It For Management

HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS
Management Information Systems - 37A021

Fall 2004
Part I: IT in the Organization
Introduction
Chapter 1: Information Technology in the Digital
Economy
Chapter 2: Information Technologies: Concepts
and Management
Virpi Kristiina Tuunainen & Matti Rossi

e-mail: [tuunaine|mrossi]@hkkk.fi
Grading Policy
The grade for the course is divided into:
Exam Part I (30 %)

– Turban, Mclean & Wetherbe: Information Technology for
Management: Transforming Business in the Digital
Economy, Chapters 1-2, Technology guides T3-T4
Exam Part II (70 %)

– Turban, Mclean & Wetherbe: Information Technology for
Economy, Chapters 3 – 16.
Course material
Turban, Mclean & Wetherbe: Information Technology for

Economy, John Wiley & Sons, Inc, 2002. 3rd Edition
Lecture slides (http://www.hkkk.fi/iss/37A021)
Contents
Part I: IT in the Organization Part V: Implementing and Managing IT
Information Technology in the Digital Economy IT Economics
Information Technologies: Concepts and Management Building Information Systems
Strategic Information Systems for Competitive Advantage Managing Information Resources and Security
Part II: The Web Revolution The Impacts of IT on Organizations, Individuals, and Society
Network Computing: Discovery, Communication, and Technology Guides
Collaboration
Hardware
Electronic Commerce
Software
Supply Chain Management and ERP
Data and Databases
Part III: Organizational Applications Telecommunications
Transaction Processing, Innovative Functional Systems, CRM, The Internet and the Web
and Integration
IT Planning and BPR
Knowledge Management
Part IV: Managerial and Decision Support Systems
Supporting Management and Decision Making
Data Management: Warehousing, Analyzing, Mining and
Visualization
Intelligent Support Systems
New to this edition

• New Chapter—Supply Chain Management
• New Chapter—Knowledge Management
• New Appendix on Ethics
• New Theme—"Transforming Business in the Digital Economy"
integrated into every chapter
• More integration of E-Commerce throughout the text
• "Lessons Learned" from IT failures added to every chapter
• Expanded and more interactive Virtual Company cases
The Digital Economy

The digital economy refers
to an economy that is based
on digital technologies,
including digital
communication networks,
computers, and software.
The digital economy is also

sometimes called the
Internet economy, the New
economy, or the Web
economy.
Old vs. “New” Economy: Photography

Old Economy “New Economy”
You buy film at the store, insert it Use a digital camera that can
into your camera & take pictures. also take videos. No film is
needed, and no processing
Once you complete the film,
required. You can see the results
sometimes weeks or months after
immediately & enlarge & print
you began the roll, you take it to
photos quickly.
the store for processing.
If your digital camera is
Go back to the store and pay for
connected to a wireless device
enlargements and duplications.
(such as a palmtop computer or
Send photos to family and friends. a cell phone) take pictures and
see them within a few seconds.
Digital Economy Business Models

Name-Your-Own-Price. Pioneered by Priceline.com, this model
allows customers to state a price they are willing to pay for a product
or service.
Dynamic Brokering. In the digital age customers can specify

requirements for a service or a product. These specifications are
broadcast over the Internet (“Webcasted”) to service providers in an
automatic invitation to submit bids.
Reverse Auctions. Electronic reverse auctions are fast, they reduce

administrative costs by as much as 85 %, & products’ prices can be
5 - 20 % lower.
Digital Economy Business Models (cont.)

Affiliate marketing is an arrangement in which marketing
partners place a banner of a company, such as Amazon.com,
on their Web site.
Group Purchasing. Anyone can pay less per unit when buying
more units. Discounts are usually available for quantity
purchases.
E-marketplaces and Exchanges. Since 1999, thousands of

electronic marketplaces, of different varieties, have sprung up.
The New World of Business

Business pressures
Organizations and their Responses
Information Technology (IT)
Major Business Pressures/Drivers

Market pressures
Technological pressures
Societal pressures
Market Pressures
Global Economy & Strong Competition. Powerful Customers.
Global competition is intensified as Consumer sophistication &
governments become involved through the expectations increase as
use of subsidies, tax policies, customers become more
import/export regulations & incentives. knowledgeable about the
Rapid and inexpensive communication availability and quality of products
and transportation modes increase the and services.
magnitude of international trade even
further.
Changing Nature of the Workforce.

