Management information system

 the computer and communications technology that supports business operations and management of a firm  an integrated, computer-based, interactive system that provides information t

Overview of Information Technology Concepts

Instructor: Prof Ilyoo B Hong

Business environment & IT

Innovations Obscelence

EC Info overload

– extracted from data

– readily useful for decision-making or solving

problem-– eg) mean or median of students’ ages or heights

Roles of IT in business firms

 Improvement of operational efficiency

development cycle

 Support of supply chain

What is MIS?

 the computer and communications

technology that supports business

operations and management of a firm

 an integrated, computer-based, interactive system that provides information to support operations and decision-making

 can collect, process, store, analyze, and

disseminate information for a specific

purpose

Strategic Planning

Tactical Control

Operational

Control

Top Management

Middle Management

Low-level Mgmt

Sales/ Mfg Financial Acct Personnel

Business Functions &

Management Levels

 TPS (Transaction Processing Systems): process transaction data

 IRS (Information Reporting Systems): provide information for mgmt

 DSS (Decision Supporting Systems): supports mgmt decision making

 ES (Expert Systems): solve problems by mimicking experts

 EIS (Executive Information Systems): provide info for executives

 OAS (Office Automation Systems): support knowledge workers

 SIS (Strategic Information Systems): create a competitive edge

 GDSS (Group Decision Support Systems): support electronic meetings

How IS Have Evolved

Unit 2 Strategic Use of IT

Instructor: Prof Ilyoo B Hong

No 1

 Contents

● Business Environment and Competitive Strategy

- Competitive forces model as an industry analysis framework

- Generic strategies

- Value chain analysis model

● What is a Strategic Information System(SIS)?

- The SIS concept

- Using IT to create a competitive edge

● SIS and Generic Strategies

- Implementing the cost leadership strategy

- Implementing the differentiation strategy

- Implementing the focus strategy

● SIS and Value Chain Analysis (VCA)

 Competitive Forces Model

a given industry

of the industry is high, and thus, the profit potential for the firm is slim

competitive forces

No 3

 Competitive Forces Model

● The five competitive forces affect the intensity of competition within an industry

● The more intense the competition, the slimmer the profit potential a firm expects

Threat of New Potential Entrant

Threat of Substitute Products/Services

Bargaining Power of Buyers

Bargaining Power

of Suppliers

Competition among Existing Rivals

 Traditional Vs Strategic Information Systems

● Traditional Information Systems

- Focuses on improving operational efficiency

- e.g., transaction processing systems

● Strategic Information systems

- Uses information systems as a competitive weapon, beyond the efficiency focus

- Centers on creating a competitive edge by weakening competitive forces

- Ultimately aims at increasing sales or expanding market shares

No 5

 Classical SIS Example #1

- Online order entry and processing system

- Based on the telecomm network linking AHS with its customers (hospitals)

- Receives an online order directly from the purchasing dept of a hospital

- Value for customer: streamlining the hospital purchasing process for efficiency and convenience

- Value for AHS: Speeding the order processing; expanding the market share

 Classical SIS Example #2

- Computer-based airline reservation system

- Uses leased lines between UA and travel agencies

- A travel agent can use a terminal to access seat reservation and flight information

- UA manipulated the way travel agents access information such that information

on their flights will be more visible than information on their competitors

- Value for customer: convenient access to reservation and flight information

- Value for UA: increased sales

No 7

경쟁사 예약시스템

Competitors’

ARS

APOLLO’s role

 Limiting information access by competitors

 Controlling information access by travel agents

 Analyzing routes/fares of competitors

Impacts on firms/industry

 Creating a competitive edge for SIS innovator

 Causing some competitors to bankrupt

 Increasing competition within an industry

 Using IT to create a competitive advantage

● Creating switching costs

- Weakens the bargaining power of buyers

- e.g., branchless virtual bank in France (Bank customers get locked in)

● Shift in balance of power via information monitoring

- Weakens the bargaining power of suppliers

- e.g., the dept store that uses a computer network to monitor prices and stock levels and make purchase decisions

● Building entry barriers

- Weakens the threat of potential entrants

- e.g., a stock price analysis DSS which is too difficult or expensive to implement

● Generating secondary products/services

- e.g., American Airlines’s Sabre (extra revenues from travel agents for info use)

