class 10: valuing information systems investments
DESCRIPTION
Class 10: Valuing Information Systems Investments. MIS 2101: Management Information Systems. Based on material from Information Systems Today: Managing in the Digital World , Leonard Jessup and Joseph Valacich, Pearson Prentice Hall, 2007 - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/1.jpg)
Class 10: Valuing Information Systems InvestmentsMIS 2101: Management Information Systems
Based on material from Information Systems Today: Managing in the Digital World, Leonard Jessup and Joseph Valacich, Pearson Prentice Hall, 2007
Also includes material by David Schuff, Paul Weinberg, and Cindy Joy Marselis.
![Page 2: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/2.jpg)
Learning Objectives Discuss how organizations can use
information systems to help create a strategic advantage
Describe how to create a business case for an information system
Explain how to evaluate an information system
![Page 3: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/3.jpg)
Valuing Information Systems What are three ways an Information
System can add value to an organization?
Where do you think the most value is added?
![Page 4: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/4.jpg)
Valuing Information Systems What do we mean
when we say we can create business value by automating, informing, and supporting strategy? Automating Informing Strategy Support
![Page 5: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/5.jpg)
Valuing Information Systems
Automating – doing things FASTER
![Page 6: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/6.jpg)
Valuing Information Systems
Informing – doing things BETTER
![Page 7: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/7.jpg)
Informing: Example Tell me more
about the loan processing example from the book…
![Page 8: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/8.jpg)
Learning Organization One that is skilled at creating, acquiring and
transferring knowledge and at modifying its behavior to reflect new knowledge and insights.
David Garvin, Harvard Business Review - 1993
![Page 9: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/9.jpg)
Valuing Information Systems
Supporting Strategy– doing things SMARTER
![Page 10: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/10.jpg)
Strategizing: Five Types of Organizational Strategies
What are “Organizational Strategies”?
Can technology be leveraged to create value supporting these strategies?
![Page 11: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/11.jpg)
Overall Low Cost Leadership Strategy
What is an example of a company that adopts an overall low cost leadership strategy?
![Page 12: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/12.jpg)
Focused Low-Cost Strategy
What is an example of a company that adopts a focused low cost strategy?
![Page 13: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/13.jpg)
Broad Differentiation Strategy
What is an example of a company that adopts a broad differentiation strategy?
![Page 14: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/14.jpg)
Focused Differentiation Strategy
What is an example of a company that adopts a focused differentiation strategy?
![Page 15: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/15.jpg)
Best-Cost Provider Strategy
What is an example of a company that adopts a best-cost provider strategy?
![Page 16: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/16.jpg)
Strategizing: Five Types of Organizational Strategies
Can technology be leveraged to create value supporting these strategies?
![Page 17: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/17.jpg)
Sources of Competitive Advantage
Who has …1. Best-made product on the market2. Superior customer service3. Achieving lower costs than rivals4. Having proprietary manufacturing technology5. Having shorter lead times in research and development projects6. Having a well-known brand name and reputation7. Giving customers more value for their money
Can MIS professionals help you achieve this?
![Page 18: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/18.jpg)
Competitive Advantage How do you identify opportunities to use
information systems for competitive advantage?
What are “Value Chains”? What is “Porter’s Five Forces Model”? Analysis tools or communication tools?
![Page 19: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/19.jpg)
What is Value Chain Analysis?CoreValueActivities
SupportValueActivities
![Page 20: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/20.jpg)
20
IS and Value Chain Analysis
What are specific examples of how these IS functions add value and help create competitive advantages?
Why might it be important for systems supporting these activities to function at an enterprise level?
![Page 21: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/21.jpg)
21
The Five Forces Model – Evaluating Business Segments
Reduce pricesIncrease qualityValue added services
ERP reduce costsCRM CAD/CAM improve quality
Increased costsReduced quality
Electronic connections to more suppliers
Product returnsLower market shareLost customers
Decision support and business intelligenceCAD product redesign
Reduced pricesLost market share
Better web presenceLower costs through ERP, supply chain, etc.
