2. Information
• data which has been
processed: sorted, classified,
calculated, summarised, etc.
• data which is meaningful to
the person who receives it

3. Data vs Information
• data is the raw
material for data
processing.
• it relates to facts,
events, transactions,
etc.
• it can be obtained
from both inside and
outside the
organisation
• data which has been
processed:
sorted, classified,
calculated,
summarised, etc.
• data which is
meaningful to the
person who receives it

4. Considerations
• data collection
• quality of source data (GIGO)
• data formats
– written, oral, visual, subconscious, etc
• storage and retrieval
Multiple-use data
• data may be processed to provide information for
more than one business activity

5. • accurate
• complete
• cost should not exceed benefit
• user targeted -communicated to right person and
by the right channel
• relevant
• adaptable
• timely
• easy to use - clear, manageable volume
Good Information Should Be:

6. Categories of Information
• strategic - used by top level management,
ad hoc enquiries, mainly external, less
details
• tactical - department level, data arising
from current activities
• operational - used on a daily basis, regular
requests for the same information, mainly
internal, more precise

7. Value of information
• information has a cost (collection, processing and
storage)
• the cost must be justified by the value it provides
(better decision making)

8. Value of information
• quanitifiable - measurable benefits in monetary
terms
– reduced uncertainty in decision making
– quicker decision making
• non-quantifiable - not strictly measurable
– other variables may need to be considered in addition to
information

9. Communication of Information
• if information has not been received or
understood then it has not been
communicated
• communication should lead to action
• what methods of communication can you
think of?

10. System
• System:
• The flow of information in an organisation
and between organisations, encompassing
the information the business creates, uses
and stores

11. Information System
• An organized combination of people, hardware,
software, communication networks, and data
resources that collects, transform, and
disseminates information in an organization.
• The flow of information in an organisation and
between organisations, encompassing the
information the business creates, uses and stores

12. Information Systems
• Definition:
– a series of inter-related activities concerned
with the capture, processing, communication
and conversion of data to information
(A Eardley)
• computer-based information systems use computers
• each is unique and designed to achieve an
organisation’s goals
• provide information at all levels, from operational to
strategic

13. IS at the Organisational Level
DATA WORKERS
KIND OF SYSTEM GROUPS SERVEDKIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR MANAGERS
MANAGEMENT LEVEL MIDDLE MANAGERS
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
RESOURCESMARKETING

14. IS at the Organisational Level
• Operational-level
– Elementary activities and
routine transactions
– Data current and accurate
• Knowledge-level
– Support knowledge and
data workers
– Integrate new knowledge
into the business
– Office automation
• Management-level
– Periodic monitoring,
control, decision-making
and administration
– Is the business working
well?
• Strategic-level
– Long-term (e.g. 5 year)
planning and strategy
– Internal and external
information

15. Types of IS
• Transaction Processing Systems (TPS)
• Knowledge Work Systems (KWS)
• Office Automation Systems (OAS)
• Management Information Systems (MIS)
• Decision-support Systems (DSS)
• Executive Support Systems (ESS)

16. Transaction Processing Systems
Operational-level Systems
Order tracking Machine control Securities trading Payroll Compensation
Order
processing
Plant scheduling Cash management Accounts
payable
Training and
development
Material movement
and control
Accounts
receivable
Employee
records
Sales and
Marketing
Manufacturing Finance Accounting Human
Resources
Systems that perform and record daily routine
transactions necessary for business

17. 13
What is a transaction processing
system?

18. Knowledge Work Systems
Knowledge-level Systems
Engineering workstations Graphics workstations Managerial workstations
Systems that aid the creation and integration
of new knowledge into an organisation

19. Office Automation Systems
Knowledge-level Systems
Word processing Document imaging E-mail / electronic
calendars
Systems that are designed to increase the
productivity of data workers

20. Management Information Systems
Management-level Systems
Sales
management
Inventory control Annual
budgeting
Capital
investment
Relocation
analysis
Sales and
Marketing
Manufacturing Finance Accounting Human
Resources
Systems that serve planning, control and
decision-making through routine summary and
reports

21. Decision-support Systems
Management-level Systems
Sales
region
analysis
Production
scheduling
Cost analysis Pricing /
profitability
analysis
Contract cost
analysis
Sales and
Marketing
Manufacturing Finance Accounting Human
Resources
Systems that combine data, models and
analysis tools for non-routine decision-making

22. 16
What is a management information
system?

23. 20
What’s a decision support system?

24. 22
What is an expert system?

