Management of Information Technology

1. Management of Information Technology Introductory Comments

2. Elements for Study of Information Systems Text’s Three Themes Enterprise Systems E-Business Information Technology Three Roles Systems User Systems Evaluator Systems Designer

3. Input-Process-Output Model for Info systems and Business Processes

4. Systems, Components, and Hiding Complexity Note that the diagram omits that System 1.2 consumes inputs A & E and produces outputs C & B. Data flow diagram leveling (Ch 2) makes these relationships clearer.

5. A Hierarchy of Information Qualities

6. Q1 – How does organizational strategy determine information systems structure? • An organization’s goals and objectives are determined by its competitive strategy. • In turn, an organization’s competitive strategy determines every information system’s • Structures • Features • Functions Fig 3-1 Organizational Strategy Determines Information Systems

7. Q2 – What Five Forces Determine Industry Structure? Fig 3-2 Porter’s Five Forces Model of Industry Structure

8. Q2 – What Five Forces Determine Industry Structure? Fig 3-3 Examples of Five Forces

9. Q3 – What is Competitive Strategy Fig 3-4 Porter’s Four Competitive Strategies

10. Q4 – What is a Value Chain? • Each competitive strategy requires a system whose benefits outweigh the risks and provide value to the customer. • Value is defined as the amount of money a customer is willing to spend on a product, service, or resource. • The difference between the value that an activity generates and the cost of the activity is the margin. • A value chain is a network of value-creating activities and is divided into primary activities and support activities.

11. Q4 – What is a Value Chain? Fig 3-5 Porter’s Value Chain Model

12. Q4 – What is a Value Chain? • Primary Activities in the value chain include: • Inbound logistics activities involve receiving and managing raw materials. • Operations activities transform raw materials into final products or create services. • Outbound logistic activities deliver finished products to customers. • Marketing and Sales activities create marketing strategies and sell products or services to customers. • Services activities provide after-sale customer support for products or services.

13. Q4 – What is a Value Chain? • Support Activities in the value chain indirectly enhance production of products and services. • Firm infrastructure includes general management, finance, accounting, legal, and government affairs (if necessary). • Human Resources recruits, compensates, evaluates and trains employees. • Technology Development includes research and development for new processes or techniques. • Procurement finds suppliers and vendors for raw materials, creates contracts, and negotiates prices of raw materials.

14. Q5 – How Do Business Processes Generate Value? Fig 3-7 Three Examples of Business Processes

15. Q5 – How Do Business Processes Generate Value? Fig 3-8 Improved Materials Ordering Process

16. Q6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? Fig 3-10 Business Process & Information System for Bike Rental

17. Q6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems? • Each business must first analyze its industry and choose a competitive strategy. Will it be a low-cost provider or differentiate its products from competitors? • Then it must design its business processes to span value-generating activities. • Once those decisions have been made, a business can structure an information system that supports its business processes.

18. Q7 – How Do Information Systems Provide Competitive Advantages? • There are two ways businesses can respond to the five competitive forces. • They can gain a competitive advantage via their products and services. • They can gain a competitive advantage by developing superior business processes.

19. Q7 – How Do Information Systems Provide Competitive Advantages? • A business can gain a competitive advantage via its products by • Creating new products and services, or • Enhancing its existing products or services, or • Differentiating its products and services from its competitors • Information systems can help create a competitive advantage by being part of the product or by providing support to the product.

20. Q7 – How Do Information Systems Provide Competitive Advantages? • A company can gain a competitive advantage by using business processes to • Lock in customers via high switching costs, making it too expensive for the customer to switch to a competitor. • Lock in suppliers via easy-to-use connections, discouraging them from changing to another business. • Create entry barriers for new competitors, thereby raising the costs to enter the market. • Establish alliances with other organizations and set standards, reducing purchase costs and providing benefits for everyone. • Reduce costs which in turn reduces prices and increases profitability.

