The Techno-MBA: The Key to the Success of Management Science in Business Schools

James Dyer, Leon Lasdon, Timothy Ruefli

Department of Management Science and Information Systems

College and Graduate School of Business Administration

University of Texas

Austin, TX, 78712

j.dyer@mail.utexas.edu, lasdon@mail.utexas.edu, t.ruefli@mail.utexas.edu

 

Introduction

The role of management science in schools of business administration is a cause of considerable concern among both academics and professionals. Recent articles in MS/ORORMS Today have pointed to an increase in the number of MBA programs where management science has been dropped as a core course (see Willemain, 1997 and Lasdon, forthcoming). As a result, the number of opportunities for Ph.D. graduates in management science in business schools has dropped significantly, and many current management science/operations research faculty feel that they are not appreciated or involved in the mainstream of business school curricula. This issue has also been the topic of several sessions in recent INFORMS meetings, notably in San Diego, and was recently addressed in a special session before the INFORMS Roundtable to discuss the implications for practitioners.

Several suggestions have been made to attempt to reverse this trend. Most have focused on improving the relevance of the required management science courses by focusing on cases ([Powell, 1996,ref Horner, 1995]., modeling instead of algorithms (ref[Willemain, 1997], the use of spreadsheets (see [Willemain, 1997], and a trio of articles on OR & Spreadsheets in the Feb. 1997 issue of ORMS Todayref.), or "real world" case studies.or teaching using cooperative active learning [Liebman, 1994], [Lasdon and Liebman, forthcoming]. Also see the monthly "Issues in Education" department of this journal We applaud all of these efforts, and consider them to be valuable suggestions that should improve the pedagogy of management science courses in general. However, we do not feel that these suggestions alone will be sufficient to reverse the negative position that management science has assumed in many schools of business. Instead, we feel that a different conceptual model of business school education offers the opportunity for a synergistic link between management science and information systemsóthat model is the Techno-MBA.

By Techno-MBA is meantwe mean an MBA program that combines the traditional core MBA courses with a concentration composed of courses in information technology (IT) in a business context. These latter courses coverboth thesome technical aspects of IT as well as its use in meeting both the operational and strategic objectives of organizations, and include consideration of the organizational and human factors involved in implementing the technology. By their very nature the IT application courses tend to beare cross-functional.

As a case in point, we offer the experience of the Department of Management Science and Information Systems (MSIS) at The University of Texas at Austin. During the 1992-93 academic year, the MBA program was revised, and the management science course was dropped from the MBA core. Only a one semester hour course in IT was in the 27 hour core, and the long run viability of the department was in jeopardy. This was and is a distinguished department which has included or includes such prominent members of INFORMS as Abraham Charnes, William D. Cooper, Darwin Klingman, Fred Glover, Leon Lasdon, and Andrew Whinston. As a response to the elimination of the management science course from the core, the MS faculty ,in alliance with the IS faculty, defined the concept of a Techno-MBA as a concentration in the new MBA program. The success of this program, its impact on the management science faculty, and its implications for future faculty members are the focus of this article.

Background

During the 1992-93 academic year at UT Austin, several Graduate School of Business (GSB) committees met to revise the existing MBA program. Oneof the criticisms of the existing program was that the number of required core courses was too large (36 semester hours) and early in the design process a constraint of at most 27 hours in the core was established. Surveys of graduates of the program were taken, and they were asked to evaluate the core courses they had taken on several dimensions. It came as no surprise to learn that the old management science core course did not fare too wellfared very badly in this survey, particularly since many of the graduates had taken the course as many as 10 years earlier when it had been taught with an emphasis on calculations, methods and algorithms.

The management science faculty was in the process of responding to these concerns, which were well known, by revising the course to rely much more heavily on spreadsheet modeling and cases, as has been suggested in several articles that have appeared on these pages. However, in the first iteration of the new program design, the plan was to reduce many of the core courses to modules that would last for half of a semester. Given the feedback from the students and the objective of reducing the size of the core, we volunteered to have the required management science course offered in this format. This was compensated somewhat by the decision to include a new half semester module on information systems in the core. in the area of information systems

AtIn the very last stages of the process, the political processpolitics raised its head as various groups that initially had been assigned half-semester modules lobbied for a full semester course due to the "critical" value of their respective areas, meaning that if some courses were to be increased in size, others would be reduced. The final vote was taken, coincidentally, when several of the key faculty from the MSIS Department were attending the Fall 1992 TIMS/ORSA Meeting in San Francisco, and the committee voted to eliminate the required management science course rather than reduce the size of any other courses. At this point, a decision was also made to offer only a one semester-hour IT course.