Competition in price, distribution and service
ERP to reduce costs and react more quickly
![Page 22: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/22.jpg)
Buyer Power What does it mean when “Buyer Power” is high?
How to loyalty programs influence buying power?
Can IT be the “enabler”?
Examples of situations where IT has increased buyer power?How can I become the preferred supplier?
![Page 23: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/23.jpg)
Supplier Power What does it mean when “Supplier Power” is high? How do tightly integrated supply chains influence supplier
power?
Examples of situations where IT has increased supplier power?How can I increase my number of suppliers?
![Page 24: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/24.jpg)
Threat of Substitute Products or Services When is the threat of substitute products high?
What are “switching costs” and how do they influence the threat of substitute products?
Can IT be the “enabler”?
Examples of situations where IT has increased the threat of substitutes?Can I increase switching costs?
![Page 25: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/25.jpg)
Threat of New Entrants Give an example of when the threat of new entrants is
high?
What is an “Entry Barrier” and how does this influence the threat of new entrants?
Can IT be the “enabler”?
Examples of situations where IT has affected the threat of new entrants?Can I create barriers to entry?
![Page 26: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/26.jpg)
Rivalry Among Competition Price, product, service and distribution?
How can you use IT?
![Page 27: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/27.jpg)
Learning Objectives Discuss how organizations can use
information systems to help create a strategic advantage
Describe how to create a business case for an information system
Explain how to evaluate an information system
![Page 28: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/28.jpg)
Making the Business Case for an IS
Identification of benefits that the proposed information system will bring to the organizationAutomating benefitsInforming benefitsStrategic benefits
![Page 29: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/29.jpg)
Productivity Gains Easy to identify costs with developing an IS How do you measure productivity gains? Why hasn’t productivity increased at the
rate of IS investments?
![Page 30: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/30.jpg)
The Productivity Paradox Give an example
of how information systems may be used in unintended ways.
![Page 31: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/31.jpg)
Measurement Problems Give an example of
how the wrong things can be measured
![Page 32: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/32.jpg)
Time Lags When can the benefits of
an information system lag behind the realized benefits?
![Page 33: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/33.jpg)
Redistribution If an information
systems simply redistributes the pieces of the pie rather than make the pie bigger, does it create any value?
![Page 34: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/34.jpg)
Mismanagement
Can a good information system overcome a bad business model?
![Page 35: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/35.jpg)
Making a Successful Business Case
On what can we base a successful business case?
![Page 36: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/36.jpg)
Arguments Based on Faith
Do you need a cost benefits analysis for an argument based on faith?
![Page 37: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/37.jpg)
Arguments Based on Fear
Do you need a cost benefits analysis for an argument based on fear?
Come on, how do you instill “fear” in an organization?
![Page 38: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/38.jpg)
Scenario You are the CIO of a small to mid sized
company You are meeting with an independent
consultant who is trying to get you to hire him to develop a business continuity plan and a disaster recovery plan
Is a business case based on “Fear” effective?
![Page 39: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/39.jpg)
Business Continuity andDisaster Recovery
Catastrophic loss of ability to deliver services from primary location
Must resume services from alternate location Disaster recovery plan driven by the business’
Recover time objective (RTO) Recovery point objective (RPO)
Business Continuity – How you continue to provide essential business services between time of the disaster and the execution of DR plan
![Page 40: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/40.jpg)
Sobering Statistics
From the U.S. National Fire Protection Agency and the U.S. Bureau of Labor Nearly 75% of all U.S. businesses have experienced a
business interruption 20% of small to medium size businesses suffer a major
disaster every five years 43% of US companies never reopen after a disaster and
29% close within three years 93% of companies that suffer a significant data lose are
out of business within five years
![Page 41: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/41.jpg)
It’s not always what you expect It’s in not always an earthquake or a hurricane
![Page 42: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/42.jpg)
Arguments Based on Fear
Do you need a cost benefits analysis for an argument based on fear?
