Management Information Systems:

Managing the Digital Firm

Sixteenth Edition • Global Edition

Chapter 1
Information Systems in Global
Business Today [ed. additional
materials added and revised
accordingly for OBE by

Dr. Moh. Amin Soetomo, ST, M.Sc,]

Copyright © 2020 Pearson Education, Ltd. All Rights Reserved

Dear Students of class: Management Information System (M IS-2021 IS-
2021 Class 3),

Greetings and hopefully finding you all in good health, safe and sound.
Let me introduce myself that I am a lecture of yours in MIS class this
coming even semester of 2023, scheduled to begin on Monday, January
9, 2023. The class starts regularly from 10.30 AM till 1.00 PM, and every
week on Mondays and scheduled to get done on May 15th, 2023. Please
attend to every class unless forced major, because it is mandatory
according to President University’s Rules. Thank you and best of luck
this semester to all of you.

Cheers,
Dr. Moh. Amin Soetomo, ST, MSc
Introduction
Faculty of Computing

President University

Management Information System

(MIS)
Graduate Profile of
Informatics Study Program
1. Possessing exceptional skills as a professional in the field of Information
Systems and having excellent abilities to lead innovation in a company at
an enterprise level by utilizing Information Systems technologies.

2. Having a strong technopreneurial drive to develop and lead an

independent business enterprise by incorporating various technologies
and cross-disciplinary approaches.

3. Graduates from Bachelor of Information Systems at President University

will possess high-caliber abilities and skills to advance the field of
Information Systems through the publication of innovative, creative, and
applicable scientific works.
Program Learning Outcomes
Informatics Study Program
1. Analyze a complex computing problem and to apply
principles of computing and other relevant disciplines to
identify solutions.
2. Design, implement, and evaluate a computing-based
solution to meet a given set of computing requirements
in the context of the program’s discipline.
Program Learning Outcomes
Informatics Study Program
3. Communicate effectively in a variety of
professional contexts

4. Recognize professional responsibilities and make

informed judgments in computing practice based on
legal and ethical principles.

5. Function effectively as a member or leader of a

team engaged in activities appropriate to the
program’s discipline.
Program Learning Outcomes
Informatics Study Program
6. apply computer science theory and software
development fundamentals to produce computing-
based solutions

7. Able to analyze, design, and develop a Startup

Business supported by information technology

8. Able to comprehend the basics of research and

scientific writing in the field of informatics
Course Learning Outcomes
MIS Course
• Able to adapt well to the development of various
contemporary technologies, particularly in the field of
Information Systems (supporting PLO number 2)
• Able to carry out a series of analysis activities and formulate
information system needs in an organization/company
(Supporting PLO number 3)
• Able to comprehend an information system in an
organization/company and manage it properly according to
the accepted standards of information system management
(Supporting PLO number 4)
Course Learning Outcomes
MIS Course (cont.)
• Able to develop a monitoring and evaluation plan for an information system
in an organization/company (supporting PLO number 4)
• Able to become a leader who can set realistic and measurable targets for the
success of an information system project (supporting PLO number 7)
• Able to lead digital transformation within an organization/company in
accordance with the latest technological development demands (supporting
PLO number 8)
• Able to utilize the advantages of technology, particularly in information
systems, to support the development of independent business enterprises or
entrepreneurships (supporting PLO number 8)
Profile

https://www.sgu.ac.id/teams/dr-ir-m-amin-soetomo-m-sc/
Background
Merdeka Belajar Kampus Merdeka

• Outcome Based Education

• Blended Learning
• Project Based Learning
• Case Based Learning
Course Goal
Upon completion of this course, students are expected to be able to:

1. Understand an IS in an organization/company & manage it properly

according to the regulation & reputable frameworks of IS management.
2. Carry out requirement analysis & activities and formulate business
processes for information system needs in an organization/company.
3. Design BI, CRM and or ERP, to support the development of small
medium enterprise.
4. Develop a monitoring and evaluation infrastructure, system plan and
development for an IS in an organization/company.
5. Perform agility to the development of emerging technologies,
particularly in the field of IS.
6. Lead digital transformation & change management matched to
industries’ needs, latest technologies, and budget available.
7. Become a leader who can SMART targets for the success of an IS
project.
Learning Activities/Classroom Policy
• Students are required to be in class and to actively
participate in class instructions. Students will complete
quiz/pop quiz, a mid-term exam (project proposal), and a
final project. Students must attend 80% of the class
attendance. For those who fail to attendance the class
more than 3 times are considered serious negligence
and will get substantial consequences toward their
final scores.
Make-up Test
• Make-up tests will be arranged only in cases of illness,
emergencies, or absolutely unavoidable situations.
Students must explain such situations with appropriate
supporting documents to justify a make-up test.
Evaluation

