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Accurate and timely information necessary to facilitate the decision making process and

enable the organizations planning, control, and operational functions to be carried out effectively James A.F. Stoner

A management information system is a formalized computer information system

that can integrate data from various sources to provide the information necessary for management decision making James O. Hicks, Jr.

MIS is the subsystem [of an organizations information system] relevant to

managerial decisions for control and strategic planning A. Ziya Aktas

The system that monitors and retrieves data from the environment, captures data
from transactions and operations within the firm, filters, organizes, and selects data and
presents them as information to managers, and provides the means for managers to generate information as desired is called the management information system (MIS)
- Robert G. Murdick

MIS is a structured, integrated database that provides and facilitates the flow of
information over all the levels and components in a multi-level organization. MIS optimizes
the transfer, collection, and presentation of information to meet the organizations needs.
Larry Long

To the above definitions can be added that management information systems are

information systems that serve the needs of the various levels of management within
the organization; whether strategic, tactical, and operational.


The following are traits of desirable management information systems. Note that
these characteristics arent the characteristics of every management information
system, but are its desirable qualities.

Records keeping of transactions, handling data process functions, and other

varieties of functional areas are to be supported by an MIS.
An MIS should use an integrated database and should provide easy access
to strategic, tactical, and operational managers with structured and timely
The MIS should ideally provide a secure system that prevents unauthorized
personnel access to confidential information.
An MIS should be somewhat flexible and adaptable to the changing times to
be able to provide the organizations changing needs at all times.
An MIS should also serve the needs of all levels of management in the

There are four levels of management within an organization

1. Operational
2. Knowledge
3. Tactical
4. Strategic

Operational Level
The operational level of management concerns itself with the efficiency
and effectiveness of transactions performed by workers.

This level has well-defined, short-term tasks. Information requirements at this

level are directed at feedback regarding the operations. Its purpose is to evaluate
the performance of people. For example, a manager requests for a report regarding the
sales of all salespersons on a particular month. The manager can use this information to
see who are doing well on their job and who arent making the grade. At this level, the
roles of intuition and personal judgments are lessened in the process of decision making
with the use of operational level management information systems.

Examples of reports produced by operational level management information systems are daily, weekly, or monthly sales reports. These reports are generated from
transaction records produced by transaction processing systems.

Transaction pro-

cessing systems are the systems used in generating records from operational business
processes or transactions.

Knowledge Level

Those who occupy this level of management are technical people engaged in the
generation of new knowledge or work with knowledge and expertise in the different
professional and technical fields such as engineering, architecture, information
technology, etc. This level of management is concerned with the production of new
designs, methods and concepts.

Examples of knowledge level systems are Computer-aided Design (CAD)

systems, Computer-aided Manufacturing (CAD) systems and Office Automation
Systems such as wordprocesssing, spreadsheets, and presentation software.
Other knowledge level systems are software used by technical people in the
performance of their functions or in coordination with other members of their work team
such as email or video conferencing.

Tactical Level
This level is concerned with meeting the series of goals required to reach the
objectives of the strategic level. This level is also concerned with decisions about
resource allocation. Usually, the information requirements in this level are periodic, such
as from year to year, quarterly, every six months, and the like. Goals in the tactical level
are more long-termed compared to the operational level. The scope, range, and people
being managed at this level are bigger, and the information available for decision
making is hardly ever conclusive. Therefore, intuition and personal judgment play a
bigger role in making decisions because of the information available at this level.

Examples of tactical level management information systems are those information

systems concerned with organizational resources such as Financial Management
Information System, Human Resources Management Information System, and Logistics
Management Information System.

Strategic Level
This level is concerned with formulating policies and long term goals. People
who make the big decisions for the entire company belong to this level. The information
needed at this level should be a comprehensive, summarized report of the statistics and
standing of a company. The information at this level is a summary of the information
gathered at tactical level, whose objective is to meet the goals set by the strategic level.
It should present trends over a period of time i.e. quarter, a semester, or a year.

Examples of strategic level management information systems are Executive

Information Systems. These systems present the enterprise wide performance of the
company for executive analysis and decision-making.


