ASHUTOSH GUPTAENROL: 01517003909MBA III SEMESTERINFORMATION SYSTEM MANAGEMENT (ASSIGNMENT)

Question 1: Strategic Information system frameworks:

a) Porter and Millar’s frameworkb) Wiseman & MacMillan frameworkc) Bakos & Treacy frameworkd) Customer Resource Life Cycle frameworke) Framework for Global Competition.

Answer 1: Strategic information systems are those computer systems that implement business strategies. They are those systems where information services resources are applied to strategic business opportunities in such a way that the computer systems have an impact on the organization’s products and business operations. Strategic information systems become an integral and necessary part of the business, and directly influence market share, earnings, and all other aspects of marketplace profitability. They may even bring in new products, new markets, and new ways of doing business. They directly affect the competitive stance of the organization, giving it an advantage against the competitors.

A) Porter and Millar’s framework: To better understand the activities through which a firm develops a competitive advantage and creates shareholder value, it is useful to separate the business system into a series of value-generating activities referred to as the value chain. In his 1985 book Competitive Advantage, Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. Porter identified primary and support activities as shown in the following diagram:

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin.

The primary value chain activities are:

Inbound Logistics: the receiving and warehousing of raw materials, and their distribution to manufacturing as they are required.

Operations: the processes of transforming inputs into finished products and services. Outbound Logistics: the warehousing and distribution of finished goods. Marketing & Sales: the identification of customer needs and the generation of sales. Service: the support of customers after the products and services are sold to them.

These primary activities are supported by:

The infrastructure of the firm: organizational structure, control systems, company culture, etc.

Human resource management: employee recruiting, hiring, training, development, and compensation.

Technology development: technologies to support value-creating activities. Procurement: purchasing inputs such as materials, supplies, and equipment.

The firm's margin or profit then depends on its effectiveness in performing these activities efficiently, so that the amount that the customer is willing to pay for the products exceeds the cost of the activities in the value chain. It is in these activities that a firm has the opportunity to generate superior value. A competitive advantage may be achieved by reconfiguring the value chain to provide lower cost or better differentiation.

B) Wiseman & MacMillan framework: Wiseman (1988) broadened the scope of Porter's model. For Wiseman, competitive advantage is "The dominance of one competitor over another or others in an arena, with factors conducive to its success over a period of time". An organisation's competitive space generally comprises many different arenas, which may be independent or linked. The organisation may possess multiple competitive advantages or disadvantages within or among its arenas.

Wiseman combined his generic strategies with Chandler's growth strategies to produce a 'strategic thrusts' framework intended as a means of identifying strategic IS. Strategic thrusts are major competitive moves made by a firm. Five are postulated:

differentiation; cost; innovation; growth; and alliance.

They are targeted at suppliers, customers and/or competitors. IT can be used to support or shape the enterprise's competitive strategy by supporting or shaping competitive thrusts.

Wiseman's five strategic thrusts require closer attention.

(1) Differentiation

The first 'strategic thrust', differentiation, was discussed earlier.

(2) Cost

Strategic cost thrusts are measures intended to:

reduce the enterprise's cost-profile, by reducing or avoiding specific costs; help suppliers, distribution channels, or customers reduce or avoid costs, so that the

enterprise receives preferential treatment or other benefits; or increase the cost-profiles of its competitors.

Economies of scale enable relatively large enterprises to acquire, produce, process, store, ship, or sell products at lower cost per unit than relatively small ones. Important factors in gaining economies of scale include:

specialisation; automation; bargaining power; experience; and failures of proportionality.

At some point, however, diseconomies may set in, due to, for example, increasing bureaucratic inefficiencies, transport charges or lack of local labour.

Economies of Scopeis another form of cost saving. Rather than arising from an expansion in the size of the primary operation, these derive from extension into additional operations which can share the infrastructure costs, like common factors of production, by-products, reusability, and expertise.

The potential also exists for economies of information whereby relatively knowledgeable firms can acquire, produce, process, store, ship, or sell products at lower average cost per unit than relatively ignorant ones.

(3) Innovation

Innovation is the adoption of the new products or processes. Product innovation involves the creation of new products, or of new features in existing products, in order to satisfy customer needs or wants which were previously unmet.

Process innovation, on the other hand, improves the efficiency or effectiveness of a process involved in the production or delivery of a product. It may involve technological change, organisational change, or often both. An innovation thrust can be aggressive, or employed defensively to imitate or neutralise a competitor's innovation.

