Information Systems in Business Today
How information systems are transforming business
Emerging mobile digital platform
Growing business use of big data
Growth in cloud computing
Globalization opportunities
Internet has drastically reduced costs of operating on
global scale
Increases in foreign trade, outsourcing
Presents both challenges and opportunities
In the emerging, fully digital firm:
Significant business relationships are digitally enabled and
mediated.
Core business processes are accomplished through digital
networks.
Key corporate assets are managed digitally.
Digital firms offer greater flexibility in organization and
management.
Time shifting, space shifting
Growing interdependence between:
Ability to use information technology and
Ability to implement corporate strategies and achieve
corporate goals
Firms invest heavily in information systems to achieve six
strategic business objectives:
Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival
Business strategic Objectives
Business processes
Software
Hardware
Data management
Telecommunication
Operational excellence:
Improvement of efficiency to attain higher profitability
Information systems, technology an important tool in
achieving greater efficiency and productivity
Walmarts Retail Link system links suppliers to stores for
superior replenishment system
New products, services, and business models:
Business model: describes how company produces, delivers,
and sells product or service to create wealth
Information systems and technology a major enabling tool
for new products, services, business models
Examples: Apples iPad, Googles Android OS, and Netflix
Customer and supplier intimacy:
Serving customers well leads to customers returning,
which raises revenues and profits.
Example: High-end hotels that use computers to track
customer preferences and used to monitor and customize
environment
Intimacy with suppliers allows them to provide vital
inputs, which lowers costs.
Improved decision making
Without accurate information:
Managers must use forecasts, best guesses, luck
Results in:
Example: JCPenneys information system which links sales
records to contract manufacturer
Overproduction, underproduction
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers
Example: Verizons Web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, and so on
Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and suppliers in real time
Examples: Apple, Walmart, UPS
Survival
Information technologies as necessity of business
Industry-level changes
Example: Citibanks introduction of ATMs
Governmental regulations requiring record-keeping
Examples: Toxic Substances Control Act, Sarbanes-Oxley
Act
Dodd-Frank Act
Information system:
Set of interrelated components
Collect, process, store, and distribute information
Support decision making, coordination, and control
Information vs. data
Data are streams of raw facts.
Information is data shaped into meaningful form
Three activities of information systems produce information
organizations need
Input: Captures raw data from organization or external
environment
Processing: Converts raw data into meaningful form
Output: Transfers processed information to people or activities
that use it
Feedback:
Computer/computer program vs. information system
Output is returned to appropriate members of organization
to help evaluate or correct input stage.
Computers and software are technical foundation and
tools, similar to the material and tools used to build a
house.
Organizational dimension of information systems
Hierarchy of authority, responsibility
Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers
Organizational dimension of information systems (cont.)
Separation of business functions
Sales and marketing
Human resources
Finance and accounting
Manufacturing and production
Unique business processes
Unique business culture
Organizational politics
Management dimension of information systems
Managers set organizational strategy for responding to
business challenges
In addition, managers must act creatively:
Creation of new products and services
Occasionally re-creating the organization
Technology dimension of information systems
Computer hardware and software
Data management technology
Networking and telecommunications technology
Networks, the Internet, intranets and extranets, World Wide
Web
IT infrastructure: provides platform that system
on
is built
Dimensions of UPS tracking system
Organizational:
Procedures for tracking packages and managing inventory
and provide information
Management:
Technology:
Monitor service levels and costs
Handheld computers, bar-code scanners, networks, desktop
computers, and so on
Business perspective on information systems:
Information system is instrument for creating value
Investments in information technology will result in
superior returns:
Productivity increases
Revenue increases
Superior long-term strategic positioning
Business information value chain
Raw data acquired and transformed through stages that
add value to that information
Value of information system determined in part by extent
to which it leads to better decisions, greater efficiency,
and higher profits
Business perspective:
Calls attention to organizational and managerial nature of
information systems
Investing in information technology does not guarantee good
returns.
There is considerable variation in the returns firms receive from
systems investments.
Factors:
Adopting the right business model
Investing in complementary assets (organizational and
management capital)
Complementary assets:
Assets required to derive value from a primary investment
Firms supporting technology investments with investment
in complementary assets receive superior returns
Example: Invest in technology and the people to make it
work properly
Complementary assets include:
Appropriate business model
Efficient business processes
Managerial assets, for example:
Incentives for management innovation
Teamwork and collaborative work environments
Social assets, for example:
The Internet and telecommunications infrastructure
Technology standards
Technical approach
Emphasizes mathematically based models
Computer science, management science, operations
research
Behavioral approach
Behavioral issues (strategic business integration,
implementation, etc.)
Psychology, economics, sociology
Management Information Systems
Organizational assets, for example:
Combines computer science, management science,
operations research, and practical orientation with
behavioral issues
Four main actors
Suppliers of hardware and software
Business firms
Managers and employees
Firms environment (legal, social, cultural context)
Approach of this book: Sociotechnical view
Optimal organizational performance achieved by jointly
optimizing both social and technical systems used in
production
Helps avoid purely technological approach