People in these different levels of management need information to be able to do

what they are expected to do. While being well informed is good, not all information is
useful for a person with a specific role or job function in a company or organization.
Information needed for close operational supervision, such as sales transaction data

need not be given to top management. Their job function is for quick analysis and
decision-making on corporate performance trends and competitive position.

A summarized version of information presented in graphic form should be provided to

them for the efficient use of their time. This is why in management information systems,
filtering information is a necessity.

Filtering Information
Filtering information is the key to developing quality information system. An
Information systems quality is judged by its output. If an information system generates
the same 20 page report to all people from clerical level to strategic level, it is defeating
the purpose of an information system. There are information which some people do not
need to know, or have very little or no use of. People at the various levels of activity
should receive only the information they need to accomplish their job functions, no
more, no less. If the same 20-page report is given to the president of the company, it
would take a very long time for the president to process all the information, which
should have been filtered into a comprehensive, quality, informative, and summarized

The goal of filtering information is for the right information to reach the right
person at the right moment and in the right form. More details of actual transactions are
needed at the operational level. Summarized performance information about the
resources used in the operational level are given at the tactical level such as Report on

Expenditures and Manpower Loading .

At the strategic level, trends about these

expenditures and manpower loading over a quarter, semester of a year are presented
through graphs and charts.
Generally, the different applications of information systems can be classified in
different ways. One convenient way to classify them is according to their role in the
operations and management of a business: either they support operations or
management activities and functions.

Operations Support Systems

The role of an organizations operations support system is to efficiently process
business transactions, control industrial processes, support enterprise communications
and collaboration and update enterprise databases.

The following are examples of operations support systems:

Transaction processing systems are systems that records and processes data from
business transactions. Examples of these are the Point-of-Sales (POS) systems in
supermarkets and department stores which input, purchase information of buyers at the
electronic cash register terminals and store and process these information in Servers
that may be located in the same building or in remote locations.

Process control systems controls and monitors physical processes. For example, a
petroleum refinery uses electronic sensors linked to computers to continually monitor
chemical processes and make instant adjustments that control the refinery processes

Enterprise collaboration systems facilitate team and workgroup communications and

enhance productivity. These may include Office Automation systems. For example,
knowledge workers in a project team may use electronic mail and video conferencing to
coordinate their activities.

Management Support Systems

Information systems that provide information and support for management

decision-making are called management support systems.

The following are examples of management support systems.

Management Information Systems(MIS) provides information in the form of

reports and displays to support business decision making. For example, sales
managers may use their networked computers and web browsers to get instantaneous
displays about their product sales or sales analysis reports about the sales made by
each sales person. These information systems originally catered to the needs of middle
managers, those in tactical level management.

Decision Support Systems( DSS) provides interactive ad hoc support for the
decision-making processes of managers and other business professionals. For
example, a production manager may use a DSS to decide how much product to
manufacture based on expected sales based on the future product promotions and the
location and availability of raw materials necessary to manufacture the product.

Executive information Systems (EIS) provides critical information from many

sources customized according to the needs of executives. For examples, top executives
may evaluate company sales performance in relations to competitors based on trends
of sales of their products in comparison with other products based on their EIS.

Other Categories of Information Systems

Other categories of information systems can support either operations or

management activities. They are the following:

Expert Systems are knowledge-based systems that provide expert advice and act as
expert consultants to users.

Knowledge Management Systems are knowledge-based systems that support the

creation, organization, and dissemination of business knowledge within the enterprise.

Strategic Information Systems support operations or management processes that

provide a firm with strategic products, services, and capabilities with competitive

Functional Business Systems support a variety of operational and managerial

applications of the basic business functions of a company such as accounting, finance,
marketing,human resource management, and operations management .


Today, many business professionals are responsible for developing information
system solutions to business problems. Business professionals should be responsible
for developing, or proposing new and improved uses of information technology.
Business managers now frequently manage the development efforts of information
systems specialists and other business end users.

Most information systems which are computer based are envisioned, designed,
and put into operation using some form of systematic development process which shall
be discussed in Module X, Systems Development and Project Management.

The concept of management information systems has evolved thru the years and
now is back with an expanded scope - information systems serving the needs of

management and business professionals in all levels of management- whether they are
in the strategic, tactical , knowledge, or operational levels.