(4) Growth

There are several ways in which an enterprise can grow:

product growth, which may involve: o 'length', i.e. new products of the same kind as existing ones (e.g. a PC

supplier may add laptops and handhelds to its desktop lines); o 'depth', i.e. variants to existing products (e.g. additional options which can be

selected by customers when buying a desktop); and o 'width', i.e. new products which complement existing ones (e.g. modems,

printers and accessories). functional growth, by performing additional business functions. geographic growth, by acquiring from additional locations, or selling into additional

locations; lateral growth, by applying excess capacity, by-products or expertise, in order to

address new marketplaces.

Growth of any kind tends to be associated with the economies of scale or scope mentioned earlier.

(5) Alliance

By an alliance, Wiseman means a combination of two or more groups or individuals, whether intra- or supra- to the enterprise, which works together to achieve a common objective. Four types of alliance are identified:

product integration; product development; product extension; and product distribution.

C) Bakos aand Treacy framework:

An important implementation question is how to find applications for the cells in this matrix. An example of a company that used this framework to find applications is GTE Corporation. The company employed a brainstorming procedure and identified more than 300 ideas for strategic applications of IT. Let us consider how IT can support the five activities (shown on the left side of Figure above) that drive bargaining power and comparative efficiency from the point of view of a company planning a defensive strategy.

1. IT can create or enhance unique product features. For example, Mattel enables customization of its Barbie dolls over the Web. Similarly, Rosenbluth’s systems provide unmatchable cost reduction for their customers.

2. IT can increase the switching cost to a company’s customers when certainIT-based services are provided (e.g., a Web-based tracking system).

3. IT contributes to internal efficiency; it is known for its effectiveness in reducing costs and increasing productivity, as shown throughout the book.

4. IT can increase interorganizational efficiency through synergy, enhancing business partnerships, joint ventures, and other alliances. This is done by using EDI, extranets, and vertical exchanges for procurement.

5. IT can create new business models, such as reverse auctions and vertical exchanges, or can support new business models, such as “fee for service,” which replaced commissions as the revenue model of Rosenbluth. In doing so, improved internal efficiency, inter-organisational efficiency, and search related costs all contribute to competitive advantage.

D) Customer Resource Life Cycle Framework: Ives and Learmonth first proposed the Customer Service Life Cycle (CSLC) in 1984 as a framework for applying information technology (IT) to externally oriented, customer-focused applications. The CSLC is based primarily on the extant knowledge that customers follow a "birth to death" cycle when dealing with a supplier's product or service. Broadly, a customer first establishes a need and characteristics of a product or service. She then acquires the product, possesses it and at some point returns, disposes or otherwise discontinues ownership. A visual depiction of the CSLC is shown in Figure 1 (Ives and Mason 1990). Ives and Learmonth posited that IT could provide the necessary tools and infrastructure for a company to serve its customers across the breadth of the life cycle. IT can be applied to the role of assisting customers identify the right products, managing purchased products or speeding the return of an item. Amazon.com, for example, uses collaborative filtering to recommend books of potential interest to a customer. These may well be products that the customer never before perceived a need for until presented with the targeted choice. The vast majority of ecommerce sites provide electronic "shopping carts" to assist the customer in managing the order process and then determining payment. Symantec's anti-virus software maintains contact with a customer's computer to assure both the software and the library of virus definitions are up to date to assure maximum protection. Symantec automatically notifies the customer when either the software or the virus definitions have upgrades available.

The incentive for suppliers to focus resources around the life cycle framework is mainly to gain competitive advantage. Dealing with customers throughout acquisition to post- transaction support involves many complex attributes and thus a potential for developing a customer relationship that is difficult for a competitor to imitate.The significant contribution of the CSLC framework to the MIS literature was its call for applying information technology (IT) to externally oriented, customer-focused applications (Ives 2001). The CSLC attempts to identify and provide a supporting structure for IT resources in this regard. IT strategy had, at that time, been primarily internally-oriented and seen as a business support mechanism for such functions as payroll, inventory or accounting. However, greater emphasis was being placed on inter-organizational information systems (Barrett and Konsynski 1982) that allowed companies to transact electronically with other organizations. This shift from internally to externally focused systems called for a different strategic perspective and was a fundamental purpose of the CSLC.

E) Framework for Global Competition:

During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing global strategies to gain a competitive advantage. However, some industries benefit more from globalization than do others, and some nations have a comparative advantage over other nations in certain industries. To create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition.