Needless to say, the implications of these decisions for the MSIS Department faculty were not positive. The department had viewed the management science core course, like its other offerings in statistics, as a "service" to the MBA program, and otherwise had focused on the Ph.D. program. At about the same time, and not coincidentally, the market for academic positions for graduates from this program werewas declining not good. It seemed clear that management science in particular and, to a lesseor extent, information systems were not viewed as playing a major role in MBA programs on a nation-wide basis. This perspective applied in particular to the perceived role of management science in the overall direction of the GSB. The tTenure prospects for non-tenured faculty were diminishedseemed dim, since some they were now relegated in some cases to teaching required undergraduate statistics courses that were previously offered by graduate students and part-time instructors.

The Techno-MBA

The MSIS Department did have one key program that was offered as a part of the MBA degree. In 1985, with the support of a grant from IBM and under the leadership of the late Professor Darwin Klingman, a small "experimental" program in Information Systems Management (ISM) was started in Classroom 2000, an innovative teaching environment (at the time) that featured networked PCs and a sophisticated media control system operated by the instructor. Theannounced goal of this program was to educate the future IS managers of Fortune 500 companies, which were still focused on a mainframe information systems environment. Enrollments were restricted by the size of the classroom to 25 per year out of an entering MBA enrollment of approximately 450, and the initial graduates from the program had some difficulty finding jobs since recruitersfrequenting the business school were not looking for individuals with their skills.

However, by 1992-93 the situation had changed dramatically, driven in part by the changes in information technology and its impacts on business. Client-server systems were effectively decentralizing information systems operations in companies, and many recognized the need for sophisticated information specialists in functional departments, in the evolving process-oriented organizational structures, and in the consulting companies that were providing guidance to industry in dealing with this changing environment. Under the direction of the last author of this article, the ISM program was reoriented to a client-server focus withan increased emphasisstress on the applications of IT to business functions. A Steering Committee (current list in Appendix) of industry executives that took an active role in specifying the knowledge that should be required of the programís graduates was established. ISM The program faculty used this information to redesign current courses and to design new courses. In particular, the members of theSteering Committee specified that ISM graduates should have a course in management science. With this charter, the second author of this article developed a management science course that combined the IT knowledge of the ISM students with computerized management science applications packages--and resulted in a courseone that stressed problem formulation and structuring, computerized data analysis, and interpretation of results.

As a result of this truly market-driven approach, the 25 to 30 graduates from the ISM program were receiving more offers at higher salaries than the typical MBA graduate, and the Steering Committee of this program was urgingcriticizing the the department tofor not expanding it (because they wanted to hire more of the programís graduates). Business Week (January 31, 1994) featured the UT ISM program in an article on Techno-MBAs. Also note that the Steering Committee were specific in their request that students in the ISM program have a course in management science. This course was modified by Leon Lasdon to capitalize on the IT knowledge and on the recent developments of computerized MS application packages.

The new MBA program adopted by the GSB in 1992 allowed concentrations to be specified, and it seemed obvious that we should expand the ISM program. However, we looked for an even more creative solution to the dilemma at hand, which we, as a department, chose to recognize as an opportunity.

The decentralization of information systems into functional areas suggested that there was a need for individuals with information technology skills who also understood these key functional areas. Therefore, we conceived of a new Techno-MBA program as a concentration in the MBA program with "tracks," which included the functional areas of marketing and finance,in addition to a new track in "change management" (i.e., re-engineering and related concepts),and in addition to the existing ISM program which wascontinued and renamed the Technology Strategies track. Later tracks in health care management and accounting were added. (See: http://www.bus.utexas.edu/~im/)

Building on the curriculum developed for the old ISM program, this new multi-track concentration required three courses in IT: a "hardware, software and telecommunications" course which reviews the state-of-the-art in IT, an information management course which covers the technical and managerial aspects of databases and information system design, and a business and systems change course which provides an exposure to project management and the role of IT in business changeconcepts. Additional courses are required depending on the track selected by the student (e.g., finance, marketing, change management). This program, called the Information Management (IM) concentration, is directed by Professor Thomas Davenport and its structure is shown in Figure 1.

