Chapter 7:

Utilizing Advanced
Information Technology
 Information and the Manager’s
Job
• Data
– Raw, unsummarized, and unanalyzed facts.
• Information
– Data that are organized in a meaningful
fashion

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 Attributes of Useful Information
Attributes
Quality The accuracy and reliability of available
information affects the quality of decisions that
managers make using the information.

Timelessness The availability of real-time information that

reflects current conditions allows managers to
maximize the effectiveness of their decisions.

Completeness Complete information allows managers to

consider all relevant factors when making
decisions.

Relevance Having information specific to a situation assists

managers in making better decisions.

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Factors Affecting the Usefulness of
Information

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 What is Information
Technology?
Information Technology – set of techniques
for acquiring,
organizing, storing,
manipulating, and
transmitting
information

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 What is Information
Technology?
Management Information System – specific
form of IT that managers utilize to generate
the specific, detailed information they need
to perform their roles effectively

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 Information and Decisions
• Most of management is about making
decisions
• To make effective decisions, managers
need information, both from inside and
outside the organization

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 Information and Control
• Managers achieve control by: establishing
measurable goals, measuring actual
performance, compare actual performance
with goals, take any corrective action
• Managers must have information to achieve
control over any organizational activity

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 Information and Coordination
• Coordination problems that managers face
in managing global supply chains are
increasing
• Managers have adopted sophisticated IT
that helps them coordinate the flow of
materials, semifinished goods, and finished
goods throughout the world

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 The Information Technology
Revolution

The Tumbling Price of Information

– The cost of computer hardware has dropped
dramatically while the power of computers has
risen sharply.

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The Information Technology
Revolution
Wireless
communications
– Cellular service has
grown rapidly to over
110 million users.
– Wireless access now
connects laptops to
networks.

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 The Information Technology
Revolution
Computer Networks
– Networking
• The exchange of information through a group or network
of interlinked computers
• Servers are powerful computers that relay information to
client computers connected on a Local Area Network
(LAN).
• Mainframes are large computers processing vast amounts
of information .
• The Internet is a world wide network of computers.

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 Software Developments
• Operating system software – software that
tells computer hardware how to run
• Applications software – software designed
for a specific task or use
• Artificial intelligence – behavior performed
by a machine that, if performed by a human
being, would be called intelligent

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 The Organizational Hierarchy
Traditionally, managers have used the
organizational hierarchy as the main
system for gathering information necessary
to make decisions and coordinate and
control activities

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 The Organizational Hierarchy
Drawbacks
• Can reduce timeliness of information
• Reduces quality of information
• Tall structure can make for an expensive
information system

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 Types of Information Systems
• Transaction Processing Systems (TPS)
– Systems designed to handle large volumes of routine
transactions.
• Were the first computer-based information systems
handling billing, payroll, and supplier payments.
• Operations Information Systems (OIS)
– Systems that gather, organize, and summarize
comprehensive data in a form of value to managers.
• Can help managers with non-routine decisions such as
customer service and productivity.

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 Types of Information Systems
Decision Support Systems (DSS)
– Provide interactive models to help managers make
non-routine decisions.
• Analyzes investment potential, new product pricing.
– Executive Support System (ESS)
• Sophisticated version of a DSS matched a top manager’s
needs.
– Group Decision Support System
• An executive support system that links top managers so
that they can function as a team.

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 Types of Information Systems
Expert Systems and Artificial Intelligence
– Employ human knowledge embedded in a
computer to solve problems usually requiring
human expertise.
• Uses artificial Intelligence to recognize, formulate,
solve problems, and learn from experience.

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 Types of Information Systems
Enterprise Resource Planning Systems –
multi-module application software packages
that coordinate the functional activities
necessary to move products from the
product design stage to the final customer
stage

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 Types of Information Systems
E-Commerce Systems – Trade that takes
place between companies, and between
companies and individual customers, using
IT and
the Internet

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 Types of E-Commerce
• Business-to-business (B2B) – trade that
takes place between companies using IT
and the Internet to link and coordinate the
value chains of different companies
• B2B marketplace – Internet-based trading
platform set up to connect buyers and
sellers in an industry

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 Types of E-Commerce
Business-to-customer
(B2C) – trade that
takes place between a
company and
individual customers
using IT and the
Internet

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 The Impact and Limitations
of Information Systems
• Computer-based Information Systems
– Are increasingly associated with
decentralization of managerial decision
making.
– Flattening (“delayering”) organizations
• Information systems reduce the need for the
hierarchy to control the firm.
• Managers control and coordinate using the system,
not workers.

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How Computer-Based Information
Systems Affect the Organizational
Hierarchy

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 The Impact and Limitations
of Information Systems
• Horizontal Information Flows
– Information networks can bridge functional
departments which allows information to flow
horizontally between departments, leading to
much higher productivity, quality, and
innovation.

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 Information Systems and
Competitive Advantage
• Competitive Advantages of Information Systems
– Improved managerial decision-making capability
– Reduced need for hierarchical control systems
– Increased efficiency by reducing requirements for
personnel
• Virtual Products
– Firms can use their information systems to custom tailor
goods and services individually for each of their
customers.

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 Limitations of Information
Systems
• Loss of the Human Element
– Information systems cannot present all kinds
of information accurately.
• Thick information, which is rich in meaning and not
quantifiable, is best suited to human analysis.
• Information systems should support face-to-face
communication, and not be expected to replace it

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 Limitations of Information
Systems
• Causes of Difficult Implementations
– Information systems can be hard to develop
and put into service.
– Consistent standards for systems do not exist.
• Makers of hardware use different standards which
makes it hard to share information between
systems.

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 Limitations of Information
Systems
• To Avoid Difficult Implementations:
– List major organization goals and the information types
require measure those goals.
– Audit the current system to verify that information
collected is accurate, reliable, timely, and relevant.
– Investigate other sources of information
– Build support for the system with workers.
– Create formal training programs.
– Emphasize that face-to-face contact is important.

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