Managers: Key to

information technology
results

Chapter 1
 Something to think about

• Why learn and get involved in information

technology? Isn’t this area of the business left to the
IT professionals and not managers?
 Why managers must understand i.t. [1]

• New IT business opportunities, as well as threats,

are coming at faster and faster rate
• Managers play a key role--- frame these
opportunities and threats so others can
understand them, and then evaluate and
prioritize problems and solutions
• Managers must lead the effort to pursue IT
policies that best meet organizational needs
 Why managers must understand i.t. [2]
• Even if organizations invest in the same IT systems
from the same vendors, they will not necessarily end up
with identical solutions or use the systems in the same
ways.
• Managers, working with IT specialists, must make many
choices about the scope of the IT solution, what data to
capture, how databases should be tailored etc.
 Why managers must understand i.t. [3]

• True productivity seldom come simply from automating

work processes--- it requires innovations to business
practices and then automating these improved processes
to take advantage of IT capabilities
• Managers are the key to ensuring IT innovations pay off;
they must lead a holistic approach that includes
encouraging acceptance of change, addressing changes in
business processes and organizational structure,
addressing new employee roles and expectations, and
establishing new measurement and reward system.
 Why managers must understand i.t.

• To gain a sustainable competitive advantage,

companies consistently must deliver increasing value
to customers. Doing so require essential information
gained through the effective use of IT that better
defines customers and their needs.
• Managers must recognize the value of this
information, know how to communicate their needs
for it, and be able to work with IT staff to build
effective IT systems
 Why managers must understand i.t. [4]

• The global business environment is rapidly changing.

• Managers require life-long learning and flexibility in
determining their business roles and career
opportunities.
• Given the strong shift toward the use of IT,
managers must be able to understand how
technology affects their industry and the world at
large
What is information technology?
• Information technology: includes all tools that capture,
store, process, exchange, and use information
• IT infrastructure: an organization’s defined set of IT
hardware, software, and networks
• IT support organization: staff of people who plans,
implements, operates, and supports IT. In many firms,
some or all technology support may be outsourced to
another firm
• Information system: IT infrastructure integrated with
employees and procedures
 Information systems

• Information system: IT infrastructure integrated with

employees and procedures
• When considering the role of business managers for
working with IT, it is useful to divide information
systems into three types: function IT, network IT and
enterprise IT
Relationships among I.T. SUPPORT, Infrastructure and
Information systems

Information
Systems:
IT, people, and
procedures

Function | Network
Enterprise

IT Infrastructure:
Hardware, Software, Networks and
Databases

IT Support Organizations
 Function i.t.

• IS that improve the productivity of individual

users in performing stand alone tasks
• Examples include CAD, word processors,
spreadsheets, decision support systems and e-
learning systems
 Decision support system

• Employs models and analytic tools to help users gain

insights into data, draw conclusions from the data, and
make recommendations
• E.g. a buyer might use a DSS to analyze supplier bids and
select the least expensive provider for raw materials
• Without DSS, such a task may take some time.
• “What-if ” analysis can provide the buyer with valuable
options
 E-learning systems

• Encompass a number of computer-enhanced

learning techniques, including computer-
based simulations, multimedia CD-ROMs,
Web-based learning materials, hypermedia,
podcasts and Webcasts
• E.g. Whirlpool uses e-learning systems to
accelerate the development of new skills and
aid employee performance
 Network i.t.

• Includes information systems that improve

communications and support collaboration among
members of a workgroup
• E.g. use of Web conferencing, wikis, and electronic
corporate directories
 Web conferencing
• Uses IT to conduct meetings or presentations in which
participants are connected via the Internet
• Screen sharing: most basic form of Web conference
• Participants can communicate via voice or text
• Webcasting: audio and video information is broadcast from the
presenter to participants
• Webinar: live Internet presentation that supports interactive
communications between the presenter and audience
• Shortens the time required to plan and conduct meetings, and
greatly reduces travel expenses
 wiki
• Hawaiian for “fast”, is a Web site that allows users to edit
and change its content easily and rapidly
• Either a hosted Internet site or a site on the company
intranet.
• Enables individual members of a workgroup or project
team to collaborate on a document, spreadsheet, or
software application without having to send the materials
back and forth
• Reduced emails, meetings and conference calls, thus
productivity has doubled
 Electronic corporate directories

• Used in large organizations to find the right person

with whom to collaborate on an issue or opportunity
• E.g. IBM’s online employee directory, called
Bluepages
• Consists of three components: database of
information about employee’s skills, a search engine,
and collaboration features that connect employees
and facilitate sharing
 Enterprise I.T.

