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System Concepts:
MIS and Other Sub Systems Using IT for Strategic Advantage & Strategic uses of IT
MIS principal concerns Facilitate decision making by supplying the information needed in an up-to-date and accurate form
to the people who need it on time in a usable form
Management information Systems (MIS), sometimes referred to as Information Management and Systems, is the discipline covering the application of people, technologies, and procedures collectively called information systems to solving business problems. Management Information Systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems.
A management information system (MIS) is designed by an organization for its smooth functioning. The MIS, a decision-making instrument used by top management, comprises of a set of controls. These controls cover the basic spheres of the business: its people, technologies, policies and procedures. The MIS gathers information on all the important realms of the business, tabulates the information and provides meaningful reports.
Features - The management information system presents data such as the organization's processes, operating procedures, internal controls and audit preparation, which the management uses to make effective and efficient decisions. The internal controls for each department contain guidelines for operation. The flow of work assigned to employees, their responsibilities and duties, for example, are listed under internal controls. Benefits - An organization benefits immensely by using an MIS. This fully automated system enables the organization to record, process and tabulate all of its business dealings and transactions. Also, the information collected makes it possible to make necessary changes and improvements to the grey areas. For example, the organization can compare actual and projected sales and take steps to correct any deviations.
MIS
By using a good MIS, the top management of the organization is able to make informed decisions. The data present in the MIS is studied and analyzed objectively and the organization is able to choose the best trade-off for its operations, sales and other functions. Also they can judge whether their resources are being used correctly.
MIS facilitates a two-communication process in the organization. The top management communicates to its employees what is expected of them and how they must accomplish the tasks entrusted. The employees in turn freely discuss their problems and concerns.
Types - There are four types of MIS. The first one, TPS (Transaction Processing System), is the most elementary. This methodology processes routine, mundane and recurring business transactions. OIS (Operations Information Systems) gathers comprehensive data and tabulates it for operations managers to use and maximize their output and minimize losses. DSS (Decision Support Systems) and ES (Expert Systems) are the two types of MIS used by the top management to make informed and intelligent decisions. The two types make extensive use of databases and modeling techniques Limitations - MIS is heavily technology driven and therefore lacks a human element. The information represented by the MIS is often rich in nature. The expertise of humans is needed to analyze the information presented and to make decisions accordingly. Considerations - Developing an MIS costs money. Usually the organization requires the help of a consultant to develop the system, therefore all the organizational procedures and controls have to be carefully and elaborately spelled out to the consultants.
MIS
Characteristics of MIS
Management Oriented Oriented: The system is designed form the top to work downwards. It does not mean that the system is designed to provide information directly to the top management. Other levels of management are also provided with relevant information. Management Directed Directed: Management orientation of MIS, it is necessary that management should continuously make reviews. Integrated System System: 5M Man, Money, Materials, Machines & Methods. The word 'integration' means that system has to cover of all the functional areas of an organization so as to produce more meaningful management information, with a view to achieving the objectives of the organization. It has to consider various subSystems, their objectives, information needs, and recognize the independence, that these sub-systems have amongst themselves, so that common areas of information are identified and processed without repetition and overlapping. For example, in the
development of an effective production scheduling system, a proper balance amongst the following factors is desired:
i. Set up costs v. Inventory level ii. Overtime iii. Manpower vi. Money available iv. Production capacity vii. Customer service.
Characteristics of MIS
Avoid Redundancy in Data Storage Storage: : As MIS is an Integrated System, no un-necessary Duplication is there for Data Gathering or Storage. Common Data Flows Flows: The integration concept of MIS, common data flow concept avoids repetition and overlapping in data collection and storage, combining similar functions, and simplifying operations wherever possible. Heavy Planning Element Element: A management information system cannot be established overnight. It takes almost 2 to 4 years to establish it successfully in an organization. Hence, long-term planning is required for MIS development in order to fulfill the future needs and objectives of the organization. Sub Sub-System Concept Concept: MIS Provisions for breaking into various SubSystems, based on activity as well as functions. Common Database Database: It acts as a Master that holds the functional Sub-Systems Together. Flexibility and ease of use use: While building an MIS system all types of possible means, which may occur in future, are added to make it flexible. A feature that often goes with flexibility is the ease of use. Computerisation Computerisation: MIS can be computerised because of its nature as a comprehensive System for Optimisation, Speed, Accuracy, Diligence, and Consistency in Data Processing.