![Page 43: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/43.jpg)
Arguments Based on Fact
Do you need a cost benefits analysis for an argument based on fact?
![Page 44: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/44.jpg)
Cost-Benefit Analysis Identifying costs
What is “Total Cost of Ownership” (TCO)?What are “Recurring vs. Non-recurring costs”?What are “Tangible vs. Intangible costs”?
![Page 45: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/45.jpg)
![Page 46: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/46.jpg)
![Page 47: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/47.jpg)
![Page 48: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/48.jpg)
![Page 49: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/49.jpg)
49
![Page 50: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/50.jpg)
Learning Objectives Discuss how organizations can use
information systems to help create a strategic advantage
Describe how to create a business case for an information system
Explain how to evaluate an information system
![Page 51: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/51.jpg)
Why is evaluation important? Systems should address a business need Otherwise
You waste money on what you buyYou still will have an unresolved “business
problem”
![Page 52: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/52.jpg)
52
How do you evaluate systems?
Understand what you need Understand what the system does Match the two up
Businessneeds
Applicationfunctionality
![Page 53: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/53.jpg)
53
Understanding what you need We talked about this way back Talk to
People involved in the business process Technical staff who have to implement the system
…to determine key features
MIS Analyst
![Page 54: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/54.jpg)
Understanding what the application does
Once you have the key features… Talk to
VendorsPeople who have bought or built similar products
Now you have a basis for comparing alternatives
![Page 55: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/55.jpg)
System Evaluation Questions
Who are the customers? What are the business drivers (the business case)?
Who are the participants? Can the system create competitive advantage?
What does the system do? Are there risks with implementing the system?
What type(s) of information system is it?
What has to go “right” for the adopting company?
What are the processes it performs?Are they well-structured?Are they well-integrated?
What are the key evaluation measures for success?How do you know if the system is working?
![Page 56: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/56.jpg)
An Evaluation Matrix for an E-Mail System
Weighted average of feature ratings Feature
Option
Creates mailing
lists(10%)
Overall cost
(30%)
Web access
(20%)
Reliability
(40%)
Total Score
Option A 7 1 8 5 4.6
Option B 3 9 4 5 5.8
![Page 57: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/57.jpg)
Partial Matrix of Functional Requirements
![Page 58: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/58.jpg)
Partial Matrix of Technical Requirements
![Page 59: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/59.jpg)
Partial Matrix of General Requirements
![Page 60: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/60.jpg)
![Page 61: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/61.jpg)
![Page 62: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/62.jpg)
Types of Systems
We’ve looked at different types of information systemsTransaction Processing Systems (TPS)Decision Support Systems (DSS)Management Information Systems (MIS)
![Page 63: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/63.jpg)
Types of Systems
We’ve looked at different types of information systemsTransaction Processing Systems (TPS)Decision Support Systems (DSS)Management Information Systems (MIS)
![Page 64: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/64.jpg)
Types of Applications… Different types of applications
1. Customer relationship management 2. Business intelligence 3. Enterprise resource planning4. Order entry/point-of-sale5. Accounting (Accounts Payable/Receivable)
![Page 65: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/65.jpg)
In-Class Activity Working in a small team of 3-4 business
professionals on a project for the CEO of Fitter Snacker…
Each team will be assigned an application which is being considered for use at Fitter Snacker
Your team will evaluate the application and prepare to answer the following questions for the CEO…
![Page 66: Class 10: Valuing Information Systems Investments](https://reader035.vdocuments.mx/reader035/viewer/2022070500/568168b2550346895ddf7bd5/html5/thumbnails/66.jpg)
Can your team answer…Who are the customers? What are the business drivers (the
business case)?Who are the participants? Can the system create competitive
advantage?What does the system do? Are there risks with implementing the
system?What type(s) of information system is it?
What has to go “right” for the adopting company?
What are the processes it performs?Are they well-structured?Are they well-integrated?
What are the key evaluation measures for success?How do you know if the system is working?