BU204 Week One Script

Week 1 Part 1

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Hello and welcome to the week one audio lecture. I am your host Ron Rosalik, a Faculty at Herzing University online.

In this audio lecture we will cover three main topics:

Management Information Systems

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The Interdependence Between Organizations and Information Technology

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How Businesses Use Information Systems

There is probably no other single factor in the past century that has had a more dramatic, far reaching impact on business than the explosion and rapid development of information technology.

Information systems are the foundation for conducting business today. In many industries, survival and even existence is difficult without extensive use of information technology. No longer can we imagine going to work and conducting business without it. As a society we have come to rely extensively on the use of information appliances such as cell phones, BlackBerrys, handhelds, and other hardware. Communicating and conducting business is increasingly being carried out through the use of e-mail, online conferencing, and international teleconferencing. Internet technologies have become essential business tools.

1:23 To discuss Topic 1 Management Information Systems we will cover three goals:

1. Define Management Information Systems2. Illustrate the basis of Management Information Systems3. Discuss how computers and technology fit into MIS.

Goal #1 defines Management Information Systems

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Let’s tackle goal #1: What is a Management Information System?

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A textbook definition is typically something like this: Management information systems (MIS) deals with behavioral issues as well as technical issues surrounding the development, use, and impact of information systems used by managers and employees in the firm. As such, MIS is defined as the study of information systems focusing on their use in business and management.

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Or, a simple and, perhaps, more practical way to understand MIS is to look at the very words that make up that term and see how they relate. “Management” and “Information Systems.” First, let’s take the word “Management”:

By definition, “management” means the Planning, Directing, Influencing and Controlling of the business – people and other assets. In short – it means getting things done through people.

Planning. With MIS a business has access to all kinds of electronic tools to plan in great detail virtually all the functions of the business. A simple example of this is project management software that incorporates Gantt charts, timelines, resource leveling, etc. And, not only can the plan be developed; it can be easily updated and shared electronically with the entire organization.

Directing. MIS provides ways to easily describe what needs to be done on a timely basis. Tasks can be promptly delegated and their progress tracked via computer technology. A very simple example of this is the feature in Microsoft Outlook call Task Management.

Influencing. Technology also provides numerous ways develop and implement incentive programs for entire staffs of people. A basic example of this is Sales Force Automation software that allows a sales manager an effective means of implementing a sales contest for the entire sales department – both internal and field representatives at the same time.

Controlling. And, virtually all of the aforementioned functions and their related programs – planning, directing and influencing – can be monitored in detail as they are implemented, with data being captured, analyzed, reported and communicated to the organization in a timely manner.

Communication. Finally, one of the most important aspects of MIS is its power of communication. I don’t think that anyone would argue that the key to effective management of any business is expert COMMUNICATION. And, indeed, providing management with the most effective and efficient means to communicate is at the very core of MIS.

5:00 Goal #2 Illustrate the basis of Marketing Information Systems

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Now let’s look at the words or term “Information Systems”. Information systems are the foundation for conducting business; they complement and supplement the management of the business. As such, they are a set of interrelated components developed to collect, process, store, and distribute information, support decision making, coordination, and control. And, typically, three activities produce information organizations need.

a. Input: Captures raw data from the internal organization or external environment. For example the sales department tracks sales data, inventory and analyzing trends in the market place – including estimated market share and competitive / industry information.

b. Processing: The company then analyzes the data and converts raw data into meaningful form such as a detailed sales report that could go to the sales director.

c. Output: Processed information is distributed to managers and appropriate staff – for example, the sales director can be given detailed reports regarding sales by product, by region, by sales rep, by customer – along with comparisons to past performance and future projections.

