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CHAPTER 1. THE COMPANY, INFORMATION SYSTEMS AND INFORMATION TECHNOLOGY
BUSINESS PROCESS: is a group of activities that aim to provide a certain good, assets to
someone/provider/costumer. It is a set of interrelated activities that produce a product or service with added
value for the company, its partners or its customers.
WHY MUST WE MANAGE BUSINESS PROCESSES? Business processes must be managed steered and improved in order to maximize the excellence of the company (and thus improve profits) through appropriate tools.
WHO IS RESPONSIBLE FOR MANAGING BUSINESS PROCESSES? The role of the manager is to steer business processes by making decisions.
Decisions must be taken with no time for reflection.
Decisions involeve complez implications.
HOW DO INFORMATION SYSTEMS HELP AND INFLUENCE? Decisions are made on the basis of knowledge and information.
Information systems (IS) and Information technology(IT) are the basis of the information and knowledge in the company. Are the pillars for decision-making.
BUSINESS PROCESS MANAGEMENT COMPANY CHALLENGES IN A GLOBAL WORLD The pressure on the company is the combination of social, cultural, legal, environmental and economic factors that constrain a condition its business processes.
Market pressure • Global economy and strong competition • Changing nature of workforce • The power of costumers Pressure technology • Technological innovation and obsolescence • Too much information Social and legal pressure • Compliance with government regulations • Protection against external threats • Ethical implications INFORMATION SYSTEMS HOW DOES THE COMPANY RESPOND TO ITS PRESSURES? Strategic systems: they help to define and implement the strategy for • Get more benefit • Be more efficient • Better negotiate with suppliers Customer focus Product customization Widespread use of IT: in all areas of the business.
• Organizational systems, • A company without IT is not conceived • Automation of the company SUMMARY Concept of business process, its management and the benefits to be gained thereby.
The need for managers to know IS and IT The conditions that must face the company WHAT IS INFORMATION? Data: events occurred and recorded. Raw material, unformatted information.
Information: Data processed or treated by someone or something context for which they have a certain sense. Meaningful data.
Knowledge: Understanding relationship between processes of information.
Wisdom: Knowledge accumulated and applied: using acquired knowledge in new problems.
CHARACTERISTICS OF INFORMATION Information presents special characteristics that should be known and taken into account.
High production cost Negligible cost of replication (regardless of the cost of media, which is not very high) Negligible cost of distribution (besides marketing cost) Production costs are not recoverable directly; only if the product is successful.
It is not consumed by use.
Its quality can’t be assessed in advance The implication of these features that every manager should know: Information is parameterized Information is reusable INFORMATION SYSTEMS The value of information often depends on its relevance or how it is published.
Information products can allow large profits.
USE OF INFORMATION Information, and therefore, knowledge is a fundamental aspect of the operation of any company, and is the base for: Knowledge of the daily operation and short-term forecast Analysis of results Drawing conclusions and improvements For strategic planning For greater collaboration among workgroups For greater collaboration of the enterprise with its environment PARADIGMS OF INFORMATION SYSTEMS IN THE COMPANY Information is an asset of company Its good or bad management affects the results of the company Company information must be unique for all who need it.
Copies, dualities, etc. must be avoided.
Information must cover all aspects of the business.
In any aspects of the business it is important to have information for this development.
Information should be easily accessible for any “uninitiated”.
The way people reach and access information must be “smart” Promote the use of market tools and systems as standard as possible in order to cut costs.
Keep always in mind the premise of “do not reinvent the wheel” Be always conscious that the use of information systems often affects company organization and vice versa.
Always keep in mind the rapid and continuous change in IS.
WHAT IS A SYSTEM? A group or combination of interrelated, interdependent, or interacting elements forming a collective entity; a methodical or coordinated assemblage of parts, facts, concepts, etc.
INFORMATION SYSTEMS WHAT IS AN INFORMATION SYSTEM (IS)? Information system (IS) is the study of complementary networks of hardware and software that people and organizations use to collect, filter, process, create, and distribute data.
This definition focus on two different ways of describing information systems: The components that make up an information system and the role that those components play in an organization.
THE 5 COMPONENTS OF AN INFORMATION SYSTEMS Hardware (HW): Physical Devices • Infrastructure, storage systems, computers...
• Communication networks: links, routers, protocols, etc.
Software (SW): Tells HW what to do • Data: Info manipulated by SW People: All people involved • Operating system, database manager, programs, files… Users, administrators, technicians Process: Steps needed to complete a business activity. Without business process, we don’t have a information system.
INFORMATION SYSTEMS IS EXAMPLES Financial control in the companies.
