Information Systems in Business

Perspectives on Information systems

■ Information Systems Components
Information system
Interrelated components working together to collect,
process, store and disseminate information to support
decision making, coordination, control, analysis and
visualisation in an organisation
Information
Data that have been shaped into a form that is
meaningful and useful to human beings
Data
Streams of raw facts representing events occurring in
organisations or the physical environment before they
have been organised and arranged into a form that
people can understand and use
■ Information Systems Components (contd.)
Input
The capture or collection of raw data from within the
organisation or from its external environment for processing
in an information system
Processing
The conversion, manipulation and analysis of raw input into
a form that is more meaningful to humans
Output
The distribution of processed information to the people or
activities where it will be used
Feedback
Output that is returned to the appropriate members of the
organisation to help them evaluate or correct input
Functions of an information system
 Information Systems Transforming Business
Visible results of this transformation :
■ The increased use of cell phones and wireless
telecommunications devices : more wireless cell phone
accounts are being opened compared to the telephone land
lines being installed
■ Everybody is going dotcom: People are buying and selling
online
■ A massive shift towards online news and information: more
and more people receive their news online, read or write
online blogs whereas newspaper readership is declining
■ Booming e-commerce and Internet advertising
■ New federal security and accounting laws that address issues
raised by the exponential growth of digital information are
emerging.
 Globalization Opportunities

■ The emergence of Internet into a full-blown

international communication system has drastically
reduced the costs of businesses operating on a
global scale.

■ Firms can achieve extraordinary cost reductions by

finding low-cost suppliers and managing production
facilities in other countries

■ Internet service firms like Google and Ebay are able

to replicate their business models and services in
multiple countries without having to redesign their
expensive fixed cost information systems
infrastructure
 The Emerging Digital Firm

■ These changes in business environment and significant

organisational redesign have led to the emergence of the digital
firm
■ The significant business relationships with customers, suppliers,
and employees of a digital firm are digitally enabled and
mediated
■ Core business processes or logically related business tasks of a
digital firm are accomplished through digital networks.
■ Key corporate assets (intellectual property, core competencies,
and financial and human assets) of a digital firm are managed
through digital means

– time shifting (business being conducted 24x7) and

– space shifting (business being conducted globally or
`beyond traditional geographic boundaries).
Strategic Business Objectives of Information Systems

■ Business firm invest heavily on 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 INTERDEPENDENCE BETWEEN ORGANIZATIONS AND

INFORMATION SYSTEMS
■ Operational excellence: Information systems and
Information Technology help to achieve higher
levels of Efficiency, productivity, and improved
changes in business practices and management
behaviour

■ New products, services, and innovative

business models: A business model describes
how a company produces, delivers, and sells a
product or service to create wealth. Information
systems and technologies create opportunities for
products, services, and new ways to engage in
business.

■ Customer and supplier intimacy: Improved

communication with customers and efficient
customer service raises revenues. Improved
communication with suppliers lowers costs.
■ Improved decision making: IT and Information systems
ensure accurate and timely information. So business managers
need not make decisions based on forecasts, best guesses,
and luck. As a result the firm gets saved from over and
under-production of goods, raising costs, and the loss of
customers.

■ Competitive advantage: Implementing effective and efficient

information systems can allow a company to charge less for
superior products. This leads to higher sales and profits than
their competitors.

■ Survival: Information systems can also be a necessity of doing

business. A necessity may be driven by industry-level changes,
as in the implementation of ATMs in the retail banking industry.
A necessity may also be driven by governmental regulations,
such as federal or state statutes requiring a business to retain
data and report specific information.
 The dimension of Information system

The dimensions of information systems include

■ organizations
■ management
■ technology
INFORMATION SYSTEMS ARE MORE THAN COMPUTERS
 Organisations

■ The key elements of an organization are its

people, structure, business processes,
politics, and culture.
■ An organization coordinates work through a
structured hierarchy and formal standard
operating procedures
■ Managerial, professional, and technical
employees form the upper levels of the
organization's hierarchy
■ lower levels consist of operational personnel.
 Organisations (contd.)