• IS that organizations use to define interactions

among their own employees and/or with external
customers, suppliers and other business partners
• Often requires radical redesign of fundamental work
processes and the automation of new processes
• Examples are transaction processing system,
enterprise resource planning, and interorganizational
systems
 Transaction processing system

• Captures data for company transactions and other

key events and update the firm’s records, which are
maintained in electronic files or databases
• Supports a specific activity of the firm, and several
may work together to support an entire business
process
• E.g. order processing – order entry, shipment
planning, shipment execution, inventory control and
accounts receivable
 Enterprise resource planning system

• Group of computer programs with a common database that a

firm uses to plan, manage and control its routine business
operations
• Enables information to be shared across business functions and
all levels of management
• Shared database eliminates such problems as lack of
information and inconsistent information, which are common
in multiple transaction processing systems that support only
one business function or one department in an organization
• E.g. Beall’s Inc., a Florida-based retailer
 Interorganizational information
systems
• Support the flow of data among organizations to achieve
shared goals
• For example, some organizations need to share data for
purchase orders, invoices and payments, along with information
about common suppliers and financial institutions
• Organizations must agree in advance on the nature and format
to be exchanged, and must be compatible technologies
• Electronic data interchange: supports the direct, computer-to-
computer transfer of information in the form of predefined
electronic documents
Examples of i.s. in each of the three
worlds of i.t.
Function IT Network IT Enterprise IT
Personal Web Transaction
productivity conferencing processing
software system
Decision support Wikis ERP
system
E-learning Electronic EDI
system corporate
directories
 The role of managers vis-à-vis
information technology
• When new IT is introduced in some organizations, managers
adopt the technology first, then try to figure out what to do
with the new information and cope with its implications. This
approach is wrong and can trigger major business disruptions.
• Managers have three critical responsibilities when it comes to
capturing real benefits from IT:
• Identifying appropriate opportunities to apply IT
• Smoothing the way for its successful introduction and
adoption
• Mitigating its associated risk
 Identifying appropriate I.T.
Opportunities [1]
• Organizations typically spend one to six percent of
their total revenues on IT
• While one company may outspend a competitor on
IT, it is not necessarily making more effective use of
IT.
• The most important consideration is what
organizations are getting out of their
investments in IT, not how much they are
investing on it.
 Identifying appropriate I.T.
Opportunities [2]
• The most effective users of IT maximize value
from IT investments that are aligned with their
organization’s strategic needs and that are well
managed and executed.
 I.t. spending based on industry

Industry Percent of Revenue Spent on IT

Overall average 3-6%
Financial services 5-7%
Telecommunications 5-7%
Professional services 5-7%
Health care 4-5%
Insurance 3-5%
Utilities 3-4%
Retail 1-3%
Construction 1-2%
 I.T. spending based on size of firm

Firm Size Annual Revenue Percent of Revenue Spend on IT

Small Less than $50M 6.9%
Medium $50M to $2B 4.1%
Large Over $2B 3.2%
 Smooth introduction and adoption
of i.t.
• To implement an IT system successfully, a company might need
to change its business processes, worker roles and
responsibilities, reward systems, and decision making.
• For some IT systems, the amount of change may be trivial; for
others, it may be monumental.
• Many organizations have tried to implement a promising new
IT system, only to have employees never use it or not use the
system to its full potential
• Managers must be able to overcome this resistance so that the
new IT system is accepted and used throughout the
organization.
 Four reasons people resist change
Reason to Resist Change Explanation
Parochial self-interest Some people are more concerned with
the impact of the change on themselves
that with how it might improve the
organization

Misunderstanding Some people have misconceptions or lack

information about the change

Low tolerance to change Some people require security and stability

in their work

Different assessments of the situation Some people disagree about the reasons
for the change or do not support the
process
 Theories on organizational change
management
• Change Management Continuum Model
• Unified Theory of Acceptance and Use of
Technology
• Three Worlds of IT Model
 Change management
continuum model
• Developed by DR Conner, it describes the key activities
that are needed to build commitment to change
• This model can identify actions to help an organization
successfully introduce and adopt a specific IT system.
• It has seven stages of commitment grouped into three
major phases: inform, educate and commit.
• People will resist adoption of the new system if a
stage is skipped or not successfully completed.
 Phases and stages of the change management
continuum model
(INFORM)
Phase Goal Stage Description
Inform Make people aware Contact Person first becomes
of the change and aware that change
why it is occurring Awareness Person has basic
knowledge of the
change
Understanding Person comprehends
nature and intent of
change and how he/she
will be affected
 Phases and stages of the change management
continuum model
(educate)
Phase Goal Stage Description
Educate People Positive Person develops
recognize Perception positive disposition
impact of toward the change
change on Adoption Change has
them and their demonstrated a
way of positive impact on
working the organization
Institutionaliza Change is durable
tion and has been formally
incorporated into
routine operating
procedures of
organization
 Phases and stages of the change management
continuum model
(commit)
Phase Goal Stage Description
Commit The change is Internalization People are highly
fully accepted committed to
and has become change because it
part of everyday matches their
life interests, goals,
and values
 Unified theory of acceptance and
use of technology
• Identifies four key factors that directly determine a
user’s acceptance and usage of IT
• Companies can use this theory to help workers
accept new IT.
• E.g. Payless ShoeSource, a retailer that implemented
software from Kronos to automate scheduling of its
20,000 sales associates in its 4600 stores
 Key factors of i.t. acceptance and
usage
Factor Definition
Performance Belief that using the system will help job
expectancy performance
Effort expectancy Degree of ease associated with use of the system
Social influence Degree of belief that important company officials
want employees to use the system
Facilitating Belief than an organizational and technical
conditions infrastructure exists to support the system
 Three worlds of i.t.