How nowadays the companies counting.
INFORMATION SYSTEMS INFORMATION TECHNOLOGY (IT) IT is the set of hardware and software components on which information systems based computers are supported.
Hardware technologies: Electronic components.
Software technologies: Software components, operating system, database manager, applications, etc.
Communications network technologies: Devices that ensure communication between computers and IS. – Mobility technologies: Ensure communication in mobile environments Technology Administration and Maintenance: Technologies to ensure proper operation assembly.
SUCCESSFUL IS The successful information systems are those that: Are defined and built for purchased for a particular purpose.
Give the information in the intended time and format Have a strong fit between systems features and organizational factors: • Business strategy • Business processes • Organizational structure • Corporate culture The underlying technology is important but not essential, because if you gave a appropriate people the technology is not a problem, because if the technology changes these people adapted quickly.
SUMMARY Concept and components of Information Systems (IS) Concept of Information Technologies (IT) Difference between IS and It INFORMATION SYSTEMS QUESTIONS 1. what are the 5 components that make up an information system? 2. what are 3 examples of information systems hardware? 3. Microsoft Windows is an example of which component of information system? 4. What is a market tool? 5. What roles do people play in information systems? 6. What is the definition of a process? 7. What is the different between IS and IT? THE REASONS WHY COMPANIES BUILD AND USE IS Main reason: to satisfy their information needs.
Increased efficiency and effectiveness Generally, improve its position against competitors and market Meet external and legal regulations IMPACT OF IS IN THE ENTERPRISE Reduced levels of management • Reporting facilities make managers (mostly midlevel) more productive and therefore their number is reduced and the structure is flattened Change the work of the manager • Using IS and IT manger can focus more attention on the decision-making process • IS allow better planning and reduces the “troubleshooter” manager.
• Is allow “remote” supervision, causing a change in the profile of the manager Eliminating jobs • As you progress through the deployment of IS, it can reduce the need of jobs. The manager must handle this situation Changes in the way people work • Attention to the ergonomics of the workplace • Opportunities for disabled • Improved quality of life • Homeworking Need for lifelong learning • The company must offer train and the employee take advantage Lower costs of business processes • Be more efficient INFORMATION SYSTEMS • Be faster in manufacturing and generally in any business process • Be better: improving quality of products and services.
Differentiation: • Using IT to differentiate ourselves in the market • Use of IT to incorporate IT into products Innovation • Support creating new products • Assistance in opening new markets • Making radical changes in processes (reengineering) Promotion • Helps in expanding business • Internationalization HOW IS AND IT ALLOW NEW CHALLENGES IS have produced and produce organizational changes in the business and culture.
The executive must know each changes and scope to manage properly its impact.
The IS and IT go beyond business operations • Change the way companies compete • Should be designed strategically FOCUS POINT IS are a tool for business, so they must be used in what is profitable.
• A common mistake in business is a bad choice or misuse of information systems and Technology of information.
Information Systems have a non-negligible cost, so you have to see the performance you get.
• Performance is not obtained directly but through improvements in the functioning of parts of the company.
Not all projects and information systems are successful The use of SI doesn’t guarantee improvement in the company "per se“ INFORMATION SYSTEMS POSSIBLE FAILURES (To take into account) Not always the use of information systems and technologies benefit in day to day business.
• Some companies fail to get all the performance out of the systems because of an organizational problem.
• The systems are not well adjusted to the business model.
• Continuous staff training is necessary.
• It is necessary to know and appreciate the benefit of investments in systems.
• It is necessary to ensure that information systems are "controllable and controlled" Most IT projects fail due to Project Management issues. Typically: • Poorly defined project scope • Inadequate risk management • Failure to identify key assumptions • Lack of effective communication at all levels • Key staff leaving the project and/or company • Poor management of expectations • Ineffective leadership • Lack of detailed documentation • Failure to track requirements • Failure to track progress • Lack of detail in the project plans • Inaccurate time and effort estimates • Cultural differences in global projects EXAMPLES OF FAILURES IN INFORMATION SYSTEMS 2004 AVIS Europe: ERP canceled after spending $ 54,4M Hewlett Packard 2004: Problems with your ERP. $ 160M loss 2002 McDonalds: Abandoned shopping system after spending $ 170M.
2001 Nike: Problems with the system supply chain. $ 100M INFORMATION SYSTEMS ABOUT THE FAILURE The total failure • When the company decides to leaving out the project o • When not used o Technology issues Problems of organization, processes and people The partial failure • To what extent the system meets expectations and delivers the expected results The system must be compared with definitions and initial expectations OTHER CHALLENGES AND POINTS TO CONSIDER Ethics of the information • Privacy: information personal of customers, suppliers, employees, etc.
