This document discusses information systems and their importance to organizations. It explains that information systems aid decision making, identify appropriate systems, and manage information gathering and storage. The document also discusses business strategy, noting that strategy determines how an organization will use its limited resources. Additionally, the document summarizes tools for developing information system strategy like SWOT analysis and identifying critical success factors. Finally, it differentiates between strategic, tactical, operational, and knowledge-level information and their respective purposes.

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Information Systems
and
Functional Applications
Abdisalam Issa-Salwe
Faculty of Professional Studies
Thames Valley University

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Why IS is important to organisations?
 Understand the role and relevance of an
information system aids decision making.
 Identifying and evaluating appropriate
information systems.
 Managing the process of information
gathering, processing, storage and
retrieval
 Managers make decisions using the
information available to them at the time.

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Life-blood of the organisation

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MEDIATING FACTORS:MEDIATING FACTORS:
EnvironmentEnvironment
CultureCulture
StructureStructure
Standard ProceduresStandard Procedures
PoliticsPolitics
ManagementManagement
Decisions ChanceDecisions Chance
ORGANISATIONSORGANISATIONS INFORMATIONINFORMATION
TECHNOLOGYTECHNOLOGY
The two-way Relationship between organisations and Information Technology

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About Business Strategy
 Organisation has a limited set of
resources (e.g. time, people, money,
physical resources) and they must decide
how to use those resources.
 Strategy is deciding what the organisation
is going to do and how it will use its
resources
 A business system is a collection of people,
machines and methods organised to
accomplish a set of specific functions.

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About Business Strategy? (cont…)
 Contributing to the establishment of the
organisation's long term business objectives e.g.
identifying and evaluating external factors which
may impact on the organisation
 Identifying and appraising the organisation's skills
and resources
 Identifying and defining business options; evaluating
these options, performing risk assessments and
recommending strategies for adoption
 Analysing the economic impact of environmental
change upon the organisation
 Analysing market and competitive developments in
relation to marketing strategy
 Contributing to the development of the
organisation's information systems strategy as a
complement to its business strategy

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Examples of Strategies
 Strategy 1: Manufacture equipment with
the money and use the building and the
people to manufacture widgets.
 Strategy 2: Outsource the production of
widgets and use the people and building to
be widget distributor - or perhaps a widget
store.
 Strategy 3: Sell the patent to a larger firm,
sell the building, fire the employees and
retire!

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Implications of information management in organisations
 It has the potential to contribute to
the achievements of organisations
 It has different purposes in different
organisations. These purposes will
be influenced by the organisation's
goals as well as by its culture and
its stance on information.
 It is practiced in a political, social
and cultural context which shapes
both what information management
does and how it does it.

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Developing IS/IT strategy
 Once key strategic issues have been
identified, they feed into business
objectives, particularly marketing
objectives.
 SWOT analysis can be used in
conjunction with other tools for audit
and analysis, such as PEST analysis and
Porter's Five-Forces analysis.

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SWOT Analysis
 SWOT analysis is an important tool for
auditing the overall strategic position of
a business and its environment.
 SWOT is an abbreviation for Strengths,
Weaknesses, Opportunities and Threats

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 Strengths and weaknesses are Internal
factors:
 For example, a strength could be your specialist
marketing expertise. A weakness could be the lack
of a new product.
 Opportunities and threats are external
factors.
 For example, an opportunity could be a developing
distribution channel such as the Internet, or
changing consumer lifestyles that potentially
increase demand for a company's products. A threat
could be a new competitor in an important existing
market or a technological change that makes
existing products potentially obsolete
SWOT Analysis (Cont…)

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SWOT Analysis (cont…)
Strength
 your specialist marketing expertise.
 a new, innovative product or service
 location of your business
 quality processes and procedures
 any other aspect of your business that adds
value to your product or service.