Activities Subsystems
IS Vs. IT
INFORMATION TECHNOLOGY Hardware Software Databases Networks Other related components
Payroll System
Information Systems
Expanding Roles of IS
1. 2. 3. 4. 5. Data Processing: 1950s-1960s Management Reporting: 1960s-1970s Decision support: 1970s-1980s Strategic and End User Support: 1980s-1990s Global Internetworking: 1990s-2000s
Other Categories
a) Expert systems
b) End user computing systems c) Business information systems d) Strategic information systems
a) Expert Systems are knowledge-based systems that provides expert advice and act as expert consultants to the users b) End user computing systems support the direct, hands on use of computers by end users for operational and managerial applications c) Business information systems support the operational and managerial applications of the basic business functions of a firm d) Strategic information systems provide a firm which strategic products, services, and capabilities for competitive advantage
Intelligence: Search for needs, collect data Design: Generate alternatives, test feasibility Choice: Select from alternatives Persuasion: Influencing others to accept & follow chosen solution Implementation: Install solution on time, within budget Follow-up: Monitor, modify, refine Constant Feedback
2. 3.
Additional Stores
Strategy
Tactics
Operations
POS Cash Registers Customers EDI Sales Reports
Supplier
Inputs: High volume transaction level data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting
Levels of Management
Lower or Operational level Management -They make structured decisions (Operational decisions). Structured decision Its a predictable decision that can be made following a well defined set of routine procedures. Most decisions at this level require easily defined information that relates to the current status and activities within the basic business functions. Information is gained from detailed reports which contain information about routine activities. Detailed tasks defined by middle management are carried out by people at operational level. Middle or Tactical Management -Acquire and arrange the resources (Computers, people etc) to meet the goals of an organization. Define the detailed tasks to be carried out at the operational level. Information needed involves review, summarization and analysis of data to help plan and control operations and implement policy that has been formulated by upper management. Information is usually given to middle managers as summarized reports. Deals with semi structured decisions. (Tactical decisions) Semi structured decisions that must be made without a base of clearly defined informational procedures. In most cases a semi structured decision is complex, requiring detailed analysis and extensive computations. Upper or Top or Strategic Management -Decides on the broad objectives of an organization. Make unstructured decisions. (Strategic decision). Unstructured decisions are the most complex type of decisions and are rarely based on predetermined routine procedures. They involve subjective judgments of the decision maker.
Management information systems (MIS) are the most common form of management support systems. They provide managerial end users with information that support much of their day-to-day decision-making needs. MIS provide a variety of reports and displays to management. DECISION SUPPORT SYSTEMS: A natural progression from information reporting systems and transaction processing systems. Decision support systems are interactive, computer-based information systems that use decision models and specialized database to assist the decision making process of managerial end users. EXECUTIVE INFORMATION SYSTEMS: EIS are management information systems tailored to the strategic information needs of top management. Top executives get the information they need from many sources, including letters, memos, periodicals, and reports produced manually as well as by computer systems.
example of Decomposition
Information system divided into subsystem such as:
o o o o o o o o o o o o o Sales & Order entry Inventory Production Personnel & Payroll Purchasing Accounting & Control Planning
Each subsystem is further divided into subsystems. Ex. Personnel & Payroll:
Personnel Reports Payroll data entry & validation Hourly Payroll processing Salaried payroll processing Payroll Report for management Payroll report for Government
The subsystems defined in (2) might be further subdivided into smaller subsystems or modules. For Example, the hourly payroll processing might be divided into modules for calculation of deductions & net pay, payroll register & audit controls preparations, register & controls outputs.
The process of decomposition could lead to a large number of subsystem interfaces to define. Each interconnection is a potential interface for communication among subsystems. Simplification is the process of organizing subsystems so as to reduce the number of interconnections. Methods of simplification are: Clusters & Decoupling
Simplification
Cluster Method
Clusters of subsystems are established which interact with each other, then a single interface path is defined from the cluster to other subsystems or clusters of subsystems. For Example: A database assessed by many programs, but the interconnection is through a database management interface.
Decoupling Method
If two different subsystems are connected very tightly, very close coordination & timing between them is required. Because, they are somewhat independent, it is difficult to make them operate completely in synchronized fashion. The solution is to decouple or loosen the connection so that the two systems can operate in the short run with some measures of independence. Some means of decoupling are:
o Inventories, buffer or waiting line o Slack & flexible resources & o Standards
Means of Decoupling
The MIS concept comprises three interrelated and interdependent key elements: management, system and information (Murdick and Ross, 1975).