The key insight behind this new program was the following: In the past, management science and information systems had been viewed as service disciplines relative to the functional areas. Currently, and more so in the future, IT will be the key concept driving business, and the functional areas will be thought of as "apps," or areas of application of IT. Further, IT will be the cross-functional "glue" which unites an organizationís functional "stovepipes" and links organizations to their suppliers, customers and alliance partners.

From this perspective, IT becomes a key element in the MBA programs of the future., bBut what is the role of management science? We recognized that in order to offer integrated MBA "tracks" that linked information technology to the functional areas, new courses were needed that focused on applications of IT to these functional areas. Because these applicationsmore oftenthan not involved the use ofinformation in formal decision models and quantitative techniques, we assigned the role of developing these courses primarily to our management science faculty, which required somemuch innovation andsome new learning on their part.

For example, oneof our young assistant professors who was hired to teach the required management science core course and Ph.D. level electives in simulation developed expertise in logistics, which became a critical course in our concentration track linking IT to marketing. More recently, a senior MSIS Department faculty member inthe area of statistics has developed a new data mining course that will be a key part of this joint IT/Marketing concentration.

Another assistant professor developed a new, two-course sequence in financial optimization models and in computational finance. Interest in this area has continued to evolve, and we have recently established a new interdisciplinary Institute for Computational Finance in cooperation with the departments of mathematics and computer science. Finally, a more traditional management science course is still required for all students enrolled in the Technology Strategies track. These initiatives are consistent with the recommendations in [Willemain, 1997] that OR/MS teachers should contribute to courses that blend OR/MS with courses in functional areas of business, especially finance and marketing.

Officially, the IM program is simply another concentration in the MBA program in the GSB at UT Austin. Unofficially, it is an alternate MBA program for the students to choose, a Techno-MBA program, since it provides students with a strong background in IT but still allows them to focus on a functional area. Students who do not choose the IM concentration still matriculate through a traditional MBA program with a one semester hour course in IT taught primarily with cases, and no exposure to management science. It should come as no surprise that students who choose the Techno-MBAoption generally receive more job offers and higher salaries than their counterparts in the "low-tech" option.

The Techno-MBA also defines a new evolutionary model for business education. Historically, business education evolved via developments in the various functional and disciplinary areas. A Techno-MBA approach changes this significantly. Contributions to developments in business education still come from the functional areas and disciplines, but more often theydevelopments are fueled by advancesdevelopments in IT and its applications. Thus the role of MS/IS departments moves fromone of supporting of the functional areasfunctional areas toone of being a source of change and innovation as best practice in business applications of IT are identified by the MS/IS faculty and incorporated in the curriculum, first as courses and then as cross-functional programs that link to faculty in functional departments. In the best of all worlds, these cross-functional programs are turned over to technologically-oriented faculty in the functional areas to free MS/IS faculty to identify and absorb further changes in IT and its applications.

The success of this innovative marriage between management science and IT can be measured in at least three ways. When this concentration was first offered in the 1994-95 academic year, the enrollment in the first year class was approximately 60 students, or roughly twice the size of the old ISM program. In the 1997-98 academic year MBA orientation, of the 425 incoming MBAs, during orientation approximately 215 of the 425 incoming MBAs selected this rigorous program, which is actually beyond the limit on the number of students that we can effectively manage with our existing faculty. It is clear that if this increased demand is to be satisfied, that the size of the MSIS Department needs tomust be expanded. Thus, a department that seemed in danger of losing resources only a few years ago may now be considered a high priority area for new resources. At the Faculty Retreat in the Fall of 1997, the dean announced that IT would be one of three areas of emphasis in the strategic plan of the school, along with entrepreneureship and a focus on Latin America.

Second, the students who graduate from the Techno-MBA concentration benefit from the combination of a strong foundation in IT combined with rigorous analytical courses linking to functional areas and business applications. The 50 graduating IM students in 1997 received an average of 3 jobgood offers each and an average salary of $69,000 and an average total compensation of $80,900. Not coincidentally, the major recruiters from the program are members of the Steering Committee and nearly half of the graduates of the IM program are hired by national consulting firms. Salary offers from some of these latter firms this Fall are in the $90,000 rangeóplus bonus.