Another way to understand the role of the Information Systems is to see it in view of its relationship to the other factors it serves. The point of this diagram is first of all to highlight the three basic activities of information systems, so that you can understand what an

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information system is doing at its most fundamental level. But the diagram also puts information systems into the context of organizations (firms), and then puts the firm into its respective environment composed of shareholders, higher level authorities (government), competitors, suppliers and customers. Therefore, you can see that information systems play a central role mediating and interacting with all these players. Hence, systems play a key role in the operations and survival of the firm.

7:27 To carry our sales department example a step further with more detail the…

…the chart above shows raw data from a supermarket checkout counter can be processed and organized to produce meaningful information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales territory.

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It is important to realize that MIS should also facilitate the output returned to appropriate members of organization to help evaluate or correct the input stage. For example, the sales director could note that it would also be useful to know how the sales were split by weeks during the period involved – since there may have been a special sales promotion going on at that time and/or a sales contest that had a certain start date and end date during that same period. In other words, MIS is a two-way street and a “loop” design.

To summarize: An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.

9:22 Goal # 3 We will discuss how computers and technology fit into MIS.

So where do computers and technology fit into MIS?

To further clarify and understand the definition of Management Information Systems your text explains the underlying idea of the digital firm. A digital firm is one in which nearly all of the

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organization’s significant business relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means.

It is important to realize that when a firm goes digital, it’s not about just adding a computer system to the mix. Throwing a computer system at outdated business processes is exactly the wrong thing to do. A truly digital firm has several characteristics that distinguish it from most of the firms claiming to be digitized:

Significant business relationships with customers, suppliers, and employees are digitally enabled and mediated.

Core business processes are accomplished through digital networks and span the entire organization or link multiple organizations.

Key corporate assets — intellectual property, core competencies, and financial and human assets — are managed through digital means.

Internal and external environments are quickly recognized and dealt with.

And the number one reason digital firms experience greater opportunities for success and profits is because they view information technology as the core of the business and a primary management tool.

A bit earlier in this presentation we highlighted how communication is the key to successful business management. In a nutshell that is truly why information systems are so essential in business today. Further, it is important to realize that such connectivity/communication is achieved by more than just computers themselves – it is the computers and the software and programs being used that tie the organization together in very effective and efficient ways. And, just one example of this that we are generally all familiar with is the Intranet in a company where we work. Email is another one. Videoconferencing and web based meetings are others. Extranets with suppliers and vendors are right up there too. I am sure you can think of many, many more examples.

So, for the digital firm, computers and software are the technical foundation and tools of MIS. A good analogy of is that of building a house: A successful Management Information System is like a completed ‘house’. Computers and software only represent the tools and materials used to build the house. Tools and materials don’t just suddenly become a completed house – outside (human) input is required. And, like houses, systems need to be designed to fit the business and the humans who work with those systems.

12:52 Organizations – a sociotechnical approach

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Again, an integral part of the transformation of business via Management Information Systems relates to the idea that systems need to be designed to fit the business and the people who work with those systems. This is the important term that your textbook refers to as the Sociotechnical view. An organization can’t afford to view its information resources as belonging to either the techies (technical approach) or the non-techies (behavioral approach). Responsibility for information belongs to everyone in the organization. This is the sociotechnical approach — a combination of the two approaches. Everyone has to work together to ensure that information systems serve the entire organization.

The critical aspect of this view is the BALANCE between technological and social/behavioral concerns. Sometimes a lesser form of technology may be the best option because it is more suited to the personal needs of the individual, for example. The two continue to grow closer together until an approach satisfying both perspectives is reached AND two sides do not always need to form an equal compromise. Sometimes highly advanced technology may be more acceptable than at other times. As you will see with packaged software solutions, and enterprise systems, firms and the organization of their departments and people within them are often required to change greatly in order to make the software applications work. A very basic example of this might be getting a new printer for a department that is a Network printer. Not only will each person’s personal work PC need to be reconfigured, but each individual will need to be trained on the capabilities and limitations of the new printer and how individual use might affect the functionality of it too. Finally, the printer may even be shared by an additional department of people and located in a different physical location.

