Haery SIhombing

Ir. Haery Ir. Haery SihombingSihombing/IP/IP

Pensyarah Pelawat

Fakulti Kejuruteraan Pembuatan

Universiti Teknologi Malaysia Melaka

12

Information Systems

&

Management

Information Systems Information Systems

&&

ManagementManagement

Haery SIhombing

Haery SIhombing

DataData: raw facts such as the number of customers.: raw facts such as the number of customers.

InformationInformation: data arranged in a meaningful fashion. : data arranged in a meaningful fashion. Good information possesses these attributes:Good information possesses these attributes:

Information QualityInformation Quality:: measures information accuracy measures information accuracy

and reliability.and reliability.

TimelinessTimeliness:: information is needed when managerial information is needed when managerial

action is taken.action is taken.

Real Time Information: reflects the current condition.Real Time Information: reflects the current condition.

CompletenessCompleteness:: manager has the information to act.manager has the information to act.

RelevanceRelevance:: information matches the managers specific information matches the managers specific

needs at hand.needs at hand.

Irrelevant information does not apply Irrelevant information does not apply

Information and The ManagerInformation and The Manager

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High

Quality

HighHigh

QualityQuality

RelevantRelevantRelevant TimelyTimelyTimely

Relatively

Complete

RelativelyRelatively

CompleteComplete

Useful

Information

UsefulUseful

InformationInformation

Information AttributesInformation Attributes

Information SystemInformation System:: acquires, organizes, stores, acquires, organizes, stores,

manipulates and transmits information.manipulates and transmits information.

AA Management Information SystemManagement Information System is the plan and is the plan and

design of an Information System to provide managers design of an Information System to provide managers

with information. with information.

Can be paper or computerCan be paper or computer--based.based.

Information technologyInformation technology:: is the means for acquiring, is the means for acquiring,

organizing, storing, manipulating, and transmittingorganizing, storing, manipulating, and transmitting

information .information .

Information technology power has increased rapidly.Information technology power has increased rapidly.

Information and DecisionsInformation and Decisions:: managing has to do with managing has to do with

making decisions.making decisions.

Good Information allows effective decision making.Good Information allows effective decision making.

Information Systems & TechnologyInformation Systems & Technology

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Information and controlInformation and control: control allows : control allows managers to regulate the efficiency and managers to regulate the efficiency and effectiveness of the organization.effectiveness of the organization.

Effective control requires good information. Effective control requires good information.

Information technology in the form of computers allows Information technology in the form of computers allows

managers quick access to information.managers quick access to information.

Information and CoordinationInformation and Coordination:: managers must managers must

coordinate departmental actions to achieve goals.coordinate departmental actions to achieve goals.

Information Systems provide information on suppliers, Information Systems provide information on suppliers,

production schedules, and orders to allow coordination.production schedules, and orders to allow coordination.

Using InformationUsing Information

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STRATEGIC INFORMATION SYSTEMSTRATEGIC INFORMATION SYSTEM

‘‘A strategic information system is A strategic information system is

(one) that supports the competitive (one) that supports the competitive

strategy of the organisation,strategy of the organisation, egeg::--

To improve customer/supplier linksTo improve customer/supplier links

Facilitate product designFacilitate product design

Improve productivityImprove productivity AhituvAhituv, Neumann & Norton , Neumann & Norton

RileyRiley

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IS Strategy Should Be...IS Strategy Should Be...

Business led.Business led. Links to and supports the Links to and supports the

business strategy.business strategy.

Demand orientatedDemand orientated.. Responds to Responds to

business needs.business needs.

Designed to Designed to offer competitive offer competitive advantageadvantage,, new products and services, new products and services,

to further business aims.to further business aims.

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Why Bother?Why Bother?

Threats from others (Threats from others (ieie on line banks, on line banks,

remote shopping, EDI links with remote shopping, EDI links with

suppliers, ATM).suppliers, ATM).

Aligning IS spending to meet business Aligning IS spending to meet business

needs.needs.

Facilitating new opportunities.Facilitating new opportunities.

Getting a grip on IT function and Getting a grip on IT function and

spending.spending.

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Output From IS StrategyOutput From IS Strategy

‘‘To create a robust information To create a robust information

management framework for the management framework for the longlong--term management of informationterm management of information and its and its

supporting technologies.supporting technologies.

To identify current and future To identify current and future

information needsinformation needs for the organisation for the organisation

that reflect that reflect close alignment of business close alignment of business and IS strategiesand IS strategies..

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Output From IS StrategyOutput From IS Strategy

Determine policies for the management, Determine policies for the management,

creation, maintenance, control and creation, maintenance, control and

accessibility of the corporate information accessibility of the corporate information

resource.resource.

