Information Systems – Week 5

1. Information Systems – Week 5 • Last week: Approaches to System Building • Radical approaches to bespoke systems (Steve Bullas) • Conventional approaches – Name three • Revision and Self-Study: Enhancing Management Decisions • Laudon & Laudon Chapter 11 (Ch.13 in 7th edition) • This week: Redesigning the Organization with IS

2. Enhancing Management Decisions • Capital Budgeting Decision on p.409 • What’s the lowest acceptable additional income at 7%? • Summary on p.426 • Distinguishes DSS and Group DSS • What kinds of DSS are described? • Where do Executive Support Systems help? • Why do you think DSS systems seem so much more sophisticated than GDSS?

3. Redesigning the Organization • Building new systems can cause organizational change • Example? • Role of IS in Total Quality Management and Business Process Reengineering • Introduction to System Development(lead in to IS Project management week) • Reading: Laudon & Laudon (2002) Ch 10 (or Chapter 11 in 6th edition)

4. Business Environment • Information Systems have both technical and social components • IS needs to support the overall business • should be included in a business plan • Management challenges • Planned organizational changes • Systems development • Understanding business value of info systems • Organizational change needs to be planned • Don’t install technology without considering people who work with it

5. Process of Building Information Systems • Systems builders need to consider: • nature of tasks • speed and sequence in which they must be completed • who has what information about what • Challenges • Benefits of planning seen as intangible • Without it, development is very risky(will your nerve hold while you’re planning?) • Can force unforeseen (and undesirable) changes... • ... While missing valuable opportunities for improvement

6. Linking IS to the Business Plan • Work within context of a strategic plan for the business • Once specific projects have been selected • Information Systems plan can be developed • Planning • Management strategy • Current situation • Directions of systems development • Implementation plan • rationale • budget • schedule

7. Resource Quality When you squeeze in one place, it bulges out in another Product factors Cost factors Function Schedule Project Variables • Which one typically gets forgotten? Dywig,odywiT

8. Strategic Business Plan • Analyse Current Situation • Systems supporting main business functions • Installed base of hardware, software, infrastructure • Known requirements not being (fully) met • Trends and anticipated demands • Review Current Organization • Are there any “ping pong” business processes? • Changing Environment • Competition and Customer expectations • Technology, regulation, acquisitions • Input costs, including commodity and energy trends • Set Major Goals of Plan

9. Planning New Developments • Description of New IS Projects should include: • Statement of corporate goals • Description of how IT supports attaining of those goals • Scope of plan – what data/processes are we considering? • Business Rationale • Plan sets out target dates and milestones • Used to judge the progress of the project • Provides details of • Hardware requirements – IT and telecommunications • Software needed – OS, package, bespoke, support • Data • Training and organizational change required

10. Information Requirements • Methods for establishing essential information requirements for organization as a whole • Enterprise Analysis (Business Systems Planning) • look at entire business • consider the functions • consider processes • consider the data elements required • Strategic analysis (Critical Success factors) • Based on belief that firm’s success is determined by a small number of easily identifiable operational goals • Shaped by industry, management, environment

11. Enterprise Analysis • Developed by IBM in the 1960s • Argues that information requirements of a firm can only be understood by looking at the entire organization in terms of organizational units, functions, processes and data elements • Basis of this approach • take a large sample of managers and ask: • how they use information • where they get information • what environment do they work in • what their objectives are • how they make decisions • what their data needs are

12. Strengths Comprehensive view of the following: the whole organization the systems in place the data elements Weaknesses produce large amount of data about here and now expensive to collect difficult to analyse based on interviews with senior or middle managers rather than general users tendency to look at existing information.. .. not how to do better Enterprise Analysis – Evaluation

13. Strategic Analysis: Critical Success factors • Argues that information requirements of organization are determined by a small number of critical success factors • Basis of this approach: • Assumes there are a small number of objectives that managers can easily identify and on which IS can focus • Collected in 3-4 personal interviews with senior managers • Senior managers identify a small number of operational goals (objectives) or critical success factors at interview • Managers asked to consider their working environment and consequent information needs • Information System focuses on these needs only • Critical success factors are pooled to form basis for the IS

14. Using CSFs to Develop Systems • Collect managers’ CSFs • Aggregate and analyse individuals’ CSFs • Develop agreement on company CSFs • Define CSFs for company • Use CSFs to develop Information System priorities • Operational and DSS • Define Data Requirements • To feed Operational and Decision Support Systems Is this bottom up approach appropriate?