• Reliability: Authentic, true and factual information • Property: Information rights management • Accessibility: Who can and who cannot access information Information Security • Unintentional acts: Human error, provider quality of service, etc.
• Natural disasters • Technical failures • Failures in safety management • Deliberate acts: Espionage, sabotage, theft of equipment or information, theft or impersonation identities, viruses, worms...
SUMMARY Reasons why companies spend time and money in IS Impact of IS in companies and vice versa.
IS challenges and failures INFORMATION SYSTEMS THE ROLE OF THE RESPONSIBLE FOR IS Job position know as CIO and stands for Chief Information Officer A CIO is an integrated business figure The profile should include these duties: • Continuously develop the organization • Consistently improve business performance through SI and ICT • Effectively manage the change of mentality in the company • To support and encourage: o Innovations and market developments and their potential in the organization.
o Improve processes o Maximize flexibility to adopt and adapt to technological changes.
o Maintain and improve continuously the inventory of IS.
• 100% user satisfaction It is a profile with two aspects: business and technology CHALLENGES POSED BY THE MANAGER SI Identify problems in the company and the areas in which IS can bring advantage Being able to develop the solution by managing the IT and working procedures.
Being able to put into service, monitor the solution and ensure that benefits are obtained Stick to a given budget Define an IT strategy Build a team (internal + external) INFORMATION SYSTEMS IS CLASSIFICATION Is in a company are classically classified by the following non IT-dependent perspective.
Hierarchical perspective: this perspective is based on the fact that the activities in the company are held at different levels, with different individuals and responsibilities at each level.
• 3 deafferents levels are identified: o Strategic level: ✓ It is responsible for making strategic and long-term decisions affecting the whole organization.
✓ This level executives must decide how the company reacts to trends and competition performances.
✓ They are characterized by the lack of structure, use of ad-hoc information and use of external sources of information.
✓ The goal is to predict the future and prepare the organization for it o Tactic level: ✓ It is the level concentrated in the decisions and the medium-term management of the company and the functional part.
✓ Activities at this level are semi-structured with mixture components and procedures well known and level of uncertainty.
✓ The focus is on the DECISIONS at tactical level: ▪ o Providing info to answer the “How’s”.
Operational level: INFORMATION SYSTEMS ✓ It is focusing on the operation of the day and the short term ✓ Decisions to make are supported by well-structured procedures.
✓ The transaction-oriented systems are (TPS) and are typically used to automate the operations of today.
✓ Its goal is to get these operations are done quickly, safety and easily.
• Analysis and conclusions: o It has proved useful to classify and well define the limits and functions of the systems, according to the level to which they were intended.
o To the extent that companies are abandoning a rigid hierarchical organization, this perspective is losing applicability.
o Limitation: In practice, it is impossible to establish a clear boundary between levels Functional perspective: • Functional systems are those that support the specific needs of individuals in the same functional area.
• Based on the idea that information needs are unique and homogeneous within a functional area.
• Optimal systems are tailored to those highly specific needs.
• They are the result of administrative decentralization of large enterprises.
• They use a language that is familiar to the professionals in the functional area.
INFORMATION SYSTEMS • Analysis and conclusions o The set of functional systems of a company is not optimal.
o There is a large redundancy of data and information. Each system has its own database. The information may not be consistent, apart from being heterogeneous.
o It requires a constant exchange of information between systems, it is not always possible and is almost never easy.
o In practice, impossible to maintain uniformity of information.
Process perspective • The functional and hierarchical perspectives are limited by: o Lack of integration of separate systems / Redundancy / Inefficiency • Based on the vision of cross business process among departments or units.
• Result of the re-organization of the company, based on BPR (Business Process Re-engineering) • BPR seeks to break down “information silos” in organizations.
• It leads to the emergence and adoption of integrated systems.
• Process reengineering requires organizational structuring o Reduced hierarchical layers o Change from vertical structure to a horizontal structure o Realigning functions/work groups around ✓ Business processes ✓ Customers o • • Decentralizing decision making by empowering employee The integration benefits are: o Reduction of duplication and redundancy o Access to information o Speed o Response time Drawbacks: o Increased coordination costs and complexity o Reduced local flexibility INFORMATION SYSTEMS SUMMARY Business information systems can be characterized through the following perspectives: Hierarchical Functional Process oriented BPR is a management approach that advocates for a process view of organizational activities.
The integration of systems is a necessary but expensive good.
As we will see in chapter 3, system integration has led to the use of ERP systems such as SAP.