GADA CAMPUS

Programme: MA in Project Management

Course Name: Project Management Information System
Course Code: PMgt 781
Credit Hours : 2
CHAPTER TWO:
Competing with Information Technology
Shishay Kiros(Ph.D.)
Asst. Professor of Project Management
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 Session outline
 Introduction
 Basic Competitive Strategies in Business Use of
Information Technology
 Competitive Forces
 How to Succeed with Strategic Information Systems
 Advantage of Information System
 Decision-Making Levels of an Organization
 Application of IS at different organizational levels
 Types of Information System at different organizational
levels
 Summary

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 Learning Objectives:
 Understand how IT can support competitive
strategies in the market
 How managers use Information system to create:
 Competitive firms and
 Provide useful products and services to
customers.
 Understand the different types of Information
system at different Decision-Making Levels of an
Organization

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 Introduction
 Information technology has become a
foundation of our every day life, business are
spending more money annually on IT
 Information technologies can support many
competitive strategies.
 IT help a business cut costs, differentiate and
innovate in its products and services, promote
growth, and develop alliances
 IT has potential to produce lasting gains in
market share.

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 Cont’d
 Information technology can change the way
businesses compete.
 We should also view IT strategically, that is, as vital
competitive networks, as a means of organizational
renewal, and as a necessary investment in
technologies;
 That enable it to reengineer or re-invent itself to
survive and succeed in today’s dynamic business
environment.

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 Cont’d
 A business can use IT to help it become an agile
company, that can respond quickly to changes in
its environment.
 Lasting competitive advantages today can only
come from innovative use of Information system
 Information system can be any kind of information
system (e.g., TPS, EIS, DSS etc)
 that uses IT to help an organization gain a
competitive advantage, reduce a competitive
disadvantage, or meet other strategic enterprise
objectives.

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 How Information Technology Can Be Used To
Implement The Five Basic Competitive Strategies:

BASIC STRATEGIES IN THE BUSINESS USE OF INFORMATION TECHNOLOGY

Lower Costs
 use IT to substantially reduce the cost of business processes.

 use IT to lower the costs of customers or suppliers.

Differentiate
 develop new IT features to differentiate products and services.

 use IT features to reduce the differentiation advantages of competitors.

 use IT features to focus products and services at selected market.

Innovate
 create new products and services that include IT components.

 develop unique new markets with the help of IT.

 make radical changes to business processes with IT that dramatically cut costs, improve quality,

efficiency, customer services.

Promote growth
 use IT to manage regional and global business expansion.

 use IT to diversity and integrate into other products and services.

Develop alliance
 use IT to create virtual organizations of business partners.

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 What is a Virtual Organization?

A virtual organization is an alliance of separate individuals, business

units or companies, all with different core competencies, working
together to bring a project to market faster. These projects are usually
initiated to serve a particular market opportunity

An example of a virtual organization is British Telecom. It operates in

over a hundred countries and is able to do so because it does not
follow the structure of a "regular" organization.

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 Competitive Forces:
• The Competitive strategies can be
deployed and used to combat some of
the competitive forces below:
Competitive
Forces

Rivalry Of Threat Of Bargaining Bargaining

Competitors New Power Of Power Of
Entrants Customers Suppliers

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 How to Succeed with Strategic Information
Systems

1.Building A Customer Focused

Business

•Strategic focus on “customer value”:

recognizes that quality, rather than
price has become the primary
determinant in a customer’s perception
of value.
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 2.Becoming An Agile Company:

• Can make profit in markets with broad

product ranges and short model
lifetimes.

• Depend heavily on internet

technologies.

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 3.Creating A Virtual Company
• A virtual company:
An organization that uses information
technology to link people, organizations,
assets, and ideas.
• It employs people who work at home.
Instead of commuting to an office every
day, email, instant messaging, data and
videoconferencing are used for
communications between employees and
management.
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The Basic Business Strategies Of Virtual
Companies

Strategies Of Virtual Companies

* Share infrastructure and risk with alliance partners

* Link complementary core competencies

* Reduce concept to cash time through sharing

* Increase facilities and market coverage
* Gain access to new markets and share market or customer loyalty

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 Advantage of Information System
 Information systems are technology driven. Without
it, business and governance would not be what they
are today.
 IS is systems that make use of information
technology to help managers ensure a smooth and
efficient running of the organization.
 Information collected by these systems is structured
so that the managers can easily evaluate the
company’s current performance vis-à-vis previous
outputs.
 IS is applied at all activities in the organization.
 IS Provides information for managing an organization
at different levels.
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 Cont.

 IS in an organization
involve three primary
resources:
 Technology,
 Information, and
 People.

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 Cont’d
 IS help all stakeholders in the company have access to
one single database that holds all the data that will be
needed in day to day operations.
 Employees and other stakeholders in the organization
will be able to spend more time doing productive tasks.
 Help significantly improve the quality of decisions
made in the company.
 IS ensure that employees have easier and closer
interaction with information about the progress of any
process within the organization
 It facilitates interpersonal communication
 It promotes learning or training.
 It increases organizational control
 Cont.

