TEACHER: Good morning, students. What do you know of information technology (IT)?
STUDENT: Yes, I know that most software is full of bugs! By the way, why these errors in the programs called “bugs”?
TEACHER: There are computer bugs have been disturbances in a 1945 Mark II were (jokingly) to catch a moth in a relay blamed. Today the term refers to an incorrect programming commands do not execute the desired result. But I am sure you must know more than the fact that the programs have received!
STUDENT: I recently read an interesting article written by John Diebold years. I quote him:
“… Information technology is increasingly the key to national economic prosperity, which affects virtually all industries and services. It would be difficult for a company that does not depend on the use of names Effective information: design of products and services, monitor and respond to market demands or make informed decisions. Information technology will change the world in a lasting and deeper than any other technology ever seen before in the history and transformation of the civilization of the game. ”
TEACHER: Interesting. There is no doubt that information technology is currently one of the main forces that have the potential to affect a number of organizations in fundamental ways.
The impact of information technology on the company was enormous and will increase substantially.
There is no doubt that the transfer is pending from an industrial economy to an economy based on service information, and no one knows when the process is slow.
Essentially, the extent and dimensions of the conventional time, space and mass constraints are no longer on the products of the information age. In contrast to the standardized product for the mass market of the industrial age created the electronic delivery of banking services, for example, is immaterial, regardless of the order and service offers immediate, and not by physical location-Bank.
STUDENTS: Online courses are a good example AmbaiU! Students from around the world have instant access to the tutorials. The dramatic growth of Internet services WWW is of course an important factor for the growth of computer science in general.
TEACHER: true. Environmental trends such as globalization and international competition are accelerating the movement towards increased use of IT by companies. The requirements of the global coordination of the activities and the need to respond quickly to threats of global competition, the importance of IT in the current economic environment highlighted. dramatic technological developments in hardware, software, databases, and telecommunications pushed while continuing the use of IT.
STUDENT: Yes, the sky is the limit for IT?
TEACHER: Not exactly. At the same time, several factors for the rapid deployment of information technology to speak. Among them are still weak development of appropriate software to justify long-standing difficulties in quantifying the benefits of information technology (IT to the investment), issues of integration of databases and the lack of standards (for the purpose of inter- organizational connection).
STUDENT: I also think that it is “over-investment” in IT over the last decade of the 20th Century. Century and early 21st Century. And what’s with the computer and strategic management?
Teachers. Certainly we are concerned especially about the likely impact of information technology on the practice of strategic management. The reason for adopting such a perspective reflects the fundamental belief that, the information is potentially on the basis of a company: Choices products, markets and technologies (the amount of business strategy), and competitive methods within each product market segments (the level of business strategy).
STUDENT: I suspect that, therefore, the role of information technology is becoming more widely than those of traditional information systems (IS) function and becomes a matter of general management and challenge.
TEACHER: Good observation. We examine three links connecting three important concepts of strategic management (SM) information technology (IT) systems and information management (IS) function.
* Link 1: Management Information Systems with Information Technology
In the traditional view, is a service (such as accounting, human resources or labor relations), which is responsible for efficient data processing and administration of management reporting and control. After points are systems to meet the information needs of various management functions and are equipped with standard methods for assessing information. The result are systems based on criteria such as speed and quality evaluation format reflects reliability, the technical capacity of the system. The implication is that the role of information technology in the first place as the fundamental technology of the SIM function.
Therefore, the most important characteristics of this link hardware and software support for information architecture and design flexibility to support minor changes in reporting requirements or respond to rapidly changing basic techniques of the system hardware.
The level of strategic planning, which has its unstructured nature of the decision-making, only minimal support from the traditional concept and definition of the tasks given to the SI.
Link 2: Strategic Management of Information Systems
The description of a link reflects a view that the Charter of the IS function directly from the Resource Assessment information derived and had no explicit links to the strategic decisions relating to the business and enterprise. This view was representative of the situation until the late 1960s and early 1970s when the need to adjust, the design of MIS requirements of the organizational realities strategic gains. In 1968, McKinsey & Co. published a report entitled Unlocking the potential gains that called for a formal link between the design and implementation of MIS and business strategies and objectives of the computer. This publication has prompted managers, the role of IT in business organizations such as something that is beyond the computing resource at the operational level of the organization and more than one mechanism for the visualization of their strategy.