The workforce is becoming more
diversified, with more females, single
parents, minorities, and handicapped
persons working in all types of positions.
Technology Pressures
Technological Innovation & Information Overload.
Obsolescence. The amount of information
Some of today’s state-of-the-art available on the Internet more than
products may be obsolete tomorrow. doubles every year.
The management of information is

Thus, technology accelerates the critical.
competitive forces.
Societal Pressures
Social Responsibility. Government Deregulation.
Issues range from the Deregulation can be a blessing to
environment to education. one company but a curse to
another company.
Government Regulations.
Ethical Issues.
Regulation issues involve
health, safety, environmental Business ethics relates to
control, and equal opportunity. standards of right and wrong in
business practices.
Organizational Framework
Organizations and Their Responses

Strategic systems
Continuous improvement efforts
Business Process Reengineering (BPR)
Business alliances
Electronic commerce
What Is an Information System?

Information systems (IS) collect, process, store, analyze, and disseminate information for a
specific purpose.
Information Systems are comprised of; inputs (data, instructions), outputs

(reports, calculations), feedback mechanisms that controls the operation and an
environment that it works within.
Components of Information Systems

Hardware is a set of devices Network is a connecting
such as processor, monitor, system that permits the sharing
keyboard, and printer. of resources between
computers.
Software is a set of programs
that enable the hardware to Procedures are the set of
process data. instructions about how to
combine the above
components.
Database is a collection of
related files, tables, relations,
and so on, that stores data. People are those individuals
who work with the system or
use its output.
General Technological Trends

General trends within computing systems include the
following:
Cost Performance Ratio
Object-Oriented Environment & Document Management.
Networked Computing
Mobile Commerce
Integrated Home Computing.
The Internet
Intranets and Extranets
Corporate Portals
The Networked Enterprise
Optical Networks
Moore’s Law
(Turban et al, 1999)

Characteristics of Information Systems

Several different information Interorganizational information
systems can exist in one systems involve information
organization. flow in two or more
organizations.
A particular information system
may be composed of several An enterprisewide system or
separate information systems. interorganizational information
system is composed of large &
small computers & hardware
Information systems are connected by different types of
connected by means of networks.
electronic networks.
Data, Information & Knowledge

One of the primary goals of Information Systems is to economically
process data into information or knowledge.
Data items refer to an elementary description of things,

events, activities, and transactions that are recorded,
classified, and stored, but not organized to convey any
specific meaning.
Information is data that have been organized so that they
have meaning and value to the recipient.
Knowledge consists of data or information that have been
organized and processed to convey understanding,
experience, accumulated learning, and expertise.
Classification of Information Systems

Organizational structure Support provided
Departmental information Transaction Processing System (TPS)

systems Management Information System (MIS)
Enterprise information Knowledge Management Systems
systems (KMS)
Interorganizational systems Office Automation System (OAS)
Decision Support System (DSS)
Functional area
Enterprise Information System (EIS)
Accounting
Group Support System (GSS)
Finance
Intelligent Support System
Manufacturing
Marketing System architecture
Human Resources … A mainframe-based system.
A standalone personal computer (PC).
Activity Supported
A distributed or a networked computing
Operational system (several variations exist).
Managerial
Strategic
Phasing of IS Utilization
k
w or
of
Service strategies
n
io
r ib -
ist er
ut
-separation of service channels and customers’ service
l d i nt
n a so
needs and their efficient integration
tio al
za g
n i in Customer centric
g a op
or evel
-IT in customer relationships