Attendance (5%)

Assignment (25%)

Midterm (30%)

Final (40%)
Grading Policy

A 85-100
B 70-84
C 60-69
D 55-59
E <55
Reference
• Laudon, Kenneth, C. and Jane P. Laudon. Management
Information Systems: Managing the Digital Firm, 15th ed.,
Global Edition.
• Using MIS 9th Edition with MyMISLab Access Card, by
Kroenke & Boyle, copyright 2016
• Kroenke, David. MIS Essentials PDF ebook Global Edition.
Available from: VitalSource Bookshelf, (4th Edition).
Pearson International Content, 2014.
• Other periodicals and or articles
Information Systems in Global
Business Today
Case Study of Premier League: The
Power of IT Analytics (1 of 2)
• Problem
– Improving revenue and player training through Big
Data.
• Solutions
– The Football Manager game simulation as a database
– A system of player-performance-enhancing IT analytics
apps
Case Study of Premier League: The
Power of IT Analytics (2 of 2)
• Use of networked sensors and powerful analytics to drive
business operations and management decisions
• Demonstrates how technology can be used to improve
consumer experience
• Illustrates why information systems are so essential today
How Information Systems Are
Transforming Business (1 of 2)
• By June 2018, more than 160 million businesses
worldwide had dot-com Internet sites registered
• In 2018 1.8 billion Internet users purchased online,
generating $2.9 billion
• Facebook attracted more than 2 billion monthly visitors
worldwide
How Information Systems Are
Transforming Business (2 of 2)
• Social networking tools being used by businesses to
connect employees, customers, and managers
• Internet advertising continues to grow at more than 20
percent per year
• New laws require businesses to store more data for longer
periods
• Changes in business result in changes in jobs and careers
Figure 1.1 Information Technology
Capital Investment
What’s New in Management
Information Systems (1 of 3)
• IT Innovations
– Cloud computing, big data, Internet of Things
– Mobile digital platform
– AI and machine learning
• New Business Models
– Online streaming music and video
– On-demand e-commerce services
What’s New in Management
Information Systems (2 of 3)
• E-commerce Expansion
– E-commerce expands to nearly $1 trillion in 2018
– Netflix now has more than 125 million US subscribers
– Online services now approach online retail in revenue
– Online mobile advertising now larger than desktop
• Management Changes
– Managers use social networks, collaboration tools
– Business intelligence applications accelerate
– Virtual meetings proliferate
What’s New in Management
Information Systems (3 of 3)
• Firms and Organizations Change
– More collaborative, less emphasis on hierarchy and
structure
– Greater emphasis on competencies and skills
– Higher-speed/more accurate decision making based on
data and analysis
– More willingness to interact with consumers (social
media)
– Better understanding of the importance of IT
Interactive Session: Management:
Can You Run the Company with Your
iPhone? (1 of 2)
• Class Discussion
– What kinds of applications are described here? What
business functions do they support? How do they
improve operational efficiency and decision making?
– Identify the problems that the business in this case
study solved by using mobile digital devices.
Interactive Session: Management:
Can You Run the Company with Your
iPhone? (2 of 2)
• Class Discussion
– What kinds of businesses are most likely to benefit
from equipping their employees with mobile digital
devices such as iPhones and iPads?
– One company deploying iPhones has stated, “The
iPhone is not a game changer, it’s an industry changer.
It changes the way that you can interact with your
customers” and “with your suppliers.” Discuss the
implications of this statement.
Globalization Challenges and
Opportunities: A Flattened World
(1 of 2)

• Internet and global communications have greatly

changed how and where business is done
– Drastic reduction of costs of operating and transacting
on global scale
– Competition for jobs, markets, resources, ideas
– Growing interdependence of global economies
Globalization Challenges and
Opportunities: A Flattened World
(2 of 2)