STUDENT proposed: Even before the McKinsey report, William King, that the “strategy set (consisting of IS strategies and objectives is the design constraints) have come to define the strategy of the organization” (composed of mission organization, goals and strategies).
TEACHER: You are a student read well, yes!
Students: We remember that I am an “IT have a family.” And I keep hearing a complaint from my family IT: While there are concerns in the discipline of MIS MIS to ensure that in accordance with the strategic business relationship designed, the link is in the other sense of the strategic environment of the enterprise GIS still largely ignored.
PROFESSOR: Yes, but that is changing fast. In addition, several authors draw attention to the possible use of information and information systems strategic advantages. When William King commented in an editorial comment in the systems of information management — quarterly information (and is) the potential to be a primary source of (competitive) advantage in the market not only as a resource to effectively or manage a service that is regularly switched on and off as needed.
STUDENT: Can one then assume that many see the connection between strategic management and is now a two-way, a common bond, which the beneficiary has a strategic role for the IF function as well?
Teacher: Yes, and it was time. In a move to go through a strategic mission, goals and tasks of the IT systems management function is a fundamental change. The systems are superior to no more than in relation to information for business decisions, but rather in terms of the strategic objectives of the organization, namely the realization of the competitive market.
The IT systems of a charter for the competitive superiority is called “information system” and differentiated from the MIS more operationally oriented. In fact, MIS has traditionally been concerned with the tax systems of structured operational decisions relative, based on currently available information, internal data. In contrast, strategic IT systems are designed to support the relatively unstructured decisions, particularly the closely related activities of the marketplace.
STUDENT: I heard that such decisions usually require a combination of internal and external data: neither well structured nor completely specified.
TEACHER: Exactly. Even if a perfect line between information systems management and strategic IT systems do not always, the conceptual distinction is important enough to be recognized as the conceptual differentiation between strategic and operational.
Let me give some examples of strategic information for use in real companies:
American Airlines SABRE reservation system in most travel agents for booking airline, hotel and car rental bookings installed.
American Hospital Supply Co.: ASAP order entry system in more than 4,500 medical facilities to order supplies online installed. The system can support various network systems
Extensive use of ATMs and Citicorp Global Transaction Network. Several systems that support their strategies for electronic banking.
McKesson Corp. Economost order entry system supports customers with inventory control and sales analysis.
United Airlines, Apollo Travel Agency booking system installed in 7700 rose by more than one service branches.
Students, do you think of the specific objectives of these were made is in?
STUDENT: Yes, I am sure, American Airlines SABRE provides critical data with performance that can be used for strategic decisions, travel agents are probably connected SABRE book than many other U.S. airlines.
PROFESSOR: Yes, some to the point that the U.S. government intervened and put a limit on the inclination to promote SABRE AA!
strategic IT systems in order to achieve its objectives through various mechanisms, but two deserve special attention. These are: (1) The restructuring of the information flow within an organization to offer competitive advantages over competitors and / or (2) development of inter-organizational systems that extend beyond the traditional boundaries of a single central point.
STUDENTS: Are close these methods are mutually exclusive?
TEACHER: No, but we will discuss independent.
Reconfiguration of information flows
Take the case of an airline that uses the data in time to increase their workload, perhaps the most important factor for success in the airline industry. In developing a strategic information system, not only to continuously collect data on flight bookings, but also the actual sales to compare against historical trends, the airline’s own ticket free agents (and agencies), the number of places available at discount a particular flight on the current status of bookings is based in advance.
STUDENTS: I also assume that similar benefits can a hotel, where flow is a determinant of competitiveness performance of the occupancy rate.
TEACHER: Correct. And the basic idea of the timeliness of the information in the context of the service sector can be extended to manufacturing. Take the case of an oil company to communicate in a position to directly and immediately with the dealers, the oil price change to a minimum delay between sets in the seat and to ensure its implementation in the stores.
STUDENT: But these figures do not affect the basic decision of Strategic Affairs.
Teachers. Correct. However, implementation of these decisions in the hierarchy of the organization and channels through the use of IT is simplified, which policy to better results.
Inter inter-organizational systems applications show the potential to achieve success in the competition, which expands on the organization of intra-information to provide information and to use-based compounds with different players on the market.
Student: Your use of relatively complex sentences today! In simple terms what to tell you that an information system, inter-organizational policy, a system that you want to connect beyond the boundaries of a single, central location several organizations.