This demand is expected to continue. Business Week [Mandel and Gutner, Oct. 13, 1997] estimates that there are 9.1 million jobs in the IT sector. These jobs increased by 4.9% in 1996 (vs. 2% for the rest of the economy) and contributed 20% to 25% of the growth in real wages and incomes in 1996. The contribution to GDP of this sector in 1996 was $420 billion, up 15% from 1995. On this basis, Business Week [Mandel, March 31, 1997] claims that IT is the prime mover of the business cycle. Add to that the notion that IT constitutes the largest category of capital expenditures for the average company. In the October 13, 1997 issue, Business Week estimates that over 500,000 managerial and professional jobs will be added in high tech over the next three years--that's 28% of all such new job positions.

The third measure of success is provided by the recent rankings of Techno-MBA programs in [Computerworld ,1997]. Their top 10 rankings are shown in Table 2(ref). In 1996, the IM concentration in the MBA program at The University of Texas was ranked #3 nationally behind MIT & Carnegie and in 1997 ranked #2 nationally, behind MIT and ahead of CarnegieMellon. These latter two schools graduate 25-30 students annually while UT graduated 50 in 1997 and is projected to graduate 130 in 1998 and 180 in 1999.

Secrets of Success

The development of a successful "Techno-MBA" program, particularly in the context of a large state university as opposed to a small focused program such as those offered at MIT and Carneigie-Mellon, requires a major commitment from information systems and management science faculty. There are several keys to success, and we believe that all of them are critical.

First, there must be a commitment to the concept that IT will be a driving force in business in the future, and that traditional MBA education emphasizing the functional areas is not the only, and perhaps is not the best, model of business education for the year 2000 and beyond.

Second, there must be a partnership between the information systems faculty and management science faculty to offer and maintain a state-of-the-art curriculum in a rapidly changing, technology-driven world.

Third, some management science faculty must be willing to learn about the problems associated with at least one functional area in depth, and teach modeling and problem solving in the context of meaningful problems rather than in traditional, technique-oriented courses. Further, they must be willing to initiate cross-functional programs and to reach out to functional area faculty as partners in this endeavor.

Fourth, an advisory committee of practitioners should be formed to meet with the faculty associated with a Techno-MBA program at least once a year to review the curriculum, to suggest changes in direction, and to identify the latest trends in business.

Fifth, the host college must be willing to make a major commitment to acquiring and maintaining the hardware and software that will support a program offering students access to state-of-the-art tools of analysis. The hardware and software combinations currently used to support the IM concentration at UT Austin are shown in Table 2.

Sixth, a recruiting process, involving IS and line managers as recruiters must be established. Traditional business school recruiting services are usually oriented to dealing with human relations types who do not have the background or knowledge to deal with Techno-MBAs.

In summary, we recognize that the traditional role of management science courses in colleges of business administration is in jeopardy. However, we believe that a creative response that links management science with IT, and emphasizes interdisciplinary programs with traditional functional areas offers new opportunities for the field. There are obvious implications of this approach for faculty and for Ph.D. students. It seems clear that those who specialize in algorithms and computational techniques may have difficulty providing significant value in the business school environments of the future. In contrast, those who emphasize links to IT via modeling and problem solving, and who are willing to gain in-depth knowledge and understanding in both IT and a functional field, will still have a great deal of value to offer. In fact, if the demand for technologically knowledgeable MBAs continues to grow as projected, then the concept of the Techno-MBA may well indicate what Andy Grove of Intel calls a 10X change [Grove, 1996] in MBA education of a magnitude not seen since the introduction of the "New Look" in the later 1940s and 1950s [Gleeson and Schlossman, 1992a, 1992b].

REFERENCES

Computerworld, "The Top 25 Techno-MBAs," May 19, 1997, pp. 86-88.

Gleeson, Robert E. and Steven Schlossman, (1992a). "The Many Faces of the New Look: The University of Virginia, Carnegie Tech, and the Reform of Management Education in the Postwar Era, Part I." Selections, Winter 1992, pp. 9-27.

Gleeson, Robert E. and Steven Schlossman, (1992b). "The Many Faces of the New Look: The University of Virginia, Carnegie Tech, and the Reform of Management Education in the Postwar Era, Part II. " Selections, Spring 1992, pp. 1-24.

