Dr.

Susmi Routray
sroutray@imt.edu
Room No. 1
Information Technology
 IT affects all aspects of human endeavor
 Managing and operating organizations
 Business enterprises
 Government organizations
 Social and charitable organizations
Operating Environment
Due to the growth and pervasiveness of IT
organizations are operating in a different
environment :

 Globalization
 E-enablement
 Knowledge Sharing and Knowledge Management
Major trends that impacts IT
Management
Who makes which
IT decision

Governance of IT

Shifting from being handled

exclusively by IS executives to
being collaborative effort between
IS and the business
How IT is being managed in leading-
edge enterprises?
 • Industrial Era

1957 • Information Era

• Information Workers
surpassed workers in
1980 all other sectors
combined
Information Age
 To perform manual information work more quickly
and more efficiently
 To manage work better
 Makes pervasive changes in the:
 structure and the operation of work
 business practices
 organizations
 industries
 global economies
 How IT is being used?
Management
philosophies

Characteristic
s of Principal Economic
resources conditions
Organization
Environment

Others…
How IT is being used?

Technological
Advances
Does technology drives changes in the organization
OR
merely supports it ???

IT and its use management

The Organizational Environment
 The external business environment
 How their firm competes?
 Turbulent business world includes shorter and shorter
product cycles

 The internal organizational Environment

 How organization operates or are managed.
The external business environment
 The internet economy
 B2C
 B2B
 Encompassing old ways and new ways of operating with
IT as an interface

 Global marketplace
 Mergers
 Internet allows companies to work globally (Three main
operating arenas)

What difference it makes to the world economy, if global
operations become much less expensive?
Why a digital firm is more likely to benefit from
globalization than a traditional firm?


Significant business relationships are digitally enabled and
mediated; Core business processes are accomplished through
digital networks; Key corporate assets are managed digitally
The external business environment
Business ecosystems
 Ecosystem – is a web of relationships surrounding one or few
companies.
 Wintel ecosystem
 PC ecosystem, Internet ecosystem, Wireless ecosystem
 Relationships and co-evolutions require a different mindset from
the command-and-control mindset of the past

Decapitalization
 Tangible : capital, equipment, and buildings
 Intangible : ideas, intellectual capital, and knowledge
 Managing talent has become as important as managing finance
The external business environment
 Faster business cycles
 Speed has become the essence
 To accelerate “time to market” or reduce “cycle time” often
depend on innovative use of IT

 Accountability and Transparency

 Greater transparency of corporate operations
 Greater accountability of corporate officers
 IT – play a role in allowing transparency and even perhaps
fostering accountability

 Government regulations
 The internal organizational
Environment
 From supply-Push to Demand-Pull
 IT – creating the demand that pulls a specific product
 Suppliers and customers co-creating products and
services
 Ex: Amazon.com
 Self-Service
 Ex: ATMs
 Indian railways website
 Real-Time Working
The internal organizational
Environment
 Team-Based Working
 Anytime, Anyplace Information Work
 Communication capabilities more important than
computing capabilities
 Outsourcing and Startegic Alliances
 Extended enterprises
 Demise of Hierarchy – team based organizational
structure
Goals of the new work
Environment
 Leverage knowledge globally
 Tacit knowledge
 Knowledge-based strategies
 Ex: Knowledge transfer + Downsizing
 Foster sharing and support the sharing with IT

 Organize for complexity

 Alliances and specialization increase complexity

 Work electronically

 Handle continuous and discontinuous change

 Innovate continually
 Quality management & process re-engineering
The Technology Environment
 Hardware Trends
 Software Trends
 Data Trends
 Communication Trends
Business Pressures and Organizational
Responses
The Role of Information Systems in
Business Today

 Growing interdependence between ability to use

information technology and ability to implement
corporate strategies and achieve corporate goals

 Business firms invest heavily in information

systems to achieve six strategic business
objectives:

 Operational excellence
 New products, services, and business models
 Customer and supplier intimacy
 Improved decision making
 Competitive advantage
 Survival
The Role of Information Systems in
Business Today
 Operational excellence:
 Improvement of efficiency to attain higher profitability
 Information systems, technology an important tool in
achieving greater efficiency and productivity
 Wal-Mart’s RetailLink system links suppliers to stores
for superior replenishment system

 Does customers recognize operational excellence? Does

it make a difference for customer purchasing?
The Role of Information Systems in
Business Today
 New products, services, and business
models:
 Business model: describes how company produces,
delivers, and sells product or service to create wealth
 Information systems and technology a major enabling
tool for new products, services, business models
 Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s Internet-
based DVD rentals
 Digital product innovation?
The Role of Information Systems in
Business Today
 Customer and supplier intimacy:
 Serving customers well leads to customers returning,
which raises revenues and profits
 Example: High-end hotels that use computers to track
customer preferences and use to monitor and customize
environment

 Intimacy with suppliers allows them to provide vital

inputs, which lowers costs
 Example: J.C.Penney’s information system which links sales
records to contract manufacturer
The Role of Information Systems in
Business Today
 Improved decision making
 Without accurate information:
 Managers must use forecasts, best guesses, luck
 Leads to:

