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Introduction to Information Systems management

Managing information is a critical skill for success in today’s business environment. All decisions made by companies involve, at some level, the management and use of IT.

Understanding the basic fundamentals about using and managing information is worth the investment of time.

The reasons for this investment:

• IS must be managed as a critical source

• IS enable change in the way people work together

• IS are part of almost every aspect of business

• IS enable or inhibit business opportunities and new strategies

• IS can be used to combat business challenges from competitors

In addition to financial issues, a manager must know how to mesh technology and people to create effective work processes. Collaboration is increasingly common, especially with the rise of social networking. Incorporating IS into the design of a business model enables people to focus their time and resources on issues that bear directly on customer satisfaction and other revenue- and profit-generating activities. The proliferation of new technologies creates a business environment filled with opportunities.
Digital natives: individuals who have grown up completely fluent in the use of personal technologies and the web

The changing demographics of the workforce and the integration of digital natives increase the rate of adoption of new technologies beyond the pace of traditional organisations.

Skills a manager needs to participate effectively in IT decisions (fig. I-2, p. 9):

• Visionary: Creativity, confidence and flexibility

• Informational and Interpersonal: Communication, listening and interpersonal skills

• Structural: Project management, analytical skills, organizational skills and planning skills.

See Figure I-4 on page 12 for manager’s roles, and see Figure I-6 on page 14 for Process view of the firm: the value chain

Comparison of data, information and knowledge

Data: simple observations of the state of the world. E.g. Daily inventory report of all inventory items sent to the CEO of a large manufacturing company

Information: Data endowed with relevance and purpose. E.g. Daily inventory report of items that are below economic order quantity levels sent to inventory manager

Knowledge: Information from the human mind. E.g. Inventory manager knowing which items need to be reordered in light of daily inventory report, anticipated labour strikes, and a flood in Brazil that affects the supply of a major component.

Mashup: Term used for applications that combine data from different source to create a new application online.

System hierarchy: See Figure I-10 on page 18: An IS comprises 3 main elements: technology, people and process. IS is defined as the combination of those 3 elements that the organization uses to produce and manage information.

Infrastructure: refers to everything that supports the flow and processing of information in an organization.

Making sure information systems are in line with strategy and the organization - Chapter 1

General managers must take a role in decisions about information systems (IS). General managers, who leave IS decisions solely to there is professionals often put themselves and their companies at a disadvantage. The IS organization manages an infrastructure that is essential to the firm’s functioning.

The Information System Strategy Triangle is a framework for understanding the impact of IS on organizations. It relates business strategies with IS strategy and organizational strategy. See Figure 1.1 on page 24

The Information System Strategy Triangle implies that a successful firm has an overriding business strategy that drives both organizational and IS strategy. The business IS and organizational strategies must constantly be adjusted to be in balance.

1.1 An overview of business strategy frameworks

Strategy = A coordinated set of actions to fulfil objectives, purposes, and goals. The essence of a strategy is setting limits on what the business will seek to accomplish. Strategy starts with a mission.

Mission = A clear and compelling statement that unifies an organization’s effort and describes what the firm is all about. In a few words the mission statement sums up what is unique about the firm. See Figure 1.2 on page 27.

Business strategy = A plan articulating where a business seeks to go and how it expects to get there. Management constructs this plan in response to market forces, customer demands, and organizational capabilities. Market forces create the competitive context for a business.

There are several well-accepted models that frame the discussions of business strategy.

Porter’s generic strategies framework

Michael Porter’s framework helps managers to understand the strategies they may choose to build a competitive advantage. Porter claims that the “fundamental basis of above-average performance in the long run is sustainable competitive advantage”.

He identified three primary strategies for achieving competitive advantage:

• Cost leadership

• Differentiation

• Focus

These advantages derive from the company’s relative position in the marketplace, and depend on the strategies and tactics used by competitors. See fig.1.3, p. 29

Cost leadership = When the organization aims to be the lowest-cost-producer in the marketplace. Only one firm can be cost leader, as soon as another firm aims to be cost leader as well, price wars will make sure one of the two companies will have to leave the market.

Differentiation = The organization qualifies its products or service in a way that allows it to appear unique in the marketplace. Multiple firms can apply a differentiation strategy, firms have to do their very best to produce and market their products in such a way that customers see a clear difference with a similar product of a competitor.