 IS help reduce the amount of paperwork

 Reports make it easy for companies to easily identify
their strengths and weaknesses in carrying out various
tasks
 From a top executive perspective, MIS help give an
overall impression of where the company stands
financially.
 IS helps eliminate redundant roles
 It creates a competitive advantage over competition.
 It helps automate the Managerial processes

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 Decision-Making Levels of an Organization
 IS is used for different Decision-Making Levels of an
Organization.
1.Executive level (top)
 Long-term decisions
 Unstructured decisions
2. Managerial level (middle)
 Decisions covering weeks and months
 Semi-structured decisions
3. Operational level (bottom)
 Day-to-day decisions
 Structured decisions

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 Application of IS at different organizational levels
 IS is used in
businesses for
different
purposes at
different
levels:
 With each
using
information
Technology
 To automate
or assist in
decision
making.
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 Types of Information System at different
organizational levels

1.TRANSACTION PROCESSING SYSTEM(TPS)

2.DECISION SUPPORT SYSTEM(DSS)
3.EXECUTIVE INFORMATION SYSTEM(EIS)
4.EXPERT SYSTEMS
5.OFFICE AUTOMATION SYSTEMS
6. COMMUNICATION SYSTEMS
Those are used for different purposes at
different organizational levels

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 1.TRANSACTION PROCESSING
SYSTEM(TPS)
 A computerized system that performs and records daily
routine transactions necessary to the conduct of the
business
 The application of IT to routine, repetitive, and usually
ordinary business transactions
 TPS are information systems that process data resulting
from the occurrence of business transactions.
 Used at Operational low level of the organization
 Transaction Processing System are operational-level
 They are usually operated directly by shop floor workers
or front line staff, which provide the key data required to
support the management of operations.

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Cont.

 Transaction processing systems are

tasked with three things:
 They collect transactions, then store them, and
then process them on a daily basis as
the transactions pass through the systems.
 In case the need arises to modify transactions that
have been done in the past or even cancel them,
then such systems offer that functionality as well.

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 Cont.
 This data is usually obtained through the automated or
semiautomated tracking of low-level activities and basic
transactions
 Goal: to automate repetitive information processing
activities within organizations
• Increases speed
• Increases accuracy
• Greater efficiency
 Supports the monitoring, collection, storage,
processing, and dissemination of the organization’s
basic business transactions
 Mainly includes accounting and financial transactions
 Mainly used for providing other information systems
with data.
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 Five Stages Of Transaction Processing

 Data Entry
 Processing
 Database
Maintenance
 Inquiry
Processing
 Document
And Report
Generation

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Cont.

In Transaction Processing Systems (TPS):

Inputs: Transactions or events

Processing: Sorting; listing; merging; updating
Outputs: Detailed reports; lists; summaries
Users: Operational personnel/manager ;
supervisors

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 Role of TPS
 Produce information for other systems
 Cross boundaries (internal and external)
 Used by operational personnel + supervisory levels
 Efficiency oriented
 Produces routine answers
Examples
 Payroll system(Payroll processing)
 production instructions
 Sales and order processing
 Inventory management
 Accounts payable and receivable

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 OBJECTIVES OF TPS
 Efficient and effective operation of the organization
 Provide timely documents and reports
 Increases the competitive advantage
 Provides necessary data for tactical and strategic
systems such as DSS
 Provide a framework for analyzing an organization’s
activities

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 TRANSACTION PROCESSING
SYSTEM

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 2.DECISION SUPPORT SYSTEM(DSS)
 Decision support systems, as you may have guessed
from their name, basically assist the decision-making
process that is carried out by management.
 Basically, they do this by generating
the necessary data and performing preliminary
statistical analysis on it.
 Support analytical work using Simulation and
Optimization
• Simulation model – calculates the simulated outcome of
tentative decisions and assumptions
• Optimization model -determine optimal decisions based
on criteria supplied by the user, mathematical search
techniques, and constraints
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 Cont.
 DSS use Online analytical processing (OLAP) : the use
of data analysis tools to explore large databases of
transaction data
 Data mining : the use of analysis tools to find patterns
in large transaction databases
Decision Support System (DSS) :
• Inputs: databases optimized for statistical analysis
• Processing: Interactive. Simulations and statistical
analysis
• Outputs: Responses to queries; statistical test results.
• Users: Professionals, managers

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 Cont.
 A Decision Support System can be seen as a knowledge
based system, used by senior managers, which
facilitates the creation of knowledge and allow its
integration into the organization.
 These systems are often used to analyze existing
structured information and allow managers to project
the potential effects of their decisions into the future.
 Such systems are usually interactive and are used to
solve structured problems.
 They offer access to databases, analytical tools, allow
"what if" simulations, and may support the exchange of
information within the organization.

