Experiencing MIS notes on Chapters 1 - 7

Chapter 1: The Importance of MIS

Q 1. Why is introduction to MIS the most important class in the business school? Moore’s law: because of technology improvements in electronic chip design and manufacturing, “the number of transistors per square inch on an integrated chip doubles every 18 months.” Because of Moore’s Law, the cost of data communications and data storage is essentially zero. Reich’s four key skills for attaining job security: 1. Abstract reasoning: is the ability to make and manipulate models. 2. Systems thinking: is the ability to model the components of the system, to connect the inputs and outputs among those components into a sensible whole that reflects the structure and dynamics of the phenomenon observed. 3. Collaboration: is the activity of two or more people working together to achieve a common goal, result, or work product. 4. Ability to experiment: involves analyzing opportunities, envisioning potential solutions, evaluating possibilities, and developing the most promising ones consistent with available resources. A tradable job is a job that is not dependent on a particular location.

Q 2. What is an information system? A system is a group of components that interact to achieve some purpose. An information system (IS) is a group of components that interact to produce information. Five-component framework: hardware, software, data, procedures, people.

Q 3. What is MIS? Management information systems (MIS) is the management and use of information systems that help businesses achieve their strategies. A. Management and use: develop, maintain, and adapt. To create an information system that meets your needs. You need to take an active role in that system’s development. B. Information systems. C. Strategies.

Q4. Why is the difference between IT and IS important to you? Information technology (IT) refers to the products, methods, inventions, and standards that are used for the purpose of producing information (hardware, software, data components). An information system is an assembly of hardware, software, data, procedures, and people that produces information. You can buy IT, but not an IS.

Chapter 2: Business Processes, Information Systems, and Information

Q 1. Why Does the GearUp Team Need to Understand Business Processes? Understand existing processes and identify existing problems.

Q 2. What Is a Business Process? A business process is a network of activities for accomplishing a business function. Business process modeling notation (BPMN): international standard for creating business process diagrams. Swimlane format + activities + roles + actors + repositories + data flows + sequence flows + subprocesses = Business Process Diagram. Swimlane format: all activities for a given role are shown in a single vertical or horizontal lane. Role: subset of activities in a business process that is performed by an actor (vendor, buyer, event sales, operations, customers…). Repository: a collection of data that is stored within the business process. Data flows: represent the movement of data from one activity to another. Sequence flows: indicate flow of activities. Subprocess: is used when the work to be done is sufficiently complex as to require a process diagram of its own.

Q 3. How Can Information Systems Improve Process Quality? Information systems improve process quality: A. By improving process effectiveness: an effective business process is one that enables the organization to accomplish its strategy. B. By improving process efficiency: efficiency is the ratio of benefits to costs. The automation of a process activity consists of moving work from the right hand-side of the five-component framework to the left. The time required to perform the analysis and locate past analyses would be reduced, the cost of the process would decrease, the process would be more efficient, and therefore process quality would increase. It is vital that business professionals be involved in developing IS.

Q 4. What is Information? Information is knowledge derived from data, whereas data is defined as recorded facts or figures. Information is: A. Knowledge derived from data B. Data presented in a meaningful context. C. Data processed by summing, ordering, averaging, grouping, comparing, or other similar operations. D. A difference that makes a difference. Information is in the mind of the perceiver. The quality of your thinking, of your ability to conceive information from data, is determined by your cognitive skills. The data is the data, the information you conceive from it is the value that you add to the IS.

Q 5. What Data Characteristics Are Necessary for Quality Information? A. Accuracy: good information is conceived from accurate, correct, and complete data, and it has been processed correctly. B. Timeliness: data should be available in time for its intended use. System is easier and cheaper to implement if data is older. C. Relevance: to context and subject - summarized appropriately for job. D. Just Barely Sufficient. E. Worth It’s Cost.

Ethics Guide A problem is a perceived difference between what is and what ought to be. Egocentric thinking: personal perspective = real view. Empathetic thinking: personal perspective as one possible interpretation – consideration for other perspectives.

Chapter 3: Organizational Strategy, Information Systems, and Competitive Advantage

Q 1. How Does Organizational Strategy Determine IS Requirements? Organizations examine the structure of their industry and, from that, develop a competitive strategy. That strategy determines value chains, which, in turn, determine business processes. The nature of business processes determines the requirements and functions of information systems.

Q 2. What Five Forces Determine Industry Structure? Porter developed the five forces model to help organizations determine the potential profitability of an industry. Application of model: towards understanding organizations’ competitive environments to formulate a competitive strategy. Porter’s five competitive forces include: A. Forces related to competition (Competitive Forces) - danger of customers taking business elsewhere: - Competition from vendors of substitutes (price and perceived benefits) - Competition from new competitors (barriers to entry, capital requirements, noncapital resources). - Competition from existing rivals (Price, quality, innovation, marketing). Strength factors: switching costs and customer loyalty. B. Forces related to supply chain bargaining power (Bargaining Power Forces): - Bargaining power of suppliers. - Bargaining power of customers. Strength factors: availability of substitutes and relative size of firm compared to size of suppliers or customers. The five forces determine the characteristics of an industry, how profitable it is, and how sustainable that profitability will be. Here, we use this model to identify sources of strong competition and use that knowledge to create a competitive strategy to combat those strong forces.

Q 3. What is Competitive Strategy? An organization responds to the structure of its industry by choosing a competitive strategy.

Porter defined four fundamental competitive strategies: 1. Cost leadership: .1 Across the industry .2 Focus within industry segment 2. Adding value to products to differentiate them from competition: .1 Across the industry .2 Focus within industry segment. According to Porter, to be effective the organization’s goals, objectives, culture, and activities must be consistent with the organization’s strategy.

