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Management in Information Technology

Since 1990s, Information Technology (IT) has been widely used in many industries. Particularly, Information Technology has modified the way of people doing their job and has changed the process and nature of work both in the public sector and commercial organizations. As rapid growth of information systems and its complexity, the challenges facing managers in these organizations has been increasing significantly. In the information-based organizations, managers both in business department and IT department must learn and extend knowledge and vision of management of information systems.

Through this text, I will provide the relevant understandings and theories that modify some issues and illustrate some solutions in order to deal with some challenges in information systems management in commercial organizations. This essay will introduce a brief overview of business information systems, and explain the relationship between business staff and IT operators, for instance the well communication and co-operation during the implementation of IT project that is related to the business sector. Moreover, this work identifies the main issues and considerations in information systems operation, and defines the theory and methodology of IT service management, such as service level management and return on investment. The purpose of this essay is to address several aspects in order to understand the importance of information systems operation, improve the quality of business service that based on information technology, and enhance the level of management of information systems.

I. Basic Information Systems Infrastructure for Business

1. The basic structure of information systems

Today it is widely recognized that most organizations need information systems to survive and succeed in the competitive business environment. Information systems can help companies extend their business range to far-away locations, offer new products and services, reform organization structure and work flows, and perhaps significantly change the way they operate business.

What is the information system? Kenneth C. Laudon and Jane P. Laudon(2002; 47) defined that an information system can be defined technically as a set of interrelated components that collect or retrieve, process, store, and distribute information to support decision making, coordination, and control in an organization.

By standing the side of information technology, a well-developed information system infrastructure is basically consist of telecommunication network systems, hard ware, software, and database.

Kenneth C. Laudon and Jane P. Laudon(2002; 96) offered the following definitions about these main components in information systems.
a) Telecommunication network system is constructed by physical devices and software that link various computer hardware components and transfer data from one physical location to another.
b) Hardware, including clients and servers, is a general concept of the physical equipments that are used for input, processing, and output activities in an information system.
c) Software is the detailed instructions that control the operation of a computer system. Software manages computer resources and acts as an intermediary between organization and stored information. There are two types of software that are system software and application software.
d) Database is a collection of data organized to service many applications at the same time by storing and managing data so that they appear to be in one location.

By establishing an efficient information system, many commercial organizations shift their business processes to be the E-mode instead of the traditional business model.

II. The functions and contribution of internal information systems and external information systems for business operation

1. Internal organizational impacts of information systems use

In recent decades, advanced information systems as a fundamental organizational component affects the internal organizational management that is related to organizational structure design and management control system, such as monitoring and evaluating workforce’s performance, controlling workflow.

Information systems can serve managerial team to be effective and reduce management cost. For example, an advanced manufacturing system is able to assist a single manager to supervise the work of a large number of employees that resulted reduction of supervisor’s number. An obviously benefit will be seen that the cost of human resource in a commercial organization can be cut down. Information systems also plays a very important role that assist managers to monitor, evaluate the employees’ performance. Then, the employees will gain their salary and reward according to the judgment by information systems. For instance, a manager in customer support center can trace and monitor each process of customer service that has done by his or her subordination because the database of customer service records all relevant data, including customer’s questions, the question’s status, relevant solutions and feedback of customer’s attitude.

As computerization in a company, the number of mixed-skilled workforce will increase and the organizational structure will be adapted and optimized. In the past, a traditional organizational structure generally is a hierarchical model. Keri E. Pearlson (2001; 37) explain that
“hierarchical structures are those where individuals are part of a bureaucracy in which each person has a single supervisor. When work is to be done, it typically comes from the top and is segmented into smaller and smaller pieces until it reaches the level of the business in which it will be done.”
In contrast, by using information system, the organization shifts to be flatter and form a networked structure that both of changes show their ability to promote flexibility and to improve the productivity. Meanwhile, as a result of centralizing the data store and easily communicating in flat and networked organizational structure, the executives making decision is more timely and accurate.

Since these internal aspects have been improved by advanced IT, the business operation for customers, in the same time, have been affected significantly.

2. Business process changed by efficient business application solutions

The contribution done by information technology is not only focusing on internal organizational management, but also to be demonstrated in improvement of business process.