– Requires new understandings of skills, markets,

opportunities
– Challenges yes, but opportunities as well
– Over half of the revenue of S&P 500 US firms is
generated off shore
– Information systems enable globalization of commerce
The Emerging Digital Firm
• In a 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
Strategic Business Objectives of
Information Systems (1 of 2)
• Growing interdependence between:
– Ability to use information technology
– Ability to implement corporate strategies and achieve
corporate goals
Strategic Business Objectives of
Information Systems (2 of 2)
• Firms invest heavily in information systems to achieve six
strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
Operational Excellence
• Improved efficiency results in higher profits
• Information systems and technologies help improve
efficiency and productivity
• Example: Walmart
– Power of combining information systems and best
business practices to achieve operational efficiency—
and over $485 billion in sales in 2017
– Most efficient retail store in world as result of digital
links between suppliers and stores
New Products, Services, and
Business Models
• Information systems and technologies enable firms to
create new products, services, and business models
• Business model: how a company produces, delivers, and
sells its products and services
• Example: Apple
– Transformed old model of music distribution with
iTunes
– Constant innovations—iPod, iPhone, iPad, etc.
Customer and Supplier Intimacy
• Customers who are served well become repeat customers
who purchase more
– Example: Mandarin Oriental Hotel
– Uses IT to foster an intimate relationship with its
customers, keeping track of preferences, etc.
• Close relationships with suppliers result in lower costs
– Examples: Mandarin Oriental Hotel and JC Penney (in
text)
– JC Penney uses IT to enhance relationship with
supplier in Hong Kong
Improved Decision Making (1 of 2)
• Without accurate information:
– Managers must use forecasts, best guesses, luck
– Results in:
§ Overproduction, underproduction
§ Misallocation of resources
§ Poor response times
Improved Decision Making (2 of 2)
• Poor outcomes raise costs, lose customers
• Real-time data improves ability of managers to make
decisions.
• Example: Verizon’s web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, etc.
Competitive Advantage
• Often results from achieving previous business objectives
• Advantages over competitors
• Charging less for superior products, better performance,
and better response to suppliers and customers
• Examples: Apple, Walmart, UPS are industry leaders
because they know how to use information systems for this
purpose
Survival
• Businesses may need to invest in information systems out
of necessity; simply the cost of doing business
• Keeping up with competitors
– Citibank’s introduction of ATMs
• Federal and state regulations and reporting requirements
– Toxic Substances Control Act and the Sarbanes-Oxley
Act
The Interdependence Between Organizations and Information
Technology

There is a growing interdependence between a firm’s information systems and its business
capabilities. Changes in strategy, rules, and business processes increasingly require
changes in hardware, software, databases, and telecommunications. Often, what the
organization would like to do depends on what its systems will permit it to do.

Figure 1-2
• Information system:
– Set of interrelated components
– Collect, process, store, and distribute information
àBy computers and software as a tool
– Support decision making, coordination, control, problem
analysis and create new product
– Provide solutions to challenges in business Env.
• Information vs. data
– Data are streams of raw facts
– Information is data shaped into meaningful form
 Perspectives on Information Systems
Data and Information

Raw data from a supermarket checkout counter can be processed and organized to produce
meaningful information, such as the total unit sales of dish detergent or the total sales
revenue from dish detergent for a specific store or sales territory.

Figure 1-3
 Perspectives on Information Systems

• Information system: activities produce required

information
– Input: Captures raw data from organization or
external environment
– Processing: Converts 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

Functions of an Information System

An information system contains information about an organization and its surrounding environment. Three basic activities—input,
processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the
organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory
agencies, interact with the organization and its information systems.

Figure 1-4
 Perspectives on Information Systems

• Computer/Computer program vs.

information system
– Computers and software are technical foundation
and tools to store and process information
– similar to the material and tools used to build a
house
– Cannot produce required information to a particular
organization
 Perspectives on Information Systems

• Dimensions (boarders) of IS
– Understanding of IS dimensions is IS literacy

– Where computer literacy is focus on primarily on

knowledge of IT

– MIS try to achieve this boarders, deals with

behavioral and technical issues surrounding
development, use and impact of IS in the firm.
Information Systems Are More Than Computers

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 1-5
 Perspectives on Information Systems

• Organizational dimension of IS
– structure: different levels and specialties
§ hierarchy of authority, responsibility: Senior Middle
Operational management, Knowledge service Data
workers
– business process: Organization coordinate its work
through its hierarchy and business process
– Culture : ways of doing things, part is embedded in IS.
 Levels in a Firm

Business organizations are hierarchies consisting of three principal levels: senior

management, middle management, and operational management. Information systems serve
each of these levels. Scientists and knowledge workers often work with middle management.