Organizations are funny things. Each one tends to have its own individual personality and yet share many things in common with other organizations. Look at some of the organizations you may be associated with — softball team, fraternity/sorority, health club, or a child’s soccer team. See,

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organizations exist everywhere, and each has its own structure, just as workplace organizations have structures and personalities to fit their needs, or in some cases, their old habits.

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The key elements of an organization are its:

People Structure Business processes Politics Culture

In every organization you’ll find senior managers making long-range decisions, middle managers carrying out the plans and goals set by senior managers, and operational managers handling the day-to-day operations of the company. As we’ll see, information systems output must be geared to each of these levels of management.

Just as every baseball team needs good players at different positions, a business organization requires different employees to help it succeed. Knowledge workers help create new knowledge for the organization and data workers help process the paperwork necessary to keep an organization functioning. Without production or service workers, how would the company get its products and services to the customer?

A baseball team needs talented, well-trained players at different positions. Sometimes, the success of the team depends on a good, well-informed coach or manager. So, too, with the workplace organization. Business organizations have their major business functions, which need many kinds of players with various talents, who are well-trained and well-informed, in order to succeed.

The larger the organization, the more formal the management structure, including the need for standardized business processes. Most of these business processes have been developed over time and help managers and employees properly complete their tasks in a more efficient manner. Many companies now integrate these business processes into their information systems to ensure uniformity, consistency, and compliance. As we’ll see in upcoming chapters, many companies are even incorporating informal work processes into their information systems in an effort to capture as much corporate knowledge as possible.

Finally, an organization’s culture is often an integral part of its information system. UPS’s culture focuses on customer service while Wal-Mart’s culture is centered on being a low-cost retailer. Each company builds its information system differently to incorporate those organizational ideals.

18:14 Management – the soul of MIS

As we discussed early on in this presentation, every good organization needs good management. One of the best analogies to a manager is a coach. They don’t actually play the game in the NBA; they don’t shoot the baskets, run the plays, sink a free throw, or dump champagne at the winning

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celebration party. They stay on the bench or sideline during the game. Their real role is to develop the game plan by analyzing their team’s strengths and weaknesses. But that’s not all; they also determine the competition’s strengths and weaknesses. Every good manager has a game plan before the team even comes out of the locker room. That plan may change as the game progresses, but managers pretty much know what they’re going to do if they are losing or if they are winning.

19: 20 Technology – the heart of MIS

Hardware and software Data management The Internet Networking Telecommunications IT infrastructure

Think about how hard, not to mention expensive, it is for an individual to acquire each new computer software program introduced to the marketplace. Think how difficult it is sometimes to learn how to use every feature of all those new products.

No matter how big your storage technology device seems to be, you’re constantly running out of room to store all the new software programs and all the data you create. In order to keep track of all of the information you have stored, you will need data management software that is designed to organize the information so that you can readily retrieve what you are looking for.

As the products and services on the Internet expand every day, your need for new networking and telecommunications technology links just seems to grow and grow.

The fastest and biggest change in modern computing is the Internet. To say that the Internet is transforming the way we live, work, and play is probably the greatest understatement in years. Businesses can create new opportunities, but they can also lose opportunities just as quickly. Now an organization has to design new systems, or transform old ones, with not just the company in mind, but 100 million other users of the Internet, extranets, and intranets. They have to decide how much or how little information to provide, in what way, with what level of access, and how best to present it. It’s a huge job!

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Topic #2: The Interdependence Between Organizations and Information Technology

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ALL of what we have covered this far clearly highlights that in contemporary systems the fact is that there is a growing interdependence between a firm’s information systems and its business capabilities – especially with respect to the people that manage them. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.

The basic point of this graphic is that in order to achieve its business objectives, a firm will need a significant investment in IT. Going the other direction (from right to left), having a significant IT platform can lead to changes in business objectives and strategies.