21. Summary: Why information systems are developed Information Systems are the means for executing business processes, activating the value chain, and achieving the business’s strategy

22. How information systems are developed: Microsoft Solutions Framework (as an example) • Microsoft® Solutions Framework (MSF) is a deliberate and disciplined approach to technology projects based on a defined set of principles, models, disciplines, concepts, guidelines, and proven practices from Microsoft. • Microsoft Solutions Framework provides an adaptable framework for successfully delivering information technology solutions. • MSF is called a framework instead of a methodology because MSF provides a flexible and scalable framework that can be adapted to meet the needs of any project (regardless of size or complexity)

23. MSF Foundational Principles Foster Open Communications Work Toward a Shared Vision Empower Team Members Establish Clear Accountability and Shared Responsibility Focus on Delivering Business Value Stay Agile, Expect Change Invest in Quality Learn from All Experiences

24. The Phases and Milestones • The MSF Process Model is divided into five distinct PHASES, each concluding with the attainment of a specific MILESTONE

25. The MSF Team Model

26. Accountability • This is a “Team of Peers” NOT an Org Chart • Each Member is responsible to specific groups of project “stakeholders”

27. How information systems are described: Data Flow Diagrams (DFDs) as an example Data flow diagram (DFD) is a picture of the movement of data between external entities and the processes and data stores within a system

28. DFD Symbols (Gane & Sarson) Process DataFlow DataStore Source/Sink (External Entity)

29. Process • Work or actions performed on data (inside the system) • Labels should be verb phrases • Receives input data and produces output

30. Rule 1: Process Can have more than one outgoing data flow or more than one incoming data flow; must have at least one of each

31. Rule 2: Process • Can connect to any other symbol (including another process symbol)

32. Process: Correct/Incorrect?

33. Data Store • Is used in a DFD to represent data that the system stores • Labels should be noun phrases

34. Rule: Data Store • Must have at least one incoming and one outgoing data flow

35. Source/Sink (External Entity) • External entity that is origin or destination of data (outside the system) • Is the singular form of a department, outside organisation, other IS, or person • Labels should be noun phrases • Source – Entity that supplies data to the system • Sink – Entity that receives data from the system

36. Rule: Source/Sink • Must be connected to a process by a data flow

37. Rules for Using DFD Symbols • Data Flow That Connects YES NO

38. Context Diagram • Top-level view of IS • Shows the system boundaries, external entities that interact with the system, and major information flows between entities and the system. • Example: Order system that a company uses to enter orders and apply payments against a customer’s balance

39. Level-0 DFD • Shows the system’s major processes, data flows, and data stores at a high level of abstraction • When the Context Diagram is expanded into DFD level-0, all the connections that flow into and out of process 0 needs to be retained.

40. Lower-Level Diagrams (but higher numbers like Level 1, Level 2, etc) • Functional Decomposition • An iterative process of breaking a system description down into finer and finer detail • Uses a series of increasingly detailed DFDs to describe an IS • Balancing • The conservation of inputs and outputs to a data flow process when that process is decomposed to a lower level • Ensures that the input and output data flows of the parent DFD are maintained on the child DFD

41. Strategies for Developing DFDs • Top-down strategy • Create the high-level diagrams (Context Diagram), then low-level diagrams (Level-0 diagram), and so on • Bottom-up strategy • Create the low-level diagrams, then higher-level diagrams

42. Exercise: Precision Tools sells a line of high-quality woodworking tools. When customers place orders on the company’s Web site, the system checks to see if the items are in stock, issues a status message to the customer, and generates a shipping order to the warehouse, which fills the order. When the order is shipped, the customer is billed. The system also produces various reports. • Draw a context diagram for the order system • Draw DFD diagram 0 for the order system

43. Identify Entities,Process,Data Stores & Data Flow • Data Flows • Order • In-Stock Request • Order Data • Status Data • Status Message • Shipping Order • Order Data • Invoice • Shipping Confirmation • Payment • Accounting Data • Accounts Receivable Data • Order Data • Inventory Reports • Entities • Customer • Warehouse • Accounting • Processes • 1.0 Check Status • 2.0 Issue Status Messages • 3.0 Generate Shipping Order • 4.0 Manage Accounts Receivable • 5.0 Produce Reports • Data Stores • D1 Pending Orders • D2 Accounts Receivable 1.0 2.0 3.0 4.0 5.0

44. Context Diagram of Order System

45. Level-0 of Order System

46. Management of Information Technology End of presentation