Chapter 15 Summary: Managing Global Systems

As we are all aware, global business has increased over the last several years and through the use of international information technology, companies can now design part of a product in one country, engineer it in another, manufacture it in a different country on the other side of the globe, and lastly sell it to whatever countries will buy the product. But first, a framework must be constructed and it’s called the international information systems architecture. This simply means understanding the key information your company needs to conduct global trade or business. The flow begins with your business drivers and challenges to corporate global strategies, organization structure, management and business processes and lastly, technology platform. Once the company knows each piece of the flow chart, then you will be able to choose the right technology platform to meet your needs for global business.

Just thinking of the hundreds of different software applications and hardware we have at my employer is a chore to keep up with. Imagine the mixture of hardware, software, and telecommunications you would have across the globe, even within one company. Many systems won’t be compatible with others and one laptop in the US will vary greatly from a laptop in Africa. Companies need to recognize these challenges and agree on common user requirements and coordinate applications and software development in an effort to manage the global IT systems. Also, updating and improving key business processes can help.

In addition to the basic challenges of different hardware and software, there are also cultural, political, religious, and language diversities that can affect global systems. These factors should be kept in mind when designing a global IT system. Also, a company needs to decide if they will build their own global network or use a virtual or Internet network to support their global IT system. Implementing an incredibly in depth and detailed global system is overall a huge undertaking and can be met with many challenges but in the end, an effective global IT system can take a mediocre company and change it into a global success.

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010.

Chapter 14 Summary: Managing Projects

           Managing projects is a very important piece of implementing or improving information systems. How well a company manages their IT projects will be a direct impact on the bottom line and a result of the effectiveness of the information technology system. It is very costly and risky for any company to invest in a new IT undertaking and if the project is not managed correctly, the system may not do what it was intended to do. A failed or poorly managed project can also result in increased costs and time, lack of technical performance, and the system not meeting the pre-conceived standards.

            The text defines a project as, “a planned series of related activities for achieving a specific business objective. Information systems projects include the development of new information systems, enhancement of existing systems, or upgrade or replacement of the firm’s information technology infrastructure.” Project management is refers to, “the application of knowledge skills, tools, and techniques to achieve specific targets within specified budget and time constraints.” (Laudon 530).

            My first personal experience with project management and IT systems occurred in the last year at my job at Chesapeake Energy. I’ve never experienced an IT department so large with different business areas of expertise. My department has our own IT team to help us with all of our needs. The project manager, Dax, first identified all of the key players for the idea to develop a new database tool that would allow us to easily set up partners for well reporting access as well as streamline current processes. He met with the management for each of the key areas to identify their needs and how they were using the current system, which consists of varying excel spreadsheets that were often not sent to everyone they needed to be included.

Then, Dax called together a meeting to discuss the idea and asked for approval to go forward. He began working on a template example and the workflow of the new application. He once again met with everyone involved and asked how the app would help them or potential issues they foresaw. After this process, he revised the example and had another large group meeting. Then, he developed the different phases of implementation for the app and what would be added during each phase. The group met together again, gave approval, and the app was given a month for testing from the key users. Another version of the app was updated and after final approval, went live. The entire process took just over a year and all of the meetings were annoying at times but necessary to the final product.

This is a great first-hand experience at effective project management and the importance of doing it right the first time. The app has proven very effective and since then, Dax has been promoted. As long as project managers keep in mind the major variables of scope, time, cost, quality, and risk, they will effectively implement an information technology project.

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010. 

Chapter 13 Summary: Building Information Systems

As the text has previously mentioned in early chapters, information systems are more than just the technology and new software that is installed for a company. Information systems encompass the business plans, new hardware, and jobs associated with the information systems. New information systems are a major undertaking for any company, large or small. They bring about incredible organizational change. There are four types of structural organization enabled changes: automation, rationalization, business process redesign, and paradigm shifts.

The most common form is automation and this simply means to automate or refine processes to be more efficient. An example could be replacing several data entry clerks with an information system database that automatically inputs the data and eliminates the need for the data entry clerks. Automation is low risk investment and can usually yield good results for a company to speed up processes and eradicates expensive payroll and employee costs.

The second type of IT-enabled organization change is rationalization of procedures. This type of change is similar to automation in that it simplifies business processes but it also finds loopholes or problems with processes and procedures and finds ways to improve workflow. Rationalization also takes into account total quality management in an effort for a company to reach its full quality potential.