Ensure that the IS function is outward Ensure that the IS function is outward

looking and not focused internally on looking and not focused internally on

technology issues.technology issues.’’ Earl M, Managing Strategies for Earl M, Managing Strategies for

Information TechnologyInformation Technology

INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY

The process and The process and

applications that applications that

create new methods create new methods

to:to:

Solve problemsSolve problems

Perform tasksPerform tasks

Manage communicationManage communication

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Information TechnologyInformation Technology began with early began with early computers.computers.

Computers are called hardware and use digital Computers are called hardware and use digital

11’’s and 0s and 0’’s to represent data.s to represent data.

Modern computers use microprocessors such as the Modern computers use microprocessors such as the

Pentium to access information.Pentium to access information.

Computer cost has dropped dramatically while Computer cost has dropped dramatically while

the power of computers has risen.the power of computers has risen.

Computers cost less and do more than ever before.Computers cost less and do more than ever before.

Connecting one computer to another is also much Connecting one computer to another is also much

easier and cheaper.easier and cheaper.

Information Technology RevolutionInformation Technology Revolution

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$400k

$300k

$200k

$100k

$3k

1980 1984 1988 1994

Cost per MIP

Price Performance Ratio of ComputerPrice Performance Ratio of Computer

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Wireless communicationsWireless communications:: connects managers connects managers and computers together without wires.and computers together without wires.

Cellular has grown rapidly to over 20 million users.Cellular has grown rapidly to over 20 million users.

Wireless modems connect one computer to another.Wireless modems connect one computer to another.

NetworksNetworks:: share information between computers.share information between computers.

Server ComputerServer Computer: powerful computer that relays : powerful computer that relays

information to client computers.information to client computers.

Servers and other computers are connected on a Local Area Servers and other computers are connected on a Local Area

Network or LANNetwork or LAN

Mainframe:Mainframe: large computers processing vast amounts of large computers processing vast amounts of

information .information .

Internet:Internet: a world wide network of computers.a world wide network of computers.

Computer CommunicationsComputer Communications

ServerServerServer

ServerServerServer

ServerServerServer

ClientClientClient

ClientClientClient

ClientClientClient

ClientClientClient

Mainframe

Hub

Mainframe

Hub

Wireless

Link

WirelessWireless

LinkLink

LaptopLaptopLaptop

3 Tier Information System3 Tier Information System

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Operating system softwareOperating system software:: tells the computer tells the computer how to run itself.how to run itself.

Applications softwareApplications software:: provide for functions such provide for functions such as word processing, spreadsheets, and graphics.as word processing, spreadsheets, and graphics.

The new software provides far better access to information The new software provides far better access to information

for managers.for managers.

Artificial IntelligenceArtificial Intelligence:: behavior by a machine that behavior by a machine that can be called intelligent.can be called intelligent.

Computers evaluate problems & act on simple tasks.Computers evaluate problems & act on simple tasks.

Speech RecognitionSpeech Recognition:: allow a computer to hear and allow a computer to hear and act on spoken commands.act on spoken commands.

Powerful programs are still being developedPowerful programs are still being developed..

Software DevelopmentsSoftware Developments

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The Role and Impact of The Role and Impact of

Technology in the EconomyTechnology in the Economy

Increase intellectual knowledgeIncrease intellectual knowledge

Achieve business objectivesAchieve business objectives

Advancement of economic systemsAdvancement of economic systems

Improving the quality of lifeImproving the quality of life

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The Impact of Technology The Impact of Technology

on Consumerson Consumers

Technology changes the way Technology changes the way

consumers:consumers:

Plan and take vacationsPlan and take vacations

Make purchasesMake purchases

Drive carsDrive cars

Obtain entertainmentObtain entertainment

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The Impact of Technology The Impact of Technology

on the Workplaceon the Workplace

Technology has:Technology has:

Improved productivityImproved productivity

Improved efficiencyImproved efficiency

Reduced costsReduced costs

Enhanced customer Enhanced customer

serviceservice

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The Biggest Technology The Biggest Technology

Challenge for BusinessChallenge for Business

Keeping pace with Keeping pace with

new information new information

technology in new technology in new

competitivecompetitive

environmentsenvironments

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NEW BUSINESSNEW BUSINESS

Using IT as the basis of new ventures.Using IT as the basis of new ventures.