Focus = The organization limits its scope to a narrower segment of the market and tailors its offerings to that group of customers. Two variants:

• Cost focus: Organization seeks a cost advantage within its segment

• Differentiation focus: Organization seeks to distinguish its products or services within the segment.

Hypercompetition Framework (by D’Aveni)

Porter’s model is not suitable to any situation. Markets are characterized more and more by fast-changing circumstances. Hypercompetition models suggest that the speed and aggressiveness of the moves and countermoves in any given market create an environment in which advantages are “rapidly created and eroded”. Markets are dynamic, and competitive advantages can be achieved by being able to change very quickly and along with the market. Firms seek to achieve this relatively transitory competitive advantage under hypercompetition in four ways:

• Cost/quality

• Timing/know-how

• Strongholds

• Deep pockets

Furthermore, firms willing to compete under hypercompetition circumstances should be able to adapt and change their organizational strategy quickly, which requires the firm to have a suitable culture. Also, the firm should be able to surprise and confuse the competition with their actions.

Why are these models essential to planning for Information Systems?

Business strategy should derive IS decision making, and changes in business strategy should entail reassessments of IS. Moreover, changes in IS potential should trigger reassessments of business strategy.

For the purposes of the Information Systems Strategy Triangle, understanding business strategy means answering the following questions:

• What is the business goal or objective?

• What is the plan for achieving it? What is the IS role in this plan?

• Who are the crucial competitors and partners, and what is required of a successful player in this marketplace?

• What are the industry forces in this marketplace?

Figure 1.4 on page 33 gives you a summary of strategic approaches and IT applications.

1.2 An overview of organizational strategies

Organizational strategy = The organizational design, as well as the choices it makes to define, set up, coordinate, and control its work processes. It must complement business strategy.

The business diamond model

The business diamond = Identifies the crucial components of an organization’s plan as its information/control, people, structure and tasks.

See Figure 1.5 on page 33 for Levitt’s Business Model.

Social Business Lens- Building a Social Business Strategy

A social business

Chapter 1: Introduction

Technological innovation is the act of introducing a new device, method, or material for application to commercial or practical objectives.

The increasing performance of innovation is due in part to the globalization of markets. Advances in information technology also have played a role in speeding the pace of innovation. Innovation enables a wider range of goods and services to be delivered to people worldwide.

The aggregate impact of technological innovation can be observed by looking at gross domestic product (GDP). The gross domestic product of an economy is its total annual output, measured by final purchase price.

While GDP has its shortcomings as a measure of standard of living, it does relate very directly to the amount of goods consumers can purchase.

Technological innovation increased the amount of output achievable from a given quantity of labor and capital.

Sometimes technological innovation results in negative externalities.

• Production technologies may create pollution that is harmful to the surrounding communities;

• Agricultural and fishing technologies can result in erosion, elimination of natural habitats, and depletion of ocean stocks;

• Medical technologies can result in unanticipated consequences such as antibiotic-resistant strains of bacteria or moral dilemmas regarding the use of genetic modification.

However, technology is, in its purest essence, knowledge – knowledge to solve our problems and pursue our goals. Technological innovation is thus the creation of new knowledge that is applied to practical problems.

Study after study has revealed that successful innovators have clearly defined innovation strategies and management processes.

It takes about 3,000 raw ideas to produce one significantly new and successful commercial product. The innovation process is thus often conceived of as a funnel, with many potential new product ideas going in the wide end, nut very few making it through the development process.

A firm’s organizational structure and control systems should encourage the generation of innovative ideas while also ensuring efficient implementation.

A firm’s new product development process should maximize the likelihood of projects being both technically and commercially successful. To achieve these things, a firm needs:

• An in-depth understanding of the dynamics of innovation;

• A well-crafted innovation strategy;

• Well-designed processes for implementing the innovation strategy.

Chapter 2: Sources of Innovation

Innovation can arise from many different sources:

• Individuals;

• Research efforts of universities, government laboratories and incubators, or private non-profit organizations;

• Firms;

• Networks of innovators.

Firms are well suited to innovation activities because they typically have greater resources than individuals and a management system to marshal those resources toward a collective purpose. Firms also face strong incentives to develop differentiating new products and services, which may give them an advantage over non-profit or government-funded entities.