D
-strategic applications
User centric
ly
- DSS
on
- office automation and PCs

lly
na
ni e
er
ito th
Information centric
nt
za g
n i in
-data bases and MIS

g a op
-integration of subsystems
or vel
De
Routine and task centric

- production systems
- administrative IS
1960 1970 1980 1990 2000

(Hannus, 1993)
Interrelated Support Systems
Non
Non Computer
Computer
Support
Support
Transaction
Transaction MIS
MIS DSS
DSS
Processes
Processes
External
External Data
Data EIS
EIS
Information
Information Warehouse
Warehouse
The TPS collects information that is used

to build the DSS and EIS. The information Internet,
Internet, other
other
Computer Support
Computer Support
in the data warehouse and DSS can be
used as an input to EIS.
Functional MISs
Sales forecast by region generated by marketing MIS.
Information Infrastructure and Architecture
Information Infrastructure: An
information infrastructure consists of the
physical facilities, services, and management
that support all shared computing resources
in an organization. There are five major
components of the infrastructure: computer
hardware, development software, networks
and communication facilities (including the
Internet and intranets), databases, and
information management personnel.
Information Architecture: An information architecture is a high level map or plan of the

information requirements in an organization. It is a guide for current operations and a blueprint for future
directions. It asssures us that the organization’s IT meets the strategic business needs of the
corporation.
Managing Information Resources

Major categories of Resources: The responsibility for the management
Hardware of information resources is divided
between two organizational entities:
Software
The information systems
Databases department (ISD) - a corporate
Networks entity.
Procedures The end-users - who are

scattered throughout the
Security facilities organization.
Physical buildings
The responsibility for managing these resources depends on many things:

the size/ nature of the organization, the amount/ type of IT resources, etc.
Generally speaking, the ISD is responsible for corporate-level and shared
resources, while the end users are responsible for departmental
resources
What is the Role of the ISD?

The role of the ISD is changing from purely technical to more
managerial and strategic.
As a result, the position of the ISD within the organization tends
to be elevated from a unit reporting to a functional department, to
a unit reporting to a senior vice president of administration or to
the CEO.
The role of the director of the ISD is changing from a technical
manager to a senior executive.
The ISD can be centralized or decentralized or a combination of
the two.
The ISD must work closely with external organizations such as
vendors, business partners, etc.
Managerial Issues
The transition to networked computing. How much infrastructure?
Converting the IT in organizations to Justifying information system
networked computing may be a applications is not an easy job due
complicated process.
to the intangible benefits and rapid
Legacy systems. changes in technologies.
Whether and when to move from the The role of end users.
legacy systems to a client/server
enterprisewide architecture is an End users play an important role in
important issue. IT development and management.
The role of the ISD. The end users know best what their
information needs are and to what
The role of the ISD can be extremely degree they are fulfilled.
important, yet top management
frequently mistreats it. Ethical Issues.
IS systems may invade the privacy
of the users or create advantages
to certain individuals at the
expense of others.

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HELSINGIN KAUPPAKORKEAKOULU-HELSINKI SCHOOL OF ECONOMICS

Management Information Systems - 37A021

Part I: IT in the Organization

Virpi Kristiina Tuunainen & Matti Rossi

Exam Part I (30 %)

Exam Part II (70 %)

Turban, Mclean & Wetherbe: Information Technology for

New to this edition

The Digital Economy

The digital economy is also

Old vs. “New” Economy: Photography

Digital Economy Business Models

Dynamic Brokering. In the digital age customers can specify

Reverse Auctions. Electronic reverse auctions are fast, they reduce

Digital Economy Business Models (cont.)

E-marketplaces and Exchanges. Since 1999, thousands of

The New World of Business

Major Business Pressures/Drivers

Changing Nature of the Workforce.

The management of information is

Organizations and Their Responses

What Is an Information System?

Information Systems are comprised of; inputs (data, instructions), outputs

Components of Information Systems

General Technological Trends

(Turban et al, 1999)

Characteristics of Information Systems

Data, Information & Knowledge

Data items refer to an elementary description of things,

Classification of Information Systems

Departmental information Transaction Processing System (TPS)

-IT in customer relationships

- office automation and PCs

-data bases and MIS

Routine and task centric

1960 1970 1980 1990 2000

Interrelated Support Systems

The TPS collects information that is used

Information Infrastructure and Architecture

Information Architecture: An information architecture is a high level map or plan of the

Managing Information Resources

Procedures The end-users - who are

The responsibility for managing these resources depends on many things:

What is the Role of the ISD?

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