Nowadays, management information systems are increasingly used for strategic

and competitive goals. With the great strides in technology development, management
information systems have become the tools and enablers of companies for strategic

Reading Assignment:
Read supplemental books: Raymond Mcleod, Management Information


PUP website: infotrac.galegroup.com/itweb/pup



Exercises/Written Assignments
1. Give three (3) definitions of management information systems. Cite authors
and references.
2. Compare the information concerns of strategic level vs. the tactical level of
3. Discuss three (3) examples of operations support system:
3.1 Transaction processing

3.2 Process control

3.3 Office automation systems
4. Differentiate the decision support system from the expert system.

5. Give examples of transaction processing systems in:

5.1 Supermarkets









Laudon, K.C., Laudon, J.P. Management Information Systems: New Approaches

to Organization and Technology, 5th edition, pp.12, 26-29. Prentice Hall,
Upper Saddle River, New Jersey. C 1998, 1996

Long, Larry. Management Information Systems, pp. 42-45. Prentice Hall, c 1989.

Long, Larry. Management Information Systems pp 21-24. Prentice Hall, c 1989.








Technology in the Networked Enterprise, 3rd edition, pp. 32-38. Richard D.

Irwin, c 1996.








Technology in E-Business Enterprise, 5th edition, International Edition, pp.




Learning Objectives:

At the end of this lesson, students should be able to do the following:

1. describe and discuss the possible strategic role of information systems
2. explain the different ways by which information systems can play a strategic
role in the organization; and,
3. appreciate the interaction between the corporate strategy and the IS
t t

Keywords and Phrases


Strategic Systems
Competitive Strategies

Competitive Advantage

Competitive Forces

Information Systems for Competitive

Nowadays, managers view information systems (IS) as something of strategic
importance to their organization. This manifests through greater competition in
developments in information technology and their strategic uses. The use of information
systems for background administrative support is being broadened; information systems
are now being used to support the various strategic goals of the organization. The
strategic use of information systems involves using information technology to develop
products, services, and capabilities that give a company major advantages over the
competitive forces it faces in the global marketplace.

Strategic information systems support or shape the competitive position and

strategies of a business enterprise. So, a strategic information system can be any kind
of information system (used at any management level, e. g. TPS, MIS, DSS, etc.) that
uses information technology to help an organization gain a competitive advantage,

reduce a competitive disadvantage, or meet other strategic goals or objectives of the

company. When managers view IS this way, they look beyond issues of technology and
consider investments in information systems that could:

provide better service to customers;

offer new or better services or products;

cost-cut and work more efficiently; and,

improve employees satisfaction.

When they consider these things, managers avoid being driven by the latest
technology trends. Without a clear sense of strategy, managers may be tempted to
always get the newest technology without a clear idea of what it would do for them,
resulting in a lack of return of investment. This module starts with the strategy
development process. We examine the strategic alignment concept leading to the use
of alternative ways of using computer-based IS, including the internet, to support their
strategy. The overall aim of this module is to guide the reader in conducting a coherent
analysis of the role which IS can play in a companys strategy.


Strategy, the strategic use of IS, and strategic advantage are some of the
words we use to describe the broad choices of companies face on which markets to
target and which products to offer. These decisions are vital for the business success.

Companies want to be in a competitive advantage in relation to their competitors.

For example, they would want

A wide distribution network;

A niche market;

A unique product in terms of cost leadership and differentiation (price and


The traditional view on management is that managers plan strategy in a slow,

conscious, planned, and intended way. But strategies can also develop in other ways,
such as during day to day tasks, managers learn more as operations go along. Thus,
new strategies emerge.

Information and communication technology developments have started a new

phase in the strategy development process.

Competitive Advantage
Lower cost
Broad target

Narrow target


Generic Strategies Source: Porter (1985)

Cost leadership can be achieved through IS, for example:

To cut order processing costs, they can use on-line order entry.

To replace manual labor, they can opt for computer-aided manufacturing.

To cut expensive inventory, they can use stock control systems

Information systems can also support or facilitate the differentiation strategy,


Stock control systems can expand the collection of supplies at any time.

Computer-aided manufacturing systems can lead to flexible delivery.

Focus/niche strategy can also be supported by information systems; i. e. :

To meet non-standard requirements, computer-aided manufacturing can

support unique requirements.

