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Computer technology impact on management
Book Reviews
"Computers may worry some spectators, when approaching man's role as creators. But I'll have no fear and will shed not a tear unless man starts acting like computers."
Editor This well structured and edited book is approximately described by the limerick of the ~:ditor. The purpose of the proceedings and the conference has been to shift from a narrow focus on technical aspects of information processing to a much wider perspective where sociological and psychological issues become the most critical ones. This kind of general attitude should be included in the knowledge basis of each enlightened OR professional. The content has been divided into the four groups: - role of information systems, - impact of information systems, - design of information systems, - look into the future, where the objects of interest are administrative and decision support systems. Some of the generally oriented papers are even politics-ideological in their nature. The most interesting ones, however, are the papers discussing the essence of decision support systems: Eason:
"Computer information systems and managerial tasks"; Tricker: "Order or freedom--the ultimate issue in information systems design"; Mitroff: "Towards a logic and methodology for 'realworld' problems"; Ackoff: "From information to control". In summary I think that it is really worthwhile to be acquainted with the subject area considered in this book.
Pentti KEROLA University of Oulu Oulu, Finland
George A. CHAMPINE Computer
Technology
Impact on Management
North-Holland, Amsterdam, 1978, xv + 292 pages, Dfl. 60.-
4i!
When starting this book I thought that it dealt with the much discussed question of how computerization influences decision-making and organization in the company. To what extent does computerization lead towards a more centralized or decentralized decision structure? Do on-line technology and nfinicomputers lead to decentralization? Or is it technology-neutral--those who want to centralize do so regardless of technology and vice versa. This, however, is not what the book is about. Its title is very misleading. If this is a book on management it is solely for EDP-managers. It is a good survey of todays computer technology and future trends in the field, but the focus is rather technical. Programmers, system designers and others directly working with the computer and with a good knowledge of a certain aspect of computer techn o l o g y - b u t without ti~ae t~ participate in conferences and seminars dealing with other aspects in the EDP field--will appreciate the book. They will receive up-to-date information on most of the technological EDP issues such as hardware technology, software., data communications, central site systems, terminals, distributed data systems, in a clear and pedagogic way. The author is associated with Sperry Univac, but the book is not a sales brochure even if the outlook is that of a computer vendor. An example is that the t;'emendous decrease in hard-ware prices, the revolation of the small chips etc. are presented enthusiastically. Nevertheless when it comes to the larger question "Have the total costs for computerization really gone down?" the presentation becomes more fragmented. Different cost data on the macro level are presented, such as user operating costs on hardware, software, data entry, communications and terminals. Champine concludes that the total cost of EDP has increased somewhat due to higher cost of manpower, higher performance systems and the purchase of data communication. Here one can add that higher demands are being made on the systems today in the field of performance, security, flexibility and man to machine requirements. For the manager faced with the decision of whether to--or, more likely, how to--computerize certaip operations, tlfis information on the economics of EDP is insufficient. That al~plies especially to the manager in the small organization. How can he install minicom-
412
Book Reviews
puters without falling into the ~ame traps as some of the larger organizations did when they started ambitious computerization projects--the MISmistake. Champine says that buying a computer today, and even more so tomorrow, is more or less hke buying a car. That is putting it too easily. The small computers that are now flooding the market promise much, but the vendors often say too little about the administrative prerequisites needed for the small systems and the impact on organization. A computer does not produce an orderly information flow, it demands an orderly input of information. Computerization often has a heavy impact on organization, skills needed and decision making. A general opinion of the book is that it is best when describing hardware, software, data communication and other rather ~,echnical aspects of EDP, but it is less convincing when it deals with the human interface, the impact on management and questions that the more general user of EDP would ask--what about control over the organization, integrity, consequences for work design, demands from labour unions, etc.? For the Scandinavian reader especially the absence of discussion on these matters is conspicuous. Champine's book is very American in its basically 'technology- solves- all- problems' approach. The belief that EDP in one form or other is a must for most companies, should not blind one to the fact that it also has its problems.
