Management Information Systems: Knowledge Hierarchy

• Intro to Management Information Systems sets the stage for technology and the modern enterprise.

Knowledge Hierarchy

• The knowledge hierarchy progresses from Data to Information to Knowledge to Insight to Wisdom.
• Each level builds upon the previous one, adding context and meaning.
• Data is raw and unorganized (e.g., 42).
• Information adds context by providing meaning to data (e.g., Net Income = $42 million).
• Knowledge represents understanding and awareness (e.g., "We had a bad year").
• Insight involves applying knowledge to a specific situation ("Consumer confidence was down").
• Wisdom is the ability to make sound judgements based on insight.

Digital Transformation

• Digital Transformation (DT) is when digital technologies have a central role in creating disruptions at society and industry levels. Disruptions then trigger strategic responses from organizations.
• Digital transformations entail using digital technologies to change value creation paths. It requires structural changes to overcome barriers.
• Changes lead to positive impacts for organizations and individuals but can have undesirable outcomes.
• Disruptions can trigger strategic responses.
• The response uses digital technologies, which enable changes in value creation paths. This can lead to organizational changes, as well as positive or negative impacts.

Information Systems

• An information system involves Input, Process, Output, and Storage.
• Feedback is crucial for improving the system.
• SIPOC is a method for defining the relevant elements of the information system to the suppliers, input, process, output, and consumer.
• Solution components: Actors give Instructions through a Bridge
• The components are: Hardware, Programs, Data, Procedures, and People.
• Hardware, Programs, and Data are computer side, and procedures and people are human side
• Automation involves moving work from the human side to the computer side.
• Increasing Degree of Difficulty of change

Information Systems Solutions: Process

• The Process includes Index Page, Category Page, Cart Page, Checkout Page, and Confirmation Page.

Information Systems Solutions: Technology

• TPS (Transaction Processing System): Is for processing real-time transaction.
• OAS (Office Automation System): Is a suite of office software, such as Microsoft Office.
• MIS (Management Information System): Is a computer system that provides the data, information, and reporting and data analysis tools to help managers make effective decisions.
• KMS (Knowledge Management System)
• DSS (Decision Support System) Includes group decisions.
• ES (Expert Systems)
• EIS (Executive Information Systems)

Enterprise Resource Planning

• ERP includes Accounting, Operations, and HR.
• CRM includes Sales, Service, and Marketing.
• There is Application Specific Software and General Purpose Personal Tools
• System Software includes Operating Systems, Data Base Management Systems and Network Management Systems.
• There is also Hardware.

Information Systems Solutions: Hardware

• Hardware includes communication devices, laptops, networks and webcams, etc.

Information Systems Solutions: Software

• Software refers to a varied range of apps.

Information Systems Solutions: Data

• Interface layers include (point-to-point XML, CSV, Excel or Middleware)

Information Systems Solutions: Networking

• Networks are configurations of hardware, software, and data components.
• Software implements communications protocols and monitors network traffic.
• Transmission media includes wires, optical fiber, and wireless signals.
• Telecommunication Hardware pass data

Information Systems Solutions: Role

• Automate information systems manage, store, organize, and transfer data generated by transactions/business processes.
• Informate information systems provide tracking information to control, manage, improve, transform and learn from processes.
• Innovate information systems facilitate the discovery and diffusion of new and valuable products or services or business processes.

Impact of Information Systems on Organizations

• Firms traditionally grew in size to reduce transaction costs
• IT potentially reduces the costs for a given size, shifting the transaction cost curve inward.
• This opens up the possibility of revenue growth without increasing size, or even revenue growth accompanied by shrinking size.
• Complexity traditionally leads to higher agency costs.
• IT shifts the agency cost curve down and to the right.
• This enables firms to increase size while lowering agency costs.
• IT reduces integration.
• Better informed workers needing incentives, flexibility, direct coordination among agents reduce centralized coordination.
• Integration results where, externalities support centralized ownership and easier monitoring of agent's actions, which leads to more contractibility.
• Information systems can reduce the number of levels in an organization.
• They provide managers with information to supervise larger numbers of workers and by giving lower-level employees more decision-making authority.

