Why Managers Must Understand IT

• Managers play a key role – Frame opportunities and threats so others can understand them – Evaluate and prioritize problems and solutions – Lead the effort to pursue IT policies that best meet organizational needs • Gains in productivity – Require innovations to business practices – Automating these improved processes to take advantage of IT capabilities Information Technology for Managers 1

What is Information Technology?

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Information technology (IT)

– Includes all tools that capture, store, process, exchange, and use information • Field of IT includes: – Computer hardware – Software – Networks and related equipment – Databases Information Technology for Managers 2

What is Information Technology? (continued)

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IT infrastructure

– Organization’s defined set of IT hardware, software, and networks

IT support organization

– Staff to plan, implement, operate, and support IT

Information systems

– Enable a firm to meet fundamental objectives – Types: function IT, network IT, and enterprise IT Information Technology for Managers 3

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Function IT

• Includes information systems that improve the productivity of individual users in performing stand alone tasks • Examples – Computer-aided design (CAD) software – Word processors – Spreadsheet software – Decision support systems – e-learning systems Information Technology for Managers 5

Function IT (continued)

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Decision support system (DSS)

– Employs models and analytic tools – Helps users: • Gain insights into data • Draw conclusions from the data • Make recommendations

E-learning systems

– Encompass a number of computer-enhanced learning techniques Information Technology for Managers 6

Network IT

• Information systems that improve communications and support collaboration among members of a workgroup • Examples – Web conferencing – Wikis – Electronic corporate directories Information Technology for Managers 7

Network IT (continued)

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Web conferencing

– Conduct meetings or presentations in which participants are connected via the Internet

Wiki

– Web site that allows users to edit and change its content easily and rapidly

Electronic corporate directories

– Used in large organizations to find the right person with whom to collaborate on an issue or opportunity Information Technology for Managers 8

Enterprise IT

• Information systems used to define interactions among employees and/or with external customers, suppliers, and other business partners • Examples – Transaction processing – Enterprise resource planning – Interorganizational systems Information Technology for Managers 9

Enterprise IT (continued)

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Transaction processing system (TPS)

– Captures data for company transactions – Updates the firm’s records, which are maintained in electronic files or databases

Enterprise resource planning system (ERP)

– Group of computer programs with a common database – Used by firms to plan, manage, and control their routine business operations Information Technology for Managers 10

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Enterprise IT (continued)

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Interorganizational information systems

– Support the flow of data among organizations to achieve shared goals Information Technology for Managers 13

Enterprise IT (continued)

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Electronic data interchange (EDI)

– Supports the direct transfer of information in the form of predefined electronic documents – Standards • United Nations/EDI for Administration, Commerce, and Transport (UN/EDIFACT) • ANSI ASC X12 Information Technology for Managers 14

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The Role of Managers Vis À-Vis IT

• Managers have a crucial role in leading the successful introduction and adoption of IT • Critical responsibilities – Identifying appropriate opportunities to apply IT – Smoothing the way for its successful introduction and adoption – Mitigating its associated risks Information Technology for Managers 16

Identifying Appropriate IT Opportunities

• Management must ensure a good return on the investment – IT-related expenses in many organizations can account for 50 percent or more of capital spending – Great variation exists in IT-related spending Information Technology for Managers 17

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Smooth Introduction and Adoption of IT

• Managers must overcome resistance – So that the new IT system is accepted and used throughout the organization – Information Technology for Managers 20

Smooth Introduction and Adoption of IT (continued)

• Three major theories on organizational change management – Change Management Continuum Model – Unified Theory of Acceptance and Use of Technology – Three Worlds of IT Information Technology for Managers 21

Smooth Introduction and Adoption of IT (continued)

• Change Management Continuum Model – Seven stages of commitment grouped into three major phases: • Inform • Educate • Commit Information Technology for Managers 22

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Smooth Introduction and Adoption of IT (continued)

• Unified Theory of Acceptance and Use of Technology – Identifies four key factors that directly determine a user’s acceptance and usage of IT Information Technology for Managers 25

Smooth Introduction and Adoption of IT (continued)

• Three Worlds of IT – Three types of IT require different types of organizational change – Four organizational complements allow improvements with IT • Better-skilled workers • Higher levels of teamwork • Redesigned processes • New decision rights Information Technology for Managers 26

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Smooth Introduction and Adoption of IT (continued)

• Successful enterprise IT system requires: – Top-down imposition of standards and procedures Information Technology for Managers 28

A Manager Takes Charge

• Toys “R” Us EDI System Rescued • Tim Meester: director of vendor partnerships • Errors in EDI data made it difficult for the vendors to get paid • Biggest challenge – Change the Toys “R” Us culture – Make employees realize that less than 100 percent accuracy was unacceptable Information Technology for Managers 29

A Manager Takes Charge (continued)

• Team had to: – Develop corrective actions – Address recurring problems both at Toys “R” Us and the vendor sites – Provide consistent advice to each vendor • Toys “R” Us implemented an extranet to link itself with all 1300 of its vendors Information Technology for Managers 30

Ensuring that IT Risks Are Mitigated

• Special measures are needed to ensure that the information and its control mechanisms stand up to intense scrutiny – Laws mandate stringent control requirements and accurate record keeping for publicly held corporations • Managers are responsible for ensuring that physical IT assets are protected against loss or damage Information Technology for Managers 31

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What if Managers Do Not Participate in IT?

• Failed IT projects can lead to lowered returns on investment and missed opportunities • Managers at 80 percent of surveyed firms believe that their operational and financial data is not as effective as it should be for developing strategies and planning Information Technology for Managers 33

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Summary

• Managers have three critical responsibilities when it comes to IT – Identifying appropriate opportunities to apply IT – Smoothing the way for its successful introduction and adoption – Mitigating its associated risks • Most effective users of IT obtain maximum value from IT investments that: – Align with the organization’s strategic needs – Are well managed and executed Information Technology for Managers 35

Summary (continued)

• Successfully implementing the three types of IT (function, network, and enterprise) requires different types of organizational change • Four organizational compliments allow IT to improve performance – Better-skilled workers – Higher levels of teamwork – Redesigned processes – New decision rights Information Technology for Managers 36