Challenges of Information Systems Although IT is advancing at a great pace, its not easy to build and use information systems.

There are five major challenges troubling managers: 1. Obtaining business values from information systems: One of the greatest challenges managers are facing today is ensuring that their companies do obtain meaningful returns on the money they spend on IS. Using IT to design, produce and deliver, maintain new products and to make money doing it are two different things. How can management ensure that IS contribute to corporate values? Are we receiving the return on investment from our systems that we should? Most companies lack a clear cut decision-making process for deciding which technology investments to pursue and for managing those investments. 2. Providing appropriate complementary assets to use IT effectively: Despite heavy IT investments, organizations are not realizing significant business values from their systems because they fail to appreciate the complementary assets required to make their technology assets work. To benefit fully from IT, realize genuine productivity and become competitive, organizations have to make fundamental change in employee and management behavior, develop new business models, retire obsolete work rules. 3. Understanding the system requirements of a global business environment: The rapid growth in international trade calls for IS that can support both producing and selling goods in many different countries. In the past, each regional office of a MNC focused on solving its own unique information problems. Language, cultural and political differences among countries frequently resulted in chaos and failure of management controls. So to avoid this situation, businesses must develop global h/w, s/w and communication standards, create crosscultural accounting structures and design transnational business processes. 4. Creating an IT infrastructure that support changing organizational goals: Many companies are saddled with expensive IT platforms that cannot adapt to innovation and change. There is are so complex that they act as constraints on business strategy and execution. 5. Designing systems that people can control & understand and use in a socially and ethically responsible manner: Although IS have provided enormous benefits, they have also created new ethical and social problems and challenges such as threats to individuals privacy and intellectual property rights, computer related health problems, computer crimes and elimination of jobs. IS must be designed so that they are secure, function as intended and so that humans can control the process Information Systems from a technical and business perspective An information system collects, stores and disseminates information from an organizations environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis and visualization. Information systems transforms raw data into useful information through three basic activities: input, processing and output. From a business perspective, an IS creates economic value, or the firm as a management solution, based on IT, to a challenge posed by the environment. The IS is part of a series of value adding activities for acquiring, transforming and distributing information to improve management decision making and ultimately increase firms profitability.

Organizations and Information systems

Information systems and organizations influence one another. ISs are built by managers to serve the interests of business firms. At the same time, the organization must be aware of and open to the influences of information systems to benefit from new technologies.

The interaction b/w IT and organizations is complex and is influenced by many factors including the organizations structure, operating procedure, politics, culture, and management decisions.

What is an Organization? An organization is a stable, formal social structure that takes resources from the environment and processes them to produce the outputs. Capital and Labor are the primary production factors provided by the environment. The organization transforms these inputs into products and services in a production function. The products and services are consumed by the environment in return for supply inputs.

Common feature of Organizations a. Routines and business processes: All organizations including business firms, become very efficient over time because individuals in the firm develop routines for producing goods and services. Routines- are the precise rules, procedures and practices that have been developed to cope with virtually all expected situations. As employees learn these routines, they become highly productive and efficient, and the firm is able to reduce its cost over time as efficiency increases. Business processes are collection of such routines. A business firm in turn is a collection of business processes. By analyzing business processes and individual routines, you can achieve a very clear understanding of how a business actually works.

b. Organizational politics: People in organizations occupy different positions with different specialties, concerns and perspectives. As a result, they naturally have divergent viewpoints about how resource, rewards and punishments should be distributed. These differences matter to both managers and employees and they result in political struggle for resources, competition and conflict within every organization. c. Organizational culture: Organizational culture is a set o fundamental assumptions about what products the organization should produce, how it should produce them, where and for whom. It is a powerful unifying force

that restrains political conflict and promotes common understanding, agreement on procedures and common practices. If we all share the same basic cultural assumptions, agreement on other matters is most likely. At times it is a powerful restrain to change, especially technology change.

Unique features of Organizations a. Different organizational types: One important way in which organizations differ is in their structure or shape. The kind of information systems you find in a business firm- and the nature of problems with these systemsoften reflect the type of organization. For instance, in a professional bureaucracy such as a hospital it is not unusual to find parallel patient record systems being operated by the administration, another by doctors and another by nurses and social workers. In small entrepreneurial firms you will often find poorly designed systems developed in a rush that often outgrow their usefulness quickly. b. Organizations and environments: Organizations reside in environments from which they draw resources and to which they supply goods and services. They have a reciprocal relationship. On the one hand, orgs are open to, and dependent on, the social and physical environment that surrounds them. Without financial and human resources, organizations could not exist. On the other hand, orgs can influence their environments. For example, business firms forms alliances with other businesses to influence the political process; they advertise to influence customer acceptance of their products. c. Other differences: Organizations differ in their ultimate goals and the type of powers to achieve them. The nature of leadership differ greatly from one organization to another. Another way organizations differ is by the tasks they perform and the technology they use.

Information and Decision Making

Data are mere facts and figures, whereas information can be considered as processed datathat help in drawing some inference. So information is refined form of data. It is useful for human understanding and decision making processes. The exact form of refinement may vary according to the needs and the nature of the applications. In some cases it is merely packaging in the form of a neatly formatted texts and graphics. In some other applications it may be in the form of a summarized data using statistical tools such as mean, median, standard deviation, probability estimates etc. Normally information systems should concentrate on information and not merely on data. Characteristics of Information a. Accuracy: Any information derived from inaccurate data is likely to give wrong results. Insistence on too much data accuracy costs money. Amount of accuracy is dependent on type of decisions to be taken. So a tradeoff between cost of processing and value of accuracy must be found. b. Timeliness: Timeliness ensures that decisions are taken at the right time. Information however accurate if not available at the right time is of historic importance only. For example, a company may receive an important order from a customer but if this information is not passed onto manufacturing deptt. in time, the order processing may get delayed. c. Relevance: It has been observed that managers suffer not as much due to lack of information but due to abundance of irrelevant information. The information provided by the ISs may not be relevant for the required purposes. This is caused due to faulty assessment of information needs of various levels of managers.

d. Other characteristics: Similarly, depending upon specific applications, reliability, source of data, consistency over time, value and presentation are some other important characteristics of information.

Types of Information There are different management activities performed by different hierarchical levels of management. Their information needs are different. So information can be classified into following three types: a. Operational Information: Information that provides support to operations and control activities is called Operational Information. It may be a daily schedule that refer to the detailed assignment of jobs to machines or machines to operators. In a service organization like hospitals, it may be a duty roster for nurses, doctors and other staff. These schedules must be detailed, unambiguous reports produced in frequent interval at relatively low cost for internal use of a particular department. Speed and accuracy are the major performance measures of such systems. b. Tactical Information: Information that aids in tactical planning and control is called tactical information. For example, such information may aid in identification and analysis of a production bottleneck in a manufacturing system. Middle managers/ HODs use tactical information. Their scope of responsibility is more than that of first level managers. So ISs should provide them summarized information, with provision for detailed information when called for. For example, a manager having overall in charge of production may require shift wise, plant wise, machine wise, operator wise analysis of performance figure. c. Strategic Information: Top Management generally takes strategic decisions. Decisions regarding setting up of net plant or selecting location of a new plant are examples of strategic decisions. This would use much of he information generated by the tactical system. But a long tem decision like this is likely to be influenced by environmental information like changing market, changing technology, changing govts policies like deregulation, tax incentive for backward area etc.