Lecture7 (is313) (the impactofit onmanagdecisionmaking)

Lecture 7

The Impact of IT on
Management Decision Making

Abdisalam Issa-Salwe
Taibah University
College of Computer Science & Engineering
Information Systems Department

1

Topic list
IT Infrastructure and IT Services
Explain the contribution of
information management of adopting
specific technologies.
Role of Managers in Organizations
The Process of Decision Making
Strategic planning tools
Value of information in decision
making

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University
2

IT Infrastructure and IT Services

One way that organizations can influence
how information technology will be used
is through decisions about the technical
and organizational configuration of
systems.
In the ever-widening role of information
systems in organizations, supporting the
widening role have been changes in
information technology (IT) infrastructure

3

IT Infrastructure and IT Services (cont…)
Decision making is often a manager's most
challenging role.
Information systems have helped managers
communicate and distribute information;
However, they have provided only limited
assistance for management decision making.
Because decision making is an area that
system designers have sought most of all to
affect (with mixed success), we now turn our
attention to this issue.

4

Each organization determines exactly how its
infrastructure will be configured.
Another way that organizations have affected
information technology is through decisions
about who will design, build and maintain the
organization's IT infrastructure.
These decisions determine how information
technology services will be delivered
The formal organizational unit or function
responsible for technology services is called the
information systems department.
The information systems department is
responsible for maintaining the hardware,
software, data storage, and networks that
comprise the firm's IT infrastructure.
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The information systems department
consists of specialists, such as
programmers, systems analysts, project
leaders, and information systems
managers (see Figure below).
Programmers are highly trained technical
specialists who write the software
instructions for the computer.
Systems analysts constitute the principal
liaisons between the information systems
groups and the rest of the organization
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It is the systems analyst's job to translate
business problems and requirements into
information requirements and systems.
Information systems managers are
leaders of teams of programmers and
analysts, project managers, physical
facility managers, telecommunications
managers, and heads of office system
groups.
They are also managers of computer
operations and data entry staff.
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Many types of specialists and groups are
responsible for the design and
management of the organization's
information technology (IT) infrastructure.
8


Also external specialists, such as
hardware vendors and manufacturers,
software firms, and consultants
frequently participate in the day-to-day
operations and long-term planning of
information systems.
In many companies, the information
systems department is headed by a chief
information officer (CIO).
The CIO is a senior management position
that oversees the use of information
technology in the firm.
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Role of Managers in Organizations

To determine how information systems
can benefit managers, we must first
examine what managers do and what
information they need for decision
making and other functions.
We must also understand how decisions
are made and what kinds of decisions can
be supported by formal information
systems

10

Role of Managers in Organizations (cont…)

Managers play a key role in organizations.
Their responsibilities range from making
decisions, to writing reports, to attending
meetings, etc.
We can better understand managerial
functions and roles by examining classical
and contemporary models of managerial
behavior.

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Observers find that managerial behavior actually has
five attributes that differ greatly from the classical
description:
• First, managers perform a great deal of work at an
unrelenting.
• Second, managerial activities are fragmented;
• Third, managers prefer speculation, hearsay, gossip.
• Fourth, they prefer oral forms of communication to
written forms because oral media provide greater
flexibility
• Fifth, managers give high priority to maintaining a
diverse and complex web of contacts that acts as an
informal information system and helps them execute
their personal agendas and short- and long-term goals.

12


Interpersonal Roles
Managers act as figureheads for the
organization when they represent their
companies to the outside world and
perform symbolic duties such as giving
out employee awards.
Managers act as leaders, attempting to
motivate, counsel, and support
subordinates

13


Informational Roles
Managers act as the nerve centers of
their organization, receiving the most
concrete, up-to-date information and
redistributing it to those who need to be
aware of it.
Managers are therefore information
disseminators and spokespersons for
their organizations

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Decisional Roles
Managers make decisions.
They act as entrepreneurs by initiating
new kinds of activities; they handle
disturbances arising in the organization;
they allocate resources to staff members
who need them; and they negotiate
conflicts and mediate between conflicting
groups in the organization

15

Support
Role Behavior
Systems
Interpersonal Roles
Figurehead None exist
Leader Interpersonal None exist
Electronic
Liaison communication
systems

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Informational Roles
Management
Nerve Center information
systems, ESS
Mail, office
Disseminator Information
systems
Office and
professional
Spokesperson processing
systems,
workstations

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Decisional Roles
Entrepreneur None exist
Disturbance
Decision None exist
handler
Resource
making
allocator
Negotiator None exist

