Chapter 3 Effects of IT on Strategy and Competition

Report
Chapter 11
Information Systems
Management
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258
[email protected]
Dr. Chen, Management Information Systems
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“… You’ve Got a Fox in Charge of a Hen
House.”
1. IS management is a mess.
2. New maintenance supervisor oversees IS, but has no
IS background
3. IS manager has a conflict of interest
4. Inherited some contractor developed applications.
5. Access to servers is wide open
6. Fox Lake’s general manager needs to get actively
involved in IS management
Dr. Chen, Management Information Systems
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Chapter Preview
• Information systems are critical to organizational
success, and like all critical assets, need to be
responsibly managed, in organizations both large and
small.
• In this chapter, we will survey the management of IS
and IT resources. We begin by discussing the major
functions and the organization of the IS department.
• Then we will consider each of the major functions in
greater detail: planning the use of IT/IS, creating and
managing the computing infrastructure, creating and
managing enterprise IS, and protecting organizational
information assets.
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Chapter Preview (cont.)
• The pros and cons of outsourcing and describing
some of its risks are presented.
• Finally, the chapter concludes with a discussion of
the relationship of users to the IS department. In
this last section, you will learn both your own and
the IS department’s rights and responsibilities.
• The goal of the chapter is to give you an
appreciation for the scale and complexity of the IS
management task and to help you become an
effective consumer of IS services.
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Study Questions
•
•
•
•
•
Q1 What are the functions and organization of
the IS department?
Q2: How do organizations plan the use of IS?
Q3: What are the advantages and disadvantages
of outsourcing? (old Q5)
Q4: What are your user rights and
responsibilities? (old Q6)
Q5: 2022?
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Types of Sourcing
_______
_______
_______
Sourcing
___________
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Q1: What are the Functions and
Organization of the IS Department?
• Major functions of information systems
department
 Plan how to use IS to accomplish
organizational goals and strategy
 Manage outsourcing relationships
 Protect information assets
 Develop, operate, and maintain organization’s
computing infrastructure
 Develop, operate, and maintain enterprise
applications
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Functions and Organization of the IS
Department
• Each organization’s IS structure varies
depending on these factors:
 ______
 _______
 __________ __________
 ________
Other factors
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How is the IS Department Organized?

This organizational structure chart shows the typical top-level reporting
relationships. Depending on the organization, the Chief Information
Officer (CIO) may report to the Chief Executive Officer (CEO), the
Chief Operating Officer (COO), or the Chief Financial Officer (CFO).
Dr. Chen, Management Information Systems
Fig 11-1 Typical Senior-level Reporting Relationships
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How Is the IT Department
Organized?
• Chief Information Officer (CIO)
 Principal manager
 Reports to CEO, COO, or CFO
• Technology office
 Head: Chief Technology Officer (CTO)
 Investigates new information systems
technologies for possible application at
organization
• Operations
 Manages computing infrastructure
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How Is the IT Department Organized?
• Development
 Manages process of creating new information
systems
 Maintains existing system
• Outsourcing relations
 Handles affairs with outsourced systems
• Data administration staff functions
 Establishes data standards and data
management practices and policies
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INFORMATION SYSTEMS (MIS/IS)
Each project
team should
include the
following three
types of people: ORGANIZATIONS
1) top/middle
management
2) technical
professional
(e.g., MIS,
accounting)
3) USERS
Dr. Chen,
Management
Information
Systems Systems Technology
Dr. Chen,
The Challenge
of the Information
TECHNOLOGY
INFORMATION
SYSTEMS
MANAGEMENT
TM -12
Q/A
T/F If an organization does not develop
programs in-house, then the
development group of the IS
department will include programmers,
test engineers, and technical writers.
Answer: ________
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What IS-Related Job Positions Exist?
Fig 11-2 Job Positions in the Information Systems Industry
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What IS-Related Job Positions Exist? (cont’d)
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What IS-Related Job Positions Exist? (cont’d)
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IT Position Requirements
(Very Important to Your Future Career!) p.390
• Most positions require business knowledge plus
technical knowledge
• Many require university degrees
• Most require good verbal and writing skills
• Think dual majors with MIS/CIS to enhance your
marketability (competitive advantage)