The basic requirements during the planning process of most importance in designing and implementing an MIS for an organization are (Kumar, 1989):
providing the information required by the planner at each step of planning; establishing procedures for obtaining the information; arranging for storage of the approved plans, as these will provide the information requisite to monitoring and controlling; and evolving methods for communicating the plans to employees in the organization.
MIS Elements
Management functions
Planning Controlling Decision making Information system Management information
Steps in Planning
1. Selecting objectives 2. Identifying activities required to achieve the stipulated objectives 3. Describing the resources or skills, or both, necessary to perform the activities 4. Defining the duration of each activity to be undertaken 5. Determining the sequence of the activities
Controlling
Controlling involves 1. Establishing standards of performance in order to reach the objective 2. Measuring actual performance against the set standards 3. Correcting deviations to ensure that actions remain on course Requirements for Controlling 1. Defining expectations in terms of information attributes 2. Developing the logic for reporting deviations to all levels of management prior to the actual occurrence of the deviation
Decision Making
Levels of decision making Strategic Tactical Technical Elements of Decision Making Model Constraints Optimization
Decision Making
Decision making is the process of selecting the most desirable or optimum alternative to solve a problem or achieve an objective. The quality and soundness of managerial decisions is largely contingent upon the information available to the decision-maker. Gorry and Scott Morton (1971) classified decision making on three levels of a continuum:
Strategic decisions are future-oriented because of uncertainty. They are part of the planning activity. Tactical decision making combines planning activities with controlling. It is for short-term activities and associated allocation of resources to them to achieve the objectives. Technical decision making is a process of ensuring efficient and effective implementation of specific tasks.
System
"A set of elements forming an activity or a procedure/scheme seeking a common goal or goals by operating on data and/or energy and/or matter in a time reference to yield information and/or energy and/or matter." Perceiving The System 1. 2. 3. 4. Some components, functions and processes performed by these various components Relationships among the components that uniquely bind them together into a conceptual assembly which is called a system An organizing principle which is an overall concept that gives it a purpose The fundamental approach of the system is the interrelationship of the sub-systems of the organization
Systems Approach
Modern management is based upon a systems approach to the organization. The systems approach views an organization as a set of interrelated sub-systems in which variables are mutually dependent. A system can be perceived as having:
some components, functions and the processes performed by these various components; relationships among the components that uniquely bind them together into a conceptual assembly which is called a system; and an organizing principle that gives it a purpose (Albrecht, 1983).
The organizing system has five basic parts, which are interdependent (Murdick and Ross, 1975). They are:
the individual; the formal and informal organization; patterns of behaviour arising out of role demands of the organization; the role perception of the individuals; and the physical environment in which individuals work.
The interrelationship of the sub-systems within an organization is fundamental to the systems approach. The different components of the organization have to operate in a coordinated manner to attain common organizational goals. This results in synergic effects. The term synergy means that when different sub-systems work together they tend to be more efficient than if they work in isolation (Murdick and Ross, 1975). Thus, the output of a system with well integrated sub-systems would be much more than the sum of the outputs of the independent sub-systems working in isolation. The systems approach provides a total view of the organization. It enables analysis of an organization in a scientific manner, so that operating management systems can be developed and an appropriate MIS designed (Murdick and Ross, 1975).
By providing the required information, an MIS can help interrelate, coordinate and integrate different sub-systems within an organization, thus facilitating and increasing coordinated working of the sub-systems, with consequent synergism. The interaction between different components of the organization depends upon integration, communication and decision making. Together they create a linking process in the organization. Integration ensures that different sub-systems work towards the common goal. Coordination and integration are useful controlling mechanisms which ensure smooth functioning in the organization, particularly as organizations become large and increasingly complex. As organizations face environmental complexity, diversity and change, they need more and more internal differentiation, and specialization becomes complex and diverse. The need for integration also increases as structural dimensions increase. Communication integrates different sub-systems (specialized units) at different levels in an organization. It is thus a basic element of the organizational structure necessary for achieving the organization's goals.
Davis and Olson (1984) analysed the implications of different characteristics of the organizational structure on the design of information systems.