The third type of organization change is business process redesign. This is a complete overhaul of the business processes. It’s more complex than automation and eliminates any unnecessary work, paper, old or outdated technology, jobs, etc.  A redesign has higher risk but usually results in a higher return on investment. An example might be Wal-Mart’s automatic re-stocking system. The systems keep track of everything purchased and more stock is re-ordered and shipped automatically when it’s needed. This information system was a total business process redesign.

Lastly, the final organizational change is called a paradigm shift. This type of change is more or less changing the entire company and more so what the company does. An example could be a company that manufactures siding for homes to a company that engineers an entirely new type of siding or home exterior product. A paradigm shift could be even more dramatic and the company could change to a roofing company. The risks are obviously higher when implementing an information technology system that will change the entire structure and purpose of your company but the rewards can be equally high.

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010. 

Chapter 12 Summary: Enhancing Decision Making

Decisions, decisions, decisions…that is the question. Many different people at varying levels within a company make thousands of decisions every day. The value of information technology and its ability to assist managers and employees with pertinent data that helps them make better decisions is priceless. Some companies have tried to determine the return on investment but it’s very difficult to do considering how many decisions are made on a daily basis. However, it’s safe to say that millions of dollars can be saved if you have accurate and timely information when making a split second decision.

There are three types of decisions and the first is unstructured decisions. “Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insight to solve them problem” (Laudon 456). An example of unstructured decisions are the types of decisions often made by senior management such as capital budget approval, long-term goals, investments, and the overall direction of the firm. The second type of decision is a structured decision and this type is opposite of the unstructured decisions. Structured decisions are routine and occur everyday. They also have clearly defined policies and procedures in place. I would call these the mundane tasks that don’t require a lot of input but still require someone to make the decision. Examples would be restocking inventory and determining overtime eligibility. The third type of decision is a combination of structured and unstructured and it’s called semi structured. Semi structured decisions are often made by middle management and do not always have a set answer or procedure to follow. Examples of a semi structured decision would be more creative services such as developing a marketing plan or designing a website. Also, creating a departmental budget would be a good example because there is room to make mistakes and try new ideas but there are still basic guidelines to follow.

There are four stages to the decision making process in which an employee would ask themselves, what is the problem? What are the possible solutions? What is the best solution? Is the solution working? Can we make it better? These questions stem from the decision-making stages: intelligence, design, choice, and implementation.

Lastly, there are different types of decision support for the different types of decisions. Middle management typically uses management information systems (MIS) to assist them with structured decisions. The decision support offers a variety of reports needed for the middle manager, whether it’s a report for daily activity in the warehouse or how many customers visited the restaurant. In addition to individual decision-making support systems, there is also a system for groups called group decision–support systems (GDSS).

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010. 

Chapter 11 Summary: Managing Knowledge

Knowledge and the opportunity to obtain new information at lightening speeds is what drives our workforce, sets us apart from our competition, and propels us forward to continue growing and improving. The text states that information can be transformed into knowledge by a firm expending additional resources to discover patterns, rules, and contexts where knowledge works. However, wisdom is considered the application of knowledge to solve problems (Laudon 417). There are two types of knowledge; tacit knowledge is knowledge that has not been documented and most likely resides in a person’s head. The second type is explicit knowledge and this type has been documented. Knowledge is really broad and somewhat abstract in its definition. Knowledge can be stored in documents, e-mails, libraries, etc. It can exist in various business processes however it is not easily moved or universally applicable.

As previously stated, knowledge can give the competitive edge to one company over another because perhaps one company’s processes, production, and use of resources saves time, money, and supplies. While the other company will fail due to the lack of knowledge and will continue wasting time, money, and resources. At Chesapeake Energy, we engineered and pioneered horizontal drilling, which is a new technology that enabled our company to become the second leading company in the U.S. for drilling natural gas. This knowledge propelled us forward and gave us the upper hand. 

With all of the tacit and explicit knowledge within a firm, there needs to be some way to manage it. “Knowledge management refers to the set of business processes developed in an organization to create, store, transfer, and apply knowledge” (Laudon 419). As with any information system, we need to decide how we will acquire the data, store the data, and ultimately disseminate and apply the data. The same goes for knowledge management systems.

There are two types of knowledge management systems, the first being the enterprise-wide knowledge management system. These systems are more broad and collect information from all parts of the company. They typically include data searches and support other technologies such as search engines and e-mail. In my opinion, an example of an enterprise-wide knowledge management system could be a company intranet or internal training system. The second type of system is a knowledge work system (KWS). These types of knowledge systems are built for a specific purpose or an expert group such as engineers, scientists, etc. The experts are responsible for creating and discovering new knowledge for the firm and therefore need more complex and dedicated systems.