Wal-Mart Case Study

• One quarter of increased productivity came from retailing and 1/6 of the improvement came from general merchandise, from Wal-Mart.
• From 1995-99, competitors increased their productivity by 28%, while Wal-Mart further increased its own efficiency another 20%.
• One-third of the retail GMS productivity improvement.

Wal-Mart Case Study: Data Warehousing

• Wal-Mart reportedly has the world's biggest private sector data warehouse and used data to improve operation's efficiency.
• Wal-Mart provided its own managers and its supply chain partners access to its data warehouse.
• Wal-Mart began using electronic scanning, Universal Product Codes (UPC) in 1983.
• Used RFID tags and data that are radio frequency identified.
• Automated the information by putting the tags on the product's shipping containers that can be read from the containers.
• Wal-Mart uses data to enable supply chain coordination through Collaborative Planning, Forecasting, and Replenishment (CPFR).
• Supply chain partners are making business plans.
• Wal-Mart implemented a vendor management system, RetailLink to give way to efficient supply chain management.

Wal-Mart RetailLink IT Benefits

• RetailLink helps increase sourcing efficiency and reduce the "bullwhip effect".
• Enhanced inventory visibility and improves coordination with vendors.
• It switched centralized recruiting and has embedded testing because retailers are labor extensive.

Wal-Mart Infrastructure Investment

• 1987 to 1993 – Wal-Mart invested $700MM on communication network and other equipment.
• Data is to be collected and analyzed daily through satellite system.

Wal-Mart Business Strategy

• Extremely competitive industry
• Price and advertising competitiveness
• Lack of buyer loyalty

CVS Case Study

• CVS Enterprise Information Technology quickly replicated its solution in 4,000 pharmacies nationwide.
• Errors in insurance and misspelling are corrected in the prescription filing.

Modern Business, Technology, and AI

• Business models have changed based on technology.
• Uber and Airbnb do not own vehicles nor any properties for hire.
• Google produces no television shows and Facebook doesn't create its own content.
• Alibaba, Shopify, Temu does not own inventory. Apple, is the most valuable and profitable firm in the United States.
• 72% of firms are failing at digital transformation.
• Five firms have surpassed $1 trillion in value: Apple, Microsoft, Alphabet, Meta, Amazon, Nvidia
• Firms are investing most of their R&D to AI.
• Nvidia leads in providing microprocessors.

AI Risks

• AI systems can be actively discriminating, biased recommendations.
• GenAl can often leave gaping security holes.
• Chatbots can often hallucinate or seemingly make things up.
• Al requires constant job training
• Tech can fight crime, advance cleantech, diagnose diseases and fuel life-science breakthroughs.
• Alexa, Siri, and Google Home are getting increasingly GenAl smart.

Digital Transformation Challenges

• Risk of failure in organization-wide transformation:
• Forbes (2016): 84%
• Bain & Company (2017): 95% (vs 88% for other types)
• McKinsey & Company (2019): 70%
• BCG (2020): 70%
• KPMG (2020): 73%

Revolution

• Young adults created technology firms like
• Michael Dell, a sophomore - Bill Gates, an undergrad
• Mark Zuckerberg: Nineteen-year-old sophomore, Steve Jobs: Twenty-one, Sergey Brin and Larry Page: Twenty-something doctoral students

Finance

• Tech firms drive new financing approaches like IPO markets and M&A.
• Al is beating major trading indexes
• Employment includes: Lending and evaluating technology in firms, using AI/Machine Learning models.

Marketing

• Surveillance: Online channels are being used to monitor consumers.
• CRM: Customer relationship is for automation.
• social technology's: Firms are shifting towards the web because you can modify, track and analyze.

Supply Chain

• SCM: Optimize supply chain management system for network optimization
• BPM: Operations management is focused on goods and services with operations excellence
• There are Quality programs and redesign. AR/VR for workforce employment.

Management

• The recruiting is online.
• KMS: Knowledge management systems are transforming into social media technologies.
• AI is used for hyperautomation and process improvement efforts.

Accounting

• Public audit's reliability are tied to the technology. Blockchain forensics are increasing.
• An Act raises the executive and board responsibilities with financial violations.
• Advisory: Major accounting firms have spawned tech-focused consulting practices.
• The Sarbanes-Oxley Act raises responsibilities and ties criminal penalties to accounting problems.

End of Session

• The next session will include disruptive technology.