaction processing system (TPS):

Transaction processing system (TPS):

 serves the most elementary day-to-day activities of an

 supplies data for higher-level management decisions.

 is often critical to survival of the organisation

 mostly for predefined, structured tasks

 can have strategic consequences (i.e. airline reservation

 provides data which is summarised into information by

 The lowest level of information system and

Transaction Processing Systems (cont…)

Systems that perform and record daily routine

Order Plant scheduling Cash Accounts Training

Transaction Processing System

Office automation system (cont…)

Systems that are designed to increase the

Office automation system (cont…)

Executive information system (EIS)

Executive Support Systems

Systems that support non-routine decision-making