MANAGEMENT INFORMATION SYSTEMS 8/E Raymond McLeod, Jr.

and George Schell

Chapter 2
Using Information Technology for Competitive Advantage

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Copyright 2001, Prentice-Hall, Inc.

What is a Firm?
s

Physical System
Closed-loop Controlled by management Uses feedback to ensure objectives met Open because of environmental interaction

Managed through use of a conceptual system

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Importance of Environment
Very reason for a firms existence s Firm takes resources from environment, transforms them, and returns goods and services to environment
s

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The Firms Environment

Society

Financial Community

Government

Global Community

Suppliers Labor unions

The Firm
Stockholders or owners

Customers

Competitors
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The Firm Is Connected to Its Environment by Resource Flows

Physical and conceptual s Some flows are major s Some should not occur at all s All resources that enter the firm from the environment eventually return to the environment
s
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Competitive Advantage
s

Computer field perspective

Use of information to gain leverage in marketplace Relies on more than physical resources

Addressed with strategic objectives

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A Value Chain
Firm Infrastructure
n rgi Ma

Support Activities

Human resource management Technology development Procurement

Primary Activities
Source : Michael E. Porter

Ma rgin
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Inbound Operations Outbound Marketing and logistics logistics sales

Service

A Value System

Supplier value chains

Firm value chain

Channel value chains

Buyer value chains

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Source : Michael E. Porter

The Information Resources

Two views of information management
1. Manage data by implementing computerbased database management systems (DBMS) 2. Manage resources that produce the information
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The Information Resources

Hardware

Software

Database

Information Specialists Users

Information

Facilities

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The Information Resource Manager -- the CIO

Chief Information Officer (CIO) is not simply a title, but role s Manager of information services s Contributes managerial skills
s

Solves information resources problems Solves problems in other areas of firms operations
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The CIO Attitude

The business is what counts s Build partnerships/ties with the rest of the firm s Improve basic business processes s Communicate in business terms, not IS jargon s Provide reliable IS services s Be positive, not defensive
s

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Strategic Planning
s

Long-range planning
Intends to give firm most favorable position in its environment Specifies strategies for achieving objectives

Need for each business area to create its own strategic plan

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The Functional Areas Should Cooperate in Developing Their Strategic Plans

Strategic planning for information resources Strategic planning for marketing resources Strategic planning for manufacturing resources Strategic planning for financial resources Strategic planning for human resources

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Strategy Set Transformation

Organizational strategy set
Mission Objectives Strategy Other strategic organizational attributes MIS strategic planning process

MIS strategy set

System objectives System constraints System design strategies
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Strategy Set Transformation: Basic Flaw

s

Business areas do not always have the resources to ensure accomplishment of strategic objectives

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SPIR
Strategy set transformation; support the firms objectives s Strategic planning for information resources (SPIR) develops firm and IS strategic plans concurrently
s

SPIR content 1. What is to be achieved 2. What will be required

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Strategic Planning for Information Resources

Influence on Information Resources

Business strategy
Influence on Business Strategy

Information resources and IS strategy

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Strategic Plan Framework for Information Resources

Strategic Plan for Information Resources

AIS Objectives

MIS Objectives

DSS Objectives

Virtual Office Objectives Required Information Resources

Knowledgebased systems Objectives

Required Information Resources

Required Information Resources

Required Information Resources

Required Information Resources

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The Strategic Implications of EndUser Computing (EUC)

s

Levels of end users in terms of capabilities

menu-level end users command-level end users end-user programmers functional support personnel

EUC application considerations

shifts workload so that end-users and information specialists talents are better used
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EUC Risks
Poorly aimed systems s Poorly designed/ documented systems s Inefficient use of information resources s Loss of data integrity s Loss of security s Loss of control
s
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Information Resources Management (IRM) Concept

Realization that firms information resources go far beyond the information itself s Activity pursued by managers at all levels s Identifying, acquiring, and managing information resources needed to satisfy information needs
s
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IRM - Required Elements

A recognition that competitive advantage can be achieved by means of superior information resources s A recognition that information services is a major functional area s A recognition that the CIO is a top-level executive
s
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IRM-Required Ingredients (cont.)

A consideration of the firms information resources when engaging in strategic planning s A formal strategic plan for information resources s A strategy for stimulating and managing end-user computing
s
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The environment of the firm

ENVIRONMENTAL INFLUENCES

The IRM Model

The firms executives

CIO
Internal influences
Information services Finance Human resources

Other executives
Firms strategic plan
Manufacturing Marketing

FUNCTIONAL AREAS INFORMATION RESOURCES

Central computing resources Disbursed computing resources

DATA AND INFORMATION

Users engaged in end-user computing Other users
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IRM Model: Firm Environment

Provides setting for achieving competitive advantage s Executives are aware of need to manage resource flows to meet needs of environmental elements
s

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IRM Model: Firms Executives

Includes CIO s Guides firm toward objectives s Key activity is strategic planning
s

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IRM Model: Business Areas

Information services is a major business area s Each area develops own strategic plans s One business area strategic plan is for information resources
s

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IRM Model: Information Resources

Strategic plan for information resources details acquisition and management s Information resources
s

Centralized Dispersed throughout firm

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IRM Model: Users

Details data and information flows between resources and users s Some users engage in end-user computing
s

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Summary
Environment of a firm consists of eight elements s Firms attempt to achieve competitive advantage
s

Margin - value of products and services over cost Value chain

s

Information resources
Hardware, software, facilities, database, information specialists, information, and users
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Summary [cont.]
s

Executives perform strategic planning

SPIR

All firms managers need to engage in IRM

Recent revelation Integrating concept

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