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Information Economics. Michael Andrianus – 1501175306 Vincentius - 1501150966. Information Economics. A concept that explains how useful the economics level of a system investment and information technology to the company .
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Information Economics Michael Andrianus – 1501175306 Vincentius - 1501150966
Information Economics • Aconcept that explains how useful the economics levelof a system investment and information technology to the company. • Information economy presents an approach that stressed the need for in-depth studies before an investment is made in the field of information technology • Information economic is a combination of information system projectand operations unit system of daily information.
Information Economics • Information Economic (IE) • New Information Economic (NIE)
Information Economics (IE) • A tools to measure the value of the information systems on business • The Economic theories that are used to define the value of the investment : • Cost benefit analysis traditional • Return on investment
Basic Concept of Information Economics (IE) • The benefits expanded by extending the concept of value. • The concept of benefits is a measure of the economy, such as cost reduction or direct revenue production andit will benefit the business. • The concept of values based on the effects of information technology investments that is shown in the company's business performance. • Ex : competitive advantage and increased market share. • The cost concept can be interpreted in various way and the investments in IT can negatively affect the company • Ex : The use of new IT will cause the need for training and preparation of organization.
Newdecision making process on investment in IT field • Based on the value of a business through the performance of which may be generated • Based on the cost of the technology
Changes that occurs • The real benefits in IT obtained from the change in the procedures for doing business for ex : products, market, management style, organization sturcture. • The way the company makes planning and managing IT also changed because of the target business is affected by the information.
Limitations and Scope of IE • The concept is not a strategic plan, the development of the system of competition, or the traditional economy. • Nor the solution of centralization or decentralization ITon of the company.
Stages using IE • Cost Benefit Analysis • IE Tools • Value linking • Value Restructuring
New Information Economic (NIE) • Practicalmethodology in conducting the IT investment priorities and demonstrate, that the focus on new investments in order to obtain tangible results for business strategy and the best operating system will help maximize the impact on the business process layer bottom
Determine The Target • Right Result • Manage and control the cost of IT and at the same time increase the process of low-class business • Right Decision • Direct the needs of the management action to produce the right outcomes
The Reality of NIE • The investment in IT is only about 2%-15% from the total profit. • The cost is for lights-on-budget and project budget
Scenario in NIE • The low-cost on lights-on and the effect on the low business process has been decresed, the company can focus on budgetting without paying attention to others. • The increase in lights-on budget but without the changing affects in low business process, the manager assume that lights-on budget will alwas increase as the increase of the application project. • The increase in lights-on budget and effect on low business process.
Strategy toward the bottom layer of the value chain • Business planning process and effective IT / IS • Decision making of resources • Planning and budgetting that is easy to do.
Common mistake • No relation between management process, business planing, IT planning, priority, budget, and performance. • The business unit are not connected
Common Problems • Business planning is not encourage the IT plan • IT planning only focus on the technology rather than support directly to the strategic planning • Business manager can not see the IT giving support to the strategic planning • IT project not support the business strategic. • Company budget nor represent the outcome in IT planning • IT planning can’t give direction to the management decision, company project and also budget • IT management can not lead IT as business
Critical Success Factor (CSF) • Business planning process and IT have to be connected • IT is capable of delivering innovation on the impact on business planning and generating new business strategies and improve the way for implementation of business strategy at this time. • Priority the investment in IT based on business strategic • Cost and investment in IT, include developing, operational, maintain, service has to connect with strategic business • Business and it management team consistently do the management processes and that contributions to IT on the performance of the lower layer to be real business unit • IT business and performance can be track • Planning and management process focus on IT cost • IT manager and business,effectively participate on the process