15. Strengths Less data to consider Is more tailored to meet the business requirement Meets changing needs of the environment Weaknesses Dependent on managers’ view No rigour Needs of the organization as a whole not taken into account Vulnerable to sub-optimization If business environment or management changes, system might not adapt successfully May need to do it all over again if management changes Critical Success Factors – Evaluation Probably need a combination of thetwo approaches

16. Increasing Risk and Reward Transforming Organizations Some ways that IT is being used for transformation • Structural organizational change from the more superficial to the most profound: • Automation • Rationalization • Reengineering • Paradigm shifts • The more profound and radical the change • the more impact on scope of business activity and on organizational and human relationships • the greater the risk of failure

17. Case Studies • Please read MacBride case study in handout • In the break and during the rest of the lectureThink about how these factors affect that business • Prepare to offer advice in the seminar • Other sources • Laudon and Laudon give several examples • TVA Nuclear (p.302) • Cemex (p.311) • An E-Commerce Site Overnight (p.327) • Or listen to the Mass Customization programme • Come up with examples of paradigm shifts

18. Evolutionary Approaches • Automation – Perform common tasks more efficiently and effectively • Fine, providing the processes you automate are necessary • Obvious candidates are payroll and accounts • Rationalization – Goal is to get processes right before automating them • Careful consideration of procedures • Structure your data in most appropriate way

19. Business Process Re-engineering Radical rethink (or Revolutionary approach) • Requires analysis of business processes • then a simplified version is sought • followed by a redesign of the process • Reorganizes workflows • combining steps to cut waste • eliminate repetitive paper intensive tasks • A new design may eliminate a job altogether • Laudon p.339 cites example of Ford motor company

20. Business Process Reengineering • BPR usually depends on Work-flow Management • Streamlining processes to move information efficiently • Steps to BPR • Develop process objectives within business vision • Identify processes to be redesigned • Make sure the process is really needed • Understand and measure performance of existing process • Are there any elements that could be cut out? • Where are delays and sources of cost? • Identify opportunities to apply IT • Build Prototype of new process to validate it • Plan and execute deployment (human and IS aspects)

21. Paradigm Shift • Paradigm is a mental model of how a complex system works – for example • Production Line paradigm assumes productivity is maximized by reducing skills through a high degree of specialization • CEGB paradigm was that generation is best done in large, efficient, centralized power stations near sources of coal • Paradigm Shift: • Is a more radical form of business change • Forces rethinking the nature of the business and the nature of the organization • “Mass Customization” involves a paradigm shift • Paradigm shifts and reengineering often fail because of the extent of the change

22. Cycle of Opportunity • Increased shop opening hours drives multiple staffing • Allowing longer opening, which leads to more sales, with • faster turnover of stock, better deployment of capital • Cheaper computers allow real-time control of telephony • Can build cellular radio network • Tracks which phone is in which cell and route calls there • Creates mass-market for mobile electronics • Business usage pays for building infrastructure • Now there are new opportunities • Can enter consumer market to bypass need for wayleaves • Mobile data will consume increasing network bandwidth • Rewarding investments yet further

23. Process Improvement and TQM • Total Quality Management makes Quality the responsibility of everyone in the organization • To improve quality of products, services and operations • Employees are encouraged to seek out problems or deficiencies • Sooner these are identified the less costly to fix them • Often incentives are used to encourage participation • TQM contributes by: • Simplifying process or product – better design • Improving responsiveness to customer demands • Reducing cycle time • Increasing precision of production

24. IS role in TQM • Supports benchmarking – performance measurement against objective criteria • Allows sharing of data • When problem is identified, solver can quickly take action • Eliminate middlemen from information flows • Improve customer service – Give an example • Supports design and production improvements • Reduced complexity • fewer things fall through the cracks • Shorter production cycle time through timely information • defects corrected more quickly; fewer faults reach customer • faster response to customer requirements

25. Building an Information System • Systems development has to be part of business strategy • Must serve the business goals • Be consistent with the business plan • And match any planned organizational change • TQM and Enterprise Analysis • Look at processes and organization wide goals • Focus on managers rather than general users • System development has to consider all its users • Eric’s view • “Big Bang” developments usually fail • Managers need to minimize number of sources of risk

26. Will never be perfect first time System Development Process • Don’t Forget • Goal of IS is solution to a specific business challenges • IS is result of a series of activities known as the systems development process • or more accurately, the system development life cycle • Stages are: • Systems Analysis and Specification • System Design (High and Low Level) • Programming • Testing • Deployment • Production, maintenance and enhancement

27. Systems Analysis Analysis of Problem to be solved by the IS • Feasibility: Can the problem be solved within constraints? • What are the requirements for the system? • Where does the information come from? • What are the costs? (hardware, software, training…) • What are the benefits? Do they justify the investment? • Are we confident that the solution will still be appropriate when delivered? • Specification: What the system must do • And what is outside its scope • Design – logical and practical

28. Summary • Information Systems can be used to cut costs, but… • the big gains come from changing how the business runs • Reward and Risk tend to grow together • Introducing IS will always create organizational change • Make sure this matches your strategy • May give you extra freedom to develop business plan • Analyse Information requirements top-down or bottom-up • Or look at them from both points of view • TQM can be assisted by Information Systems • Building a good IS needs good objectives, planning and implementation