Sources of Competitive Advantage from a Global Strategy

A well-designed global strategy can help a firm to gain a competitive advantage. This advantage can arise from the following sources:

Efficiency Economies of scale from access to more customers and markets Exploit another country's resources - labor, raw materials Extend the product life cycle - older products can be sold in lesser developed

countries Operational flexibility - shift production as costs, exchange rates, etc. change

over time

Strategic First mover advantage and only provider of a product to a market Cross subsidization between countries Transfer price

Risk Diversify macroeconomic risks (business cycles not perfectly correlated

among countries) Diversify operational risks (labor problems, earthquakes, wars)

Learning Broaden learning opportunities due to diversity of operating environments

Reputation Crossover customers between markets - reputation and brand identification

Strategic Objectives

Sources of Competitive Advantage

National Differences Scale Economies Scope Economies

Efficiency in Operations

Exploit factor cost differences

Scale in each activitySharing investments

and costs

FlexibilityMarket or policy-induced changes

Balancing scale with strategic & operational

risks

Portfolio diversification

Innovation and Learning

Societal differences in management and

organization

Experience - cost reduction and

innovation

Shared learning across activities

Question 2: “The function of IS includes gathering, maintenance and analysis of data concerning internal resources and intelligence about the competitors, suppliers, customers, government and other relevant organisations”. In the light of the above statement describe how Information System helps MIS.

Answer 2: Information system is regarded as a tool to provide various services to different management functions. The tools have been developing year by year and the application of the tool has become more and more diverse. In management it is now a very powerful mean to manage and control various activities and decision making process. The original idea of automating mechanical processes got quickly succeeded by the rationalisation and integration of the system. In both of these forms, IS was regarded primarily as an operational support tool and secondarily as a service tool for management. Subsequent to the development, it was during the last few years that an additional potential was discovered. It was found that, in some cases, information technology (IT) had been critical to the implementation of an organisation’s strategy.

IS includes gathering, maintenance and analysis of data concerning internal resources and intelligence about the competitors, suppliers, customers, government and other relevant organisations. This statement truly shows the role of IS in MIS as an information system collects, analyses and presents the relevant information to the managers for the better decision making and efficient working of the organisation.

Question 3: What are the various activities involved in implementation of MIS?

Answer 3:

Implementation of MIS

The choice of the system or the sub-system depends on its position in the total MIS plan, the size of the system, the user understands of the system and the complexity and its interface with other systems. The designer first develops systems independently and starts integrating them with other systems, enlarging the system scope and meeting the varying information needs.

Determining the position of the system in the MIS is easy. The real problem is in the degree of structure, and formalization in the system and procedures which determine the timing and duration of development of the system. Higher the degree of structure and formalization, greater is the stabilization of the rules, the procedures, decision making and the understanding of the overall business activity.

MIS is generally used by medium and larger scale organizations.

Implementation of MIS can be achieved by using any of the methods such as direct, parallel, modular or phase in.

• Direct Approach

Direct installation of the new system with immediate discontinuance of the old existing system is referred as “cold turnkey” approach. This approach becomes useful when these factors are considered.

1. The new system does no replace the existing system.2. Old system is regarded absolutely of no value3. New system is compact and simple.4. The design of the new system is inexpensive with more advantages and less

risk involved.

• Parallel Approach

The selected new system is installed and operated with current system. This method is expensive because of duplicating facilities and personal to maintain both the systems. In this approach a target date must be fixed when the operations of old system cease and new one will operate on its own.

• Modular Approach

This is generally recognized as “Pilot approach”, means the implementation of a system in the Organization on a piece-meal basis.

This has few advantages / merits:1. The risk of systems failure is localized2. The major problem can be easily identified and corrected before further

implementation.3. Operating personal can be trained before system is installed in a location.

• Phase-in-Implementation

This approach is similar to modular method but it differs because of segmentation of system, however, not the organization. It has advantages that the rate of changes in a given Organization can be totally minimized and the data processing resource can be acquired gradually over a period of time. System exhibits certain disadvantages such as limited applicability, more costs incurred to develop interface with old system and a feeling in the Organization that system is never completed.

IMPLEMENTATION PROCEDURES:

1) Planning the Implementation

After designing the MIS it is essential that the organization should plan carefully for implementation. The planning stage should invariably include the following:

a. Identification of tasks of Implementation: Planning the implementation activities, acquisition of facilities, procedures development, generating files and forms, testing the system and evaluating and maintenance of the system.

b. Relationship establishment among the activity: Network diagram must be prepared to correlate concurrent and sequential activities.

c. Establishing of MIS: For monitoring the progress of implementation and for proper control of activities, efficient information system should be developed.

d. Acquisition of Facilities: For installation of new system or to replace current system the manager should prepare a proposal for approval from the management by considering space requirement movement of personal and location for utility outlets and controls.

e. Procedure Development: This is an important stop for implementation of the system including various activities such as evaluation selection of hardware, purchase or development of software, testing and implementation strategies.

f. Generating Files and Forms: The MIS manager should generate files and formats for storing actual date. This requires checklist data, format date storage forms and other remarks in data base.

g. Testing of the System: Test should be performed in accordance with the specifications at the implementation stage consisting of component test sub system test and total system test.