Accounting and information systems
Marketing and information systems
Management and information systems
Operations and information systems
HRM and information systems
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Q2
How Do Organizations Plan the Use of IS?
Major IS Planning Functions
• The figure below shows the necessary steps an organization must take to plan how
it will use IS and IT and to make sure both of them support the organization’s
strategy.
• The CIO is responsible for most of these items. It’s a never-ending process as
organizations change, grow, or merge with other companies.
• The steering committee, a group of senior managers from major business
functions, works with the CIO to set IS priorities, make decisions about major IS
projects, and serve as a communication channel between users and the IS function.
Fig 11-3 Planning the Use of IS/IT
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Explain How You Would Respond to
Each Situation.
1. Playing computer games during
work hours
2. Playing computer games before
and after work hours
3. Responding to emails from an ill
parent
4. Watching DVDs during lunch and
breaks
5. Sending emails to plan a party that
mostly involves people from work
6. Sending emails to plan a party that
mostly involves no one from work
7. Updating your Facebook page
8. Reading news on CNN.com
9. Checking stock market over
Internet
Dr. Chen, Management Information Systems
10. Tweeting friends on your computer
about your softball win last night.
11. Selling personal items on eBay
12. Paying personal bills online
13. Paying personal bills online when
traveling on company business
14. Buying an airplane ticket for an ill
parent over the Internet
15. Changing content of a personal Web
site
16. Changing content of a personal
business Web site
17. Buying an airplane ticket for a personal
vacation over Internet
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Align Information Systems with
Organizational Strategy
• As strategies change, as the organization merges
with other organizations, as divisions are sold, IS
must evolve along with the organization.
• Changing a network requires time and resources.
Integrating disparate information systems
applications is even slower and more expensive.
• Without a persuasive CIO, IS can be perceived as
a drag on the organization’s opportunities.
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Q/A
Which of the following is a function of the
steering committee for an IS department?
A) writing program code
B) imparting training
C) adapting software
D) setting IS priorities
Answer: ______
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Information System Strategy Triangle
Strategy Triangle
Business (Firm)
Strategy
Where is the business
going and why?
Needs and priorities
IS/IT Strategy
Organizational Strategy
What is required?
Infrastructure and
services
How it can be delivered?
1. Architecture/Infrastructure
2. MIS organization
3. Funding
4. Project Management
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Information System Strategy Triangle
• A business strategy is a well-articulated
vision of where the business seeks to go and
how it expects to get there.
• An organizational strategy is the
organization’s design, as well as the choices it
makes to define, set up, coordinate, and control
its work processes.
• IS/IT strategy is the plan the organization
uses in providing information systems and
services.
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Communicate Issues to the Executive
Group
• CIO provides the IS perspective during
discussions of problem solutions, proposals, and
new initiatives.
• For example, when considering a merger, it is
important that a company consider integration of
information systems in the merged entities. This
consideration needs to be addressed during
evaluation of merger opportunity.
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Develop Priorities and Enforce Them
Within the IS Department
• CIO must ensure that priorities consistent with
overall organizational strategy are developed and
communicated to IS department.
• Must also ensure that IS department evaluates
proposals and projects for using new technology
in light of those communicated priorities.
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Sponsor the Steering Committee
• Steering committee is a group of senior managers from
major business functions that works with the CIO to set
IS priorities and decide among major IS projects and
alternatives.
• Provides a forum where information systems personnel
can discuss potential IS initiatives and directions with the
user community
• Provides a forum where users may express their needs,
frustrations, and other issues they have with the IS
department
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Q3. Outsourcing: What and Why?
• Outsourcing is the process of hiring another organization
to perform a service. Outsourcing is done to save costs, to
gain expertise, and to free up management time.
• Any value chain business activity can be outsourced
• “Your back room is someone else’s front room.” (Peter
Drucker)
• Drivers (at least four advantages) include:
 Reducing ________
 Transition to new _____________
 Focus on _______ business strategies;
 Provide better management and focus of IT personnel.
• Disadvantages are present in outsourcing and include:
 Losing ________
 _________ to undue decisions, etc.
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Sourcing Decision Cycle Framework
• Sourcing involves many decisions (Figure 11 Extra1).
• The first step is the make or buy decision.
• If buy is selected then the company must decide
where.
• If the company decides to go offshore it must decide
if the offshore company is near or far.
• Periodic evaluation must take place.
• Continual evaluation is needed to determine if the
arrangement is satisfactory or not (either for
outsourcing or insourcing).
Dr. Chen, Management Information Systems
Where?
OFFSHORING
Where & how the sourcing
should be delivered?
(distant land)
NEARSHORING
In or Out of
Country?
Make or Buy?
CAPTIVE CENTER
FARSHORING
OUTSOURCING
BUY
(overseas subsidiary)
(proximate)
INSHORING
Status Quo or
Change?
MAKE
Backsourcing
INSOURCING
FIGURE 11 Extra 1 SOURCING DECISION CYCLE FRAMEWORK
Dr. Chen, Management Information Systems
Outsourcing Information Systems
• Outsourcing, the process of hiring another organization to perform a
service, can provide advantages like the ones shown in this figure.
• India is the most popular foreign outsourcer because of its large,
well-educated, English-speaking population who earn 20 to 30
percent less in labor costs than their U.S. counterparts.


