Management Information Systems

Information Systems in Global Business Today

The content is based on slides provided by the textbook publisher without specific citations, copyrighted by
Kenneth C. Laudon and Jane P. Laudon (2022). Management Information Systems: Managing the Digital Firm,
17th Edition. Pearson Education ISBN 978-0-13 697127-6
Learning Objectives
1.1 How are information systems transforming business, and why are
they so essential for running and managing a business today?
1.2 What is an information system? How does it work? What are its
management, organization, and technology components? Why are
complementary assets essential for ensuring that information
systems provide genuine value for organizations?
1.3 What academic disciplines are used to study information systems,
and how does each contribute to an understanding of information
systems?
1.4 How will MIS help my career?
How Information Systems Are
Transforming Business
• Global spending on information technology (IT) and IT
services: nearly $(5.1 / 1.61) trillion; $1.0 trillion in 2024
spent on management consulting and services (Statista,
ibisworld)
• Organizational, management, and cultural changes are
often required for firms to derive full business value from IT
investments
Figure 1.1 Information Technology
Capital Investment

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Figure 1.1 Information Technology
Capital Investment

This graph represents the global IT capital investment flow from 2019 to 2024 in trillion U.S. dollars,
illustrating the trends and fluctuations in spending over the years. (gartner.com, statista.com)
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
– Use of social networks for business objectives
• New Business Models
– Online streaming and downloadable video
§ Examples: Netflix, Apple TV Channels, Amazon
What’s New in Management
Information Systems (2 of 3)
• E-commerce Expansion
– E-commerce worldwide expands to nearly $6.09 trillion in 2024
(Shopify)
– Growth in social commerce spurred by growth of mobile platform
– Mobile retail e-commerce growing more than 20 percent a year,
reaching almost $2.07 trillion in 2024 (oberlo.com)
• Management Changes
– Managers becoming more mobile
– Managers use social networks, collaboration tools
– Business intelligence applications accelerate
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
Globalization Challenges and
Opportunities: A Flattened World
• 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
– Requires new understandings of skills, markets,
opportunities
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
Figure 1.2 The Interdependence Between
Organizations and Information Systems

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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 $524 billion in sales in 2019
– 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
• Without accurate information, managers must use
forecasts, best guesses, and luck, resulting in
misallocation of resources, inventory, employees
• 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; it is 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
What Is an Information System?
(1 of 3)
• Information technology: the hardware and software a
business uses to achieve objectives
• Information system: interrelated components that manage
information to:
– Support decision making and control
– Help with analysis, visualization, and product creation
• Data: streams of raw facts
• Information: data shaped into meaningful, useful form
Figure 1.3 Data and Information

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What Is an Information System?
(2 of 3)
• Activities in an information system that produce
information:
– Input
– Processing
– Output
– Feedback
• Sharp distinction between computer or computer program
versus information system
What is an Information System?
(3 of 3)
• Feedback
– Output is returned to appropriate members of
organization to help evaluate or correct input stage
• Computer/computer program vs. information system
– Computers and software are technical foundation and
tools, similar to the material and tools used to build a
house
Figure 1.4 Functions of an
Information System

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Dimensions of Information Systems
• Organizations
• Management
• Technology
Figure 1.5 Information Systems Are
More Than Computers

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Dimensions of Information Systems:
Organizations (1 of 2)
• Hierarchy of authority, responsibility
– Senior management
– Middle management
– Operational management
– Knowledge workers
– Data workers
– Production or service workers
Figure 1.6 Levels in a Firm

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Dimensions of Information Systems:
Organizations (2 of 2)
• Separation of business functions
– Sales and marketing
– Human resources
– Finance and accounting
– Manufacturing and production
• Unique business processes
• Unique business culture
• Organizational politics
Dimensions of Information Systems:
Management
• 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
Dimensions of Information Systems:
Information Technology
• 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
It Isn’t Just Technology: A Business
Perspective on Information Systems
(1 of 3)
• Information system is instrument for creating value
• Investments in information technology should result in
superior returns
– Productivity increases
– Revenue increases
– Superior long-term strategic positioning
It Isn’t Just Technology: A Business
Perspective on Information Systems
(2 of 3)
• 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
It Isn’t Just Technology: A Business
Perspective on Information Systems
(3 of 3)
• 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)
Figure 1.7 The Business Information
Value Chain

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Complementary Assets:
Organizational Capital and the Right
Business Model (1 of 2)
• 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
Figure 1.8 Variation in Returns on
Information Technology Investment

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Complementary Assets: Organizational
Capital and the Right Business Model (2 of 2)
• Complementary assets
– Examples of organizational assets
§ Appropriate business model
§ Efficient business processes
– Examples of managerial assets
§ Incentives for management innovation
§ Teamwork and collaborative work environments
– Examples of social assets
§ The Internet and telecommunications infrastructure
§ Technology standards
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Figure 1.9 Contemporary Approaches
to Information Systems

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Technical Approach
• Emphasizes mathematically based models
• Computer science, management science, operations
research
Behavioral Approach
• Behavioral issues (strategic business integration,
implementation, etc.)
• Psychology, economics, sociology
Approach of This Text:
Sociotechnical Systems (1 of 2)
• Management information systems
– Combine 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
– Firm’s environment (legal, social, cultural context)
Approach of This Text:
Sociotechnical Systems (2 of 2)
• Sociotechnical view
– Optimal organizational performance achieved by jointly
optimizing both social and technical systems used in
production
– Helps avoid purely technological approach
Figure 1.10 A Sociotechnical
Perspective on Information Systems

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