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SWOT Analysis (cont…)
Weakness could be:
 lack of marketing expertise
 undifferentiated products and service (i.e. in
relation to your competitors)
 location of your business
 poor quality goods or services
 damaged reputation

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SWOT Analysis (cont…)
Opportunity could be:
 a developing market such as the Internet.
 mergers, joint ventures or strategic alliances
 moving into new market segments that offer
improved profits
 a new international market
 a market vacated by an ineffective competitor

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SWOT Analysis (cont…)
Threat could be:
 a new competitor in your home market
 price wars with competitors
 a competitor has a new, innovative product or
service
 competitors have superior access to channels
of distribution
 taxation is introduced on your product or
service

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Critical Success Factors (CSF)
 A small number of easily identifiable
operational goals
 Shaped by industry, manager,
environment
 Believed to assure firm’s success
 Used to determine organization’s
information requirements

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CSF example
Example Goals CSF
Profit concern Earnings per share
Return on
investment
Market share
New product
Automotive industry:
styling
quality dealer system
cost control
Energy standards
Not for profit Excellent health care Regional integration
Improved monitoring of
regulations
Efficient use of resources

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Process of Decision Making
 Strategic Decision Making:
Determines long-term objectives,
resources, and policies
 Management Control: Monitors
effective or efficient usage of
resources and performance of
operational units

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Process of Decision Making (cont…)
 Operational control: Determines
how to perform specific tasks set by
strategic and middle-management
decision makers
 Knowledge-level decision making:
Evaluates new ideas for products,
services, ways to communicate new
knowledge, ways to distribute
information

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Decisions
 Types of management decision:
Structured:
 Repetitive, routine, procedure have been agreed
to deal with them.
Unstructured:
 Judgement, insight and evaluation is necessary to
deal with them.
 They are usually important decisions that
affect the future of the organisation, there
are no set procedures.

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Structured or Unstructured
 In which town will the new branch
be located?
 How many extra staff do we hire for
the Christmas period?
 What can be done about an
employee who has had too many
sick days off after being warned
about their attendance.
 Should the stores adopt their own
store card?

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Information requirement
 Strategic information
 Tactical information
 Operational information

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Information requirement (cont…)
 Strategic information: Strategic information is
concerned with the whole organisation and is relevant
to the long term operational success.
 It is derived from both internal and external sources and
is summarised at a high level.
 Tactical information: Tactical information is concerned
with activities or departments and is relevant to the
short and medium term.
 It is primarily generated internally (but may have a
limited external component)...Tactical information data is
based upon quantitative measures and is prepared
routinely and regularly.
 Operational information: Operational information is
concerned with specific tasks and is relevant to the
immediate term.
 It is derived from internal sources and is largely
quantitative, detailed since it involves the processing of
raw data) and is prepared very frequently.

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Strategic level Information
 Strategic information is used to plan the
objectives of the organisation, and to
assess whether the objectives are being
met in practice.
 Strategic information systems is to help
organisations to do things better, to win.
(Strategic Information Systems, M
Neumann, 1996).
 An information system to be strategic it is
to aligned with business goals as this has
an impact on organisational performance.

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Strategic level information (cont…)
 Strategic information systems
 computer systems at any level of an
organisation that change the goals, processes,
products, services, or environmental
relationships to help the organisation gain a
competitive advantage
 Information considered as a resource,
much like capital and labor
 IT-critical competitive strategies:
Customer lock-in, customer lock-out, new
business entry

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Strategic level information (cont…)
 What do managers need to know about
organisations in order to build and use
information systems successfully?
 What impact do information systems have
on organisations?
 How do information systems support the
activities of managers in organisations?
 How can businesses use information
systems for competitive advantage?
 Why is it so difficult to build successful
information systems, including systems
that promote competitive advantage?

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Strategic level information (cont…)
 Strategy of an organisation is the
roadmap towards attainment of its long
term goals and objectives.
 Effective operationalisation of strategy
enables effective and efficient realization
of organisational goals.
 In the dynamic business environment of
today, information has emerged as one of
the key drivers in successfully steering
the organisational strategy.

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Operational-level information
 Support operational managers by keeping
track of the elementary activities and
transactions of the organisation.
 The principle purpose of systems at this
level is to answer routine questions and
track the flow of transactions through the
organisation.
 Covers things such as sales, receipts,
cash deposits, payroll, credit decisions,
flow of materials.

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Knowledge-level information
 Support knowledge and data workers in
an organisation. The purpose of these
systems is to help the organisation
discover, organise and integrate new
and existing knowledge into the
business, and to help control the flow
of paperwork. These systems, specially
in the form of collaboration tools,
workstations, and office systems, are
the fastest growing applications in
business today.

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Reference
 BPP, Information Systems, Study Text, Paper 2.1,
BPP Professional Education, United Kingdom.
 Lachlan M. MacKinnon, Information: Types of
Information System Systems,
http://www.macs.hw.ac.uk/~lachlan/dbislectures/lectures/ty
,