Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

Introduction

Why Should a Manager Study Information Systems?

–After all, an entire department is in charge of IT.

• Nearly all decisions in organizations rely on information systems at some level.

• Personal devices are ubiquitous. • In 2014, 90% of US adults had a cell phone and 87% used the

Internet.

• Personal experience with technology helps but the corporate setting has many different requirements in the areas of: • Security, Privacy, Risks • Support • Architecture

• Firms use IT to enhance their business models or change entire industries.

• Managers need to know the basics.

3© 2016 John Wi ley & Sons, Inc.

Why Should you Participate in IT Decisions in your Firms?

• IT permeates almost every aspect of business

• IT enables change in how people work

• IT is at the heart of Internet-based solutions

• IT enables or inhibits opportunities/strategies

• IT combats competitors’ business challenges

• IT provides customers with a voice

• IT supports data-driven decision-making

• IT can help secure key assets

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A Business View of Critical Resources

• Spending is quite high: Worldwide $3.7 trillion in 2014

• Expenditures span 5 categories • Devices (e.g., PCs, tablets, mobile phones) • Data centers (e.g., servers, storage equipment)

• Enterprise (companywide) software • IT Services (e.g., support and consulting services) • Telecommunications (e.g., voice and data services)

• If these expenditures do not return value, they will dwindle over time

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People and Technology Work Together

• Some of the most-used sites focus on Web 2.0 • In Web 2.0, significant content comes from users

• Information Sharing

• User-centered design

• Interoperability

• Collaboration

• Skilled business managers must balance: • The benefits of introducing new technology

• The costs associated with changing the existing behaviors of people in the workplace

• Does not require deep technical knowledge • Requires understanding the consequences of the choices made

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CTO of @Walmart Labs

• What did Jeremy King say in his blog (pg. 4)? • “Every company is a tech company”

• Do you believe this is true for most firms, or is Wal-Mart somehow different? Why?

• Can you name firms that do not receive key impacts or benefits from technology?

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Opportunities and New Strategies from IT

• New business opportunities spring up with little warning

• Managers must: • Frame the opportunities in an understandable way for

business leaders

• Evaluate them against business needs and choices • Pursue those that fit into an articulated business

strategy.

• The quality of available information will impact the quality of their decisions and their implementation

• Managers will therefore lead the changes driven by information systems

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Competitive Challenges

• Competitors spring up—sometimes unexpectedly

• General managers are in the best position to • See those threats • Attempt to combat them, using technology as a tool

• They need an understanding of • The capabilities of the organization • How those capabilities, together with IS, can

• Create competitive advantage

• Change the competitive landscape for an entire industry

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Managers Need to be Aware of the importance of:

• Customer pull • Customers now have power using social media • Entire business models sometimes need to be redesigned

• Data-driven decision making • Now available: more data than ever before

• From social media • From large data stores in firms

• Predictive analytics tools can help with analysis of that data

• Securing key assets • A balance is needed

• Too little security endangers assets of the firm and its customers • Too much reduces operational convenience

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What Happens if Management Does not Participate?

• Breakdown in servicing customers

• Sales decline

• Damaged reputation

• Poor spending: • Overspending and excess capacity, or • Underspending and restricted opportunity

• Inefficient business processes

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Failing to Consider IS Strategy

• Leads to: • IS that fail to support business goals (e.g., Victoria’s

Secret site overload) • IS that fail to support organizational systems (e.g.,

workers buying mobile devices but the IT department only supports desktop PCs)

• Misalignment between business goals and organizational systems

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Skills Managers Need for Their IT Decisions

• Visionary role • Creativity • Curiosity • Confidence • Focus on business

solutions • Flexibility

• Informational and Interpersonal • Communication • Listening • Information gathering • Interpersonal skills

• Structural • Project management • Analytical • Organizational • Planning • Leading • Controlling

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Upcoming Material

1. Information Systems Strategy Triangle: Alignment of IT and the business

2. Links between IS and business strategy 3. Links between IS and organizational strategy 4. Collaboration and individual work 5. Business processes 6. Architecture and infrastructure 7. Participating in decisions about IS security 8. The business of IS 9. Governance of IS resources 10. Sourcing 11. Project and change management 12. Business intelligence 13. Ethical use of information

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Assumptions

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Assumptions About Management

• Interpersonal • Figurehead • Leader • Liaison

• Informational • Monitor • Disseminator • Spokesperson

• Decisional • Entrepreneur • Disturbance Handler • Resource Allocator • Negotiator

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Assumptions About Business – Functional View

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Process View

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Assumptions about the Nature of Information

• Data – simple observations

• Information – data + relevance + purpose

• Knowledge – information + context + synthesis + reflection

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Data, Information, and Knowledge

Data Information Knowledge Definition Simple observations of

the state of the world Data endowed with relevance and purpose

Information from the human mind (includes reflection, synthesis, context)

Characteristics • Easily structured

• Easily captured on machines

• Often quantified

• Easily transferred

• Mere facts

• Requires unit of analysis

• Data that have been processed

• Human mediation necessary

• Hard to structure

• Difficult to capture on machines

• Often tacit

• Hard to transfer

Example Daily inventory report of all items

Daily inventory report of items with low levels of stock

Report of which items need to be reordered after considering inventory levels, anticipated labor strikes, and a flood affecting a supplier

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Characteristics of Information Across Levels

Top Management Middle Management Supervisory and Lower-Level Management

Time Horizon Long: years Medium: weeks, months, years

Short: day to day

Level of Detail Highly aggregated

Less accurate

More predictive

Summarized

Integrated

Often financial

Very detailed

Very accurate

Often nonfinancial

Source Primarily external Primarily internal with limited external

Internal

Decision Extremely judgmental

Uses creativity and analytical skills

Relatively judgmental Heavy reliance on rules

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Economics of Information vs Things

Things Information Wear out Does not wear out but can become

obsolete or untrue

Are replicated at the expense of the manufacturer

Is replicated at almost zero cost without limit

Exist in a tangible location Does not physically exist

When sold, possession changes hands

When sold, seller may still possess and sell again

Price based on production costs Price based on value to consumer

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Internet of Things (IoT) • Combine information and things = IoT • From the 1970s: Coke machine at Carnegie Mellon

University • From the 1980s: Elevators that call for service without

people knowing there is a problem • Today:

• Self-driving cars • Internet-connected (and controllable) thermostats, stoves,

alarm systems • Pets that are trackable online • Heart monitors that alert doctors or hospitals of a problem • Digital video recorders that can be controlled around the

world • Quad-copters (drones) that can

• Record video marked with location data • Return to the point of origin if it goes out of range of the “pilot” • Notify regarding its location and avoid objects in a database

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The Term “Information Systems”

Composed of: • Technology

• People • Processes

Information Technology vs Information Systems

• The term “IT” tends to be more fashionable • But IT actually refers to just the technology

• Many people interchange the terms

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Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.