Session 1 to 5 MIS
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Transcript of Session 1 to 5 MIS
Indian Institute of Management, Lucknow 1
Introduction to Management Information Systems
Amit AgrahariAsst Prof of Information Technology and Systems
Indian Institute of Management, Lucknow
Indian Institute of Management, Lucknow 2
Agenda and Key Take Away
• Agenda– Introduction to the course– It fails !– Management of Information Systems– IT’s productivity paradox
• Key Take Away– IT as a socio technical system– IT fails and may not increase firm’s productivity
Indian Institute of Management, Lucknow 3
Ground Rules
• MIS is about common sense.
• Manager’s perspective– Achieve business objectives using technology– Know what you don’t know
• Readings– Book and Polycopy
• Group of six students each (with two subgroups for case study) (CR?)
• Presentation and report on a topic of your choice (20 Marks).
• Submit a write up on case study before the class. (5 Marks Each * Four Case Studies) – Hard copy 3-4 pages
• Mid Term and End Term = 30 marks each
Indian Institute of Management, Lucknow 4
C'est le Début
• No Lingua Franca for business and IT– Why can’t you teach management to IT guys?
• Business should drive technology– Dot com?– Technology fails– IT capabilities and how to harness them – No IT abuse – Are you aware of IT failure examples at IIML?
Indian Institute of Management, Lucknow 5
Indian Institute of Management, Lucknow 6
Robert N. Charette (2005) Why Software Fails http://spectrum.ieee.org/computing/software/why-software-fails/0
Indian Institute of Management, Lucknow 7
The CHAOS Report 2009 on IT Project Failure
Year 2009
Year 2006
Year 2004
Year 2002
Year 2000
Year 1998
Year 1996
Year 1994
Successful 32% 35% 29% 34% 28% 26% 27% 16%
Challenged 44% 19% 53% 15% 23% 28% 40% 31%
Failed 24% 46% 18% 51% 49% 46% 33% 53%
Indian Institute of Management, Lucknow 8
Contemporary approaches to IS
• Technical approach– Mathematical models to study IS, technology and its
capabilities– Computer science, Management science, Operations
research
• Behavioral approach– Strategic business integration, design, implementation,
utilization– Economics, Sociology, Psychology
• Sociotechnical approach– Because no single approach effectively captures the
reality of IS.
Indian Institute of Management, Lucknow 9
The Socio-Technical System
Can Blogs and Wiki be used for knowledge management in GOI departments?
Indian Institute of Management, Lucknow 10
The Discipline of Information Systems
• Information Systems = Information Technology + Organizational Processes + People
• [IS is to CS] as [Pharmacy is to Chemistry]
• Pharmacists know Chemistry, but Pharmacists are interested in “applying” the science to the practical matter of fixing biochemical maladies. Similarly, IS is said to be an applied science that focuses on solving organizational problems, thus requiring a rich understanding of organizations and the interface between systems and organizations.
Indian Institute of Management, Lucknow 11
Definition: Information Systems
• Knowledge that aids in the productive application of information technology to human organizations and their management (ISR 2002)
• The information systems field examines more than just the technological system, or just the social system, or even the two side by side; in addition, it investigates the phenomena that emerge when the two interact. (MIS Quarterly 2001)
Indian Institute of Management, Lucknow 12
Definition: Information Systems
• Knowledge concerning both the management of information technology and the use of information technology for managerial and organizational purposes (Zmud 1997).
• The effective design, delivery, use and impact of Information technologies in organization and society (Avison and Fitzgerald, 2003) .
Indian Institute of Management, Lucknow 13
Definition: Information Systems
• We conclude that IS includes– Use of technology and NOT the technology
alone. – Design and Management of technology– Impact of technology in productivity
measures (ATM)
• It investigates the phenomenon that emerge when technological and social system interact
Indian Institute of Management, Lucknow 14
IT – Productivity – Competitive Advantage
• Steven Roach, Chief economist, Morgan Stanly, (1987)– IT stock has no impact on Productivity
• Robert Solow (1987) – We see the computer age everywhere except in
productivity statistics
• Mckinsey’s study on US productivity growth 1995-2000 found negligible impact of IT on productivity improvement in 53 sectors(70% of the economy)
• Nic Carr (2003)– IT is a commodity, it can’t bring any competitive
advantage
Indian Institute of Management, Lucknow 15
Information Systems and Firm’s Productivity
Source: Based on Erik Brynjolfsson and Lorin M. Hitt, “Beyond Computation: Information Technology, Organizational Transformation and Business Performance.” Journal of Economic Perspectives 14, no. 4 (Fall 2000).