■ Senior management makes long-range strategic

decisions and ensures the firm's financial
performance.
■ Middle management carries out the plans of senior
management
■ Operational management monitors the firm's daily
activities.
■ Knowledge workers such as engineers and scientists
design products and create and distribute new
knowledge for the organization.
■ Data workers such as secretaries process the
organization's paperwork.
■ Production or service workers produce the products
or services.
 Organisation (contd.)

■ Experts are employed for the specialized tasks

performed by organizations consisting of
– sales and marketing,
– manufacturing and production,
– finance and accounting
– human resources.

■ An organization coordinates work through its

hierarchy and business processes.
■ These processes may be documented and formal, or
informal, unwritten work processes,
 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
 Organisations (contd.)

■ Each organization has a unique culture

■ Culture: fundamental set of assumptions, values, and
ways of doing things, that are accepted by most of its
members.
■ Parts of an organization's culture can be found in its
information systems
■ For example, UPS's organizational focus on customer
service can be found in the package tracking system
available to customers.
■ Information systems may also reflect the
organizational politics or conflicts that result from
differing views and opinions in an organization.
 Management

■ Management’s job : Making sense out of the situations

faced by organisation, making decisions and formulating
action plans to solve organisational problems
■ Managers perceive business challenges in the
environment, set the appropriate strategies, allocate
resources and coordinate the work to achieve success
■ Managers must exercise responsible leadership
■ Managers have to create new products and services,
manage the company, and even re-create the
organization from time to time.
■ Information systems act as a key component to make the
managers able to do these tasks effectively
 Technology

■ Information technology is one of the many tools used

by management to cope with change.
■ A firm's information technology (IT) infrastructure is a
technology platform or foundation on which a firm can
build its information systems.
■ Information technology (IT) infrastructure: Computer
hardware, software, data, storage technology, and
networks providing a portfolio of shared IT resources
for the organization
 Technology (contd.)
IT infrastructure consists of:

■ Computer hardware: The physical equipment and computing

devices used for input, storage, processing, output, and
telecommunications

■ Computer software: The detailed, pre programmed instructions

that control and coordinate the computer hardware components

■ Data management software: The software governing the

organization of data on physical storage media

■ Networking and telecommunications technology: Hardware

and software used to link the various pieces of hardware and
transfer data from one physical location to another; a computer
network links two or more computers together to share data,
A Business Perspective on Information systems
■ From a business perspective, an information system is an
important instrument for creating value for the firm
■ Information systems enable the firm to increase its revenue or
decrease its costs by providing necessary information
■ This helps managers make better decisions
■ As a result, the execution of business processes is improved.
■ Every business has an information value chain in which raw
data is systematically acquired and then transformed through
various stages that add value to that information.
■ The value of an information system to a business depends on
how effectively it can lead to better management decisions,
more efficient business processes, and higher firm profitability.
■ The decision to invest in any new information system is
determined by these factors as well.
THE BUSINESS INFORMATION VALUE CHAIN
 Contemporary Approaches to Information Systems
■ Information systems are socio-technical systems.
■ Although they are composed of machines, devices,
and "hard" physical technology, they require
substantial social, organizational, and intellectual
investments to make them work properly.
■ Since problems with information systems and their
solutions are rarely all technical or all behavioural, a
multidisciplinary approach is needed.
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
 Technical Approach
■ The technical approach emphasizes mathematically
based, normative models to study information systems,
■ It also talks about the physical technology and formal
capabilities of these systems.
■ The disciplines that contribute to the technical
approach are Computer science, Management science
and Operations Research
 Behaviourial Approach

■ The behavioral approach is a growing part of the

information systems field
■ It does not ignore technology, but tends to focus on
non-technical solutions
■ It concentrates on changes in attitudes, management
and organizational policy, and behavior.
■ It studies the information system s a stimulus for a
behavioural problem or an issue