Using Advanced

Information
Technology to
Increase
Performance
chapter eighteen

Learning Objectives
1.
2.
3.
4.
5.

Differentiate between data and information, and list the

attributes of useful information
Describe three reasons why managers must have access to
information to perform their tasks and roles effectively.
Describe the computer hardware and software innovations
that have created the IT revolution.
Differentiate among seven performance-enhancing kinds of
management information systems.
Explain how IT is helping managers build strategic alliances
and network structures to increase efficiency and
effectiveness.
18-2

Information and the Managers Job

Data
Raw, unsummarized,
and unanalyzed facts.

Information
Data that are
organized in a
meaningful fashion

18-3

Attributes of Useful Information

Attributes
Quality

The accuracy and reliability of available

information affects the quality of decisions
that managers make using the information.

Timeliness

The availability of real-time information

that reflects current conditions

Completeness

Complete information allows managers to

exercise control, achieve coordination, or
make an effective decision

Relevance

Having information that suits a managers

particular needs and circumstances
assists managers in making better
decisions.
18-4

Factors Affecting the Usefulness of

Information

Figure 18.1
18-5

What is Information Technology?

Information Technology
set of methods or techniques for acquiring,
organizing, storing,
manipulating, and
transmitting
information

18-6

What is Information Technology?

Management Information System
specific form of IT that managers utilize to
generate the specific, detailed information they
need to perform their roles effectively

18-7

What is Information Technology?

Managers need information for three reasons:
1. To make effective decisions
2. To control the activities of the organization
3. To coordinate the activities of the
organization

18-8

Information and Control

Managers achieve control by:
1. Establishing measurable goals
2. Measuring actual performance
3. Comparing actual performance with goals
4. Evaluating results and taking any corrective
action

18-9

Information and Coordination

Coordination problems that managers face in
managing global supply chains are increasing
Managers have adopted sophisticated IT that
helps them coordinate the flow of materials,
semifinished goods, and finished goods
throughout the world

18-10

The Effects of Advancing IT

IT helps create new product opportunities that
managers and their organizations can take
advantage of
IT creates new and improved products that
reduce or destroy demand for older,
established products

18-11

IT and the Product Life Cycle

Product Life Cycle
Refers to the way in which the demand for a
product changes in a predictable way over time

18-12

A Product Life Cycle

Figure 18.2
18-13

A Product Life Cycle

Embryonic stage
Product has yet to gain widespread acceptance
Customers are unsure what a product has to offer

Growth stage
Many consumers are buying the product for the
first time
Demand increases rapidly

18-14

A Product Life Cycle

Mature stage
Market peaks because most customers have
already bought the product
Demand is typically replacement demand

Decline stage
Advancing IT leads to the development of a more
advanced product making the old one obsolete

18-15

Computer Networks
Network
Interlinked computers that exchange information.

Servers are powerful computers that relay

information to client computers connected on a
Local Area Network (LAN).

18-16

A Four-Tier Information System

with Cloud Computing

Figure 18.3

18-17

Types of Management Information

Systems
Operating system
software
software that tells
computer hardware
how to run

Applications software
software designed for
a specific task or use

18-18

The Organizational Hierarchy

Traditionally, managers have used the
organizational hierarchy as the main system
for gathering information necessary to make
decisions and coordinate and control activities

18-19

The Organizational Hierarchy

Drawbacks
Can reduce timeliness of information
Reduces quality of information
Tall structure can make for an expensive
information system

18-20

Six Computer-Based Management

Information Systems

Figure 18.4
18-21

Types of Information Systems

Transaction Processing Systems
A management information system designed to
handle large volumes of routine, recurring
transactions.
Were the first computer-based information
systems handling billing, payroll, and supplier
payments.

18-22

Types of Information Systems

Operations Information Systems
A management information system that gathers,
organizes, and summarizes comprehensive data in
a form that managers can use in their nonroutine
coordinating, controlling, and decision-making
tasks.
Can help managers with non-routine decisions
such as customer service and productivity.

18-23

Types of Information Systems

Decision Support Systems
An interactive computer-based management
information system that managers can use to
make nonroutine decisions.
New productive capacity, new product
development, launch a new promotional
campaign, enter a new market or expand
internationally

18-24

Types of Information Systems

Executive Support System
A sophisticated version of a decision support
system that is designed to meet the needs of top
managers.

Group Decision Support System

An executive support system that links top
managers so that they can function as a team.

18-25

Artificial Intelligence and

Expert Systems
Artificial Intelligence
Behavior by a machine that, if performed by a
human being, would be called intelligent
Already possible to write programs that can solve
problems and perform simple tasks

18-26

Artificial Intelligence and

Expert Systems
Expert Systems
A management information system that employs
human knowledge, embedded in a computer, to
solve problems that ordinarily require human
expertise.

18-27

Enterprise Resource Planning

Systems
Enterprise Resource Planning Systems
Multi-module application software packages that
coordinate the functional activities necessary to
move products from the design stage to the final
customer stage.

18-28

Enterprise Resource Planning

Systems
1. Help each individual function improve its
functional-level skills
2. Improve integration among all functions so
that they work together to build a
competitive advantage for the company

18-29

Types of Information Systems

E-Commerce Systems
Trade that takes place between companies, and
between companies and individual customers,
using IT and
the Internet

18-30

Types of E-Commerce

Figure 18.5
18-31

E-Commerce Systems
Business-to-business (B2B)
trade that takes place between companies using
IT and the Internet to link and coordinate the
value chains of different companies

18-32

E-Commerce Systems
B2B marketplace
Internet-based trading platform set up to connect
buyers and sellers in an industry

18-33

E-Commerce Systems
Business-to-customer
(B2C)
trade that takes place
between a company
and individual
customers using IT and
the Internet

18-34

Example Adorama.com
Adorama.com sells cameras and accessories
through their web site as well as a physical
store in New York City
They also provide online training in
photography, lighting and composition

18-35

Strategic Alliances, B2B Network

Structures, and IT
Strategic Alliances
An agreement in which managers pool or share
their organizations resources and know-how with
a foreign company, and the two organizations
share the rewards and risks of starting a new
venture.

18-36

Strategic Alliances, B2B Network

Structures, and IT
B2B network structure
A series of global strategic alliances that an
organization creates with suppliers,
manufacturers, and distributors to produce and
market a product.

18-37

Flatter Structures and Horizontal

Information Flows
Boundaryless Organization
An organization whose members are linked by
computers, faxes, computer-aided design
systems, and video teleconferencing and who
rarely, if ever, see one another face-to-face.

18-38

Flatter Structures and Horizontal

Information Flows
Knowledge management system
A company specific virtual information system
that systematizes the knowledge of its employees
and facilitates the sharing and integrating of their
expertise.

18-39

Video Case: Death of the

Business Trip
What are the benefits of new technologies like
TelePresence?
What is the impact of TelePresence on
organizations?
What are the limitations of technologies like
TelePresence?

18-40