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Lecture 1 - Is in Business Today

Information systems are essential for businesses today to achieve strategic objectives like operational excellence, new products and services, customer intimacy, improved decision making, competitive advantage, and survival. They involve the collection, storage, and distribution of data to support management and organizational functions. Contemporary approaches to information systems view them as consisting of organizational, management, and technology dimensions that must be aligned. From a business perspective, information systems are part of a value chain that transforms raw data into useful information to improve performance and profits.

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Siddhartha Patra
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73 views26 pages

Lecture 1 - Is in Business Today

Information systems are essential for businesses today to achieve strategic objectives like operational excellence, new products and services, customer intimacy, improved decision making, competitive advantage, and survival. They involve the collection, storage, and distribution of data to support management and organizational functions. Contemporary approaches to information systems view them as consisting of organizational, management, and technology dimensions that must be aligned. From a business perspective, information systems are part of a value chain that transforms raw data into useful information to improve performance and profits.

Uploaded by

Siddhartha Patra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Session 1

Information Systems in
Business Today
Learning Objectives

Define an information system and its components


Management
Organization, and
Technology

Business information value chain

Contemporary approaches to information systems

Explain why information systems are so essential in business


today
Strategic business objectives
The Role of Information Systems in
Business Today

How information systems are transforming business


Increase in wireless technology use, Web sites
Increased business use of Web 2.0 technologies
Cloud computing, mobile digital platform allow more distributed
work, decision making, and collaboration

Globalization opportunities
Internet has drastically reduced costs of operating on global
scale
Presents both challenges and opportunities
Information Systems

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
Information Systems

Data and Information

Figure: Raw data from a supermarket checkout counter organized to get meaningful
information
Perspectives on Information Systems

Information systems have three activities:

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:
Output returned to appropriate members of organization to help
evaluate or correct input stage
Perspectives on Information Systems

Figure: Activities of an Information System


Perspectives on Information Systems

Business organizations are


hierarchy of authority and
responsibility consisting of
three principal levels:
- senior management
- middle management
- operational management

Figure: Management Levels in a Firm


Perspectives on Information Systems

Using information systems


effectively requires an
understanding of the
organization,
management, and
information technology
shaping the systems.

An information system
creates value for the firm
as an organizational and
management solution to
challenges posed by the
environment.

Figure: Information Systems are More than Computers


Perspectives on Information Systems

Organizational dimension of information systems


Separation of business functions
Sales and marketing
Human resources
Finance and accounting
Manufacturing and production
Unique business processes
Unique business culture
Perspectives on Information Systems

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


Perspectives on Information Systems

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 is built on


Business Perspectives on Information
Systems
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 Perspectives on Information
Systems
From a business perspective,
information systems are part
of a series of value-adding
activities
for
acquiring, transforming, and
distributing information
that managers can use
to
improve decision making,
enhance organizational
performance, and
ultimately,
increase firm profitability.
Figure: The Business Information Value Chain
Contemporary Approaches to Information
Systems

Figure: Contemporary Approaches to Information Systems


Contemporary Approaches to Information
Systems
Management Information Systems

Combines computer science, management science, operations


research and practical orientation with behavioral issues

Four main actors:

Hardware and software

Business firms

Managers and employees

Firms environment (legal, social, cultural context)


The Role of Information Systems in
Business Today

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
The Role of Information Systems in
Business Today

Growing interdependence between ability to use IT and ability to


implement corporate strategies and achieve corporate goals

Business 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
The Role of Information Systems in
Business Today

Operational Excellence

Improvement of efficiency to attain higher profitability

Information systems, technology an important tool in achieving


greater efficiency and productivity

Walmarts RetailLink system links suppliers to stores for


superior replenishment system
The Role of Information Systems in
Business Today

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 iPod, iTunes, iPhone, iPad, Googles Android
OS, and Netflix
The Role of Information Systems in
Business Today

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 use to monitor and customize environment
Intimacy with suppliers allows them to provide vital inputs,
which lowers costs
Example: J.C.Penneys information system which links sales
records to contract manufacturer
The Role of Information Systems in
Business Today

Improved Decision Making

Without accurate information:


Managers must use forecasts, best guesses, luck
Leads to:
Overproduction, underproduction of goods and services
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, etc.
The Role of Information Systems in
Business Today

Competitive Advantage

Delivering better performance

Charging less for superior products

Responding to customers and suppliers in real time

Examples: Apple, Walmart, UPS


The Role of Information Systems in
Business Today

Survival

Information technologies as necessity of business

May be:
Industry-level changes, e.g. Citibanks introduction of ATMs
Governmental regulations requiring record-keeping
Examples: Toxic Substances Control Act, Sarbanes-Oxley Act
The Role of Information Systems in
Business Today
The Interdependence between Organizations and Information Technology

Figure: Interdependence between a firms information systems and its business capabilities
Thank You!

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