An enterprise information system is a comprehensive business application software package that contains all business modules needed to run the business process. According to the description shown in Keri E. Pearlson’s literature, an enterprise information system basically should include modules to support the following:

a) Manufacturing module, which contains materials management, inventory, equipment maintenance, production planning, routing, shipping, purchasing, etc.
b) Accounting module, which contains general ledger, accounts payable, accounts receivable, cash management, forecasting, cost-accounting, profitability analysis, etc.
c) Human resources module, which contains employee data, position management, skills inventory, time accounting, payroll, travel expenses, etc.
d) Sales module, which contains order entry, order management, delivery support, sales planning, pricing, etc.

In traditional way, when a company operates a business processes, the data organized separately in each divisions which were designed by functions rather than by requirement of operating process. By well-defined business processes and modified the procedure of tasks, enterprise information systems can enable to redesign the traditional division structure and business processes to be new one. Through use of information systems, all data will be centralized in the database in order to help each sector in the company share data to implement business process efficiently and accurately. For instance, when sales department provide the information that some new order were created, this information will be transferred shortly to manufacturing department and accounting department. The following step in process will be that manufacturing department will arrange production based on customer’s requirement. In the meantime, accounting staff will prepare the invoice for the payment from customer and arrange capital for some relevant expenses, such as fee for shipment and material purchase.

Due to rely on a powerful enterprise information system, the company gains numerous benefits and enhances its capability against competitors, such as reduction of producing cost, fast delivery of service and production to customer, and quick response of customer support and trouble shooting.

III. Issues and Consideration in Management of Information Systems

1. Advanced management tools versus Challenge and Risk

1.1 Background

The information systems in the commercial organizations have become more complex than few years before. The market demand of using management tools to monitor each component of the information systems infrastructure is dramatically increasing.

According to the report, Giga Research Group claim that the infrastructure management space is composed of three major categories of service management (see Figure 1). Firstly, service assurance layer deals with infrastructure problems, which occurred in hardware, software or network systems, in real time and quasi-real time by monitoring, alerts, root-cause identification of problems and suggestions for corrective actions. Secondly, service verification is a key layer in the liaison between business and IT operations that points out where service levels are agreed on and where specific performance targets are assigned to the IT department. Last one is service forecast that concerned with the changes to the fundamental services of IT, such as whether changes are needed now, as a reaction to unforeseen problems in architecture and infrastructure capacity that means performance management, as a planning for establishing new systems that will relate to capacity planning or as an evaluation of the business process impact of IT services that will link with business process performance management.

The Service assurance level is basic and primary stage in infrastructure management system. In this level, establishing network management and server management is generally first step for the most commercial organizations in order to solve the problems during the operation, such as overloading data transmission, data-frag or system crush-down.

1.2 Network management

Today, information technology, particularly telecommunication systems, lets business processes transcend the firm’s boundaries or its country’s borders. With electronic data interchange and Web-based technology, business information flows freely from one firm to another. Through WAN and LAN, users in the network can send or receive variety of media and information, such as e-mail, internet phone, video conferencing, and electronic data transfer.

Due to the numerous of data interchange, number of nodes increases rapidly and communication paths grow longer and more convoluted, obviously, network management is important to maintain the performance of the “high-way”. Both physical network instruments and logical network must be managed, including customer terminals, local cabling, modems, VPN, and lines or links. Frequently, communication software, network application servers, routers, and switches also must be managed.

Many IT vendors offer products to help manage network systems. These products include Hewlett-Packard’s OpenView, Bay Network’s OPTIVITY, IBM’s Tivoli, and Cisco Systems CiscoWorks. These management tools assist network managers to keep networks and their many devices performing satisfactorily by discovering and monitoring equipment inventory, remote controlling, configuring, and tuning, as they grow and expand.

No matter which tool is used, all the products follow the disciplines of network management defined by the International Standard Organization (ISO), which consists of “fault management, configuration management, accounting management, security management, performance management, and adjacent areas such as planning.”