Peter GORPE The Swedish Agency for Administrative Development Stockholm, Sweden Jack P.C. KLEIJNEN Computers and Profits: Quantifying Financial Benefits of Information Addison-Wesley, Reading, 1980, xx + 262 pages, US $ 22.50 The topic of this book is how to quantify the financial benefits of computerized information for managerial decision making. The book has ten chapters with the following contents: Chapter I is a brief introduction. Chapter 2 discusses different decision types (operational, tactical, and strategic) and their different needs for information. Also, the relationship between an
organization's physical system, data processing, information system, and decision system is discussed. Chapter 3 considers briefly various technical aspects of computer performance, such as response time and reliability, and how they can be measured. Chapter 4 treats scoring methods. The motivation is that scoring methods may be used in the evaluation and selection of a computer system. .Since scoring methods are a special case of more general utility functions, the chapter includes a discussion of decision-theoretic approaches to utility measurement as well. Chapter 5, the longest one in the book, contains a 'microeconomic framework', meaning an assortment of approaches and models from microeconomics, managerial economics, and accounting. These approaches and models relate to the supply and demand for computers and information, the pricing of computer jobs, and investment analysis. Chapter6 discusses various attributes of information, such as timeliness and accuracy. Chapter 7 outlines the well-known decision-theoretic approach to the evaluation of information, in the context of ~ simple decision tree example of the 'newsboy' type. The extension to multi-person, or team, decisions is also considered. Chapter 8 comments on various models, more or less relevant for the quantification of information value, incluc3ing control theory, Forrester-type systems dynamics, simulation, and linear programming. Chapter 9 reports on original research by the author: a computerized management game, where the effect of various degrees of accuracy of production and ~ales information could be studied experimentally. Chapter 10 is a brief conclusion. It is evident from this brief description of the contents that this book includes a rather wide range of materials. This brings up one weakness of the book: It is not always clear how the various materials are related to the main issue~ formulated at the outset of the book: the quantification of the value of computerized information for decision making. In fact, the reader has the impression of going through a discussion of various methods and models related only in a rather loose sense to computers and computerized information. On p. 135, the author--correctly, in this reviewer's opinion--identifies information economics (which includes decision theory and the newsboy exampie) as the only theoretical structure explicitly focusing on the central issue of the book, the value of an information system. One wishes that the
"Computers may worry some spectators, when approaching man's role as creators. But I'll have no fear and will shed not a tear unless man starts acting like computers."
Editor This well structured and edited book is approximately described by the limerick of the ~:ditor. The purpose of the proceedings and the conference has been to shift from a narrow focus on technical aspects of information processing to a much wider perspective where sociological and psychological issues become the most critical ones. This kind of general attitude should be included in the knowledge basis of each enlightened OR professional. The content has been divided into the four groups: - role of information systems, - impact of information systems, - design of information systems, - look into the future, where the objects of interest are administrative and decision support systems. Some of the generally oriented papers are even politics-ideological in their nature. The most interesting ones, however, are the papers discussing the essence of decision support systems: Eason:
"Computer information systems and managerial tasks"; Tricker: "Order or freedom--the ultimate issue in information systems design"; Mitroff: "Towards a logic and methodology for 'realworld' problems"; Ackoff: "From information to control". In summary I think that it is really worthwhile to be acquainted with the subject area considered in this book.
Pentti KEROLA University of Oulu Oulu, Finland
George A. CHAMPINE Computer
Technology
Impact on Management
North-Holland, Amsterdam, 1978, xv + 292 pages, Dfl. 60.-
4i!