From a business perspective, an information system provides a solution to a problem or challenge facing a firm and provides real economic value to the business. The decision to build or maintain an information system assumes that the returns on this investment will be superior to other investments in buildings, machines, or other assets. These superior returns will be expressed as:

Increased productivity Increased revenues Enhanced organizational performance

From a business perspective, an information system is an important instrument for creating value for the firm. Information systems enable the firm to increase its revenue or decrease its costs by providing information that helps managers make better decisions or that improves the execution of business processes.

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There are three ways an information system can add value to a business:

Help managers make better decisions Help make business processes more efficient Increase profitability

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Businesses rely on information systems to help them achieve their goals; a business without adequate information systems will inevitably fall short. But information systems are also products of the businesses that use them. Businesses shape their information systems and information systems shape businesses.

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Information Technology Capital Investment

The total investment in IT reached one trillion dollars in 2008, and, of that, over 500 billion dollars of that was invested in information technology. And, part of the reason why this number is soooo big is that it takes BOTH technology and the people to make it work properly – AND THAT, in total means BIG BUCKS! Furthermore, as a firm becomes more digital, its information system continues to extend beyond the traditional role of serving the employees. Developing the complementary assets associated with the information systems such as developing new business models and processes, changing management behavior and organizational culture, emphasizing employee training in technology, and creating new partnerships with suppliers, customers, and even competitors, is proving to be a daunting task.

And, MIS is quite costly because it is much more than just clicking a mouse, pounding the computer keyboard, or surfing the Web. It’s about integrating the various elements of an organization, technical and nontechnical, into a successful enterprise. A successful manager concentrates on all the parts of the information systems and integrates them into a single, cohesive system that serves the needs of the organization, the wants of the customer, and the desires of the employees. The more complex the system, the harder to manage, but the greater the payoff.

The high cost of MIS is also why many managers take issue with supporting such technology. Sometimes this happens because management is skeptical of the advantages vs. the cost or perceived results. And, just having technology does not always mean that you have the software or programs to make the work more efficient.  The processes that can be streamlined via technology usually require high levels of these programs too. 

In some companies the upper management doesn't understand this overall technological environment and its costs and benefits.  And, furthermore, many top managers are skeptical about technology since they simply do not understand it and won't admit it.  As a result, quite often, the support and resources to get the proper navigation, processes, designs, graphics and so on is just not there.  It takes a strong individual to work with upper management to bring forth that understanding. 

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References slide

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Laudon, K.C. & Laudon, J.P. (2014). Management information systems: Managing the digital firm.

(13th ed). Upper Saddle River, NJ: Pearson.

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Week 1 Part 2

How Businesses Use Information Systems

To discuss Topic 3 we will cover three goals:

1. How Information Technology Enhances Business Processes

2. Types of Information Systems

3. Collaboration

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How Information Technology Enhances Business Processes

Some processes that may have contributed to an organization’s success have now outgrown their usefulness. Information systems can help an organization recognize processes that may need to be changed. An information system could be used to automate some of those processes or help managers determine that they are no longer needed. And a successful organization will use an information system to determine which processes are working well.

The key to using information systems to analyze, change, automate, or delete processes is that the organization must determine the appropriateness of the recommendations and must determine the right questions. Throwing a new-fangled computer system at the supposed problem is not the answer. And answering the wrong question with a good answer can be far more devastating to the bottom line than not doing anything at all. In other words, if the system says a process should be changed but it truly doesn’t make sense to change it, then don’t. The system should supply recommendations; humans still have the ultimate decision-making responsibility.

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Information systems enhance business processes in two ways:

Increasing the efficiency of existing processes by automating them. Enabling entirely new processes that are capable of transforming the business by changing the

flow of information.12

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Types of Information Systems

Transaction Processing Systems

Management information systems (MIS)

Decision-support systems (DSS)

Executive support systems (ESS)

There is no one single information system that will satisfy all of the needs of an organization. At first glance it can be difficult to comprehend all the different systems in a business, and even more difficult to understand how they relate to one another.