• Successfully implementing three types of IT (function,

network, and enterprise) requires different types of
organizational change
• Andrew McAfee suggests that companies need to change
the way they get work done to enable improved
performance it IT.
• Four organizational complements allow these
improvements with IT: better-skilled workers, higher
levels of teamwork, redesigned processes, and new
decision rights.
Manager’s role in three worlds of i.t. model
Function IT Network IT Enterprise IT
Benefits Improved productivity Increase collaboration Increased standardization and
ability to monitor work

Examples Personal productivity E-mail, instant messaging, TPS, ERP, IOS

software, decision project management software
support system

Organizational Does not bring Bring complements with it Full complements must be in
complements complements with it place when IT “goes live”

Partial benefits can be Allow users to implement and

achieved without all modify complements over time
complements being in
place

Manager’s role Encourage use, Demonstrate how technology Must identify and put into
challenge workers to can be used, set norms for place the full set of
find new uses participation organizational complements
prior to adoption

Intervene forcefully and

continually to ensure adoption
 Ensuring that i.t. risks are mitigated

• Special measures are needed to ensure that the

information and its control mechanisms stand up to
intense scrutiny
• Managers are also responsible for ensuring that physical
IT assets, such as applications, databases, networks and
hardware are protected against loss or damage.
• Management’s responsibility also includes ensuring that
data assets are secure from unwanted intrusion, loss and
alteration and ensuring that personal data is secured to
protect individual privacy rights.
 Examples of i.t. risks [1]
IT Risks
Inability to continue operations due to a
natural disaster or accident
Inability to continue operations due to a
deliberate attack on IT assets
Compromise of confidential data about
organizational plans, products, or services
Compromise of personal, private data about
employees and customers
Violation of legally mandated procedures for
controlling IT assets
Example
Fire destroys IT resources at corporate headquarters
Hackers carry out denial-of-service attack on
organization’s Web site
Senior executive loses laptop containing critical data
Hackers access and download customer data
including account numbers
IT system controls are inadequate to meet specific
guidelines for maintaining the integrity of financial
data
IT Risks
Examples of i.t. risks [2]
Violation of established, generally accepted
accounting principles
Violation of the organization’s defined
procedures and/or accounting practices
Loss of physical IT assets
Inappropriate use of IT resources that places
firm in a compromising position
Inappropriate use of IT resources that reduces
worker productivity
Example
IT system controls are violated so that the same
person can both initiate a purchase order and
approve the invoice for that purchase order
IT system controls are circumvented by granting
access to inappropriate people to adjust finished
product inventory counts
Theft of computers from corporate training
facility
Employees use corporate e-mail to disseminate
sexually explicit material; firm is subjected to a
sexual harassment lawsuit
Employees waste time at work visiting Web sites
that are not related to their work
IBM Global risk study (2010) [1]

• Global risk survey of people in various roles to

understand how IT managers are working to better
understand and mitigate IT risk
• 66 percent of respondents rate their entity’s overall
approach to mitigating IT risk as “good to expert.”
• IT professionals are involved in a number of risk-
related issues and feel strongly that they should be
even more involved in the future.
 IBM Global risk study (2010) [2]

Present: IT Risk Present: IT Risk Future: Emerging IT

Issues Maturity Risks
improvement
IT security [78%] IT risk planning Social networking tools
happens in silos [48%] [64%]
HW & SW malfunction Creating a formal risk Mobile platforms
[63%] management [54%]
department [41%]
Power failure [50%] Being more proactive Cloud computing
vs. reactive [38%] [42%]
Physical Security [40%]
What if managers do not participate
in i.t.?
• Managers cannot afford to ignore IT, because failed
IT projects can lead to lowered returns on
investment and missed opportunities
• IT applications were often developed that did not fit
the organization’s overall strategic plan. As a
result, projects failed to meet business objectives or
deliver anticipated results.
 A Manager’s checklist: Set of actions in support and
ensure successful use of i.t.

• (Appropriate response is “YES”)

• Do you get involved in identifying and evaluating potential
opportunities to apply IT?
• Do you work to smooth the introduction and adoption of IT in
your area of the business?
• Do you work with appropriate resources to identify and
mitigate IT-related risks?
• Do you understand that the successful implementation of each
type of IT (function, network and enterprise) requires different
degrees and types of organization change?