When customers order online, they can modify products creating

something unique, by selecting from a variety of features.

The figure below is called the strategic choice model. IS is the dependent
variable. An example of this is the use of bar codes in stores to encode transaction data
fast and accurately. As a result, it improves the quality of service and reduces costs as
well. This supports the strategic objective of using Information Systems.

The link between strategy and IS:



Strategy can also be the dependent variable, as shown on the figure below.



Yet, it is also possible for the two (IS and Strategy) to affect each other. In an
interaction model, companies have strategy, and look for ways they can apply IS on the
strategy. By doing this, they improve their ability to manage advanced IS.


Computer based ISs competitive conditions have been changing in many
industries. Many tools are now being used to analyze the link between strategy and
information systems.

Information systems and the threat of new entrants

Managers see new entrants as a threat. They raise entry barriers, or enter new
markets by using IS so they could reduce the threat from new entrants.

Using Information Systems to raise entry barriers

A machine manufacturer can provide a link automatically directing a customer to

their site. This makes it hard for competitors since the customers themselves are
automatically directed by the link to the manufacturer, instead of choosing which service
to choose.

Customers also are likely to choose the standard service, so that big

companies who have been providing the service for a long time are going to be hard to
compete with.
Using IS to enter markets more easily

IS can be used by companies to attain a stronger position in the maintenance

market. For example, IS can be used to make available an extensive after-sales

Information systems and the bargaining power of suppliers

Increasing power of suppliers

Information Systems can track the cost of providing to customers much more
closely, and it is a useful tool for suppliers. For example, the supplier can adjust the cost
of a particular product or service in order to maximize revenue.

Decreasing power of suppliers

Useful as it is in tracking the cost of providing to customers, IS can also work at

the suppliers expense. Information systems that compare the prices of various
suppliers can be used by customers to strengthen their position in the marketplace.

When retail chains use modern communication technologies to link with their
suppliers, the balance of power is altered. When they use IS, it reduces inventory costs,
improve information flows and fulfillment time.

Information systems and the intensity of rivalry

IS can be used to reduce costs. With online inventory systems, radical changes in
manufacturing supply systems have become possible. Great reductions in inventory costs and
other costs associated with it are made possible.

Using IS to enable more effective management

A detailed business pattern can now be provided by a travel agents accounting system
to managers. This enables managers to supervise more closely the trends. They can, as a
result, make better-informed promotional and pricing decisions.

Information Systems can also be a threat

New entrants were able to take advantage of IS in the advent of the boom of call
centers. Telephone banking was introduced to call centers very quickly, and they have
taken advantage of the fact that they didnt have an established network and used the
technology. This worked at a disadvantage on established banks with many local

Because of IS, new entrants can easily enter the market and compete with the
established market holders. They can immediately be a threat to old players in the

Information systems place new demands on management time

A major system implementation takes a great deal of management time, which
managers tend to overlook. When managers do not give importance to the time they
spend on studying how IS would work for them, the incorporation of IS in their strategy
will not be that effective.

Implementing an information system successfully is difficult

Implementation of a successful information system is difficult especially to those
who are innovative in other aspects or those systems which involves many stakeholders
with different interests.

Even when applications work, there may be downsides

A companys dependency and lack of insight and knowledge in IS matters would
hinder them from having successful negotiations, and crucial company knowledge
becomes the asset of other companies.


The case for alignment
The central idea of strategic alignment is the search for the particular fit between
variables. Writers have recommended that IS must fit the unit or organization in which
they are utilized. Smith and Lockamy (1997) suggested that managers should target a
good fit between the degree of fit, the current information systems, IS strategy and the
organization, and the customers. According to these authors, managers should ensure

Strategy is driven on the

customers expectations and

New processes should create

value for the customer.

IS supports those procedures

in a way that supports company strategy.

The contingency approach to alignment

The fit should reflect the situation in which the unit is operating. The contingency
approach has three variables, which are:

Routine or non-routine primary tasks of the business,

High or low degree of interdependency of doing tasks,

The stable or unstable environment of the business.

The approach overlooks historical, cultural, and political variables; so these

should be taken into consideration when interpreting results.