25. Executive Support Systems
Strategic-level Systems
5-year sales
trend
forecasting
5-year operating
plan
5-year budget
forecasting
Profit
planning
Personnel
planning
Sales and
Marketing
Manufacturing Finance Accountin
g
Human
Resources
Systems that support non-routine decision-
making through advanced graphics and
communications

26. Interrelationships
• TPS major producer of data
• External data also required
for MIS, DSS and ESS
• Typical loose coupling of
systems
• ‘Digital firms’ have tighter
integration
ESS
TPS
KWS
OAS
DSSMIS

27. Examples of IS by function :
Sales and Marketing
System Description Organisational
Level
Order processing Enter, process and
track orders
Operational
Market analysis Identify customers and
markets
Knowledge
Pricing analysis Determine prices Management
Sales trends Prepare 5 year
forecasts
Strategic

28. Examples of IS by function :
Manufacturing and Production
System Description Organisational
Level
Machine control Control actions of
equipment
Operational
Computer-aided
design (CAD)
Design new products Knowledge
Production planning Decide number and
schedule of products
Management
Facilities location Decide where to
locate facilities
Strategic

29. Examples of IS by function :
Finance and Accounting
System Description Organisational
Level
Accounts receivable Track money owed to
firm
Operational
Portfolio analysis Design firm’s
investments
Knowledge
Budgeting Prepare short-term
budgets
Management
Profit planning Plan long-term profits Strategic

30. Examples of IS by function :
Human Resources
System Description Organisational
Level
Training and
development
Track training, skills
and appraisals
Operational
Career paths Design employee
career paths
Knowledge
Compensation
analysis
Monitor wages,
salaries and benefits
Management
Human resources
planning
Plan long-term
workforce needs
Strategic

31. Information Systems
1. Information processing
capability
2. Information for managerial
decision making
hardware,
software,
procedures,
people, data
combine
to create
that provide
Information SystemInformation System

32. Sit in a group, discuss and present ONE - TWO:
INFORMATION SYSTEMS that you know belong to
the categories below:
TPS KWS MIS DSS ESS

33. Transaction Processing Systems is an information system that captures
and processes data generated during an organization’s day-to-day
transactions.
Management Information Systems is an information system that
generates accurate, timely and organized information so managers and other
users can make decisions, solve problems, supervise activities, and track
progress
Knowledge work systems (Office Automation Systems) help to deal
with problems requiring technical expertise or knowledge. Software includes:
Word-processing for clerical staff; Spreadsheets for accounts, and sales
staff; Database managements systems for keeping records; CAD for
designers; Project management systems; Expert systems for specialist
staff.
Decision support system (DSS) is an information system designed to
help users reach a decision when a decision-making situation arises. A
decision support system uses data from internal and/or external sources
Executive Information Systems is a tool for the senior manager . For
individuals with limited time, limited keyboarding skills, and little direct
experience with computers. An EIS is easy to navigate and tailored to
executive’s information needs. Its features include reports, analysis and

34. STRATEGIC INFORMATION
SYSTEMS

35. Business Challenges
• Increasingly keen global competition calls for
rapid product and process innovation.
• Dramatic increases in knowledge that can affect
your business call for organizational knowledge
management supported by IT
• Faster pace of business events – the cause and the
result of time-based competition.
• Information is key!

36. STRATEGIC INFORMATION
SYSTEMS
• A Strategic Information System (SIS) = Any
information system that supports or shapes a firm’s
competitive strategy
• Any kind of information system that uses IT to help
an organization to :
–Gain a competitive advantage
–Reduce a competitive disadvantage
–Or meet other strategic objectives
• A successful SIS significantly changes the way
business is done (S. Neumann)

37. STRATEGIC INFORMATION
SYSTEMS
• Examples:
• Cost:
– Use IS to reduce cost of
business process
– Use IS to lower costs of
customers and suppliers
• Differentiate
– Use IS features to reduce
the differentiation
advantages of competitors
– Use IS to focus products
and services at selected
market niches
• Innovate
– Create a unique market niche with the
help of IS/IT
– Make radical changes to business process
using IS/IT that can cut cost, improve
quality, efficiency, shorten time to
market
• Promote growth
– Use IS to manage regional and global
expansion
– Use IS to diversify and intergrate to other
products and services
• Develop Alliances
– Use IS to create virtual organization for
business partners
– Use IS to support strategic business
relationships with customers, suppliers,
subcontractors, etc

38. How could the firm where you
work benefit from IT?
• In supply chain management through inventory
management
• In the customer interface via ecommerce
• In logistics through GPS/GIS
• In client management through groupware
• In marketing through datamining
• In internal management through Intranets

39. Competitive Impacts of SIS
• product development cycle
• product quality enhancement
• sales force and selling support
• order cycle automation
• office cost reduction
• channel and inventory management
• reduction of management levels
• product features enhancement and threat of
substitution

40. Industry Impacts of SIS
• nature of products and services
• product life cycle
• geographical scope
• economies of scale in production
• shift in value-added locus
• bargaining power of suppliers
• new business creation

41. Factors characteristic of SIS
• changes relationship between organisation and
customers
• facilitates being proactive to customers
• more timely and reliable information
• better communication within organisation
• enables monitoring of performance of
organisation
• gives management information for decision
making.

