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Ch8 - Information Technology and Control

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Joel Marcus

Chapter 8 Information Technology and Control Information Technology Evolution IT systems used in the past only for operations purposes, machine room efficiency, current operations being performed more efficiently with the use of computer and technology. Transaction processing systems automate the organization’s routine, day-to-day business transactions. Data warehousing is the use of huge databases that combine all of an organization’s data to allow users to access the data directly, create reports, and obtain responses to what-if questions. Business intelligence refers to the high-tech analysis of a company’s data in order to make better strategic decisions; searching out and analyzing data from multiple sources across the enterprise, to identify patterns and relationships that might be significant (data mining). Information for Decision Making and Control Through the application of more sophisticated computer-based systems, managers have tools to improve the performance of departments and the organization as a whole. Organizational Decision-Making Systems  Management Information System – is a computer-based system that provides information and support for managerial decision making.  Information Reporting System – the most common form of MIS, provides mid-level managers with reports that summarize data and support day-to-day decision making.  Executive Information System – is a higher level application that facilitates decision making at the highest levels of management. These systems are based on software that can convert large amounts of data into pertinent information in a timely fashion.  Decision Support System – provides specific benefits to managers at all levels; this interactive system relies on decision models and integrated databases; users can pose what if questions and test possible alternatives. Feedback Control Model  Effective control systems involve the use of feedback to determine whether organizational performance meets established standards to help the organization attains its goals. o Setting strategic goals, establishing metrics and standards of performance, comparing metrics of performance to standards, and correcting or changing activities as needed  Management Control Systems are the formal routines, reports, and procedures that use information to maintain or alter patterns in organization activities. o Executive dashboards used to measure key control indicators, ie. sales vs. targets o 4 control system elements: budget/financial reports, statistical reports, reward systems, quality-control systems – each focusing on a different aspect of the production process. o Benchmarking: the process of continually measuring products, services, and practices against tough competitors or industry leaders. o Six Sigma: is a highly ambitious quality standard that specifies a goal of no more than 3.4 defects per million parts.  The Balanced Scorecard combines several indicators of effectiveness into a single framework, balancing traditional financial measures with operational measures relating to an organization’s critical success factors. o 4 major perspectives: financial performance, customer service indicators, internal business process indicators, and the organization’s potential for learning and growth. o The components of the scorecard are designed in an integrative manner so that they reinforce one another and link short term actions with long term strategic goals. Adding Strategic Value: Strengthening Internal Coordination Intranets are a private, organization wide information system that uses the communications protocols and standards of the Internet but is accessible only to people within the organization. Intranets can improve internal communications and unlock hidden information. They enable employees to keep in touch with what’s going on around the organization, quickly and easily find the information they need, share ideas, and work on projects collaboratively. Enterprise Resource Planning systems collect, process, and provide information about a company’s entire enterprise and allows for management to get a comprehensive view of the organization’s activities and how they affect other parts of the firm, in order to make better decisions. Knowledge Management refers to the efforts to systematically find, organize, and make available a company’s intellectual capital and to foster a culture of continuous learning and
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