No 9

 Generic Strategies & IT

● Cost Leadership Strategy

- Focuses on increasing profits by dramatically saving costs

- e.g., CAD/CAM, JIT, online order entry & processing system

Inbound logistics

Corporate infrastructure(acct/fin, planning, etc.) Manpower resource management

Technology development

titive Edge (profit)

Support

activities

Primary

activities

A business firm’s individual’s individual value activity incrementally contributes value

to the firm, and these values gather to become a competitive advantage for the firm

 Value Chain Analysis

- Operations/Production: Transforms the raw materials into finished products

- Outbound Logistics: Stores in the warehouse and transports to the point of sale the finished products

- Marketing & Sales: Promoting, advertising, and selling the finished goods

- After-sale Service: Providing service to enhance or maintain product value

● Support Activities

- Corporate Infrastructure: Providing administrative support for primary activities

- HRD: Recruiting, employing, training, and developing human resources

- Technology Development: Improving products or manufacturing process

- Materials procurement: Purchasing the raw materials for production

Inb Log

(JIT, EDI, email)

Oper

(CAD/

CAM, CIM)

Outb Log

(EDI)

Marketing and sales (DSS)

Service (wireless DB tracking)

Corp Infra (groupware, email, OA system) HRD (performance DB; distance learning) Technology Development (CAD)

Procurement (JIT, EDI)

No 0

Business Process Innovation through IT

● The Concept of Business Process Innovation

Attribute Process Improvement Process Innovation

Level of Change Incremental Radical

Starting Point Existing process Clean slate

Frequency of Change One-time/continuous One-time

Typical Scope Narrow, within functions Broad, cross-functional

Primary Enabler Statistical control Information technology

Type of Change Cultural Cultural/structural

[Source: Davenport, Thomas H Process Innovation: Reengineering Work through Information

 What is Business Process Innovation?

● Business process innovation refers to a means or process through which

a firm can increase competitiveness by making big changes in the way the firm conducts its business

● Examples: reengineering, benchmarking, TQM(total quality management)

● Process innovation is different from process improvement

No 2

 What is Reengineering?

● Often referred to as BPR(Business Process Reengineering)

● a business process innovation technique that seeks cost reduction, increase in market responsiveness, and improvement in product/service quality for the purpose of increasing customer satisfaction and of creating

 Principles of Reengineering

● Integrate related parts of work

rapidly

● Centralize resource management

resources and reduce the costs of resource management

● Focus on concurrent processing of tasks

concurrently if necessary (‘concurrent processing’)

work process

No 4

 Examples of Reengineering

Company Process Result Existing IT New IT

IBM Credit Load

processing

Cycle time was reduced to 1 day from 7 days (85%);

Number of applications processed per day increased 100 times

Database

Computer system supporting a loan officer

Kodak Product

development

Cycle time was reduced to

38 weeks from 70 weeks (46%); Costs were saved

Shared databases;

Cycle time was reduced to 2 hours from 2 months (99%)

Separate databases

Integrated DB; Telecomm

network; Expert systems

Customer

Sales person

Operator Credit

dept

Business practices dept

Price dept

New Process

 Process Innovation at IBM Credit

Manufacturing facility design

 Process Innovation at Kodak

 Stages of Reengineering

Select a target process

Understand the existing process

Set the objectives of the process

Design the new process

Develop a change model

Implement the process

Operate the process

No 8

 Factors Leading to a BPR Failure

Unclear about reengineering concept Clearly understand the key philosophy of reengineering Unclear about what to reengineer Choose the right target process

Consuming excessive amount of time in

analyzing the existing process

Promptly understand the old process according to the time plan

Absence of strong management leadership Management should lead the changes of process and

organization Process redesign in a small scale Pursue innovative process redesign in a large scale Trying to implement a new process

immediately following process redesign Test ideas thoroughly before implementation

Staying way behind the schedule Don’t lose focus, and remain within the preset scope

Ignoring organizational changes required by

process changes

Be ready to undertake full-scale changes in the organizational system including organizational structure and jobs

Unrealistic implementation of process change Implement the new process promptly, instantaneously,

and repetitively Ignoring needs/wants of organizational

members Be thoughtful of individuals’ needs

Internet & Digital Economy

 Internet Shopping Malls

 Electronic Payment Systems

 Agent Technology

What is Internet?