Requires a business case to attract Requires a business case to attract

‘‘venture capitalventure capital’’ from inside and from inside and

outside:outside:--

Show finance needed and profitabilityShow finance needed and profitability

Market research Market research

Organisational structureOrganisational structure

Delivery mechanismDelivery mechanism

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IT Improves Global AccessIT Improves Global Access

Global markets and foreign Global markets and foreign

business professionals are now business professionals are now

linked through telecommunicationlinked through telecommunication

Productivity has doubled in the last 10 years Productivity has doubled in the last 10 years

throughthrough ““real timereal time”” access to people and access to people and

marketsmarkets

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MANAGING INFORMATIONMANAGING INFORMATION

Data:Data:Numerical or verbal descriptions related to Numerical or verbal descriptions related to statistics or other items that have not statistics or other items that have not been analyzed or summarizedbeen analyzed or summarized

Knowledge:Knowledge:An understanding of data gained through An understanding of data gained through study or experiencestudy or experience

Information:Information:Data and knowledge that can be used in Data and knowledge that can be used in making decisionsmaking decisions

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Management Information SystemsManagement Information Systems

MISMISUsed for organizing and transmitting data Used for organizing and transmitting data

into information that can be used in into information that can be used in

decision makingdecision making

Breaks down time and location barriersBreaks down time and location barriers

Wireless communications Wireless communications

Computers, personal data assistants, cell phones, Computers, personal data assistants, cell phones,

pagers, and GPS positioning devices found in carspagers, and GPS positioning devices found in cars

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Collecting DataCollecting Data

To be effective, an To be effective, an

MIS must be able MIS must be able

to:to:Collect dataCollect data

Store dataStore data

Update dataUpdate data

Process dataProcess data

Present informationPresent information

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DatabaseDatabase

A collection of A collection of

data stored in data stored in

one place and one place and

accessibleaccessible

throughout the throughout the

networknetwork

Transaction Processing Systems (TPS):Transaction Processing Systems (TPS):designed to handle large volumes of routine designed to handle large volumes of routine transactions.transactions.

The first The first computercomputer--based Information based Information

System.System.

Billing, payroll, supplier payments are examples.Billing, payroll, supplier payments are examples.

Operations Information Systems (OIS):Operations Information Systems (OIS):gathers comprehensive data, organizes it and gathers comprehensive data, organizes it and summarizes it in a form valuable to summarizes it in a form valuable to managers.managers.

Can help managers with nonCan help managers with non--routine decisions routine decisions such as customer service and productivity.such as customer service and productivity.

Provides sales, inventory & performance oriented data.Provides sales, inventory & performance oriented data.

Types of Information SystemsTypes of Information Systems

Decision Support Systems (DSS):Decision Support Systems (DSS): providesprovidesinteractive models to help managers make better interactive models to help managers make better decisions.decisions.

Excellent for unusual, Excellent for unusual, nonnon--programmedprogrammed decisionsdecisionsAnalyzes investment potential, new product pricing.Analyzes investment potential, new product pricing.

Often used by middle and upper managers.Often used by middle and upper managers.

Executive Support System (ESS):Executive Support System (ESS):sophisticated version of a DSS to match top sophisticated version of a DSS to match top managermanager’’s needs.s needs.

Focus on user friendly features.Focus on user friendly features.

Expert SystemsExpert Systems:: employees human knowledge employees human knowledge captured in a computer to solve problems usually captured in a computer to solve problems usually requiring human insight.requiring human insight.

UseUse Artificial IntelligenceArtificial Intelligence to recognize, formulate, to recognize, formulate, solve problems, and learn from experience.solve problems, and learn from experience.

Types of Information SystemsTypes of Information Systems

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Transaction

Processing

Systems

Operations

Information

System

Decision

Support

Systems

Expert

Systems

Programmed

Decision

Making

Non-Programmed

Decision

Making

Types of Information SystemsTypes of Information Systems

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Information Systems have provided Information Systems have provided managers with better information, enabling managers with better information, enabling

better decision makingbetter decision making..Effective Information Systems can be a source of Effective Information Systems can be a source of

competitive advantage.competitive advantage.

ComputerComputer--based information systems are based information systems are associated with decentralization of associated with decentralization of managerial decision making.managerial decision making.

Flattening the OrganizationFlattening the Organization:: informationinformation

systems reduce the need for the hierarchy to control systems reduce the need for the hierarchy to control

the firm.the firm.

Managers control and coordinate using the system, Managers control and coordinate using the system,

not workers.not workers.

Information Systems ImpactsInformation Systems Impacts

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Horizontal Information FlowsHorizontal Information Flows:: InformationInformationnetworks can bridge functional departments.networks can bridge functional departments.

Allow information to flow horizontally between Allow information to flow horizontally between

departments.departments.

Can lead to much higher productivity, quality, and Can lead to much higher productivity, quality, and

innovation.innovation.

Virtual productsVirtual products:: firms can use their firms can use their information system to custom tailor goods and information system to custom tailor goods and services to each customer.services to each customer.

Systems can allow this at no increase in cost.Systems can allow this at no increase in cost.

Information Systems ImpactsInformation Systems Impacts

BeforeBefore

Tall structureTall structure

primarily up and primarily up and

down down

communicationcommunication

AfterAfter

Flat structure both Flat structure both

upup--down and down and

laterallateral

communicationcommunication

Information Systems Impacts Information Systems Impacts

on Organizational Hierarchyon Organizational Hierarchy

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Technological factorsTechnological factors: consistent standards : consistent standards for systems do not exist.for systems do not exist.