International
outsourcing is
well-suited to 24/7
operations like
customer support.
Some say
outsourcing is a
threat to U.S.
technology
leadership.
Dr. Chen, Management Information Systems
Fig 11-4 Popular Reasons for Outsourcing IS Services
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Risk Reduction
• Caps financial risk
• Ensures certain level of quality, or avoids having
substandard quality
• Vendor assumes responsibility for hardware,
software, network protocol selection, and
knowing applicable tax laws
• Easier to hire another vendor than to fire and
rehire internal staff.
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International Outsourcing
• India
 Large, well-educated, English-speaking, labor cost
70-80% less than in US.
• China and other countries.
• Modern telephone technology and Internetenabled service databases
• Customer support and other functions
operational 24/7.
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What Are the Outsourcing Alternatives?

This figure shows alternatives businesses have for outsourcing
some or all of their information system components.
Major categories of alternatives by information
systems components
Oracle, EDS
Amazon
Salesforce.com
Oracle/PeopleSoft
Web storefront
Employee
Travel
IaaS: Infrastructure-as-a-Service
SaaS: Software-as-a-Service
Dr. Chen, Management Information Systems
Fig 11-5 IS/IT Outsourcing Alternatives
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There are a lot of risks to outsourcing information systems
as this figure describes.
Dr. Chen, Management Information Systems
Fig 11-6 Outsourcing Risks
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Q/A
When a company outsources a system,
it no longer has control over
prioritizing fixes for software failures
and problems.
Answer: _______
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When to Outsourcing?
• Which IS activities are strategic to our company's
business?
15 percent?
• Will outsourcing save us at least ____
• Does our firm have access to the needed technology
and expertise?
 If not, outsourcing may be the answer to acquiring
these resources.
• Does outsourcing increase our firm's flexibility?
5 years
Write shorter contracts - less than ___
Dr. Chen, Management Information Systems
INSOURCING
What is the example(s) mentioned in the
Friedman’s Video (The World is Flat)?
Dr. Chen, Management Information Systems
Crowdsourcing
• Definition:
– Taking a task traditionally performed by an employee or
contractor, and outsourcing it to an undefined, generally
large group of people, in the form of an open call.
• Used by companies to increase productivity, lower
production costs, and fill skill gaps.
• Can be used for a variety of tasks.
• Companies do not have control over the people doing
the work.
• Has cost more than traditional methods.
Dr. Chen, Management Information Systems
Q4: What Are Your IS Rights and
Responsibilities?
Fig 11-15 User Information Systems Rights and Responsibilities
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Q4: What Are Your IS Rights and
Responsibilities? (cont’d)
Fig 11-15 User Information Systems Rights and Responsibilities
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Q/A
Which of the following is true about the changes and
developments foreseen for 2022?
A) Licensed, off-the-shelf software will become less
configurable, less adaptable, and less flexible.
B) Fewer applications will be developed in-house and
software customization will become easier.
C) Better-skilled employees will be needed to adapt
software to increasingly unique organizational needs.
D) Small computing devices will become more
expensive and lose their popularity.
Answer: ______
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Q5: 2022?
• Hardware infrastructure will migrate to cloud
• Licensed, off-the-shelf software more
configurable, adaptable and flexible.
• iOS devices and other, small computing devices
will become cheaper and more popular.
• Fewer and less-skilled employees needed
• Loss of control of employees’ use of IT
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• You have certain rights and responsibilities with regard to the IS
department that supports you in your job. Here is a list of them.
Dr. Chen, Management Information Systems
Fig 11-7 User Information Systems Rights and Responsibilities
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• End of chapter 11
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