In conclusion, knowledge management systems are necessary to collect and disperse knowledge within a company. Knowledge is power.

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010. 

Chapter 10 Summary: Digital Markets, Digital Goods

This chapter is about e-commerce, which “refers to the use of the Internet and the Web to transact business” (Laudon 373). The text says that in 2010 e-commerce represents about 6 percent of all retail sales but that statistic seemed a little dated so I decided to do a little extra research. According to the U.S. Census Bureau, that statistic is about the same in the end of 2012 with e-commerce making up 5.2 percent of total retail sales. However, e-commerce retails sales increased by 15.8 percent from 2011 to 2012. This data was released on February 15, 2013 at this website: http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf. The statistics show us that e-commerce has seen rapid growth in the last few years and I believe it will continue to grow in the future.

We need to understand the differences between e-commerce and traditional retail sales to fully appreciate the rapid growth of this convenient shopping experience. First, e-commerce is ubiquitous meaning that you don’t have to physically go to a brick and mortar store or own a store to participate. Anyone can make purchases at any time from any where in the world which also lends itself to uniqueness and global reach.

Also, e-commerce allows for more accessible entry to the market because of the universal standards. A company doesn’t need to rely on traditional television and radio technology and guidelines for their location or even bringing your goods to the market. Now with e-commerce, every country pretty well uses the same guidelines. The richness of the information provided also enhances the popularity of e-commerce. Through customer reviews, audio, and video the quality of the products and additional information can help a consumer make a more informed decision.

Next, interactivity plays a huge part of e-commerce in that it allows the consumer to feel like they have a say in the product and therefore make more of an investment. Interactivity also gives the producer valuable information through surveys and the release of the customer’s information. Another valuable advantage to e-commerce is the information density or the “total amount and quality of information available to all market participants, consumers, and merchants alike” (Laudon 377).

E-commerce saves a company processing and storage space, time, and costs and gives companies more timely information. The density of information also gives companies the competitive edge and collects data that allows producers to price discriminate, knowing that different people will pay different prices. In addition to the density of information, personalization and customization of the Internet and e-commerce has greatly enhanced the consumer experience and allowed for more direct and targeted marketing. Also, e-commerce companies don’t have to spend large amounts marketing thanks to social media. Through social media, anyone is now an author and publisher of valuable content, which in turn creates, free marketing for e-commerce companies.

E-commerce, like many of the other information technology advances we have studied thus far, has completely revolutionized and digitalized the consumer buying experience.

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010. 

Chapter 9 Summary: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

          Information technology is the hub of all of a business’s activities from finance to distribution, however, a system had to be created in order to centralize and conglomerate all of the different software and applications within a company. Enterprise systems came about to do just that. Enterprise software is built around thousands of predefined business processes that reflect best practices. Companies implementing this software must first select the functions of the system they wish to use and then map their business process to the predefined business processes in the software (Laudon 338).  Enterprise systems can help a company see a snapshot of the inflows and outflows of the company in real time, thus better equipping leadership to make informed decisions.

            A supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers (Laudon 340). A supply chain is important to the flow of business and creates the ability to use a just-in-time strategy, however, due to poor lack of communication a bullwhip effect can be created and results in an overstock of product. It makes perfect sense for a company to use supply chain software to streamline these processes and hopefully prevent the bullwhip effect. There are two types of supply chain management systems set-ups, the first is the push-based model in which items are pushed to consumers based on a projected demand and the second is the pull-based model in which the demand creates the product schedule. Implementing a supply chain management system can help a company save money, improve business processes, and increase profits.

            Another use for enterprise systems is to enhance the customer relationship. I used to work for a marketing department for a hospital in Ohio. It’s hard to market to people who aren’t sick or don’t need your services, so you instead focus on getting and keeping them as a customer. The idea is that if a patient needed a heart surgery or stitches, they would choose your hospital and doctors over another hospital nearby. This marketing strategy is called customer relationship management and IT has also created customer relationship management (CRM) systems to improve the customer relationship. CRM systems can be used for sales force automation, customer service, and marketing to improve the customer experience as well as collect valuable consumer data.
           

            While enterprise systems can change the way you do businesses, there are challenges such as expense, time for implementation, major changes to business processes, operating problems and losses, switching costs, differing definitions of organization-wide data, and finding a software that meets the needs of your company depending on size and customizations. In the end, it really boils down to what your leadership team decides is best for the company and for what it can afford. Changing the way you do business comes with a price and the question is, are enterprise systems worth that price?

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010.