governmental organizations

Services Available on Internet

 electronic mail

– allows for exchange of personal messages between individuals

– uploads/downloads files

 telnet

– permits log-ins to access resources in remote locations

– designed to let user groups exchange information of their interest

Company Uses of the Web for Electronic Commerce

1.Market place awareness

Electronic Commerce

products, services, and information via computer networks, including the Internet

zations

Benefits of EC

– EC decreases the cost of creating, processing, distributing, storing, and retrieving paper-based info, as well as telelcom cost

– EC allows reduced inventories and overhead by facilitating SCM

– EC allows small businesses to compete against larger ones

– EC provides consumers with more choices (more vendors/products)

– EC keeps the costs of products and services down

– EC provides the opportunity to shop 365 days a year, 24 hours a day

– EC decreases the need to travel for business transactions

– EC lowers the prices of merchandise, allowing poor people to buy

B-to-B EC Applications

 EDI(Electronic Data Interchange):

– defined as the electronic movement of specially formatted standard

business documents, such as orders, bills, and confirmations sent between businesses

– document formatting standards: X12, EDIFACT, etc

– widely used by retailers, manufacturers, insurance companies, and other paperwork-intensive organizations

– can significantly lower paperwork-related cost and speed up transactions

 There has been a shift from VAN-based

EDI to Internet-based EDI

B-to-C EC Applications

 Advertising and Online Publishing

– websites of most large corporations

 Cyberbanking, Personal Finance, and Stock Trading

– online decision support tools

 Travel and Real Estate

– digital photos

 Retailers & Internet Shopping Malls

– electronic catalogs

 Auctions

Cyber Auction Site

Selection of the successful bidder



Item Registra-tion



How Electronic Auction Works

Categories of Internet Shopping Malls

Direct Sale, Multiple Products

Indirect Sale, Multiple Products

Direct Sale, Single Product

Indirect Sale, Single Product

Electronic Payment Systems

Intelligent Agents

 A technology designed to alleviate the information

overflow problem and facilitate EC

 special software that travel from site to site, performing tasks useful for the user

 Functions of intelligent agents:

mySimon.com: an Agent to Aid in Shopping

Database Hierarchy

Logical Data Storage

Physical Data Storage

Hierararchical Element Example

100 Brake Pad Sonata DY 10,000 5

105 Spark Plug Avante DY 3,000 10

110 Headlight Avante JS 65,000 3

Brake Pad

10101000

0

Sales File Order File

Product File Part Database

Product File

No Description Model Vendor Unit Pr Qty

100 Brake Pad Sonata DY 10,000 5

No Description Model Vendor Unit Pr Qty

‘Description’ Field

Record of the Part ‘Brake Pad’

The Alphabet ‘B’

in ‘Brake Pad’

The Rightmost bit

File-oriented Approach

Order Entry Program

Invoicing Program

매입 파일

Invoice File

매입 파일 Packing List File

Problems of File-oriented Approach

Database-oriented Approach

Order Entry Program

Invoicing Program

Advantages of Database Approach

Database Management System

Program 1

Program 2

Program 3

Organizational Database DBMS

Microsoft Access: a DBMS for Windows 98

Order

Product Contains

Is- Purchased- From

• Product Code

• Description

• Unit Price

• Vendor Data Attributes for the ‘Product’ Entity

• Vendor ID

• Vendor Name

• Mailing Address

• Phone Number Data Attributes for the ‘Vendor’ Entity Entity-Relationship Diagram(ERD)

Logical Data Models

 Tree (Hierarchical) Data Model

– simple to understand & implement

– parent-child relationship

– quite complex

– owner-member relationship

 Relational Data Model

– data is represented as tables (i.e., rows & columns)

Network Data Model

2

Project No Project Name Dept No.

P100 Campus Information System Development D200

P110 Accounting Auditing System Development D200

P120 Auto Production Information System Update D221

Employee No Employee Name Hire Date Dept No.

E1011 Jane Smith 1993.10.1 D200

E1024 Gregory Johnson 1990.3.5 D200

E3003 Sam Brown 1995.8.1 D201

Relational Data Model

Emerging Database Trends

Recent Trends in DB Technologies

- Multimedia database: Includes graphics, audio, video, and text; technical drawings

- Hypermedia database: Interconnects various multimedia data for efficient access

- Datawarehouse: A collection of multiple databases (oriented to an enterprise)

- Data mart: A subset of a datawarehouse (oriented to a department or a team)

- Data mining: An analytic process designed to explore big data within a datawarehouse

- a system designed to capture, store, manipulate, analyze, manage, and present all types

of spatial or geographical data