Q 4. How Does Competitive Strategy Determine Value Chain Structure? Formulate competitive strategy based on industry analysis. Then, organize and structure organization to implement strategy. Value: is the amount of money that a customer is willing to pay for a resource, product, or service. Margin: is the difference between the value that an activity generates and the cost of the activity. A business with a differentiation strategy will add cost to an activity only as long as the activity has a positive margin. Value chain: is a network of value-creating activities. Generic value chains consist of five primary activities and four support activities: A. Primary Activities: are business functions that relate directly to the production of the organization’s products or services: - inbound logistics: receiving and handling inputs - operations/manufacturing: transform raw materials into product. - outbound logistics: deliver finished product to customer. - sales and marketing: inducing and providing means to purchase. - customer service: customer support and maintenance. B. Support activities: are business functions that assist and facilitate the primary activities and contribute indirectly to the production, sale, and service of the product. - procurement: finding vendors, forming contracts, prices… - technology: R&D. - human resources: recruiting, training, compensating. - firm infrastructure: general management, finance, accounting.

Linkages: are interactions across value activities Once discrete activities are defined, linkages between activities should be identified. A linkage exists if the performance or cost of one activity affects that of another. In service companies: value is generated by operations, marketing and sales, and service activities.

Q 5. How Do Value Chains Determine Business Processes and Information Systems? Business processes implement value chains or portions of value chains. Thus, one or more business processes support each value chain.

Q 6. How Do IS Provide Competitive Advantage? How organizations respond to the five competitive forces: A. Competitive advantage via products and services: Product Implementations: 1. Create a new product or service. 2. Enhance products or services. 3. Differentiate products or services. Information systems can be part of a product or can provide support for a product or service. B. Competitive advantage via business processes: Process Implementations: 1. Lock in customers and buyers (high switching costs). 2. Lock in suppliers. 3. Raise barriers to market entry. 4. Establish Alliances. 5. Reduce Costs.

Chapter 7: Organizations and Information Systems

Q 1. How Do Information Systems Vary By Scope? Modern organizations use four types of information systems that vary according to the scope of the organizational unit: A. Personal Information Systems: are information systems used by a single individual. B. Workgroup Information Systems (departmental or functional IS): is an information system that facilitates the activities of a group of people. Procedures must be understood by all members of the group. Consequences are not isolated to the group. C. Enterprise Information Systems: are information systems that span an organization and support activities of people in multiple departments. Usually difficult to change. D. Inter-Enterprise Information Systems: are information systems that are shared by two or more independent organizations. Usually exceedingly difficult to change.

Q 2. How Do Enterprise Systems Solve the Problems of Information Silos? An information silo (or island of automation) is the condition that exists when data are isolated in separated information systems. Silos come into existence as entities at one organizational level create information systems that meet their particular needs only. Information silos are not a problem until they begin sharing inconsistent duplicate data about the same entities. It’s completely natural for a workgroup to develop information systems solely for its own needs, but, over time, the existence of these separate systems will result in information silos that cause numerous problems. Problems of information silos: 1. Data integrity: data integrity issues arise when an organization has inconsistent duplicated data. 2. When applications are isolated, business processes are disjointed. Consequences of disjointed systems: 3. Lack of integrated enterprise information. 4. Inefficiency: decisions are made in isolation when using isolated functional applications. 5. Increased cost for the organization.

To solve problems: 1. Either eliminate data duplication: Integrate data into a single shared database and revise applications and business processes to use that database. 2. Or allow data duplication: Manage data to avoid problems. Business process reengineering: Enterprise systems enabled the creation of stronger, faster, more effective linkages among value chains. Business process reengineering: the activity of altering and redesigning business processes to take advantage of new information systems.

Q 3. How Do CRM, ERP, And EAI Support Enterprise Systems? Inherent processes: predesigned procedures for using software products (standardized business processes). These prebuilt procedures are based upon “industry best practices”. Three categories of enterprise applications emerged: 1. Customer Relationship Management (CRM) System: is a suite of applications, a database, and a set of inherent processes for managing all the interactions with the customer, from lead generation to customer service. Four phases of the customer life cycle: marketing, customer acquisition, relationship management, and loss/churn. 2. Enterprise Resource Planning (ERP): is a suite of applications, a database, and a set of inherent processes for consolidating business operations into a single, consistent, computing platform. ERP includes the functions of CRM, but also incorporates accounting, manufacturing, inventory, and human resources applications. ERP systems are used to forecast sales and to create manufacturing plans and schedules to meet those forecasts. 3. Enterprise Application Integration (EAI): is a suite of software applications that integrates existing systems by providing layers of software that connect applications together. EAI: -­‐ -­‐ -­‐

Connects system islands via a new layer of software/system. Enables existing applications to communicate and share data. Provides integrated information.

-­‐ -­‐

Leverages existing systems – leaving functional applications as is, but providing an integration layer over the top Enables a gradual move to ERP.

No centralized database – EAI keeps files of metadata that describe where data are located. The major benefit of EAI is that it enables organizations to use existing applications while eliminating many of the serious problems of isolated systems. Challenges of implementing new enterprise systems: expense and risks of implementing new enterprise systems arise from four primary factors: -­‐ -­‐

-­‐ -­‐

Collaborative management: no clear boss – processes are a collaborative effort among many departments and customers. Requirements gaps: licensed products are never a perfect fit. There are gaps between the requirements of the organization and the capabilities of the licensed application. Identify gaps: what to do with them? Change process to adapt to new applications or alter applications to match what the organization does. Transition problems: planning and training cause problems + stress on employees. Employee resistance: change threatens employee self-efficacy. Management must communicate need for change.

Q 4. How Do Inter-Enterprise IS Solve the Problems of Enterprise Silos? Distributed systems: processing is distributed across multiple computing devices.