Grove, Andrew S., Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company and Career, Bantam Doubleday Dell Pub, 1996.

Horner, P., "Money Talks--the Case for Teaching MS/OR Case Studies in Business Schools," ORMS Today, Oct. 1995, pp. 30-34.

Lasdon, L. and Liebman, J., "Teaching Nonlinear Programming Using Cooperative Active Learning," to appear in Interfaces.

Liebman, J., "New Approaches to Operations Research Education," International Transactions in Operational Research, Vol. 1, No. 2, April 1994, pp. 189-196

Mandel, Michael J., "The New Business Cycle," Business Week, March 31, 1997, 58-68.

Mandel, Michael J., and Gutner, T. "Your Next Job," Business Week, October 13, 1997, 64-70.

Powell, S.," Innovative Approaches to Management Science," ORMS Today, Oct. 1996, pp. 40-45.

Willemain, T. et al., "OR/MS and MBAs: Mediating the Mismatches," ORMS

Today, Vol. 24, No. 1, February 1997.

 

 

 

 

 

FIGURES AND TABLES

 

3M Austin Center

AMR--SABRE Group Holdings, Inc.

American Management Systems, Inc.

Andersen Consulting

Arthur Andersen

Apple Computer

A.T. Kearny

Carnegie Technologies

Compaq Computer Corp.

Coopers & Lybrand LLP

Dell Computer Corporation

Deloitte & Touche Consulting Group

Edward Jones & Company

Electronic Data Systems

Ernst & Young LLP

FedEx Corporation

Ford Motor Company

General Motors Corporation

Hewlett Packard

ISSC, Inc.

Intel Corporation

Insource Management Group, Inc.

Insource Technology Corporation - Internet

Solutions Group

NuMega Tech

Oracle Government & Software

Proctor & Gamble

Stuart & Co.

Sterling Information Group

Texas Instruments Software Division

Trilogy Development Group

Vtel Corporation

Table 1-IM Steering Committee

 

MBA Program Location

Annual Avg.

Annual Avg.

 

Tuition

Starting Salary

1. MIT Cambridge, MA

$23,000

NA

2. Univ of Texas at Austin Austin, TX

$ 1,920(A)

$61,000

3. Carnegie Mellon UnivPittsburgh, PA

$22,100

$68,224

4. University of Minnesota Minneapolis, MN

$ 9,341(A)

$51,569

5. University of Michigan Ann Arbor, MI

$16,800(A)

NA

6. University of Illinois Urbana, IL

$10,122(A)

$65,000

7. University of Arizona Tucson, AZ

$ 2,008(A)

$53,400

8. Univ of PennsylvaniaPhiladelphia, PA

$23,208

$56,000

9. Univ of Cal at Berkeley Berkeley, CA

$10,400(A)

$63,000

10. New York University NY, NY

$23,000

$85,000

NOTE: (A): denotes instate tuition

Table 2-Computerworld Top 10 Techno-MBA Programs

 

 

 

 

Course

Software

Hardware/Net OS

MIS 380N.1 Hardware, Software & Telecommunications

Windows NT client and server

MS Office Professional

MS Front Page

MS Visual Basic 5

MS Exchange & Outlook

Netscape Communicator

Lotus Notes 4.5 & Domino Server

WinFTP and Eudora

47 Pentium PCs connected by Ethernet

2 Dedicated Servers

Twin video projectors

VCR

TV camera

MIS 380N.2 Managing Information

Informix

Oracle 7.3

ERwin

Dedicated Pentium Pro Server

UNIX, HPUX

MIS 380N.3 Business and Systems Change

MS Project

 

MIS 381N.13 Advanced Data Communication

Oracle 8.0

WebServer 3.0

Dedicated Pentium Pro Server

MIS 381N.8 Data Communication, Networks, and Distributed Processing

JAVA

JAVA Script

CGI

 

MIS 382N.4 Cross-Functional Systems Integration

SAP R/3 (all modules)

Dedicated Pentium Pro Server

MIS 383N.1 Computer Audit and Systems Security

Windows NT

Solaris

LINIX

Dedicated Pentium Pro Server

 

 

Table 3-Hardware and Software Requirements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIGURE 1

IM Program Structure