Concept Hierarchy of authority Specialization Formalization Centralization Modification of basic model Information model of organization Organizational culture Organizational power
Organizational growth Goal displacement Organizational learning Project model of organizational change Case for stable system Systems that promote organizational change Organizations as sociotechnical systems
Implications for Information Systems A tall hierarchy with narrow span of control requires more formal control information at upper levels than a flat hierarchy with wide span of control. Information system applications have to fit the specialization of the organization. Information systems are a major method for increasing formalization. Information systems can be designed to suit any level of centralization. Information systems can be designed to support product or service organizations, project organizations, lateral relations and matrix organizations. Organizational mechanisms reduce the need for information processing and communication. Vertical information systems are an alternative to lateral relations. Information systems are used to coordinate lateral activities. Organizational culture affects information requirements and system acceptance. Organizational power affects organizational behaviour during information system planning, resource allocation and implementation. Computer systems can be an instrument of organizational power through access to information. The information system may need to change at different stages of growth. When identifying goals during requirements determination, care should be taken to avoid displaced goals. Suggests need for information system design for efficiency measures to promote single loop learning and effectiveness measures for double loop learning. Describes general concepts for managing change with information system projects. Establish control over frequency of information system changes. Reporting critical change variables, organizational change, or relationships, and use of multiple channels in a semi-confusing system may be useful for promoting responses to a changing environment. Provides approach to requirements determination and job design when both social and technical considerations are involved.
Information
'A set of classified and interpreted data used in the decision making process" Information has also been defined as some tangible entity which serves to reduce uncertainty about future state or events In the context of different levels of decision making, information can be described as:
Source data inference and predictions drawn from the data value and choices (evaluation of inferences with regard to the objectives, and then choosing courses of action) action which involves a course of action
The value of management information lies in its content, form and timing of presentation
Conceptual Basis of MIS 1. Concepts of organization 2. Organizational theories, principles, structure, behaviour and processes such as communication, power and decision making 3. Motivation and leadership behaviour
Types of MIS
1. 2. 3. 4. Databank information system Predictive information system Decision making information system Decision taking information system
Types of MIS
MIS can be categorized (Mason, 1981) as follows: Databank information systems refer to creation of a database by classifying and storing data which might be potentially useful to the decision-maker. The information provided by the databank is merely suggestive. The decision-maker has to determine contextually the cause and effect relationships. MIS designs based on the databank information system are better suited for unstructured decisions. Predictive information systems provide source and data along with predictions and inferences. The decision-maker can also enquire as to 'what if a certain action is taken?' and whether the underlying assumptions are true. This type of MIS is useful for semi-structured decisions. Decision-making information systems provide expert advice to the decision-maker either in the form of a single recommended course of action or as criteria for choice, given the value system prevailing in the organization. The decision-maker has just to approve, disapprove or modify the recommendation. Decision-making information systems are suitable for structured decisions. Operations research and costeffectiveness studies are examples of decision-making information systems. Decision-taking information systems integrate predictive information and decision-making systems.
Process of MIS
The MIS implementation process (Table 3) involves a number of sequential steps (Murdick and Ross, 1975): 1. First establish management information needs and formulate broad systems objectives so as to delineate important decision areas (e.g., general management, financial management or human resources management). Within these decision areas there will be factors relevant to the management decision areas, e.g., general management will be concerned about its relationship with the managing board, institute-client relationships and information to be provided to the staff. This will then lead the design team to ask what information units will be needed to monitor the identified factors of concern. Positions or managers needing information for decision making will be identified. 2. Develop a general description of a possible MIS as a coarse design. This design will have to be further refined by more precise specifications. For efficient management of information processing, the MIS should be based on a few databases related to different sub-systems of the organization.
Process of MIS
1. Once the information units needed have been determined and a systems design developed, decide how information will be collected. Positions will be allocated responsibility for generating and packaging the information. 2. Develop a network showing information flows. 3. Test the system until it meets the operational requirements, considering the specifications stipulated for performance and the specified organizational constraints. 4. Re-check that all the critical data pertaining to various subsystems and for the organization as a whole are fully captured. Ensure that information is generated in a timely manner. 5. Monitor actual implementation of the MIS and its functioning from time to time.
1. Understand the organization 2. Analyse the information requirements of the organization 3. Plan overall strategy 4. Review 5. Preliminary analysis 6. Feasibility assessment 7. Detailed fact finding 8. Analysis 9. Design 10. Development 11. Cutover 12. Obtain conceptual schema 13. Recruit database administrator 14. Obtain logical schema 15. Create data dictionary 16. Obtain physical schema 17. Create database 18. Modify data dictionary 19. Develop sub-schemas 20. Modify database 21. Amend database
MIS Criteria
Strategies For Determining MIS Design Organization-chart approach Integrate-later approach Data-collection approach Database approach Top-down approach
This is further divided into functional areas as indicated in the figure hence this show that systems are built to serve different organisational interests.
