Foundations of Information Technology in Business

Why Study Information Technology?

Information technology can help all kinds of businesses improve the efficiency and effectiveness of their business processes, managerial decision making, and workgroup collaboration, thus strengthening their competitive positions in a rapidly changing marketplace.

Why Study Information Technology

Internet-based systems have become a necessary ingredient for business success in today s dynamic global environment. Information technologies are playing an expanding role in business.

What is a System?
A system can most simply be defined as a group of interrelated or interacting elements forming a unified whole. Three basic interaction components or functions of a system: Input this involves capturing and assembling elements that are required to be processed. Output this involves transferring the information generated by the system to their ultimate destination Processing is the transformation process that converts the input into output.

What is an Information System?

An Information System is a set of inter-related components that collect (or retrieve), process, store , and distribute information to support decision making and control in an organization. Any organized combination of people, hardware, software, communications networks, and data resources that stores, retrieves, transforms, and disseminates information in an organization.

Information Systems vs. Information Technology

Information Systems (IS) all components and resources necessary to deliver information and information processing functions to the organization Information Technology (IT) various hardware components necessary for the system to operate

A Business System

Types of Information Resources

Computer Hardware Resources
including microcomputers, midsize servers, and large mainframe systems, and the input, output, and storage devices that support them

Computer Software Resources

including operating system software, Web browsers, software productivity suites, and software for business applications like customer relationship management and supply chain management

Types of Information Resources

Telecommunications Network Resources
including the telecommunications media, processors, and software needed to provide wire-based and wireless access and support for the Internet and private Internetbased networks examples include twisted-pair wire, coaxial and fiber-optic cables, microwave, cellular, and satellite wireless technologies examples include communications processors such as modems and internetwork processors, and communications control software such as network operating systems and Internet browser packages.

Types of Information Resources

Data Resource Management Resources including database management system software for the development, access, and maintenance of the databases of an organization People Resources
end users or Clients Accountants, Clerks, customers IS Specialists people who develop and operate the Information Systems System analyst, System Developers, System operators

IS Resources & Activities

Conceptual Framework of IS Knowledge

Roles of IT in Business

The Manager s Job

The most important task of managers is making decisions. IT changes the manner in which many decisions are made

Automation of routine decisions Less expertise required for many decisions. More rapid identification of problems and opportunities Less reliance on experts to provide support to top executives. Empowerment of lower and middle levels of management. Decision making undertaken by non-managerial employees. Power redistribution among managers Thinner organizations. Organizational intelligence that is more timely, comprehensive, accurate, and available

Information Systems Activities

Input of Data Resources Processing of Data into Information Output of Information Products Storage of Data Resources Control of System Performance

Types of Information required by an organization

Strategic Information Tactical Information Operational Information Statutory Information

Strategic Information:

Information needed for long term planning Directing the course the business should take Less structured Volume of important information in strategic planning is small and difficult to obtain.

Tactical Information:

Needed for taking short range decisions to run the business effectively Requires specifically designed processing of data Mostly obtained form the day-to-day collection of routine data Much more in volume

Operational Information:
Needed for day-to-day operations of a business organization Easily obtained by simple clerical processing of data volume is much more than that of tactical information.

Statutory Information:
Information and reports required by law to be sent to government authorities Clearly specified Require straight forward processing of data.

Impact Of IT On Personnel Issues

MANAGERIAL ISSUES
The effects of offshore outsourcing. Offshore outsourcing may be either an opportunity or a threat to an organization. To improve organizational efficiency, companies should explore the opportunities to outsource certain noncore activities to firms in other parts of the world. However, managers should be aware of various legal and ethical considerations surrounding this issue as well as the impact of outsourcing on the size and morale of their workforce. Managing and evaluating remote workers. Telecommuting increases the number of employees working away from the office. To manage these employees, it is vital to place a greater emphasis on regular formal communications. Effective performance evaluation is also different and requires a closer examination of the actual outputs produced by each employee. Dealing with information overload. In many workplaces, the capacity of information systems to collect and generate information has outpaced the ability of human employees to absorb it. The resulting information overload negatively impacts employees and their productivity. A greater investment in knowledge management systems, decision support systems, and related tools may help to solve this problem

MANAGERIAL ISSUES
Providing high-quality information. As companies continue to rely on increasingly larger volumes of information, the issue of information quality becomes critically important to the success of the organizations. Furthermore, recent laws, such as the SarbanesOxley Act, make CEOs and CFOs personally liable for the quality and accuracy of financial information disclosed to the public. Displacement of employees with information technology. In any occupationblue-collar, clerical, or white-collarmachines are acquiring the capabilities to perform human tasks more effectively and efficiently. Although this trend is unlikely to result in massive worldwide unemployment, it can have dramatic results on individual organizations and on individual employees. Thus, managers should be aware of the potentially disruptive technologies that may displace them or their colleagues and subordinates. Use of electronic surveillance. Proliferation of computer and white-collar crime impels employers to use information technology to monitor their employees. While electronic surveillance may reduce the incidence of unlawful activities, it may also result in employee resentment and other unintended consequences.

Organizational Pyramid vs Information Pyramid

Strategic decision

Top

Top

Environment al Info

Tactical decision

Middle

Middle

Operational decision

Operational

Operational

Internal Info

Responsiveness to Change
like a chameleon, an organization must respond to rapidly changing environments I/T may be used in numerous ways to facilitate responsiveness

Competitive Strategy
Competition is a fact of life for organizations I/T is a necessary tool for implementing effective organizational strategies

Competitive Strategies
I/T facilitates the integration of suppliers, customers, and markets this shrinks time and distance, reducing organizational and international boundaries

Organizational Management
an organization is composed of individuals who cooperate to accomplish goals management refers to the activities required to keep an organization alive and functioning

Current Trends in Management

Process-based management Customer satisfaction (customer-driven organizations) Co-opetition Information dissemination (empowering employees

Measures of Success
Efficiency
Minimize costs Minimize time Minimize the use of information resources

Effectiveness
Support an organization s business strategies Enable its business processes Enhance its organizational structure and culture Increase the customer business value of the enterprise

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