1

Introduction to

Information Systems management & Business

Intelligence

Agenda

• BI - How do you align Business strategy and IT

for competitive advantage?

• Functional Areas and Business processes

• Strategic Information Systems

Stylianos Drakatos, PhD, PMP

Decision Sciences and Telecommunications professor at FIU

Senior partner with eTechnologies Associates

Basic BI Questions

• BI is a hot area in IT.

• Dashboard is an important element in BI.

• A BI system do

– Collecting, Correcting, Integrating, Sorting,

and Accessing

• An BI system has to be

– Accuracy, timeliness, usefulness.

• A Good UI Design can change people’s

perceptions and influence decisions

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Presentation content sources

• Content from my FIU/Barry and Intl. Courses

• Managing and Using IS: A strategic Approach, Keri

Pearlson & Carol Saunders

• Managing Issues of ERP, David L. Olson

• Concepts in ERP, Ellen Monk and Bert Wagner

• Information Technology for Management, Turban, et al.

• PMI South Florida Chapter

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Strategic Alignment Model

Business

Organization Information

Technology

Many CIOs are struggling in their quest of aligning IT with the corporate business strategies, objectives,

metrics and culture. CIOs need to become more involved in the development of strategic initiatives and

build an understanding of the corporate and line of business missions and goals if they seek to align IT with

the corporate directions. Moreover, CIOs need to interpret that knowledge into a flexible IT strategy if the

alignment is to succeed long-term.

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Business

Objective

Strategic

Imperative

Business

Initiative

Technology

Initiative

IT Project

Business

Initiative

Technology

Initiative

Technology

Initiative

Technology

Initiative

IT Project

IT Project

IT Project

IT Project

IT Project

IT Project

IT Project

Strategic

Imperative

Business

Initiative

Technology

Initiative

IT Project

Business

Initiative

Technology

Initiative

Technology

Initiative

Technology

Initiative

IT Project

IT Project

IT Project

IT Project

IT Project

IT Project

IT Project

Strategic Alignment – Aligning IT Projects with

Business Objectives

Establish customer intimacy through

direct relationships with the end users

Establish & build

direct customer

relationships to collect

customer data from

sale to service

Common customer

databases are required

for centralized reporting

and analysis

Establish a master

customer database

Select and implement a

CRM system

Innovative customer solutions & services

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Business Strategy (Understanding business strategy means asnwering the following questions:)

• What are the business goals or objectives

(the Vision)?

• What is the plan for achieving it?

(the Strategy)

• What is the role of IS in this plan?

• Who are the crucial competitors and partner?

What is required of a succesful player in this

value net?

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• What are the important structures and reporting

relationships within the organization?

• Who holds the decision rights to critical decisions?

• What are the characteristics, experiences, and skill

levels of the people within the organization?

• What are the key business processes?

• What is the culture of the organization?

Organization Strategy (Understanding organizational strategy means asnwering the following questions:)

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Key Functions of Today’s IT Organization

• Business Service Management

• IT Asset Management

• IT Portfolio Management

• Enterprise Architecture

• Project Governance

• Project Management and Program

Management

• IT Security Management

• IT Service Management

• Business Technology Optimization

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Information System Hierarchy

• Information systems are comprised of three

main elements:

– IT Technology

– People

– Process

• IT Technology components – (Hardware,

Software), (Data Management, Networking).

• Architecture – strategy implicit in these

components. (i.e., centralized, client-server)

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Data Information Knowledge

Definition Simple Observations

of the sate of the

world

Data endowed with

relevance and

purpose

Info from the

human mind

(includes

reflection, etc)

Characteristic •Easily structured

• “ captured

• “ transferred

•Often quantified

•Mere facts

•Requires unit of

analysis

•Data that has

been processed

•Human mediation

necessary

•Hard to structure

•Difficult to

capture on

machines

•Often tacit

•Hard to transfer

Example Daily inventory

reports of all

inventory items sent

to CEO of large

manufacturing

company

Daily inventory

report of items

below economic

order quality levels

sent to inventory

manager (IM)

IM knows which

items need to be

reordered in light

of related potential

problems

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Applications Architectures (Centralized, Three Tiers and Peer-to-Peer)

Database

Application

LogicData Storage

Presentation

Input/Output

of data to

users

Access to

DB to

Read/Write

data

Central DB

(stores all data and

application

programs)

DatabaseDatabase

Application

LogicData Storage

Presentation

Input/Output

of data to

users

Access to

DB to

Read/Write

data

Central DB

(stores all data and

application

programs)The three tiers distributed processing architecture

based on client-server technologies

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Agenda

• How do you align strategy and IT for competitive

advantage?