Transaction Processing Systems The operational level of an organization includes various units such as order processing, material movement control, payroll, accounts payable, and employee record keeping. This level is responsible for daily operations. The information systems used in this level of the organization are transaction processing systems (TPS), so called because they record the routine transactions that take place in everyday operations. TPS combine data in various ways to fulfill the hundreds of information needs a company requires to be successful. The data are very detailed at this level.

Management Information Systems and Decision-Support Systems Think about the functions of managers that you may have learned about in other classes: directing, controlling, communicating, planning, and decision making. Each manager takes on these roles countless times in a day. Managers review endless amounts of data that make their jobs easier and more efficient.

Management information systems (MIS) are designed to produce information on a periodic basis instead of on a daily recurring basis like those using a transaction processing system. Managers also require information on an exception basis. That is, they need to know if production is higher or lower than the targeted rate or if they are over or under their budgets. They also need to know about trends instead of straight numbers. The questions they may ask of the system would be: “How far behind in production are we for this quarter?” or “How many more workers would we need if we increased production by 10,000 candy bars per quarter?”

Decision-support systems (DSS) also serve the management level of an organization, but in a somewhat different way from an MIS. An MIS uses internal data to supply useful information. A DSS

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uses internal data but also combines it with external data to help analyze various decisions management must make. Analyzing complex, interactive decisions is the primary reason for a company to use a DSS.

Executive support systems (ESS) are used at the very upper echelons of management. At the strategic level, the typical decision is very unstructured. Often there is no specific question, but rather a series of undefined situations executives may face. There are no easy, definable answers. These executives require summarized, historical information gleaned from all other levels of the organization, coupled with large amounts of external data gathered from many sources.

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Systems That Span the Enterprise

Enterprise Supply chain management Customer relationship management Knowledge management systems

Enterprise Applications No business can afford disjointed information systems that don’t work together to produce a coherent picture of the entire organization. All the functions of a business must be integrated across traditional lines of demarcation. Islands of information can be devastating to a company if data cannot be shared throughout the company. Even worse, the islands of information can create problems if each faction of an enterprise has differing information that conflicts with other islands of information. These kinds of problems are what gave rise to enterprise applications that share the same data anywhere it’s needed in an organization. As networks of all kinds take hold, from the Internet to intranets to extranets, Web-based enterprise applications are increasingly widespread.

There are four major enterprise applications: enterprise, supply chain management, customer relationship management, and knowledge management systems.

Enterprise SystemsEnterprise systems (also known as enterprise resource planning or (ERP) systems) is used to bridge the communication gap between all departments and all users of information within a company. Enterprise systems truly allow a company to use information as a vital resource and enhance the bottom line.

The greatest enticement of enterprise systems is the chance to cut costs firm-wide and enhance the ability to pass information throughout the organization. The biggest drawbacks to building enterprise information systems are time, money, and people. Because the installation of the system is so invasive, it takes a tremendous amount of time to install the hardware and software, train people to use it, and rework business processes that will then inevitably change. Many companies find it more trouble than they care to handle.

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Supply Chain Management SystemsEven if you properly manage your processes, wring out excess costs from every corner of the organization, and above all, have the best products at the lowest cost, if you can’t get your products to the right customers at the right time what good is all the rest? Managing your supply chain and getting products or services to customers efficiently and effectively is the real key to success.

Supply chain management systems offer new opportunities for companies to integrate data and information with their suppliers and customers and ultimately, lower costs for everyone.

Customer Relationship Management SystemsCRM technology isn’t just a nice looking Web site for customers to click through or more reports dumped on managers’ desks that they don’t have time to review. CRM systems involve business processes in all the functional areas and every management level of a firm. The ideal CRM system provides end-to-end customer care from receipt of order through product delivery.

