Strategic Management of Information Systems

Why MIS is the Most Important Business Class

Why is the introduction to Management Information Systems (MIS) the most important class in business school? Consider these fundamental laws of technology:

• Nielsen's Law: Internet connectivity increases over the years.
• Bell's Law: Electronic devices become smaller over the years.
• Moore's Law: The price per 100,000 transistors becomes lower over the years (Pic2).

MIS Job Demand and Security

Why are MIS-related jobs in high demand? They have been the fastest-growing jobs over the past 20 years, as product and service innovation is made easier through technology. MIS affects everyone because technological change is accelerating. For example, Bell's Law impacts businesses; a company could go bankrupt quickly if technology changes and they fail to adapt, as seen with Blockbuster.

To attain job security, one must understand how Moore's, Metcalfe's, and Kryder's Laws are driving data processing, storage, and communications costs to essentially zero. These create marketable skills (Pic1).

Types of Information Systems

• Transaction Processing Systems (TPS): Collect, modify, and retrieve transaction data.
• Management Information Systems (MIS): Convert TPS data into information for monitoring performance.
• Decision Support Systems (DSS): Support decision-making business activities.
• Expert Systems: Use a database of expert knowledge to offer advice or make decisions.
• Artificial Intelligence Systems (AI): Learn from past experience and perform human-like tasks.
• Executive Information Systems (EIS): Provide easy access to internal and external information relevant to organizational goals to support senior decision-making.

Components of an Information System

The components of an information system include: Hardware, software, data, procedures, and people. Information Management (IM) is the practice of managing Information Systems (IS), while IS serves as the backbone of all business.

Business Processes and Information Systems

Why does the Falcon Security team need to understand business processes? They must develop new or redesign existing business processes and possibly information systems to support a 3D printing facility. Business Process Modeling (BPM) helps organizations by providing a systematic way for business analysts to represent business processes using Process Symbols (Pic3).

Improving Process Quality and Automation

How can information systems improve process quality? For example, having two separate repositories is more likely to create process inefficiencies. Conversely, a single repository is less costly, generates fewer errors, and is just as effective. In this model, buyers and operations share a single, integrated repository of vendor data. Automation further improves quality by moving work from the human side to the computer side.

Defining Information and Data Quality

What is Information? It can be defined as:

1. Knowledge derived from data, where data is defined as recorded facts or figures.
2. Data presented in a meaningful context.
3. Processed data, or data processed by summing, ordering, averaging, grouping, comparing, or other similar methods.

Quality information requires specific data characteristics:

• Accurate: Correct and complete.
• Timely: Available in time for its intended use (e.g., a stock chart).
• Relevant: Both to the context and to the subject, depending on the goal and the person using it.
• Just Barely Sufficient: Sufficient for the purpose without excess information. The higher you rise into management, the more data you will be given, and the more data you will need to ignore. Good use of IS helps save time in getting useful information.
• Worth its Cost: There are costs for developing, operating, and maintaining IS; the investment in new data or systems must be justified.

Organizational Strategy and Competitive Advantage

How does organizational strategy determine information systems structure? The flow follows this path: Industry Structure > Competitive Strategy > Value Chains > Business Processes > Information Systems.

Porter's Five Forces

The industry structure is analyzed using Porter's Five Forces:

• Threat of new entrants
• Threat of substitutes
• Degree of rivalry
• Bargaining power of suppliers (Supplier power)
• Bargaining power of buyers (Buyer power)

Examples of these forces include:

• Strong forces: Toyota buying paint because they buy in large volumes; new car dealers because they control the true price of vehicles.
• Weak forces: A student versus university policy; farmers in a surplus year.

Value Chain and Competitive Advantage

Supporting activities in the Value Chain include: Technology, Procurement (採購), HR, and Firm Infrastructure. Information systems provide competitive advantage through:

• Product Implementations: 1. Create new products or services; 2. Enhance products or services.
• Process Implementations: 4. Lock in customers and buyers; 5. Lock in suppliers; 6. Raise barriers to market entry; 7. Establish alliances; 8. Reduce costs.

Database Management and Data Modeling

Software Applications and DBMS

• Horizontal-market application (Off-the-shelf/現成): Provide capabilities common across all organizations and industries.
• Vertical-market applications (Off-the-shelf then customized): Serve the needs of a specific industry.
• One-of-a-kind applications (Custom-developed): Developed for a specific, unique need.

The purpose of a database is to organize and keep track of different kinds of data. A Database Management System (DBMS) acts as the bridge between the database (tables, relationships, metadata) and the database application (forms, reports, queries, programs) used by users.

There are 4 DBMS operations: 1. Read, 2. Insert, 3. Modify, and 4. Delete data. Structured Query Language (SQL) is the international standard used by most popular DBMS. Database applications make databases more useful by being tailor-made for different purposes.

Entity-Relationship Data Model

The components of the Entity-Relationship (ER) Data Model include:

• Entities: Something users want to track (e.g., order, customer, salesperson, item, volunteer, donation).
• Attributes: Characteristics of an entity (e.g., order number, phone number).
• Identifier: Uniquely identifies one entity from another (e.g., student ID).

Relationships include:

• 1:N Relationship: One department can have many advisors, but an advisor belongs to only one department.
• N:M Relationship: An advisor can have many students, and a student can have many advisors.

The Entity-Relationship Diagram uses general notation (Pic3).

Database Design and Normalization

A database model is transformed into a design through Normalization. This is the process of converting poorly structured tables into two or more well-structured tables. The goal is to construct tables with data about a single theme or entity to minimize data integrity problems. Data integrity problems produce wrong and inconsistent information, causing users to lose confidence and creating a poor system reputation; these occur if data is duplicated.