1.3 Server performance management

It is a trend that many commercial organizations prefer to establish a centralized enterprise information system in order to control information resources and business operation more directly and more effectively. While, IT managers will face the challenge and very high risk that once the central system is broken down for minutes, all business process and internal workflow will be stopped because of this incident. A centralized enterprise information system depends on powerful computer capacity and on high performance of system resources. There are six elements form the performance management discipline, stated by Carroll W Frenzel, which are defining performance, planning performance, measuring performance, analyzing performance, reporting results and tuning the system.

Systems hardware, operating systems and application programmes are all scoped into the range of performance management. Performance measurement include CPU performance and associated hardware and software performance. System response time is the key standard, which relates to CPU hardware, I/O channel, and other devices, and also links to operating system and application programmes, to define the performance level.

Performance planning is a process to establish objectives that will be identified by some parameters, such as system response time, transaction processing rate, workload of CPU, memory or I/O and etc.

By means of measuring performance and analyzing measurement, a large and complex centralized enterprise information system can be monitored, managed and enhanced. Through use of management tools, IT experts are able to discover the serious system event, such as slow storage access or overloaded system resources. Then, when gathering and analyzing all necessary event record and parameter data, IT experts will notice the gap between current system performance and planning objectives. Finally, these IT staff must take corrective action to improve system performance, which is called system tuning, in order to achieve the requirement of business growth. All of management means or procedure are reviewed by regular reports that reflect performance both IT team and enterprise information systems.

2. IT managers’ consideration

2.1 Relationship between business sectors and IT department

No doubt that information systems facilitate commercial organization to be successful. However, what is the core competitive advantage for the organization? The people, that include all staff both in business sectors and in IT department, are the key to capturing the benefits of technological advances in information age. A well co-operational relationship is the critical link between business sectors and IT department to affect the impact of using information system. “To achieve maximum effectiveness, IT manager must execute their management systems harmoniously with others.”

When business sectors want to release several new services or productions to the market, IT department definitely has responsibility to provide relevant information and suggestion to business sectors. These information or suggestion must relate to following factors:
a) Whether current systems capacity can afford the business growth once the new product or service is released.
b) According to the present technique development and the program developing ability, how many days the new customized application for the new service or product can be launched.
c) The technical risk and cost for launching the new product or service.
Meanwhile, business sectors also need to clarify the main points to IT department, which must include:
a) Addressing the functions and bottom-line of requirement of new product or service.
b) Estimating market potential and daily volume of business transaction in order to design the system capacity and system architecture.
c) Settling timetable
By interactively communicating and supporting, project implementation can be smoothly fulfilled.

2.2 Knowledge Management

Both telecommunication network and systems are only basic infrastructure that their initial task is transfer and transact data, information and knowledge. The fact is that organization gains only limited benefit from knowledge isolated with individual sector or individuals. To obtain the full value of knowledge and maximum competitive advantage, commercial organizations must improve their managerial level of knowledge management. Especially in IT department, IT managers need to consider why manage knowledge and what is efficient way to manage knowledge.

Defined by Drucker, Peter F(1998:45), knowledge is a mix of contextual information, values, experiences, and rules. It is richer and deeper than information, and more valuable because information combined with personal experience, judgment, and wisdom shift to be knowledge.

There are some evidences to prove the importance of knowledge management. Firstly, Sharing knowledge, that is one of themes of knowledge management, is a vital element to achieve success in an application development project. Each programmer needs to share his or her information with others. And then, according to other team members’ suggestion, experience, and project requirement, this programmer revise the part of application programme done by him or her. Secondly, as information systems become more complex and large, and IT knowledge changes rapidly, system administrators and IT managers are hard to well know every piece of new knowledge shortly. Knowledge management provides a way to optimize the use of existing knowledge and sort, organize, and store new knowledge regularly and transfer them timely to each IT staff if they need.

Keri E. Pearlson(2001: 197) indicate that knowledge management involves three main processes that are the generation, codification, and transfer of knowledge. Knowledge generation concerns the “intentional” activities of an organization to acquire or create new knowledge. The persistent action should be acquisition of knowledge, research or development of knowledge by adding new concept, and adaptation of knowledge against out competition or new challenge brought by market environment change. Knowledge codification is a main part of knowledge management, which is composed of defining strategic intent, identifying and evaluating existing knowledge, merging and organizing existing knowledge and new one, and storing knowledge into appropriate media for future transfer. Knowledge transfer is formed by different way that can be regular training, self-accessing knowledge database, testing, and etc.