Why Information Systems? Ask managers to describe their most important resources and they'll list a) Money b) Equipment c) Materials d) People It's very unusual for managers to consider information an important resource and yet it is. Importance of Information Technology
o o o o 1) Capital Management 2) Foundation of Doing Business 3) Productivity 4) Strategic Opportunity and advantage
A combination of information technology innovations and a changing domestic and global environment makes the role of IT in business even more important than a few years year ago. There are five factors to consider when assessing the growing impact of IT in business organisations.
o o o o o a) Internet growth and technology convergence b) Transformation of the business enterprise c) Growth of a globally connected economy d) Growth of knowledge and information based economies e) Emergence of the digital firm
Business Perspective of information Systems Business firms invest in information technology and systems because they provide real economic value to the business. The decision to build /maintain an information system assumes that the returns on this investment will be superior to other investments in buildings, machines or other assets. These superior returns will be expressed as increase in productivity, increase in revenues or perhaps a superior long term strategic positioning of the firm in certain markets.
Dimensions of Information Systems There are three dimensions of information systems namely
a) Organisation b) Management c) Information technology
a) Organisation Information systems are an integral part of organisations. The key elements of an organisation are its :
(i) People (ii) Structure (iii) Business processes (iv) Politics (v) Culture
Organisations are composed of different levels and specialties. Their structures reveal a clear-cut division of labour. Experts are employed and trained for different functions. The major business functions or specialised tasks performed by business organisation consist of:
(i) Sales and marketing (ii) Manufacturing and production (iii) Finance and accounting (iv) Human resources
An organisation coordinates work through a structured hierarchy and through its business processes. The hierarchy arranges people in a pyramid structure of rising authority and responsibility. The upper levels of the hierarchy consist of
(i) Managerial (ii) Professionals (iii) Technical employees
The above mentioned components must be coordinated to provide the firm with a coherent IT infrastructure.
Standardisation of data collection Timely distribution Confidentiality of data Costs of collection and collation of data Data Requirements and Use in the Formulation of Management Plans Monitoring, control and surveillance Data Requirements and Use in the Determination of Management Actions and Monitoring Performance
Information Resources Management (IRM) is an emerging discipline that helps managers assess and exploit their information assets for business development. It draws on the techniques of information science (libraries) and information systems (IT related). It an important foundation for knowledge management, in that deals systematically with explicit knowledge. Knowledge centers often play an important part in introducing IRM into an organisation. The IRM Network has developed a model highlighting the five key activities for their effective IRM management:
Identification What information is there? How is it identified and coded? Ownership Who is responsible for different information entities and co-ordination? Cost and Value A basic model for making judgements on purchase and use Development Increasing its value or stimulating demand. Exploitation Proactive maximisation of value for money
Strategic - the information needs to support the implementation of business strategies; also the way that information itself can be a key lever of strategy (in terms of new product and service opportunities) Organisational - ownership, evaluation, fragmentation, isolation from processes, the politics of information Structural Integrating external and internal information, its categorisation, refining it from data into classified actionable 'chunks'. Systems User accessibility, interface to sources, multiple databases, retrieval, usability Human Processing capability, overload, incentives to share.
7. Mix hard/soft, internal/external. True patterns and insights emerge when internal and external data is juxtaposed, when hard data is evaluated against qualitative analysis. Tweak your MkIS system to do these comparisons. 8. Optimize your information purchases. You don't have to control purchasing, but most organisations do not know how much they are really spending on external information. By treating consultancy, market research, library expenses, report and databases as separate categories, many organisations are confusing media with content. 9. Introduce mining and refining processes. Good information management involves 'data mining', 'information refining' and 'knowledge editing'. You can use technology such as intelligent agents, to help, but ultimately subject matter experts are needed to repackage relevant material in a user friendly format. One useful technique is content analysis, whose methods have been developed by Trend Monitor International in their Information Refinery, and are used in our analysis services. The classifying, synthesising and refining of information combines the crafts of the information scientist, librarian, business analyst and market researcher/analyst. Yet many organisations do not integrate these disciplines. 10. Develop Appropriate Technological Systems Continual advances in technology increase the opportunities available for competitive advantage through effective information management. In particular, intranets, groupware and other collaborative technologies make it possible for more widespread sharing and collaborative use of information. Advances in text retrieval, document management and a host of other trends in knowledge management technologies have all created new opportunities for providers and users alike. 11. Exploit technology convergence. Telecommunications, office systems, publishing, documentation are converging. Exploit this convergence through open networking, using facilities such as the World Wide Web, not just for external information dissemination but for sharing information internally. 12. Encourage a Sharing Culture Information acquires value when turned into intelligence. Market Intelligence Systems (MkIS) are human expert-centred. Raw information needs interpretation, discussing and analysing teams of experts, offering different perspectives. This know-how sharing is a hall-mark of successful organisations.