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The Process of Decision Making

Decision making can be classified by
organizational level, corresponding to the
strategic, management, knowledge, and
operational levels of the organization.
Within each of these levels of decision
making, researchers classify decisions as
structured, unstructured or semi-
structured.
Strategic decision making determines the
objectives, resources, and policies of the
organization.
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The Process of Decision Making (cont…)
Management Control decision is principally
concerned with how efficiently and effectively
resources are used and how well operational units
are performing.
It is to monitor the effectiveness or efficient
usage of resources and performance of
operational units
Operational control decision making determines how
to carry out the specific tasks set forth by strategic
and middle-management decision makers.
Knowledge-level decision making deals with
evaluating new ideas for products and services,
ways to communicate new knowledge, and ways to
distribute information throughout the organization.
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Structured decisions are repetitive and
routine, and they involve a definite
procedure for handling them so that they
do not have to be treated each time as if
they were new.
Some decisions are semi-structured; in
such cases, only part of the problem has a
clear-cut answer provided by an accepted
procedure.
They are based on both type.

21

Unstructured decisions are those in which the
decision maker must provide judgment,
evaluation, and insights into the problem
definition.
Judgement, insight and evaluation is
necessary to deal with them
Each of these decisions is novel, important,
and non-routine, and there is no well-
understood or agreed-on procedure for
making them (Gorry and Scott-Morton, 1971).

22


In general, operational control personnel
face fairly well structured problems. In
contrast, strategic planners tackle highly
unstructured problems.
Many of the problems knowledge workers
encounter are fairly unstructured as well.
Nevertheless, each level of the
organization contains both structured and
unstructured problems

23

Different kinds of information systems at the
various organization levels support different types
of decisions. Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University
Abdisalam
24

SWOT Analysis Tool
SWOT analysis is an important tool for
auditing the overall strategic position of
a business and its environment.
SWOT is an abbreviation for Strengths,
Weaknesses, Opportunities and Threats

25

SWOT Analysis (Cont…)
Strengths and weaknesses are Internal
factors:
For example, a strength could be your specialist
marketing expertise. A weakness could be the lack
of a new product.
Opportunities and threats are external
factors.
For example, an opportunity could be a developing
distribution channel such as the Internet, or
changing consumer lifestyles that potentially
increase demand for a company's products. A threat
could be a new competitor in an important existing
market or a technological change that makes
existing products potentially obsolete

26

27

SWOT Analysis (cont…)
Strength
your specialist marketing expertise.
a new, innovative product or service
location of your business
quality processes and procedures
any other aspect of your business that adds
value to your product or service.

28

Weakness could be:
lack of marketing expertise
undifferentiated products and service (i.e. in
relation to your competitors)
location of your business
poor quality goods or services
damaged reputation

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Opportunity could be:
a developing market such as the Internet.
mergers, joint ventures or strategic alliances
moving into new market segments that offer
improved profits
a new international market
a market vacated by an ineffective competitor

30

Threat could be:
a new competitor in your home market
price wars with competitors
a competitor has a new, innovative product or
service
competitors have superior access to channels
of distribution
taxation is introduced on your product or
service

31

Critical Success Factors (CSF)
A small number of easily identifiable
operational goals
Shaped by industry, manager,
environment
Believed to assure firm’s success
Used to determine organization’s
information requirements

32

CSF example
Example Goals CSF

Profit concern Earnings per share Automotive industry:
Return on styling
investment quality dealer system
Market share cost control
New product Energy standards

Not for profit Excellent health care Regional integration
Improved monitoring of
regulations
Efficient use of resources

33

Group Exercise
Form into three groups.
You are directors of three companies
trying to decide how IT can be used
to help achieve your competitive
strategy.
You are free to decide the
industry/activities of your individual
company.
(Note how IT is organised to complement the
company’s strategy).

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Reference

Laudon, K. & Laudon, J.
(2006) Management
Information Systems:
Managing the Digital Firm,
9th ed. Prentice Hall

35

Tutorial Discussion
You are a firm of management consultants.
A client has sent you the following email:
“We are an SME in the Sheet Metal Industry.
We produce standard products as well as custom-
products made according to clients’ specifications
Currently our operations are do not involve e-
commerce
technologies (although our design systems and
machinery are
computer controlled). We would like you to advice on
adopting e-commerce for our business.”
Give the client a preliminary consultation
(Note you are not being asked to be too specific).

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Lecture7 (is313) (the impactofit onmanagdecisionmaking)

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