Chapter 1: The Modern Organization in the Global, Web-Based Environment
Management Information Systems (Information Systems): deal with the planning for – and the
development, management, and use of – information technology tools to help people perform all of the
tasks related to information processing and management.
Information technology (IT): relates to any computer-based tool that people use to work with
information and to support the information and information-processing needs of an organization.
1.1 The Importance of Planning for IT
Organizational Strategic Plan
o States the firm’s overall mission
o The goals that follow from that mission
o The broad steps necessary to reach these goals
The strategic planning process modifies the organization’s objectives and resources to meet its changing
markets and opportunities.
o Describes the way an organization’s information resources should be used to
accomplish its mission
o Encompasses both the technical and managerial aspects of information resources
o Technical aspects include hardware and operating systems, networking, data
management systems, and applications software.
o Managerial aspects specify how managing the IT department will be accomplished, how
the functional area managers will be involved, and how IT decision will be made.
The organizational strategic plan and the existing IT architecture provide the inputs in
developing the IT strategic plan.
IT strategic plan: set of long-rang e goals that describe the IT infrastructure and identify the
major IT initiatives needed to achieve the organization’s goals. The IT strategic plan must meet
o It must be aligned with the organization’s strategic plan
o It must provide for an IT architecture that enables users, applications, and databases to
be seamlessly networked and integrated o It must efficiently allocate IS development resources among competing projects so the
projects can be completed on time and within budget and have the required
One critical component in developing and implementing the IT strategic plan is the IT
steering committee. This committee, composed of a group of managers and staff
representing various organizational units, is set up to establish IT priorities and to ensure
that the MIS function is meeting the enterprise’s needs. The committee’s major tasks are to
link corporate strategy and IT strategy, to approve the allocation of resources for the MIS
function, and to establish performance measures for the MIS function and ensure that they
are met. The IT steering committee is important to the organization because it ensures that
the information systems and applications are acquired so that employees get the resources
that they need to do their job.
After a company has agreed on an IT strategic plan, it next develops the IS operational plan. This
plan consists of a clear set of projects that the IS department and the functional area managers
will execute in support of the IT strategic plan. A typical IS operation plan contains the following
o Mission: the mission of the IS function (derived from IT strategy)
o IS environment: a summary of information needs of the functional areas and of the
organization as a whole
o Objectives of the IS function: the best current estimate of the goals of the IS function
o Constraints of the IS function: technological, financial, personnel, and other resource
limitations on the IS function
o The application portfolio: a prioritized inventory of present applications and a detailed
plan of projects to be developed or continued during the current year
o Resource allocation and project management: a listing of who is going to do what, how,
1.2 Business Processes and Business Process Management
Business Process: a collection of related activities that produce a product or a service of value to
the organization, its business partners, and/or its customers.
Business Process Reengineering (BPR), is an approach that improves the efficiency and
effectiveness of an organization’s business processes. The key to BPR is for enterprises to
examine their business processes from a “clean sheet” perspective and then determine how
they could best reconstruct those processes to improve their business functions.
Business Process Management (BPM): a management technique that includes methods and
tools to support the design, analysis, implementation, management, and optimization of
business processes. Initially BPM helps companies improve profitability by decreasing costs and
increasing revenues. Over time, BPM can create a competitive advantage by improving
organization flexibility. 1.3 Information Systems: Concepts and Definitions
An Information System (IS) collects, processes, stores, analyzes, and disseminates information
for a specific purpose. It has been said that the purpose of information systems is to get the
right information to the right people at the right time in the right amount and in the right
One of the primary goals of information systems is to economically process data into
information and knowledge.
Data items: refer to an elementary description of things, events, activities, and transactions that
are recorded, classified, and stored but not organized to convey any specific meaning. Data
items can be numbers, letters, figures, sounds, or images.
Information: refers to data that have been organized so that they have meaning and value to
Knowledge: consists of data and/or information that have been organized and processed to
convey understanding, experience, accumulated learning, and expertise as they apply to a
current business problem.
Information Technology Architecture: a high-level map or plan of the information assets in an
organization. It is both a guide for current operations and a blueprint for future directions. The
IT architecture integrates the entire organization’s business needs for information, the IT
infrastructure, and all applications. The IT architecture shows how all aspects of information
technology in an organization fit together.
Information Technology Infrastructure: consists of the physical facilities, IT components, IT
services, and IT personnel that support the entire organization. IT components are the computer
hardware, software, and communications technologies that provide the foundation for all of an
organization’s information systems. IT personnel use IT components to produce IT services,
which include data management, systems development, and security concerns.
An organization’s IT infrastructure should not be confused with its platform. A firm’s platform
consists only of its IT components. Therefore, a platform is a part of an IT infrastructure.
1.4 The Global, Web-Based Platform
The platform enables individual to connect, compute, communicate, collaborate, and compete
everywhere and anywhere, anytime and all the time; to access limitless amounts of information,
services, and entertainment; to exchange knowledge, and to produce and sell goods and
services. It operates without regard to geography, time, distance, or even language barriers. In
essence, this platform makes globalization possible. Globalization is the integration and
interdependence of economic, social, cultural, and ecological facets of life, enabled by rapid
advances in information technology. Historically, globalization has occurred in three stages.
The three stages of globalization as argued by Thomas Friedman o The first era, Globalization 1.0, lasted from 1492 to 1800. During this era, the force
behind globalization was how much muscle, horsepower, wind power, or steam power a
country ad and could deploy.
o The second era, Globalization 2.0, lasted from 1800 to 2000. In this era, the force behind
globalization was multinational companies; that is, companies that had their
headquarters in one country but operated in several countries. In the first half of this
era, globalization was driven by falling transportation costs, generated by the
development of the steam engine and the railroads. In the second half of this era,
globalization was driven by falling telecommunications costs resulting from the
telegraph, telephones, computers, satellites, fibre optic cable, and the Internet and
World Wide Web. The global economy began appearing during this era.
o Around the year 2000, we entered Globalization 3.0, which was driven by the
convergence of 10 forces Friedman calls “flatteners”. In era 3.0, the global, web-based
platform has emerged.
o Each era has been characterized by a distinctive focus. The focus of Globalization 1.0
was on countries, the focus of Globalization 2.0 was on companies, and the focus of
Globalization 3.0 is on groups and individuals.
Table 1.2 FRIEDMAN'S TEN FLATTENERS
1. Fall of the Berlin Wall on November 9, 6. Offshoring
• Shifted the world toward free‐market • Relocating an entire operation, or just
economies and away from centrally planned certain tasks, to another country; for
economies. example, moving an entire manufacturing
operation to China.
• Led to eventual rise of the European Union
and early thinking about the world as a single,
2. Netscape goes public on August 9, 1995 7. Supply chaining
• Popularized the Internet and the World Wide • Technological revolution led to the creation
Web. of networks composed of companies, their
suppliers, and their customers, all of whom
could collaborate and share information for