Lo
Hi
Lo Hi
Indian Institute of Management, Lucknow 16
Productivity Paradox Explanations• Measurement
– Systematic bias in conventional productivity measurement that prevent accurate assessment
• Lags due to learning and adjustments
– It usually takes 2 to 3 years before the benefits are realised– Managers should rationally account for lags
• Redistribution– IT rearranges the shares of pie without making it any bigger– One firms gain comes entirely on other firm’s expense (Auction)
• Mismanagement– IT might increase organizational slack instead of output or profit– Should we readjust people or fire them? (Can you fire them)– Benefits are passed on to customers (Railways online
reservation)
Indian Institute of Management, Lucknow 17
Productivity Paradox
• Eric Brynjolfsson (1993)– Cracking productivity paradox. – Around half of IT value is due to unique
characteristics of firm – Other half is shared generally by all firms
IT
Decentralization
Low
High
High
Low
0.0161
-0.03660
0.0455
Erik Brynjolfsson and Lorin M Hill (1998) Beyond the productivity paradox http://ebusiness.mit.edu/erik/bpp.pdf
Indian Institute of Management, Lucknow 18
Complimentary assets
• Assets required to derive value from a primary investment.– Business Model– Processes– Decentralized and distributed decision making– Organizational culture (Does culture affect IS or
IS affect culture)– Training– Collaborative work environment– Standards
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Does IT Matter?
• World spend on IT USD 2 Trillion per year
• Assumption : IT’s potency and ubiquity have increased, so too has its strategic value
• Scarcity and not ubiquity offers competitive advantage
• Processors, data storage, & networks are available to all. IT is a commodity
Year % of Capital exp of American Firms
1965 5%
1980 15%
1990 30%
2000 50%
US dept of commerce’s bureau of economic analysis
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Does IT Matter ?
• Proprietary v/s infrastructure technologies
• IT as commodity– IT is a transport mechanism, so more valuable
when shared– IT is highly replicable – endlessly and perfectly
reproducible at no virtually no cost. Combined with standardization it dooms most infrastructure technology
– Internet accelerate commoditization– Lower cost of computing
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The Sprint to Commoditization
Indian Institute of Management, Lucknow 22
IT Doesn’t Matter
• IT offered competitive advantages during build out phase, which is coming to and end– It’s power is outstripping most of the business needs it fulfills– Price has dropped to a point where everyone can afford it– Data transfer capacity is more than demand– IT vendors are positioning themselves as utility suppliers– Investment bubble
• Can infrastructure technologies bring competitive advantage– Does IT bring more value as infrastructure technology (ATM)
• Today, no company builds its business strategy around electricity usage– Spend less (IT is a commodity) – Follow don’t lead (Reduce risk) – Focus on vulnerabilities ( Cede control over IT and focus on
resulting vulnerabilities)
Indian Institute of Management, Lucknow 23
How to Move Beyond Technology?
In 1992 Max Hopper of American Airlines said that the era of competitive benefits from proprietary systems are over since computers are as ubiquitous as the telephone and any travel agency could replace CRS with in 30 days.
déjà vu ?
Indian Institute of Management, Lucknow 24
IT Enabled Business Transformation
J. C. Henderson, N. Venkatraman (1993) Strategic alignment: Leveraging information technology for transforming organizations http://proquest.umi.com/pqdweb?did=547750&sid=2&Fmt=3&clientId=43454&RQT=309&VName=PQD
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Classification of IT
Amit AgrahariAsst Prof of Information Technology and Systems Area
Indian Institute of Management, Lucknow
Indian Institute of Management, Lucknow 26
Different Types of Information Systems
• Can we categorize them?– IS categories are less useful as rigid
classifications – It helps us visualize potential application of
different approaches, strength and weakness of these approaches
• Heart of IS value proposition– Finding innovative ways to leverage existing IT
infrastructure
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Data, Information and Knowledge
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Three Fundamental Role of IT
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The Four Major Types of Information Systems
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Business Operations and Managerial Decision Making
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Mastering Three World of IT
• GPT and complimentary assets – Better skilled workers, higher levels of
teamwork, redesigned processes, new decision rights
• Business executives should– Help select technologies– Nurture their adoption– Ensure their exploitation– Depending on IT capability, roles should be
tailored
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Three Categories*
IT Category
Definition Characteristics Examples
Function IT IT that assists execution of a discrete function or task
Can be adopted without complementImpact increases when complements are in place
Simulators, Spreadsheets, CAD/CAM software, Statistical Software
Enterprise IT
IT that integrates multiple functions by imposing new work structures
Imposes complementsDefines tasks and sequenceMandates data formatsUse is mandatory
ERP, SCM, CRM, Procurement software
Network IT IT that integrates multiple functions without imposing new work structure
Let complements emergeDoesn’t specify task or sequenceAccepts data in many formatUse is optional
E-Mail, Instant messaging, Wikis
* McAfee, A. 2006. Mastering the three worlds of information technology. Harvard Business Review. 84(11).
