Principles of Management Lecture 9 - Information Technology and Digital Business

Laptops, Notebooks & Tablets, Smartphones

• Transaction-processing systems
• Operations information systems
• Decision support systems
• Expert systems
• Enterprise resource planning systems
• E-Commerce systems

These computer-based management information systems (MIS) are on a scale of programmed decision making to nonprogrammed decision making (see visual)

Traditionally, managers have used the organizational hierarchy as the main system for gathering information necessary to decide, control and coordinate.

• Can reduce timeliness of information
• Reduces quality of information
• Tall structure can make for an expensive information system

A management information system designed to handle large volumes of routine, recurring transactions.

Example: Bank managers record outflow and inflow of capital, supermarket managers record sales and track inventory levels.

A management information system that gathers, organizes, and summarizes comprehensive data in a form that managers can use in their non-routine coordinating, controlling, and decision-making tasks.

Example: UPS tracks performance of its thousands of ground stations based on punctuality, productivity (number of packages per employee-hour), cost control and profitability.

An interactive computer-based management information system that managers can use to make non-routine decisions: New productive capacity, enter a new market / expand internationally, launch promotional campaign.

Executive support system: Sophisticated version designed to meet the needs of top managers.

Group decision support system: An executive support system that links top managers so that they can function as a team.

Example: Iteris Clear Path Weather support system, helps government agencies develop road maintenance strategies that optimise the use of personnel, materials and equipment in snowy conditions.

Behavior by a machine that, if performed by a human being, would be called “intelligent”.

Possible to write programs that can solve problems and perform tasks.

Expert system: Employs human knowledge, embedded in a computer, to solve problems that ordinarily require human expertise.

Example: Programs / algorithms «learn» from «watching» the user what their preferences are (e.g. typing on smart device sharpens suggested words function, sorting through emails increases search function for important ones).

Multimodule application software packages that coordinate the functional activities necessary to move products from the design stage to the final customer stage.

Help each individual function improve its functional-level skills.

Improve integration among all functions so that they work together to build a competitive advantage for the company.

Example: SAP IT, product development shares status with manufacturing which can simultaneously plan production process, sourcing also in the loop which can order supplies accordingly, etc.

Trade that takes place between companies, and between companies and individual customers, using IT and the Internet.

• Trade that takes place between companies using IT and the Internet to link and coordinate the value chains of different companies

• B2Bmarketplace:Internet-basedtradingplatformsetuptoconnectbuyers and sellers in an industry

• Trade that takes place between a company and individual customers using IT and the Internet

• Example: Online stores and platforms

Strategic alliances and IT

• An agreement in which managers pool or share their organization’s resources and know-how with a foreign company, and the two organizations share the rewards and risks of starting a new venture

B2B network structures and IT

• A series of global strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product

Flatter structures and horizontal information flows

• Boundaryless organization
  - An organization linked by computers, mobile technology, and video teleconferencing and whose employees and associates rarely see one another face-to-face
   
• Virtual organization
  - One in which employees are linked to an organization’s centralized information system and rarely see one another face-to-face, if ever
  - Employees infrequently visit the physical premises of their companies, receive their assignments electronically,  report back to their superiors electronically, and operate autonomously
   
• Knowledge management system
  - A company-specific virtual information system that systematizes the knowledge of its employees and facilitates the sharing and integrating of their expertise

The S-curve shows the innovation from its slow early beginnings as the technology or process is developed, to an acceleration phase (a steeper line) as it matures and, finally, to its stabilization over time (the flattening curve), with corresponding increases in performance of the item or organization using it.

The key to adoption is that the person must perceive the idea, behavior, or product as new or innovative. It is through this that diffusion is possible. People who adopt an innovation early have different characteristics than people who adopt an innovation later. The majority of the general population tends to fall in the middle categories, it is still necessary to understand the characteristics of the target population. When promoting an innovation, there are different strategies used to appeal to the different adopter categories.

1. Innovators - want to be the first to try the innovation. Venturesome and interested in new ideas. These people are very willing to take risks, and are often the first to develop new ideas. Very little, if anything, needs to be done to appeal to this population.
    
2. Early Adopters - represent opinion leaders. Enjoy leadership roles, and embrace change opportunities. Are already aware of the need to change and so are very comfortable adopting new ideas. Strategies to appeal to this population include how-to manuals and information sheets on implementation. They do not need information to convince them to change.
    
3. Early Majority - rarely leaders, but they do adopt new ideas before the average person. Typically need to see evidence that the innovation works before they are willing to adopt it. Strategies to appeal to this population include success stories and evidence of the innovation's effectiveness.
    
4. Late Majority - skeptical of change, and will only adopt an innovation after it has been tried by the majority. Strategies to appeal to this population include information on how many other people have tried the innovation and have adopted it successfully.
    
5. Laggards - bound by tradition and very conservative. Very skeptical of change and are the hardest group to bring on board. Strategies to appeal to this population include statistics, fear appeals, and pressure from people in the other adopter groups.

• Higher market share

• Higher profit ratios

• Better image

• Lower marketing expenses

• Higher attractiveness on labour market

• Stronger employee identification with company

• Data that are organized in a meaningful fashion

• Can communicate valuable knowledge

• Example: Graph showing the change in profitability, average spending per customer etc.

• Quality
• Timeliness
• Completeness
• Relevance

... determines the usefulness of information.

The accuracy and reliability of available information affects the quality of decisions that managers make using the information.

The availability of real-time information that reflects current conditions is needed for decision making.

Complete information allows managers to exercise control, achieve coordination, or make an effective decision.

Having information that suits a manager’s particular needs and circumstances assists managers in making better decisions.

Set of methods or techniques for acquiring, organizing, storing, manipulating, and transmitting information.

Specific form of IT that managers utilize to generate the specific, detailed information they need to perform their roles effectively.

• To decide effectively
• To control the activities of the organization
• To coordinate the activities of the organization

• Taking into account information from inside the organisation (e.g. costs, revenues etc.)

• Taking into account information from external stakeholders (e.g. competitors, suppliers, customers etc.)

• Example: Pricing strategy of a new PC
  • Unit costs manufacturing (cost pricing)
  • Competitor product pricing, features etc. (competitive pricing)
  • Extra value / urgency / premium product (value pricing)

• Establishing measurable goals
• Measuring actual performance
• Comparing actual performance with goals
• Evaluating results and taking any corrective action
• Example: Accounting monitors expenditures versus budgets

• Gathering information on various functions (e.g. sourcing, manufacturing)

• Improving their understanding of the supply chain holistically and the role everyone plays

• Example: «Origin Express» program at Starbucks allows managers to get involved in the logistics of the supply chain by visiting coffee plantations

• IT helps create new product opportunities that managers and their organizations can take advantage of

• IT creates new and improved products that reduce or destroy demand for older, established products

• Product life cycle: The way in which the demand for a product changes in a predictable way over time

A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves. There are four stages in a product's life cycle—embryonic, growth, maturity, and decline stage. ... Newer, more successful products push older ones out of the market.