42. The SABRE and SMART system
Strategy: differentiate, cost, innovate
• The Sabre system has become a major source of
revenues for American Airlines since travel
agencies pay significant fees for its extended
services.
– proprietary information technology and services that an
enterprise develops can be turned into dedicated
information service providers in the market.
• American Airline's SMARTS Sales Management
and Report Tracking in a knowledge oriented SIS
– Information on revenue, booking and performance
could be monitored using reservation data and
historical data.
– This enables incentive scheme for individual agents to
be developed, rather than general incentive schemes

43. Sony Ericsson
Strategy : Alliance

44. CASE: Mobile Oil Moves to Web-based System
Strategy: Cost
Problem:
 Largest marketer of lubricants in the USA
 In 1995, introduced EDI system
 Used to place orders, submit invoices & exchange business documents
 It was too expensive, too complex to use
Solution:
 In 1997, moved to web-based extranet-supported B2B system
Results:
 Reduced transaction cost from $45/order to $1.25
 Fewer shortages, better customer service
 decline in distributor administration costs

45. CASE: Caltex Corporation
Strategy : Alliance
 Major multinational company selling gasoline & petrol products.
 In 2000, created a centralized e-purchasing corporate
exchange (www.caltex.com)
 Suppliers build electronic catalogues with Ariba’s software.
 Many benefits to buyers and suppliers, particularly in Asia, Africa
& the Middle East.
 System enables Caltex to successfully handle complex
multinational business environments.

46. CASE: Volvo Speed Cars
Strategy : CostProblem:
 In comparison to global competitors, Volvo’s cars were to
expensive, with a slow delivery time.
Solution:
 Creation of global ISDN-based network
Result:
 Reduction in delivery time from 12 - 16 weeks to 4 - 6 weeks for
customized cars.
 Reduction in cost of doing business, along with the price of the
car.

47. Problem: Advantage of SIS is
difficult to sustain !!
• How can IS remain strategic?
– IT purchased so easily on the open market may not produce sustainable
competitive advantage
• Firms may gain competitive advantage by following the IT
leader rather than being the IT leader.
• However, the development of SIS may give a company first
mover advantage which, even if it only lasts for 6 months is
enough to gain more market share which can then be built on
by other means.
• Proper planning in development and management of SIS is
vital.

48. Sit in a group and discuss and present ONE – TWO :
STRATEGIC INFORMATION SYSTEMS that you
know which support any of these strategy
Cost Differentiate Innovate Promote
Growth
Alliances

49. Information cost and IS
investment

50. Investments in IS/IT
• How to justify investments in applications
and associated technology?
• How benefits from investment can be
realised?
• How can risks be assessed and avoided?

51. • IT overhead costs are consistently larger than
anticipated (A.T. Kearney, 1987 per Kobler Unit
1991))
• Computers are showing up everywhere except in the
productivity statistics (Nobel Laureate Robert Solow
per Dunlop & Kling 1991)
• IT is not linked to overall productivity
increases(OECD 1988)
• 70% of users declare that their systems are not
returning their company's investment (Romtech,
1989)
• Only 15% of companies following an IT strategy
regard their strategy as 'highly successful'
(Sheffield / Arthur Andersen, 1988)

52. Typical 5 Year Cost of Owning a PC

53. IS cost

54. IS cost
• Tangible vs intangible
• Need to be predicted , then be reduced where
appropriate, but not at the expense of net benefit
• Keen(1991): % of error depend on the nature of
IS project
• Inaccurate forecast leads to:
– A lack of confidence in IS
– Choosing wrong IS project
– Loss of opportunity on worthwhile project due to
resources dry up

55. Checklist for IS cost
Hardware cost Printers,storage, etc
Software cost Off-the-shelf, in-house development
Installation cost Data entry from manual to digitized, data
conversion
Environmental cost Wiring, furniture, air conditioning
Running cost Electrical power, telephone lines,
subscription fees
Maintenance cost Hardware and software servicing
Security cost Disaster recovery plan, accidental damage
Training cost Network infrastructure, data warehousing
Networking cost Background education, specific training
Wider organizational
cost
New salary structures, transitional cost
Hochstrasser and Griffiths (1990)

56. Allocation of the IS investment
• Cover two types of resources:
– Technology
– Personnel associated with managing and
operating the technology
• Ratio of IS spending will be different over
time and industry sector

57. IS benefit – information value
• Value comes from:
– Accuracy
– Quality
– Usability
– User satisfaction
– Functionality
– Reliability
– Utilization
– Relevance
– Productivity
– Security
– Profitability
– Speed volume

58. The effects of technology

59. The strategic alignment process