PROFESSOR: I’m glad you understand! The potential todevelop such links (and its benefits in order to obtain a competitive advantage) is perhaps the most important reason for the increased attention to IT systems from a perspective of strategic management.
The railway industry, one of the highest levels of the “penetration” of the electronic data interchange (EDI) shows, among all industries, use of multiple levels of inter-organizational systems. And relatively new industries such as courier (FedEx, UPS, etc.) are good examples.
Let me also mention the McKesson Drug Company. The McKesson case is often cited as one of the most successful business transformation capabilities with the help of information technology. McKesson is a U.S. national drug-dealer who receives almost 100 percent of its orders electronically from pharmacies Economost through their systems. A customer orders by a single pass through the store with an input device for manual control of the input a product ID or by using a barcode scanner. Reorder quantities are on the shelf tags. If the entire order was completed, it will be delivered to the processing of data.
McKesson benefits clearly achieved operational efficiency to improve profitability. Although the company does not appear to share against its competitors to gain significant strategic advantage leading distributor in sales and market share gains against its strong competition has made. The system has also produced “increased binding of McKesson customers, which is a substantial advantage strategically. In addition, McKesson offers a range of other services are based on data collected from the order entry system.
The company also provides other specialized health care companies in the strategic systems. The following message is a good example:
In May 2003, McKesson Corporation announced that Liberty Health has in Jersey City, NJ signed an eight-year, $ 47,000,000 agreement for products and services designed to transform the use of clinical data in support of patient care in the system of three hospitals. Liberty Health commissioned McKesson Horizon Clinicals (TM) Suite (programs) to improve the safety of patients receiving medication errors and increasing patient referrals by physicians and other caregivers with better access to information.
“We have an opportunity of a lifetime to support the use of IT for patient care and improve the quality of how we invent new hospital to open our new,” said Dr. Jonathan Metsch, president and CEO of Liberty Health. “To create the best environment of care is a fact that we deliver the latest medical equipment. But just as importantly, we offer the most advanced clinical solutions, our 900 physicians and nurses, as they offer to support health care to this community of 600,000 people. Therefore, we are with McKesson have joined forces – we have super advanced clinical applications. ”
Link 3: Strategic Management of Information Technology
In recent years, several powerful new forces in the force and the technical environment of a market, the connection between strategic management and information technology in relation to the fundamental role she played in influence to recognize the development of a business strategy, rather than support its implementation.
The potential of new modes of competition and new products and services made possible by IT managers with a very different range of opportunities and risks. Given the general explosion of computing power and communications capabilities (voice and integrated data, Internet), may be many new business applications (and were) to improve in those areas that directly developed effectiveness and efficiency of the market.
For example, the strategy of the Merrill Lynch Merrill Lynch shows the potential of information technologies to provide superior substitutes (or services) and the development, how to change the definition and scope of business activities. The introduction of the cash management account (CMA) of Merrill Lynch is a revolution in terms of the new concept of financial services in a market that was dominated by traditional banks. The new business concept has been around the integration of the various financial instruments under one roof, so that the individual investor in the position to the comfort of the transfer through it and enjoy being built as “float” that banks traditionally enjoyed. This account allows the integration of four basic services to investors: (1) automatic investment and cash dividends in the money market account, (2) credit by a standard margin account, (3) cash, check or debit card, and (4) investment advice in the management and the diversification of the account.
The strategy could not be realized without the use of information technology, as they show every day to swap through the different accounts, credit card charges, checks, securities and deposits develop and update a daily credit limit for each account holder. This operation of complex information processing is not by chance on the concept of the enterprise, but crucial to the design and operation. The importance of IT in this strategy, it is perhaps best by the fact that Merrill Lynch received a patent for the system of cash management account selected. The annual fee for this product Merrill Lynch generated quite important.
Although several variants (circurnventing patent protection), this basic concept have emerged in recent years, no one has voted so far for the success of the products of Merrill Lynch.
Other companies that the information used to break to the traditional boundaries of industry in the service sector Sears are now an international provider of financial services, Citicorp, now an investment and real estate agency and a bank, and American Express, always strong in the travel industry , a piece does in banking, insurance, securities and also a supermarket and financial information has become. In fact, the entire industry because of the parallel forces is converted, but related, deregulation and technology.