Figure 1-6
 Perspectives on Information Systems

• Organizational dimension (cont.)

– Experts are employed and trained for different
business functions (tasks):

§ Sales and marketing

§ Human resources
§ Finance and accounting
§ Production and manufacturing)
 Perspectives on Information Systems

• Management dimension
– Make decisions, formulate action plan and solve
organizational problem
– 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
– Computer hardware
– Software: instructions that control H/W
– Data management technology: S/W governing data
– Networking and telecommunications technology
§ H/W and S/W link pieces of H/W and transfer data:
Network, Internet, intranets and extranets, WWW
– IT infrastructure: platform that the firm can built on
its IS
 Perspectives on Information Systems

• Business perspective on IS:

– IS instrument for creating value to firms
– Investments in IS result in superior returns:
§ Increases productivity and revenue
– IS provides information that helps managers making
better decisions and improve the execution of business
process
– Value of IS
 Perspectives on Information Systems

• Business information value chain

– Raw data acquired and transformed through stages
that add value to that information
– Value of information system determined by its
ability to result in better decisions, greater efficiency
of business process, and higher profits

• Business perspective: Calls attention to

organizational and managerial nature of
information systems
 The Business Information Value Chain

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 1-7
 Variation in Returns on
Information Technology Investment

Although, on average, investments in information technology produce returns far above

those returned by other investments, there is considerable variation across firms.

Figure 1-8
 Perspectives on Information Systems

• Investing in information technology does not

guarantee good returns

• Considerable variation in the returns firms

receive from systems investments

• Factors:
– Adopting right business model according (suite) to
new technology
– complementary investments (business processes,
models, management behavior and culture)
 Perspectives on Information Systems

• Complementary assets:
– Assets required to derive value from a primary
investment
– Firms supporting their technology investments with
investment in complementary assets receive superior
returns
– E.g.: invest in technology and the people to make it work
properly
 Perspectives on Information Systems

• Complementary assets include:

– Organizational investments, e.g.
§ Appropriate business model
§ Efficient business processes
– Managerial investments, e.g.
§ Incentives for management innovation
§ Teamwork and collaborative work environments
– Social investments, e.g.
§ The Internet and telecommunications infrastructure
§ Technology standards
 Perspectives on Information Systems

Contemporary Approaches to Information Systems

The study of information systems deals with issues and insights contributed from technical
and behavioral disciplines.

Figure 1-9
 Contemporary Approaches to Information Systems

• Technical approach: Emphasizes mathematically

based models
• Computer science theories of commutation ,data storage
• management science: models of DM and practices
• operations research: optimizing selected parameters of org.
• Behavioral approach: Behavioral issues such
strategic business integration, implementation...
• Psychology: how decision makers use formal information
• Economics: how IS change the control and cost structures
• Sociology: how system affect individuals and groups
 Contemporary Approaches to Information Systems

• Management Information Systems

• Use of computer-based information systems in business firms
• Combines work of CS, management, and operating research
toward developing system solutions to real word problems
• Concerned with behavioral issues of development, use and
impact of IS
• main actors : Suppliers of hardware and software,
Business firms, Managers and employees, Firm’s environment
(legal, social, cultural context)
 Contemporary Approaches to Information Systems

• 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

 Perspectives on Information Systems

A Sociotechnical Perspective on Information Systems

In a sociotechnical perspective, the performance of a system is optimized when both the

technology and the organization mutually adjust to one another until a satisfactory fit is
obtained.

Figure 1-10
 The Role of Information Systems in Business Today

Important concepts

Effectiveness : achieved output / expected output

Efficiency : achieved output / consumed input
Group Assignment:
Forming Groups, Participant & Class Discussion
(Seeking and pondering Ideas Relevant toward
Project Topics)
Group Assignment:
Forming Groups, Participant & Class Discussion
(Seeking and pondering Ideas Relevant toward
Project Topics)