• Functional Areas and Business processes

• Strategic Information Systems

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Functional Areas of Operation

• Most companies have four main functional areas:

– Marketing and Sales (M/S)

– Supply Chain Management (SCM)

– Accounting and Finance (A/F)

– Human Resources (HR)

• Each main functional area consists of a number of

narrower business functions specific to the

functional area.

• Historically, businesses have organized themselves

according to business functions.

• Business Schools continue to be similarly

organized.

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Functional Areas of Operation

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Functional View • Functional View of the business

– Based on the functions people perform.

– Information flows vertically in the organization.

– Sometimes information flows across the organization.

– Accounting, Operations, Marketing, Sales and Support.

– Executive Management receives the information and distributes as need arrives.

– See Figure I.5

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Figure I.5 Hierarchical View of the firm.

The Functional View of Business

Burst mode communication mode instead of online

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Business Processes • A business process is a collection of activities that

takes one or more inputs and creates an output that

is of value to the customer

• The customer may be the traditional external

customer who buys the product or service, or an

internal customer (a colleague in another

department)

The business process view is the customer’s

perspective.

• The customer does not care that different functions

are involved in processing their order, and will not

tolerate mistakes and delays caused by poor

coordination of business functions

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Process View of Business

Sa

les

Fu

nc

tio

n

Ac

co

un

tin

g

Fu

nc

tio

n

Pu

rch

as

ing

Fu

ncti

on

Pro

du

cti

on

Fu

nc

tio

n

Lo

gis

tic

s

Fu

nc

tio

n

Material Order Process

Customer Order Process

Online mode of communications – a number of platforms integration

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The Value System

• These Internet-based EDI systems offer strategic benefits

– Faster business cycle (PO to Receiving)

– Automation of business procedures (Automated Replenishment)

– Reduced operational costs

– Greater advantage in a fierce competitive environment

A firm’s value chain is part of a larger stream of

activities, which Porter calls a value system. A value

system includes the suppliers that provide the inputs

necessary to the firm and their value chains. This also is

the basis for the supply chain management concept.

Many of these alliances (Strategic Alliances) and

business partnerships are based on Internet connectivity

(Inter-organizational information systems (IOSs))

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The Value Chain

• Primary activities are those activities in which materials are purchased, processed into products, and delivered to customers. Each adds value to the product or service hence the value chain.

– Inbound logistics (inputs)

– Operations (manufacturing and testing)

– Outbound logistics (storage and distribution)

– Marketing and sales

– Service

According to the value chain model (Porter, 1985), the activities

conducted in any organization can be divided into two parts: primary

activities and support activities.

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The Value Chain (Continued)

• Unlike the primary activities, which directly add value to the product or service, the support activities are operations that support the creation of value (primary activities)

– The firm’s infrastructure (accounting, finance, management)

– Human resources management

– Technology development (R&D)

– Procurement

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The Value Chain (Continued)

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E-commerce and Industry Value

Chains

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Agenda

• How do you align strategy and IT for competitive

advantage?

• Functional Areas and Business processes

• Strategic Information Systems

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Integration of Business Functions

• Sharing data efficiently and effectively

within and between functional areas leads to

more efficient business processes

• Integrated Information systems that share

data between functional areas are called

Strategic Information Systems or Strategic

Applications Systems

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Sustaining a Strategic

Information System (SIS)

• These Internet-based EDI systems offer strategic benefits.

Strategic information systems are designed to establish a

profitable and sustainable position against the

competitive forces in an industry. Due to advances in

systems development it has become increasingly difficult

to sustain an advantage for an extended period.

Experience also indicates that information systems, by

themselves, can rarely provide a sustainable competitive

advantage. Therefore, the major problem that companies

now face is how to sustain their competitive advantage.

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ERP Overview

• Enterprise Resource Planning (ERP) programs are

software (SIS) used by companies to manage

information in every area of the business.

• ERP programs help manage company-wide

business processes using a common database and

shared management reporting tools.

• ERP software supports the efficient operation of

business processes by integrating activities

throughout a business.

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C O N T R O L L I N G

R E S O U R C E S

Purchasing

Manufacturing

Sales/Distribution

Procurement

market

Sales

market

Balance sheet Finance Capital Costs

Machines Operating resources Human resources

SAP R/3 Integration

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SAP R/3 Integration

R/3

Client Server

FI

CO

AM

PS

WF

IS

MM

HR

SD

PP

QM

PM

BPPs shared

across

application

modules

Business Process Procedures

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Questions

Class Logistics

About professor

• Education Background

• Work experiences

• Current Project

• Communication Methods

About yourself

• Briefly tell us the following in class

– Name

– Career plan for the next five years.

– The dream of your life

Form your project Group

• Every Group should have 3-4 members.

• The best group composition should have

members from diverse background.

• First deliverable: You need to give us a short

presentation making the business case for

your project.

Collaboration Methods

• Social Network?

• Wiki?

• Blog?

• Blackboard only?