 Overproduction, underproduction of goods and services

 Misallocation of resources

 Poor response times

 Poor outcomes raise costs, lose customers

 Example: Verizon’s Web-based digital dashboard to provide

managers with real-time data on customer complaints, network
performance, line outages, etc.
 Have you ever been recipients of exceptional service from a company ,
made possible by improved decision-making and whether or not
information systems contributed to that level of service?
The Role of Information Systems in
Business Today
 Operational excellence:
 Improvement of efficiency to attain higher profitability
 New products, services, and business models:
 Enabled by technology
 Customer and supplier intimacy:
 Serving customers raises revenues and profits
 Better communication with suppliers lowers costs
 Improved decision making
 More accurate data leads to better decisions
The Role of Information Systems in
Business Today
 Competitive advantage
 Delivering better performance
 Charging less for superior products
 Responding to customers and suppliers in real time
 Example: Toyota and TPS (Toyota Production System)
enjoy a considerable advantage over competitors –
information systems are critical to the implementation
of TPS
The Role of Information Systems in
Business Today
 Survival
 Information technologies as necessity of business
 May be:
 Industry-level changes, e.g. Citibank’s introduction of ATMs
 Governmental regulations requiring record-keeping
 Examples: Toxic Substances Control Act, Sarbanes-Oxley
Act
 The Sarbanes-Oxley Act requires that public firms keep all
data, including e-mail, on record for 5 years.
There is a growing interdependence between a firm’s information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly
require changes in hardware, software, databases, and telecommunications.
The ability of a firm to use IT is becoming intertwined with the firm's ability to
implement corporate strategy
Businesses shape their information systems and information systems shape
businesses.
Data, Information, and Knowledge
 Data: raw facts
 Information: collection of facts organized in such a
way that they have value beyond the facts themselves
 Knowledge: awareness and understanding of a set of
information and ways that information can be made
useful to support a specific task or reach a decision
Generating Information
 A process:
 Is manipulation of data
 Usually produces information
 May produce more data and often useless
 A piece of information in one context may be
considered data in another context
 Data processing
Data processing involves:
• collecting data

• processing data (classifying, sorting,

aggregating, calculating, selecting,
retrieving)

• making data available (communicate)

Generating Information (continued)

Input-process-output
Information in Context
 Not all information is useful
 Useful information is:
 Relevant
 Complete
 Accurate
 Current
 Obtained economically (in business)
Information in Context

Figure 1.2: Characteristics of useful information

The Value of Information
 Value of information is directly linked to how it helps
decision makers achieve their organization’s goals
 For example, value of information might be measured
in:
 Time required to make a decision
 Increased profits to company
What Is a System?
 System: array of components that work together to
achieve a goal or goals
 A system:
 Accepts input
 Processes input
 Produces output
What Is a System? (continued)
 A system may:
 Have multiple goals
 Contain subsystems
 Subsystems:
 Have sub-goals that meet the main goal
 Transfer output to other subsystems
What Is a System? (continued)
 Closed system: has no connections with other
systems (does not interact with environment)

 Open system: interfaces and interacts with other

systems (interacts with the environment)
 Often a subsystem of a bigger system

 Information system: processes data and produces

information
System concepts:

 Decomposition
 Modularity
 Coupling
 Cohesion
 People
Technologies

Information
Systems
IS

Organizational
Processes mechanisms
The Benefits of Human-Computer
Synergy
 Humans are relatively slow and make mistakes
 Computers cannot make decisions
 Synergy: combining resources to produce greater
output
The Benefits of Human-Computer
Synergy (continued)

Qualities of humans and computers that contribute to synergy

Information Systems in
Organizations
 Computer-based information system: system with
a computer at its center
 Certain trends have made information systems
important in business
 Organizations lag behind if they do not use
information systems
Information System Perspectives
 Imperative to understand information systems from
both:

 Technical perspective, and

 Business perspective
Technical Perspective
 System  Information

 A set of interrelated components that collect (or

retrieve), process, store, and distribute information to
support decision making and control in an
organization
Technical Perspective
 Data
 Employee Sales
 Amy $20,000
 John $15,000
 Shaun $10,000
 Brett $12,000

 Information
 Average sales/employee $14,250
Business Perspective
 Information systems are more than just information
technology

 Businesses invest in IS in order to create value and

increase profitability
Business Perspective
 Information systems are an organizational and
management solution to business challenges that arise
from the business environment

 IS create value primarily by changing business

processes and management decision making
Business Perspective
 So what is an information system?

 At the heart is the technical perspective

 But a broader perspective is the business perspective

Why the Benefits of IT are Not
Achieved
Lack of knowledge about IT and IT
management
Incompatible hardware and software
Inefficiencies in work processes
Incompatible organizational cultures and
climates
Managers need to know how to manage
and use information
Executive Roles in Information Technology

• Manages External
Stakeholder Relationships
• Sets Strategic Direction CEO
Chief Executive
• Defines High Level IT
Officer
Needs for the Future

COO CFO CIO

Chief Operations Chief Financial Chief Information
Officer Officer Officer

• Manages Operations • Manages Accounting & Finance

• Allocates Resources • Forecasts Needs and Secures Financial
• Primary Consumer of IT Resources
within the Organization • Allocates Budget for IT Expenditures
Executive Roles in Information Technology

CEO
Chief Executive
Officer

COO CFO CIO

Chief Operations Chief Financial Chief Information
Officer Officer Officer

• Manages IT Organization and Operations

• Forecasts IT Needs from Business Strategy
• Sets Direction for IT Architecture and Organization
• Plans, Designs and Delivers IT throughout the firm
How system can help your
business?