Ch.8 - Information Technology and Control

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3 Apr 2012
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Chapter 8: Information Technology and Control
Information Technology Evolution
Essential for organizations
Managers spend at least 80% of time actively exchanging information
Problems and information differ depending on place in organization
oFirst-line management focuses on well-defined problems, operational issues, and past events
oTop management focuses on ambiguous issues, strategy, and planning
Transaction processing systems (TPS) are automation of the organization’s routine, day-to-day
business transactions and its goal is to reduce labour costs and make the system more efficient
Data warehousing is the use of a huge database that combines all of an organization’s data and allows
users to access the data directly, create reports, and obtain answers to “what-if” questions
Business intelligence refers to the high-tech analysis of a company’s data in order to make better
decisions. Also known as data mining, it allows for data analysis from multiple sources (inside and
outside of the organization) to identify patterns and relationships
Information for Decision Making and Control
Organizational Decision-Making Systems
Management information system (MIS)
oComputer-based system that provides information and support for rapid and efficient
managerial decision making
Information reporting system
oMost common form of MIS, and are computerized systems that provide managers with reports
that summarize data and support day-to-day decision making
Executive information system (EIS)
oA higher-level application that facilitates decision making at the highest levels of management
that are based on software that convert large amounts of complex data into pertinent
information and provide that info to top managers quickly
Decision support system (DSS)
oEnables managers at all levels to retrieve, manipulate, and display info from integrated
databases for making decisions, and they can test multiple alternatives and choose the one with
the best outcome
Feedback Control Model
A control cycle that involves setting goals, establishing standards of performance, measuring actual
performance and comparing it to standards, and changing activities as needed based on the feedback
This model explains why McDonald’s for example, started introducing healthier items on their menu
2 types are management control systems and balanced scorecard
Management Control Systems
The formalized routines, reports, and procedures that use info to maintain or alter patterns in
organizational activity
Targets are set in advance, outcomes are compared to the targets, and differences reported to managers
for corrective action
Many organizations use executive dashboards, which enable managers to see at a glance key control
indicators such as sales in relation to targets, number of products on back-order, or percentage of
customer service calls resolved within a specified time period
4 elements of management control systems include:
oBudget, financial reports
Controls financial resources and reduces uncertainty about availability of resources
oStatistical reports
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