Noticeably the internet raises a lot of new questions. Some industries are already
affected by the internet while others are in a state of change while the pace and path of
change is still uncertain. There are also other industries that are not yet extremely

Companies make use of the internet in different forms and modes. Some basic
strategic questions for business regarding the internet are:

1. Which business processes and business functions can be enhanced using

the internet?
2. How can the internet improve or change the competition?
3. How can internet-related activities be placed in a firm?

Applying the five forces model

Due to its global and omnipresent characteristics, the Internet has a tendency to
make competition more intense. Using Porters analysis model we can illustrate how the
internet affects many industries in the competitive landscape.

Internet and the threat of new entrants

Businesses can easily enter the Internet and because of that, enter a market
easily as well. Fewer physical facilities are needed and all energy can be spent on web
presence and other directly business-related activities. Some internet-based businesses
are creating completely new markets, such as search engines and electronic auctions.

Such companies hardly have any competitors in the early age of business development
and are able to gain first-mover advantages. Others are entering established markets
and may challenge existing businesses. Examples of markets which are affected by and
being transformed by new Internet entrants are the markets of stock brokering, books,
CDs, and many business-to-business markets.

Internet and the threat of substitutes

The internet can be used as a substitute for certain products. News and
information, for example, can be found online. For people who are online on a regular
basis, the internet is a very consistent and rich source for news and information.
Certain products or services are easier to replace in the Internet than others.
Especially when these products or services are:

Digitizable (software, reports, information; music and videos and films)

Standardizable (insurances, commodity goods; bank services)

Portable (information)

Low touch (in contrast to high touch books, music)

These are often easy to substitute by Internet-based suppliers.

Internet and bargaining power of suppliers and buyers

The internet can influence the reason for why particular markets exist. Such
marketplaces are examples of changes in the supply chain in some industries. The
internet can bring about reintermediation. That is, a new company creates a position

because of its value-adding activities. For example, when a website offers consumers
buying guides or ratings for certain products.

The Internet can also bring about

disintermediation, or the removal of intermediaries or players in the value chain. For

example, when somebody orders a book from Amazon.com, bookshops, wholesalers
and importers of books are disintermediated. These are illustrations of changes in the
power of suppliers and buyers due to the Internet.

Internet and the intensity of rivalry

Many businesses are very keen to observe how their competitors use the
Internet in the marketplace nowadays, since the role of the internet in the future is still a
bit uncertain. They are using the Internet to differentiate and improve services and at
the same time cut down on expenses.

Positioning Internet activities within the company

Adapting strategy to the internet, companies are deciding how to relate the
internet to the existing business. Will it be an exclusive channel, or will it be a
complementary source for consumers? Here are some possibilities:

CONSERVATION means operating without the use of the internet.

SEPARATION means separating units for i-business.
INTEGRATION means combining what exists with the internet.
TRANSFORMATION means from existing to new form entirely .
INITIATION means starting a new business.

The theme of this chapter is to see how information systems can support an
organizations strategy. An observer who sees business organizations as rational, wellinformed decision-making bodies blessed with foresight would have no problem in
advising how managers should do the job. But the link between IS and strategy is much
more temporary and uncertain.

IS isnt an isolated part of the organization. It interacts not just with broad
strategy, but with most other functional areas of the business. Developing an IS strategy
can be cautious at best, provisional approach, with an emphasis on learning and
reflection, and a readiness to change course if business requirements change, as they
unavoidably will.

Reading Assignment:
David Boddy, Albert Boonstra and Graham Kennedy, Managing Information
Systems, an organizational perspective, Pearson Education Limited,Edinburgh Gate,
Harlow Essex CM20 2JE, 2002 Chap4

Exercises/Written Assignments
1. Identify a strategic information system in your company or industry. Do a costbenefit analysis of this system.

2. How should one identify systems for development that could be very strategic
for the company? Can one already say that a conceptualized system will be
strategic for the company? What are the criteria for saying that a system still
to be developed will be strategic for the company?

David Boddy, Albert Boonstra and Graham Kennedy, Managing Information
Systems, an organizational perspective, Pearson Education Limited,Edinburgh Gate,
Harlow Essex CM20 2JE, 2002 Chap4



Methods in Information Systems Planning

Learning Objectives:

At the end of the lesson, students should be able to:

1. differentiate and describe the different methods used for determining the
information requirements of organizations;
2. identify which methods best suit particular types of organizations; and,

Keywords and Phrases


Strategic Planning
Value Chain Analysis

Information Requirements
Linkage Analysis

Critical Success Factors

Managing Information Systems is becoming more important and also more
difficult nowadays, but technology is changing rapidly, that planning could be difficult.
However, it is still critical for an organizations survival. Planning the effective use of IS
is very important for the survival of an organization.