2) Evaluation and maintenance of system

The performance should e evaluated in order to find out cost effectiveness and efficacy of the system with minimum errors due to designs environmental changes or services.

Software Maintenances

The proper maintenance is the enigma of the system development and it holds software industry captive lying up programming resources. There are some problems in maintenance such as regarding it as non rewarding non availability of technicians

and tools no cognizance of users about maintenance problem and cost lack of standard procedures and guidelines. Most programmers feel maintenance as low level drudgery. If proper attentions is paid over a period of time eventually less maintenance is required.

Types of Maintenance

The maintenance of system are classified into corrective/adaptive/perfective. Corrective maintenance means repairing process or performance failures. Adaptive maintenance means changing the programming function whereas perfective maintenance deals with enhancing the performance or modifying the program.

Primary Activities of a Maintenance Procedure

Documentation is major part of maintenance in system development. Maintenance staff receives requests from the authorized user. Programming library should be maintained.

Reduction in Maintenance Costs

Several organizations having MIS generally go in for reducing maintenance costs and it consists of three major phases.

Maintenance management audit through questionnaires and interviews. Software system audit. Software modification.

Evaluation Methods:

Evaluation of the MIS in an organization is integral part of the control processes. There are several evaluation approaches such as quality assurance review compliance of audits budget performance review computer personal productivity assessment computer performance evaluation service level monitoring user audit survey post installation review and cost benefit analysis.

Evaluation performance measurement can be classified into two classes as effectiveness and efficiency. The relationship between effectiveness and efficiency is that the format is a measure of goodness of out put and the latter is a measure of the resources required to achieve the output.

Question 4: What are the risks involved in using MIS in business organisation and how can they be addressed?

Answer 4: 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.Since management requires information to assess and monitor performance at all levels of the organization, MIS risk can extend to all levels of the operations. Additionally, poorly programmed or non-secure systems in which data can be manipulated and/or systems requiring ongoing repairs can easily disrupt routine work flow and can lead to incorrect decisions or impaired planning.

Assessing Vulnerability to MIS RiskTo function effectively as an interacting, interrelated, and interdependent feedback tool for management and staff, MIS must be "useable." The five elements of a useable MIS system are: timeliness, accuracy, consistency, completeness, and relevance. The usefulness of MIS is hindered whenever one or more of these elements is compromised.

TimelinessTo simplify prompt decision making, an institution's MIS should be capable of providing and distributing current information to appropriate users. Information systems should be designed to expedite reporting of information. The system should be able to quickly collect and edit data, summarize results, and be able to adjust and correct errors promptly.

AccuracyA sound system of automated and manual internal controls must exist throughout all information systems processing activities. Information should receive appropriate editing, balancing, and internal control checks. A comprehensive internal and external audit program should be employed to ensure the adequacy of internal controls.

ConsistencyTo be reliable, data should be processed and compiled consistently and uniformly. Variations in how data is collected and reported can distort information and trend analysis. In addition, because data collection and reporting processes will change over time, management must establish sound procedures to allow for systems changes. These procedures should be well defined and documented, clearly communicated to appropriate employees, and should include an effective monitoring system.

CompletenessDecision makers need complete and pertinent information in a summarized form. Reports should be designed to eliminate clutter and voluminous detail, thereby avoiding "information overload."

RelevanceInformation provided to management must be relevant. Information that is inappropriate, unnecessary, or too detailed for effective decision making has no value. MIS must be appropriate to support the management level using it. The relevance and level of detail provided through MIS systems directly correlate to what is needed by the board of directors, executive management, departmental or area mid-level managers, etc. in the performance of their jobs.

Question 5: List any two examples of MIS in a business organisation.Answer 5:

Inbound logistics

Complex products like cars are made up of thousands of different components from all around the world. Inventory costs can be very high for manufacturing companies. But what if components were ordered only when customers order products? That's what material requirements planning (MRP) systems do, and they save millions in inventory costs (among other things).

Here's another example. Some companies buy commodities. Commodities are products like sugar and coal that are more-or-less the same no matter who produces them. Commodities are often produced all over the world, and prices vary from moment to moment. Some firms use IT to carefully track commodity prices, and buy where it is most economic. They also use statistical models to decide when to buy futures.

Operations

Flexible manufacturing systems (FMS) support mass customization. An FMS has a number of robotic cells, each of which has a robot and a material handling system. Automatically guided vehicles (AGVs) move materials and products around.

When a customer order arrives, a computer schedules it into the manufacturing stream. The computer sends the robots the programs the need to make the product, and routes the AGVs as needed.

Marketing and sales

Companies like Amazon only sell online. They use purchase histories to recommend products to customers.

Many brick and mortar retailers let customers search store inventories over the Web.