Work Structure : Attributes of a business process (workflow, interdependencies, decision right allocation)
Indian Institute of Management, Lucknow 33
Capabilities
• Function IT– Increased experimentation capacity– Greater precision
• Enterprise IT– Define and deploy novel business process– Standardization of workflows, Can be replicated
easily– Monitoring of activities and events
• Network IT– Collaboration without mandating or predicting user
behavior– Allowing expression of judgment– Enabling self organization
Indian Institute of Management, Lucknow 34
Managing IT
• IT Selection– Rather focusing on IT, decide on what capability do
you need
• IT Adoption– Help create complements that will maximize IT’s value.– For NIT managers should refrain from intervening too
often or with too heavy a hand– Manager must intervene forcefully throughout EIT
adoption
• IT Exploitation– Exploit EIT by fine tuning complements– NIT exploitation needs continuous guidance to help
sustain and increase use– Exploiting EIT might need a FIT over it
Indian Institute of Management, Lucknow 35
The Dialogue
• FIT– Enable employees to do their job more
efficiently?– Are our function technologies outdated? If so,
why? What has charged.
• NIT– How do our people collaborate? Do we know
what technologies they are using?– Do we have ways of letting qualitative
information flow.– How do we know what our people are working
on and what they think hot topics are?
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The Dialogue
• EIT– In what ways our current processes are not supporting
the business needs? Redesigning and scope redefinition.
– Are there best practices that should be embedded, so that they can be deployed widely?
– What should we monitor? If it isn’t monitored why? – What is the most important period that we could easily
analyze? On hour ago? Yesterday? Last month? Last quarter?
• ROI figures are nearly worthless. Smart companies keep track of spending and milestones and constantly check to see if they are on track to gain the IT based capabilities they desire.
Indian Institute of Management, Lucknow 37
Strategic Role of IS
Amit AgrahariAsst Prof of Information Technology and Systems
Area
Indian Institute of Management, Lucknow
Indian Institute of Management, Lucknow 38
Agenda and Key Takeaway
• Agenda– Explore relationship between firm’s strategy IT
used– IT as a tool for competitive advantage– Complementary assets for sustainable
competitive advantage
• Key Takeaway– Appreciation for strategic role of IT– Using porter’s model to analyze competitive
advantage from IT
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Analyzing IS as a Source of Competitive Advantage
Operational effectiveness: Performing the same task better
Strategic positioning: Performing different activities or same activities in different way
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Is IT Source of Sustainable Competitive Advantage?
• Sustainable competitive advantages come from resources that are (RBV)– Valuable– Rare– Imperfectly imitable– Non substitutable
• Can IT offer sustainable competitive advantage?
• Generic information technology, technical skills of IT labor, and IT spending per se, are not likely to be source of competitive advantage
Indian Institute of Management, Lucknow 41
Generic Competitive Strategies
• Low cost leadership– Lower operational cost; POS at Wal-Mart is
linked with a central computer that collect and transmit purchase orders to supplier, thus continuous replenishment
• Product differentiation– Using IS to enable new products and services,
or greatly change the customer’s convenience in using existing products
– Apple iPod along with online unique music library
Indian Institute of Management, Lucknow 42
Generic Competitive Strategies
• Strengthen customer and supplier alliance– Switching costs– Amazon’s one click encourages return purchase by
making it easy. It stores buyer information including contact and credit card information, that can be access through one click.