2.3 Financial consideration—TCO & ROI

Effectively operating an enterprise information system means that the information system can be a large and growing portion of annual budget of organization. To maintain systems’ high reliability, IT department regularly spends money on investment of extending hardware capacity, upgrading software version, developing customized application, and etc. Increasingly, IT managers have to consider and review all costs of operating information systems. When IT department establish a new enterprise information system, IT managers not only concern the technique advantages and the expenditure of equipment purchase, and also need to consider the term of project implementation and employees training that are invisible costs and issues to affect a IT project being success or failure. Once a new enterprise information system is successfully implemented, annual maintenance expenditure on infrastructure, including telecommunication, system’s warranty, electricity power supply, will be considered. In present decade, Outsourcing that means organizations move people and work segments to specialty vendors, which is claimed by Carroll W. Frenzel (1999:512), is a way to reduce IT maintenance expenditure.

On the other hand, satisfied IT service can be a resource for the entire organization to facilitate gaining profit from customer, that will partly recover the investment on machines, software and people. Paul A. Strassmann(1990:14) believes that far beyond the traditional return on investment (ROI) theory that focuses on earnings per share and revenue growth, ROI contributed by the advanced information systems is thought as how efficiently supporting business mission and contributing to productivity. For example, both CEO and IT managers will consider whether their service or product can satisfy their customer against competitors, whether the information system can delivery service or product faster that competitors, and whether the new information technique can reduce the business operating cost, when they invest a new enterprise information system.

3. SLA-the measurement of the performance of IT department

3.1 What is SLA

How to provide the satisfied service and how to meet the requirements of the business departments are the next questions that IT manager should consider. And also, To avoid the misunderstanding and clarify the service standard, organizations must use rational management techniques to set and meet realistic expectations. SLA (Service-Level Agreement) is the means of filling the gap between IT service level and expectations of the business departments. One very important result of the service-level agreement process is that each department in the entire organization clearly understands what is expected from and delivered by computer center operations.

Carroll( 1999) claim that Service-Level agreements are the foundation of a group of management processes collectively called disciplines. Disciplines, which were mentioned in previous section, are management processes consisting of procedures, tools and people organized to govern important facets of computer system operations, whether located in IT organization or business organizations.

Service-Level agreement is a continuous procedure, including service level definition, service measurement, service report, and service improvement.

3.2 How to create and implement SLA

There are three sectors, which are customer, business sector and IT department, which involve to settle this agreement. Most players in IT industry unanimously state that service level agreement can be confirmed by following process. Confirming the IT service process, service price and service expectation is first step. After that, IT department will simulate the entire service process for customer. Nest step is to confirm the compulsory components of information system, responsible administrators, and vital technical support resources, which relate to this agreement. Before implementing this service project, IT department need to draft a proposal and quantifying the standard in each critical parameter. During the period of service, Providing the regular SLA report to customers and business sectors is an important part of the work. The last step in this process is that IT department will negotiate with customers and business sectors, then revise and improve the service goal.

SLA seems to be a popularity through out of commercial society. By means of fulfilling SLA, all participants clearly modify and deeply understand their responsibilities and benefits. As a result, high levels of trust, confidence, and respect mutually benefit all the commercial organization’s units and its customers.


In commercial society, management of operating information system is a revolutionary managerial subject. It analyses each issue, concern, and concept related to information systems management. And also, it assists IT managers to escape from failure of implementing IT project or IT service.

However, The priority in commercial organization is not IT, but business operation. To enhance managerial level of operating information systems is a vital and essential strategy that is critical resource to ensure commercial organizations to achieve their business goal. IT manager, who can not narrow his or her thought focusing on technical issues only, should be a hybrid manager with business common knowledge in commercial organization, who has responsibility to concern and involve into business operation and decisions.

Technically, Advanced management techniques construct a reliable infrastructure to ensure providing high quality service or production to the clients. Financial, High quality IS operation reduces enterprises’ operating cost in various way in order to assist them to be more profitable. Commercially, by means of computerized enterprises, they will obtain significant core competence to be survived in fierce competition, and to occupy a larger market share.

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