Makers of hardware use different standards.Makers of hardware use different standards.

Makes it hard to share information between systems.Makes it hard to share information between systems.

Resistance by IndividualsResistance by Individuals: many managers : many managers do not use the system fully.do not use the system fully.

Some managers are afraid of technology or do not Some managers are afraid of technology or do not

understand it.understand it.

Political ResistancePolitical Resistance: the information system : the information system changes the way information flows in the firm changes the way information flows in the firm

Some managers feel threatened by it.Some managers feel threatened by it.

Managers may think they will be laidManagers may think they will be laid--off.off.

Barriers to Information SystemsBarriers to Information Systems

Loss of the human elementLoss of the human element:: informationinformationsystems cannot present all kinds of information systems cannot present all kinds of information accurately.accurately.

Thick information,Thick information, which is rich in meaning and which is rich in meaning and not quantifiable, is best suited to human analysis.not quantifiable, is best suited to human analysis.

Example: employee evaluations need faceExample: employee evaluations need face--toto--faceface

communication to convey all information.communication to convey all information.

Difficult installationsDifficult installations:: Information systems can Information systems can be hard to develop. be hard to develop.

To avoid problems: To avoid problems: list major organization goals.list major organization goals.

build support for the system with workers.build support for the system with workers.

create formal training programs.create formal training programs.

emphasize that faceemphasize that face--toto--face contact is important.face contact is important.

Limitations to Information SystemsLimitations to Information Systems

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ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

The use of IT presents major The use of IT presents major security challenges, poses serious security challenges, poses serious ethical questions, and affects ethical questions, and affects society in significant ways.society in significant ways.

IT raises ethical issues in the areas of..IT raises ethical issues in the areas of..

CrimeCrime

PrivacyPrivacy

IndividualityIndividuality

EmploymentEmployment

HealthHealth

Working conditionsWorking conditions

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But, IT has beneficial results as well.But, IT has beneficial results as well.

So as managers, it is our responsibility So as managers, it is our responsibility

to minimize the detrimental effects and to minimize the detrimental effects and

optimize the beneficial effects.optimize the beneficial effects.

ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

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Business EthicsBusiness Ethics

Basic categories of ethical issuesBasic categories of ethical issues

Employee privacyEmployee privacy

Security of company recordsSecurity of company records

Workplace safetyWorkplace safety

ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

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Theories of corporate social Theories of corporate social

responsibilityresponsibility

Stockholder theoryStockholder theory

Managers are agents of the stockholders. Their Managers are agents of the stockholders. Their

only ethical responsibility is to increase profit only ethical responsibility is to increase profit

without violating the law or engaging in fraudwithout violating the law or engaging in fraud

ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

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Social Contract TheorySocial Contract TheoryCompanies have ethical responsibilities to all Companies have ethical responsibilities to all

members of society, which allow corporations to members of society, which allow corporations to

exist based on a social contractexist based on a social contract

First condition First condition –– companies must enhance economic companies must enhance economic

satisfaction of consumers and employeessatisfaction of consumers and employees

Second condition Second condition –– avoid fraudulent practices, show avoid fraudulent practices, show

respect for employees as human beings, and avoid respect for employees as human beings, and avoid

practices that systematically worsen the position of practices that systematically worsen the position of

any group in societyany group in society

ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

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Stakeholder theoryStakeholder theoryManagers have an ethical responsibility to manage a firm for Managers have an ethical responsibility to manage a firm for

the benefit of the benefit of allall its stakeholders.its stakeholders.

StockholdersStockholders

EmployeesEmployees

CustomersCustomers

SuppliersSuppliers

Local communityLocal community

Sometimes stakeholders are considered to includeSometimes stakeholders are considered to include

CompetitorsCompetitors

Government agencies and special interest groupsGovernment agencies and special interest groups

Future generationsFuture generations

ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

Technology EthicsTechnology Ethics

Four PrinciplesFour Principles

1.1. ProportionalityProportionality

Good must outweigh any harm or riskGood must outweigh any harm or risk

Must be no alternative that achieves the same or comparable Must be no alternative that achieves the same or comparable

benefits with less harm or riskbenefits with less harm or risk

2.2. Informed consentInformed consent

Those affected should understand and accept the risksThose affected should understand and accept the risks

3.3. JusticeJustice

Benefits and burdens should be distributed fairlyBenefits and burdens should be distributed fairly

4.4. Minimized RiskMinimized Risk

Even if judged acceptable by the other three guidelines, the Even if judged acceptable by the other three guidelines, the

technology must be implemented so as to avoid all technology must be implemented so as to avoid all

unnecessary riskunnecessary risk

ETHICAL RESPONSIBILITYETHICAL RESPONSIBILITY

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