When starting this book I thought that it dealt with the much discussed question of how computerization influences decision-making and organization in the company. To what extent does computerization lead towards a more centralized or decentralized decision structure? Do on-line technology and nfinicomputers lead to decentralization? Or is it technology-neutral--those who want to centralize do so regardless of technology and vice versa. This, however, is not what the book is about. Its title is very misleading. If this is a book on management it is solely for EDP-managers. It is a good survey of todays computer technology and future trends in the field, but the focus is rather technical. Programmers, system designers and others directly working with the computer and with a good knowledge of a certain aspect of computer techn o l o g y - b u t without ti~ae t~ participate in conferences and seminars dealing with other aspects in the EDP field--will appreciate the book. They will receive up-to-date information on most of the technological EDP issues such as hardware technology, software., data communications, central site systems, terminals, distributed data systems, in a clear and pedagogic way. The author is associated with Sperry Univac, but the book is not a sales brochure even if the outlook is that of a computer vendor. An example is that the t;'emendous decrease in hard-ware prices, the revolation of the small chips etc. are presented enthusiastically. Nevertheless when it comes to the larger question "Have the total costs for computerization really gone down?" the presentation becomes more fragmented. Different cost data on the macro level are presented, such as user operating costs on hardware, software, data entry, communications and terminals. Champine concludes that the total cost of EDP has increased somewhat due to higher cost of manpower, higher performance systems and the purchase of data communication. Here one can add that higher demands are being made on the systems today in the field of performance, security, flexibility and man to machine requirements. For the manager faced with the decision of whether to--or, more likely, how to--computerize certaip operations, tlfis information on the economics of EDP is insufficient. That al~plies especially to the manager in the small organization. How can he install minicom-
412
Book Reviews
puters without falling into the ~ame traps as some of the larger organizations did when they started ambitious computerization projects--the MISmistake. Champine says that buying a computer today, and even more so tomorrow, is more or less hke buying a car. That is putting it too easily. The small computers that are now flooding the market promise much, but the vendors often say too little about the administrative prerequisites needed for the small systems and the impact on organization. A computer does not produce an orderly information flow, it demands an orderly input of information. Computerization often has a heavy impact on organization, skills needed and decision making. A general opinion of the book is that it is best when describing hardware, software, data communication and other rather ~,echnical aspects of EDP, but it is less convincing when it deals with the human interface, the impact on management and questions that the more general user of EDP would ask--what about control over the organization, integrity, consequences for work design, demands from labour unions, etc.? For the Scandinavian reader especially the absence of discussion on these matters is conspicuous. Champine's book is very American in its basically 'technology- solves- all- problems' approach. The belief that EDP in one form or other is a must for most companies, should not blind one to the fact that it also has its problems.
Peter GORPE The Swedish Agency for Administrative Development Stockholm, Sweden Jack P.C. KLEIJNEN Computers and Profits: Quantifying Financial Benefits of Information Addison-Wesley, Reading, 1980, xx + 262 pages, US $ 22.50 The topic of this book is how to quantify the financial benefits of computerized information for managerial decision making. The book has ten chapters with the following contents: Chapter I is a brief introduction. Chapter 2 discusses different decision types (operational, tactical, and strategic) and their different needs for information. Also, the relationship between an
organization's physical system, data processing, information system, and decision system is discussed. Chapter 3 considers briefly various technical aspects of computer performance, such as response time and reliability, and how they can be measured. Chapter 4 treats scoring methods. The motivation is that scoring methods may be used in the evaluation and selection of a computer system. .Since scoring methods are a special case of more general utility functions, the chapter includes a discussion of decision-theoretic approaches to utility measurement as well. Chapter 5, the longest one in the book, contains a 'microeconomic framework', meaning an assortment of approaches and models from microeconomics, managerial economics, and accounting. These approaches and models relate to the supply and demand for computers and information, the pricing of computer jobs, and investment analysis. Chapter6 discusses various attributes of information, such as timeliness and accuracy. Chapter 7 outlines the well-known decision-theoretic approach to the evaluation of information, in the context of ~ simple decision tree example of the 'newsboy' type. The extension to multi-person, or team, decisions is also considered. Chapter 8 comments on various models, more or less relevant for the quantification of information value, incluc3ing control theory, Forrester-type systems dynamics, simulation, and linear programming. Chapter 9 reports on original research by the author: a computerized management game, where the effect of various degrees of accuracy of production and ~ales information could be studied experimentally. Chapter 10 is a brief conclusion. It is evident from this brief description of the contents that this book includes a rather wide range of materials. This brings up one weakness of the book: It is not always clear how the various materials are related to the main issue~ formulated at the outset of the book: the quantification of the value of computerized information for decision making. In fact, the reader has the impression of going through a discussion of various methods and models related only in a rather loose sense to computers and computerized information. On p. 135, the author--correctly, in this reviewer's opinion--identifies information economics (which includes decision theory and the newsboy exampie) as the only theoretical structure explicitly focusing on the central issue of the book, the value of an information system. One wishes that the