– Why can’t it be replicated
• Innovation and growth– Find niche market and serve this narrow target
better than competitors– Use IS to innovate and expand into new markets– Hilton employees can scan through 180 million
records during check in and find out customer’s preference and his profitability
Indian Institute of Management, Lucknow 43
Two Bank’s Strategies
HSBC Citigroup
Decentralized management approach to allow regional IT services to meet local needs … “The world’s local bank”
Centralized management approach to provide common and standard technological platform for easy system integration and global expansion … “Under one umbrella”
Acquires and uses external resources, mainly through strategic alliances and off shoring
Acquires and uses external resources mainly through mergers and acquisition
Aims to provide customer with multiple communication channels to make it easy to do business with the bank
Aims to provide customers with a unified group wide, standard technological platform to make it easy to do business with the bank
Indian Institute of Management, Lucknow 44
Understanding IT Strategy
• Strategic objectives are supported by IS. – For example one of HSBC’s strategic priority “aim to
expand business by focusing on deposit taking and risk management” is supported by HSBC Direct which is an online only bank account.
• IT infrastructure can impose a constraint on the organization. – For example HSBC while following its decentralized
approach could meet local needs well, it also created incompatible information systems, restraining HSBC’s ability to offer account aggregation benefits to its customers.
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HSBC’ Security Failure
http://blogs.zdnet.com/projectfailures/?p=687
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Citi’s ATM failure
http://www.boingboing.net/2006/03/05/citibank-under-fraud.html
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IS @ Zara
• Tripled in size between 1996 and 2000, then skyrocketed from $2.43 billion in 2001 to $13.6 billion in 2007. By August 2008, sales edged ahead of Gap, making Inditex the world’s largest fashion retailer
• Zaraʼs IT expenditure is less than one-fourth the fashion industry average”
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IS Planning and Development
Amit AgrahariAsst Prof of Information Technology and Systems
Indian Institute of Management, Lucknow
Indian Institute of Management, Lucknow 49
IS Planning 101
• Course correction
• IT success depends upon manager’s involvement – Shared business IT understanding
• Planning and lack of planning
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Pre RFP Requirements - During Consulting
• Process definitions are at a very high level (i.e.) 10,000 feet view of processes– To define scope of work– Which set of processes will be handled
electronically using software; strategic decision taken by customer’s managerial staff
• Process information sources– Secondary sources, End-users– iterative process
• Customer wants to see results and the software being deployed
Indian Institute of Management, Lucknow 51
Pre RFP Requirement - During Consulting
• Deliverables of the exercise– AS IS process document– TO BE process document
• The bidding and delivery teams will rely on the process documentation and continuously refer to the document during the course of the project – So, do justice – Be careful not to miss-out on key processes – If key processes are missed out, scope creep
discussions will happen during the delivery stage
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Business Processes
• Strategy -> KPI -> Processes -> IT
• Business Process– Set of activities performed in coordination– To realize a business goal
• Traditional V/S Process oriented organizations
• Tasks of Business Process Management, can be divided into – Process Identification– Process Modelling– Process Analysis – Process Management
Indian Institute of Management, Lucknow 53
Process Modeling
• Process modelling is a method for enabling an enterprise to document its processes and to recognize the resources required by each process– Understand the nature of various processes– Recognize the resources necessary for the
execution of each process (people, machine etc)
– Rearrange the system of processes and resources (i.e. process orientation)
– To permanently improve processes
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BPMN: Categories of Elements
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Exercise
• To open an account at I-bank, a customer has to fill up and submit account opening form to the front end clerk, who verifies the form and documents. If the form is not complete he returns it to the customer. If the form is correct it goes to the back office where customer’s eligibility for opening an account is checked. If found unfit customer is informed about the rejection, otherwise it moves on to another member of back office who opens an account in the system and associate debit card, PIN, cheque book, phone banking PIN, Internet banking id and password with the account. Next the account is activated and physical deliverables are send to the dispatch department. Dispatch department send these items to the customer. For security reasons these documents have to be dispatched separately.
Customer
Front end clerk
Back Office Member 1
Back Office Member 2
Dispatch
Fill up and submit a/c
opening form
Verify completeness of form and document
Complete Y/N
No
Verify eligibility for account opening
Eligible?Inform customer about rejection
Open an account in the system
Associate Debit card, Cheque book no, phone banking PIN, internet banking id
and password
Activate account
Send Physical deliverables to the dispatch
Send debit card
Send PIN
Send cheque book
Send phone banking no
Send internet banking id
Send internet banking pwd
Receive documents
Indian Institute of Management, Lucknow 57
Fulfilling your IT Requirements
• Request for proposal (RFP)
• Proposal submission, Bidding and Win
• Contract formation and Statement of work (SOW)
• Project initiation / Kickoff, Planning
• Requirements workshop (Requirement gathering)
• Gap / Fitment analysis
• Design
• Build
• Test
• Cut over and deploy / Go live
• Post go live support