CRM also helps a firm cut the costs of keeping good customers by supplying the entire organization with a consolidated view of the customers’ needs. Unprofitable customers are more easily identified with a CRM system and the time and energy spent can be retargeted to more profitable customers.

Knowledge Management Systems You may not think of a knowledge management system as an integral part of the overall information system of an organization. Most of the other systems have been recognized for many years, but this one may be thought of as relatively new. Knowledge management systems (KMS) enable organizations to better manage processes for capturing and applying knowledge and expertise.

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Collaboration and Social Business/Networking Systems

Collaboration Social Business and Social Networking Tools for Collaboration and Social Networking

Collaboration

One of the most significant developments using Internet technology has been the ability to collaborate both within the company and on the outside. Collaboration means working with others to achieve a task or mission accomplishment and takes place in the organization or between businesses. For example, through the use of project management software, a team made up of individuals at various locations around the world can share information and ultimately managing project to success.

Social Business and Social Networking

It almost goes without saying that many companies today enhance their collaboration by using social business – the use of social networking platforms, including Facebook, Twitter, and internal corporate social tools – to engage their employees, customers, and suppliers. The benefits of such social business

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and networking are huge. A recent global survey of business and information systems managers found that investments in collaboration technology and social business produced organizational improvements that returned over four times the amount of the investment, with the greatest benefits for sales, marketing, and are R&D functions.

Via the social networking implementation, the company has the opportunity to provide information to customers and prospects so that they can get answers to questions, as opposed to having to contact customer service representatives. The social media information posted by a company can also reduce the costs of technical support. What typically happens is that the same types of problems recur over and over again. The company can provide solutions to these reoccurring problems on a social media site and customers then have a comfortable way of determining how to solve their problems without waiting in some long queue on the phone.

By also providing information in a way that gives a visitor data that helps them to determine whether or not the company appears to have a suitable solution or not is an excellent way to both generate and qualify leads. This is because one of the most important aspects of being involved in implementing social media is to develop brand awareness and maintain a high level of integrity in the eyes of both customers and prospects globally.

Tools for Collaboration and Social Networking

In order to facilitate collaboration and social networking, companies have numerous tools available and the list continues to grow. Most all of us are familiar with email and instant messaging. However, wikis, virtual meeting systems – like “Blackboard Collaborate”, Microsoft SharePoint and Lotus Notes are just a handful of quite sophisticated networking platforms. Such tools for collaboration and networking can be synchronous or asynchronous, and facilitating meetings with people that are in remote locations and/or co-located.

14:11

State-of-the-Art MIS

A continuing stream of information technology innovations is transforming the traditional business world. Examples include the emergence of cloud computing, the growth of mobile digital business platform based on smart phones, tablets, and ultra-books, and not least, the use of social networks by managers to achieve business objectives. These innovations are enabling the creation of new products and services, new business models, and the new business processes.

Likewise, the management of business firms have changed with the use of new mobile smart phones, high-speed wireless Wi-Fi networks, wireless laptop and tablet computers, – remote sales staff are only seconds away from their manager’s questions and oversight. Managers can now be on the move and yet still be in continuous contact with their employees.

Finally, private social networks, wikis and blogs are becoming important corporate tools for communication, collaboration, and information sharing. For example, customer relationship

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management (CRM) software can be stored in cloud computing systems so that virtually everyone in the organization, including remote sales staff can have access to the CRM system 24/7/365. This is particularly useful for medium to small companies that do not have sufficient computer storage systems in order to handle the enormous sizes of the software and databases that house the typical CRM system. Obviously, there may be some security issues with respect to these cloud systems, but there are ways of managing and monitoring such cloud storage to maintain maximum security.

Thank you for your attention.

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References

Laudon, K.C. & Laudon, J.P. (2014). Management information systems: Managing the digital firm.

(13th ed). Upper Saddle River, NJ: Pearson.

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