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 Cont.
 Refers to systems which support the process of
decision-making dealing with unstructured problems
 May be defined as the “what-if” approach that assists
management in formulating policies and projecting
the likely consequences of decisions
 Provides strategic information

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 FUNCTIONS OF A DSS

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 Role of DSS
 Support ill- structured or semi-structured decisions
 Have analytical and/or modelling capacity
 Are concerned with predicting the future
 Are effectiveness oriented

Some examples of DSS

 Group Decision Support Systems (GDSS)

 Logistics systems
 Financial Planning systems

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 3.EXECUTIVE INFORMATION SYSTEM(EIS)
 Executives need a system that helps them do their job.
 EIS provides a flexible access to information for
monitoring results and general business conditions
 Basically, the Executive information system will give
them a bird's-eye view of the entire company by
providing them with company-wide data whenever they
need it.
 The system will generate convenient reports for the
executives of the company with graphs and other
pictorial representations
 Ultimately, such a system helps executives in the
decision-making process by allowing them to make
quality decisions.
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 Cont.
 Executive Information Systems are strategic-level
information systems that are found at the top of the
Pyramid.
 They help executives and senior managers analyze the
environment in which the organization operates, to
identify long-term trends, and to plan appropriate
courses of action.
 The information in such systems is often weakly
structured and comes from both internal and external
sources.
 Executive Information System also known as Executive
Support System are designed to be operated directly by
executives without the need for intermediaries and easily
tailored to the preferences of the individual using them.
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 Role of EIS
 Are concerned with ease of use
 Are concerned with predicting the future
 Are effectiveness oriented
 Are highly flexible
 Support unstructured decisions
 Use internal and external data sources
 Used only at the most senior management levels

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 FUNCTIONS OF AN EIS

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Cont.

Executive Support System (ESS) :

• Inputs: Aggregate data. Internal and external
• Processing: Interactive and graphical simulations
• Outputs: Projections
• Users: Senior managers

Example:
 5-year operating plan. Answer question like “what are
long-term industry cost trends and how are we doing
relative to them?”

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 4.EXPERT SYSTEMS
 Expert System Support professionals faced with
complex situations requiring expert knowledge in a well-
defined area
 Expert systems can be defined as programs that help the
computer make decisions in a similar way as an expert in
specific domain, a particular subject area of interest.
 It aims at formalizing expertise and make it available for
repetitive type of business decisions.
 They represent human expertise also called knowledge-
based systems

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 Cont.
 It makes use of artificial intelligence(AI) to generate
knowledge out of the information in various business
activities.
• AI involves computer systems taking on the
characteristics of human intelligence
• Robotics
• Natural language processing
• Learning systems
• Neural networks (patterns & trends)
 They’re useful in such diverse areas as medical
diagnosis, portfolio management, and credit
assessment.

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 Cont.
Expert systems can be used in several areas of an
organization:
1. Accounting and finance
•In selecting forecasting models
•In providing tax advice
2. Marketing
•In establishing sales quotas
•In responding to customer inquiries
3. Manufacturing
•In determining whether process is running correctly
•In analyzing quality and providing corrective actions
•In product design and layout
4.Others
• In assessing project proposals, etc
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 5.OFFICE AUTOMATION SYSTEMS

 Office automation is the integration of computer,

telecommunications and office equipment
technologies to improve the execution of business
functions through:
 Increasing the productivity, effectiveness and
 Working conditions of office support.
 Help people perform personal record keeping,
writing, and calculations efficiently

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 Cont.

The concept of office automation

encompasses the application of
computer and communication
technology to improve the productivity
of all types of office workers including:
 Clerical,
 Administrative,
 Professional and
 Executive.
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 Cont.
 Help people perform personal record keeping, writing,
and calculations efficiently
 Aim is to improve the productivity of managers at
various levels of management by providing secretarial
assistance and better communication facilities.
 Main types of tools include:
 Spreadsheet programs
 Text & image processing systems
 Presentation packages
 Personal database systems and note-taking systems

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 Cont.
Examples:
•Communicating and scheduling
•Document preparation
•Analyzing data
•Consolidating information

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 COMPONENTS OF OFFICE
AUTOMATION SYSTEM AND THEIR
FUNCTIONS

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 6. Communication Systems
 Sharing information in many different forms
1.Teleconferencing
• The use of electronic transmission to permit same-time
different-place meetings
2.Audio conferencing
• a single telephone call involving 3 or more people
3. Audio-graphic conferencing
• an extension of audio conferencing, permitting the
participants to see graphical material
4.Videoconferencing
• interactive meeting involving groups of people that can
• see each other using display screens
5. E-mail, Voice Mail, and Fax
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 Cont.
6. Groupware
•Software and related procedures that help teams work
together by sharing information and by controlling internal
workflows
7. Intranets and Extranets
•INTRANETS: Private networks, Use the same interface as
the Web, Accessible only to company employees
Examples of applications: Corporate news, Employee
manuals, Corporate policies,, etc
•EXTRANETS: Similar to intranets, but geared towards
customers
Examples of applications: Detailed product descriptions,
FAQs, Maintenance information, etc.
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 Interrelationship among all Systems

 Output data from one IS type is input data for others

IS types to process
 TPS generally feed all other systems

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 Summary

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 Group Class Discussion(5%)

Discuss the practices of Information

Systems types in your organization

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