Numerous tools, approaches, and mechanisms have been developed to help in

systems planning. However, there is no single way to go about it. Most organizations,
as a result, use more than a single approach or tool to help in this important IS
management function.



First step in the information systems planning process is determining the

organizations information needs, or information requirements.

Various approaches

have been devised in order to derive the organizations information requirements. The
Critical Success Factors Method is one of the earliest methods used by business
organizations to focus on the information support to be given to the critical factors that
contribute to the companys success or greater competitiveness.

The key is in

identifying these critical success factors so that information needed for their execution
or sustenance can be identified. Once identified, information systems to generate these
critical information can be conceptualized and prioritized for development and
implementation. Identifying the CSFs have traditionally been the task of the companys
top executives.

The Value-Chain Matrix developed by Michael Porter, is another method used

by business organizations which focuses on the primary activities of the company in
producing and delivering their goods or services to their target clientele. This method
distinguishes two main types of activities of a company; the primary, which are directly
involved in the production and delivery process; and the secondary activities which are
not directly involved in production and delivery but which support or provide the most
appropriate resources or technologies

for these activities. The value chain is the

sequence of activities that add value to the product during its creation, production,
delivery and after sales support.

Using this method, companies will then have an analytical guide to determine
which among the activities of the value chain, is vital information lacking or needed.
The timeliness or frequency of information generation is also of great importance in this
analysis. This will not just indicate information to generate but will specify the
performance of the information system. For example, deriving market demand
information on real time is key to production and delivery success of fast moving

Other methods contribute to the selection of technologies that will develop or

implement the information system to be designed based on these information
requirements or specifications. Frameworks such as Nolans Stages of Growth and
Linkage Analysis Planning belong to this type of planning method or tool.

Michael Porter s The Value-Chain Matrix can also determine where another
company adds more value and team up with the said firms outsourcing activity to the
other company. The following terms have evolved to describe e-commerce or ebusiness, where business transactions and information are exchanged via the Internet.
These are the translations of these terms

Virtual value chains marketplaces are termed market spaces in the Internet
Marketplaces physical location of physical products
Market spaces physical location and products are substituted by information.

How can companies create value in market space? Or how can they create value
for both market space and marketplace at the same time, leveraging off each other?

To compete in market space, companies need to use information to make new

value for the customer, such as offering a service for the customer on the company

At every step in the chain information, value can be added in five ways:
gathering, organizing, selecting, synthesizing, and distributing. The IS organization
should therefore be playing a major role in market space.

Making operations visible (seeing operations through production systems)

followed by putting mirroring capabilities (substituting virtual activities to physical values)
in place, and creating space-based customer relationships add value to the company.

Taking advantage of these changes requires a shift from supply-side of thinking

to demand-side of thinking. Companies should sense and respond rather than make
and sell products and services. IS should help and identify the company use in this


Critical Success Factors (CSF) method is a method for defining executive
information needs. This method focuses on the current information needs of individual
managers, whether the information needs are factual or opinion-based. This method
has become a popular planning approach and can be used by companies to assist
companies in identifying information system that needs developing.

CSFs are defined as the few key areas of the job where things must go right for
the organization to succeed. CSFs should be reexamined as often as needed since it is
time dependent and time sensitive so they can keep track of the current business

There are four sources for these factors. One is the industry. Another is the
company itself which is situated within the industry. The environment would be the third

source, as the temporal organizational factors be the fourth factor, or the areas of
company activity that usually dont warrant concern but are unacceptable at the

Monitoring and building, which involves keeping track of the progress of

programs for change, are other critical success factors in addition to the four sources.

Listing the current corporate objectives and goals, and using them to determine which
factors are important for accomplishing objectives, are ways to use CSF, along with two
or three main measures for each factor.