Networks of innovators that leverage knowledge and other resources from multiple sources are one of the most powerful agents of technological advance. We can thus think of sources of innovation as composing a complex system wherein any particular innovation may emerge primarily from one or more components of the system of linkages between them.

Innovation begins with the generation of new ideas. An idea is something imagined or pictured in the mind. The ability to generate new and useful ideas is termed creativity.

Creativity is defined as the ability to produce work that is useful and novel.

Novel work must be different from work that has been previously produced and surprising in that it is not simply the next logical step in a series of known solutions. The degree to which a product is novel is a function both of how different it is from prior work and of the audience’s prior experiences. A product could be novel to the person who made it, but known to most everyone else. In this case, we would call it reinvention.

An individual’s creative ability is a function of his or her intellectual abilities, knowledge, style of thinking, personality, motivation, and environment.

The impact of knowledge on creativity is somewhat double-edged. If an individual has too little knowledge of a field, he or she is unlikely to understand it well enough to contribute meaningfully to it. On the other hand, if an individual knows a field too well, that person can become trapped in the existing logic and paradigms, preventing him of her from coming up with solutions that require an alternative perspective.

The personality traits deemed most important for creativity include:

• Self-efficacy;

• Tolerance for ambiguity;

• Willingness to overcome obstacles and take reasonable risks;

• Intrinsic motivation.

Finally, to fully unleash an individual’s creative potential often requires an environment that provides support and rewards for creative ideas.

The creativity of the organization is a function of creativity of the individuals within the organization and a variety of social processes and contextual factors that shape the way those individuals interact and behave. The organization’s structure, routines, and incentives could thwart individual creativity or amplify it.

Intranet is a private network, accessible only to authorized individuals. There they can submit their ideas and actively interact and collaborate on the ideas of others. Through active exchange, the employees can evaluate and refine the ideas, improving their fit with the diverse needs of the organization’s stakeholders.

Idea collection systems are relatively easy and inexpensive to implement, but are only a first step in unleashing employee creativity.

Creativity training programs encourage managers to develop verbal and non-verbal cues that signal employees that their thinking and autonomy is respected.

Sometimes monetary rewards undermine creativity by encouraging employees to focus on extrinsic rather than intrinsic motivation.

Innovation required combining a creative idea with resources and expertise that make it possible to embody the creative idea in an useful form.

Analysis of personality traits of inventors suggest these individuals are likely to be interested in theoretical and abstract thinking, and have an unusual enthusiasm for problem solving. Their tendency toward introversion may cause them to be better at manipulating concepts than at interacting socially.

Most successful inventors possess the following traits:

• Mastered basics tools and operations of the field in which they invent (they have pursued two or three field simultaneously);

• Curious and more interested in problems than solutions;

• Question assumptions made in previous work in the field;

• Have the sense that all knowledge is unified. They seek global solutions rather than local solutions and are generalists by nature.

While manufacturers typically create new product innovations in order to profit from the sale of the innovation to customers, user innovators often have no initial intention to profit from the sale of their innovation – they create the innovation for their own use.

One of the most obvious sources of firm innovations is the firm’s own research and development efforts. Research can refer to both basic research and applied research.

• Basic research is effort directed at increasing understanding of a topic or field without a specific immediate commercial application in mind.

• Applied research is directed at increasing understanding of a topic to meet a specific need. In industry, this research typically has specific commercial objectives.

Development refers to activities that apply knowledge to produce useful devices, materials or processes.

A firm’s R&D intensity had a strong positive correlation with its sales growth rate, sales from new products, and profitability.

The science-push approach assumed that innovation proceeded linearly from scientific discovery, to invention, to engineering, then manufacturing activities, and finally marketing.

The demand-pull approach argued that innovation was driven by the perceived demand of potential users. Research staff would develop new products in efforts to respond to customer problems or suggestions. The view was criticized as being too simplistic.

Most current research suggests that firms that are successful innovators utilize multiple sources of information and ideas:

• In-house research and development;

• Linkages to customers or other potential users of innovations;

• Linkages to external network of firms;

• Linkages to other external resources of scientific/technical information.

Collaborators can pool resources such as knowledge and capital, and they can share the risk of a new product development project. The most frequent collaborations are between firms and their customers, suppliers,