Transcript Chapter 2

MANAGEMENT INFORMATION SYSTEMS 8/E
Raymond McLeod, Jr. and George Schell
Chapter 2
Using Information Technology
for Competitive Advantage
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Copyright 2001, Prentice-Hall, Inc.
What is a Firm?
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Physical System
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Closed-loop
Controlled by management
Uses feedback to ensure objectives met
Open because of environmental interaction
Managed through use of a conceptual
system
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Importance of Environment
Very reason for a firm’s existence
 Firm takes resources from environment,
transforms them, and returns goods and
services to environment
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The Firm’s Environment
Society
Financial
Community
Suppliers
Government
The
Firm
Labor
unions
Global
Community
Customers
Competitors
Stockholders
or owners
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The Firm Is Connected to Its
Environment by Resource Flows
Physical and conceptual
 Some flows are major
 Some should not occur at all
 All resources that enter the firm from the
environment eventually return to the
environment
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Competitive Advantage

Computer field perspective
– Use of information to gain leverage in
marketplace
– Relies on more than physical resources
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Addressed with strategic objectives
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A Value Chain
Firm Infrastructure
Support
Activities
Human resource management
Technology development
Procurement
Inbound Operations Outbound Marketing
and
logistics
logistics
sales
Primary Activities
Source : Michael E. Porter
Service
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A Value System
Supplier
value
chains
Firm
value
chain
Channel
value
chains
Buyer
value
chains
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Source : Michael E. Porter
The Information Resources
Two views of information management
1. Manage data by implementing computerbased database management systems
(DBMS)
2. Manage resources that produce the
information
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The Information Resources
Software
Hardware
Information
Specialists
Database
Information
Users
Facilities
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The Information Resource
Manager -- the CIO
Chief Information Officer (CIO) is not
simply a title, but role
 Manager of information services
 Contributes managerial skills
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– Solves information resources problems
– Solves problems in other areas of firm’s
operations
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The CIO Attitude
The business is what counts
 Build partnerships/ties with the rest of the
firm
 Improve basic business processes
 Communicate in business terms, not IS
jargon
 Provide reliable IS services
 Be positive, not defensive
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Strategic Planning
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Long-range planning
– Intends to give firm most favorable position in
its environment
– Specifies strategies for achieving objectives
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Need for each business area to create its
own strategic plan
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The Functional Areas Should Cooperate
in Developing Their Strategic Plans
Strategic
planning for
information resources
Strategic
planning for
marketing
resources
Strategic
planning for
financial resources
Strategic
planning for
manufacturing
resources
Strategic
planning for
human
resources
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Strategy Set Transformation
Organizational
strategy set
MIS
strategy set
Mission
System
objectives
Objectives
System
constraints
Strategy
Other
strategic
organizational
attributes
MIS
strategic
planning
process
System
design
strategies
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Strategy Set Transformation:
Basic Flaw
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Business areas do not always have the
resources to ensure accomplishment of
strategic objectives
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SPIR
Strategy set transformation; support the
firm’s objectives
 Strategic planning for information resources
(SPIR) develops firm and IS strategic plans
concurrently
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– SPIR content
» 1. What is to be achieved
» 2. What will be required
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Strategic Planning for
Information Resources
Influence on
Information
Resources
Business
strategy
Influence on
Business
Strategy
Information
resources
and
IS
strategy
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Strategic Plan Framework for
Information Resources
Strategic Plan
for Information
Resources
AIS
Objectives
MIS
Objectives
DSS
Objectives
Virtual
Office
Objectives
Knowledgebased systems
Objectives
Required
Information
Resources
Required
Information
Resources
Required
Information
Resources
Required
Information
Resources
Required
Information
Resources
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The Strategic Implications of
End-User Computing (EUC)
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Levels of end users in terms of capabilities
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menu-level end users
command-level end users
end-user programmers
functional support personnel
EUC application considerations
– shifts workload so that end-users and
information specialists’ talents are better used
– reduces communications gap
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EUC Risks
Poorly aimed systems
 Poorly designed/ documented systems
 Inefficient use of information resources
 Loss of data integrity
 Loss of security
 Loss of control
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Information Resources
Management (IRM) Concept
Realization that firm’s information
resources go far beyond the information
itself
 Activity pursued by managers at all levels
 Identifying, acquiring, and managing
information resources needed to satisfy
information needs
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IRM - Required Elements
A recognition that competitive advantage
can be achieved by means of superior
information resources
 A recognition that information services is a
major functional area
 A recognition that the CIO is a top-level
executive
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IRM-Required Ingredients (cont.)
A consideration of the firm’s information
resources when engaging in strategic
planning
 A formal strategic plan for information
resources
 A strategy for stimulating and managing
end-user computing
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The IRM Model
The environment of the firm
ENVIRONMENTAL INFLUENCES
The firm’s executives
Other executives
CIO
Firm’s strategic plan
Internal influences
FUNCTIONAL AREAS
Information
services
Finance
Human
resources
Manufacturing
Marketing
INFORMATION RESOURCES
Central computing
resources
Disbursed computing
resources
DATA AND INFORMATION
Users engaged in
end-user computing
Other users
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IRM Model: Firm Environment
Provides setting for achieving competitive
advantage
 Executives are aware of need to manage
resource flows to meet needs of
environmental elements
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IRM Model: Firm’s Executives
Includes CIO
 Guides firm toward objectives
 Key activity is strategic planning
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IRM Model: Business Areas
Information services is a major business
area
 Each area develops own strategic plans
 One business area strategic plan is for
information resources
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IRM Model: Information
Resources
Strategic plan for information resources
details acquisition and management
 Information resources
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– Centralized
– Dispersed throughout firm
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IRM Model: Users
Details data and information flows between
resources and users
 Some users engage in end-user computing
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Summary
Environment of a firm consists of eight
elements
 Firms attempt to achieve competitive
advantage
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– Margin - value of products and services over
cost
– Value chain
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Information resources
– Hardware, software, facilities, database,
information specialists, information, and users
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Summary [cont.]
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Executives perform strategic planning
– SPIR
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All firm’s managers need to engage in IRM
– Recent revelation
– Integrating concept
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