A paper published in 1974 entitled, Managing the Four Stages of EDP Growth
by Richard Nolan and Chuck Gibson contained observations of many organizations
getting through four stages when being introduced to new technology. The four stages
as described by Nolan are the following:

Stage 1: Early Successes. Beginning use of new technology. Early successes

lead to increased interest and experimentation of the technology.

Stage 2: Contagion. Interest grows fast as newer products and services based
on technology are brought into the market. Rapid uncontrollable growth
occurs. This is the learning period for the field for new uses and for
new products and services catering to the new technology.

Stage 3: Control. Management begins to cut costs and reduce waste, leading to
efforts toward standardization.

Stage 4: Integration. The use of the new technology is considered mature. Its
dominant design mastered, making way for newer technologies, and
the four stages repeats.

An organization can simultaneously be in several stages for different

technologies. Nolans stages of growth enables an organization to evaluate the stage of
growth of a particular information technology to be used in the development and
implementation of information systems; so that they can choose the technology to be
used based on its stage of growth in the industry or in the organization and if truly
necessary, prepare for the consequences of its implementation based on its stage of


The portfolio management approach Cisco uses is called the e-business value
matrix. The e-business value matrix classifies the different information systems projects
identified into the following types:

New Fundamentals. These are projects providing a fundamentally new way of

working in overhead areas, not business-critical areas. It focuses on
increasing productivity, and low-risk. Mostly these types of projects








administrative systems such as payroll, accounting, Attendance

monitoring, etc.
Operational Excellence. These are medium risk projects that might involve
reengineering work processes. It focuses on increasing customer
satisfaction and corporate agility, and does not aim for immediate

Customer-relations management systems development

projects fall into this category.

Rational Experimentation. This involves testing new ideas and projects. In

several months time or less, the concept must be proven. These
experiments or incubator-type projects have incremental funding and
short time frames. Information systems to facilitate primary activities in
the value chain; such as supply chain management and sales demand
forecasting system are candidates for rational experimentation.

Breakthrough Strategy. Such projects have the potential to have a big impact
on the company and even the industry if successful. This strategy is
very risky and failure must be viewed the right way. Once operational
these systems may be viewed as strategic; or likely to have impact on
the companys profitability and greater competitiveness. The CIO must
be educated on their role because their involvement is a key in the
implementation of these projects.


Technology, demographics, global competition, government regulations and
environmental factors are considered in this model. The goals of each step of this
method are to identify who has the power in the linkages and determine future
opportunities and threats for the company.

When the one who has the power has been identified, the management must
determine who manages each link. Oftentimes there is no one managing the link, which
should be a concern for the management. The most important link is picked and the firm
decides how to control it.

Get management to recognize that extended enterprise exists and manage

relationships in it. About 70% of the final cost of goods and services is in their
information content. Managing information as a strategic tool is very important.

Electronic devices are used to distribute, create, and present knowledge and
information as part or as an additional good of a product or service. Those who control
electronic markets will be the winners since they will be able to create niche markets as
they arise.

A successful planning effort should support peering into the future in a sense and
respond way. The systems plan may not be effective when it doesnt align with
corporate strategy. A misalignment is unlikely with the boom of internet commerce. Yet,
ecommerce is not fully integrated in many companies.

Reading Assignment:
Barbara McNurlin and Ralph Sprague,Jr. Information Systems Management in
Practice, 5th Edition, Chap.4

Exercises/Written Assignments
1. Using the Critical Success Factors method, determine the information
requirements of a new company in an automotive industry.

2. Use the Value Chain matrix in identifying application systems that will generate
the information required in the value chain of this company.

3. Use the linkage analysis method in determining what linkages with partners
and suppliers this company must develop and maintain.

4. Use Nolans Stages of growth in identifying which technologies to use and how
these are to be introduced in the company.


1. Knowing the different systems panning processes, find out what automated tool
available in the market you can use to support a particular planning process.
Describe this tool.
2. Interview the MIS manager of a small company and ask about the current
electronic linkages it has with its partners or clientele. What are the benefits of
each party from the electronic channel?
3. Visit the CIO of a local organization/company. Find out how their information
systems plan link with their business plan.

Barbara McNurlin and Ralpj Sprague, Jr.Information Systemzs Management in
Practice, 5th Edition.,2002 Prentice Hall.

Laudon and Laudon, Management Information Systems.