IRM OUTLINE:
Information Resource (IRM) Concepts o Information Resource Management Defined o Managing Information as a Corporate Resource o Systems Systems-land vs. IRMIRM-land o The Problem - The "Disintegrated System Paradigm" Consequences of the "Dis-integrated System Paradigm" Trends in the Dis-Integrated Systems Environment Data Quality in Systemsland The Orthogonal Process/Data Conundrum o The IRM Goal Information Resource Categories and Management Objectives The Primacy of the Data Resource Trends in the IRM environment Data Quality in IRM-land o IRM Requires . . .
The Big Six Critical Success Factors for an IRM Environment o 1. Executive Leadership and Involvement Example CIO Charter Example Executive Information Steering Group Charter o 2. Formal IRM Infrastructure (Ground Rules/Controls) IR Framework IRM Policies IRM Standards IRM Method(s) IRM Tools
IRM OUTLINE:
o 3. Living ConceptualConceptual-Level Enterprise Information Resource Models Enterprise Functional Model Enterprise Organisational Model Enterprise Geographic Business Location Model Enterprise Conceptual Data Model Enterprise Conceptual Transaction Model Enterprise Conceptual Distribution Model Enterprise Conceptual Technology Model o 4. The Master Implementation/Migration Plan o 5. Effective IRM Organisational Structure and Transition Plan o 6. Appropriate Skill Base How to Transition from "Disintegrated SystemsSystems-land" to "IRM"IRM-land" o Businesses Change When . . . o IRM Step-by-Step Transition Plan o Evolutionary, Not Revolutionary Transition
IRM OUTLINE:
Information technology becomes a strategic asset when it makes the entire business adaptive and ready for change.
Across industries, IT budgets as a percentage of sales hover just below 4 percent. Information technology expenditures are a significant cost for most organizations. But many still struggle to effectively account for their return on IT investments, either in reduced costs or in differentiated value to their customers. One of the biggest problems in justifying IT budgets is the growth of the knowledge economy: Our economics remain rooted in Industrial Age terms. When the only framework is industrial economics, everything looks like a production line. The most common strategies for understanding and accepting IT investments include the competitive cost of doing business argument, followed quicklyand not surprisingly, given the previously stated positionby the attachment of technology to a process. There is nothing wrong with either approach, but neither helps IT managers connect spending to a business outcome in a tangible way. Information technology becomes a strategic asset when it makes the entire business adaptive and ready for change by connecting people, process, and information to drive results. How an organization measures the results of its technology investments is important, because the continuous improvement of any function requires a clear way to measure performance against goals. The strategic value of IT, therefore, becomes clearer when executives move away from Industrial Age metrics and toward a more holistic assessment of return on knowledge. In fact, better measurement of the return on IT investments can yield strong overall financial returns. Companies that excel at managing the value of their IT investments outpace their peers in overall financial performance, according to research by The Hackett Group. Essentially, Hackett says, companies that better manage the business value of ITincluding governance, portfolio management, and other IT management tacticshave 49 percent higher net profitability than their peer group. In addition, their return on equity and return on assets are higher
3.
4. 5.
6.
7.
8.
1990s: Re-engineering
o Working inward (business process reengineering)
2005 onwards:
o Working inwards, outwards and across to achieve competitive advantage o 2008: Putting IT in the forefront of business strategy
Conclusion
Many best practices evolved over the years, with respect to strategic use of IT
o Each required right resources and skills
Intranets and Web portals are ways to bring cohesion within flatter organizations Customer-centric business strategy leads to use of IT across organizational boundaries (supply chain) As IT continues to evolve, so does its strategic uses