MANAGEMENT INFORMATION SYSTEMS

Managing the Digital Firm

Laudon and Laudon, 17th Edition

Chapter 1
INFORMATION SYSTEMS IN BUSINESS
TODAY
Chapter Objective
• How are information systems transforming business – relationship to globalization.

• Why are information systems so essential for running and managing a business

• What exactly is an Information System? How does it work?

• Complementary assets for information systems

• Identify the major management challenges to building and using information systems.
Textbook: Essentials of Management Information Systems.
Author(s): Kenneth C. Laudon, Jane P. Laudon, Carol Guercio
Traver. Publisher: Pearson, Year: 2024, ISBN:
9780137946792,1292450363,9781292450360,9781292450452

Download the Book from the following link:

https://u.pcloud.link/publink/show?
code=XZ4Qzs0ZSjwaQtO5TEXimltWqeKgw84YVYDX
Mid Term Assessments [40%]
Final Term Assessments [60%]
Item Marks Date

2 Quizzes, Best one will be counted 20 Week 2,4

[2 case studies]
Group Presentation/Business-tech Project/ Poster Competition 20 Week 3, 5
and Case studies
Exam [20 MCQ], 3 Essay Type Question 50 Week 6
Class Performance [+Attendance] 10
Why Problem-solving and decision-making
Skills matters ?
• To Solve a problem,
• You need to identify the right problem (You have 2 Options)
• Through analysis
• Assumptions and Gut feelings.
• Then you need Develop a Strategy/plan (Perfect vs real) and execute
it.
• “If I only had an hour to chop down a tree, I would spend the first
45 minutes sharpening my axe.” – Abraham Lincoln.
• How you identify problem and solve that depends on
Who you are ?
• Your value, beliefs, Goals, Philosophies.
 Businessmen are Engineers always
goal oriented. focus on Problems.

As a Result, Business students must learn how to use technology to

improve businesses and CSE students need to know how to
Improve/develop technologies.
MIS helps
to set
What is MIS ?
MIS is the study of
PEOPLE

ORGANIZATIONS TECHNOLOGY

AND THE RELATIONSHIPS AMONG THEM.

 Cup
(Hardware)

HOT Water
(Software)

Milk, Sugar, Tea

Leaf, lemon
(Data->
information)

Analogy of Information Systems

What Is an Information System?
An information system can be defined technically as a set of
interrelated components that collect (or retrieve), process, store,
and distribute information to support decision making and control
in an organization.

In addition to supporting decision making, coordination, and

control, information systems may also help managers and workers
analyze problems, visualize complex subjects, and create new
products.
Page 16
 What Is an Information System?
• Information systems contain information about
significant people, places, and things within the
organization or in the environment surrounding it.
• By information we mean data that have been
shaped into a form that is meaningful and useful to
human beings. Data, in contrast, are streams of raw
facts representing events occurring in organizations or
the physical environment before they have been
organized and arranged into a form that people can
understand and use.
 Define an information system, explain how it works, and
identify its people, organizational, and technology component
• From a technical perspective, an information system collects, stores, and
disseminates information from an organization’s environment and internal
operations to support organizational functions and decision making,
communication, coordination, control, analysis, and visualization.
• Information systems transform raw data into useful information through three
basic activities: input, processing, and output. From a business perspective, an
information system provides a solution to a problem or challenge facing a firm
and represents a combination of people, organization, and technology elements.
• The people dimension of information systems involves issues such as training, job
attitudes, and management behavior.
• The technology dimension consists of computer hardware, software, data
management technology, and networking/ telecommunications technology,
including the Internet.
• The Internet of Things (IoT), Big Data, and cloud computing are especially
important technologies.
• atThe
Look organizational
the discussion dimension
Questions of the textbook: Page 62 of information systems involves issues such as the
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
 The Role of Information Systems in
Business Today

FIGURE 1-1
IT EQUIPMENT, SOFTWARE,
and R&D SPENDING IN
NOMINAL GDP
(as a percent of total capital
spending in nominal GDP)
Example
 Information Security
Office of Budget and Finance
Education – Partnership –
Solutions

Where is IoT?

It’s everywhere!
 Education – Partnership –
Solutions

Wearable Tech Healthca

re

Driverless car
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 information
technology and ability to implement corporate strategies and
achieve corporate goals
The Role of Information Systems in
Business Today
The Interdependence Between Organizations and Information Technology

Figure 1.2
In contemporary systems
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.
Digital Firm
Being a digital firm doesn't mean that you just offer digital
goods and services.

A digital firm would have most of its relationships with

customers, suppliers, and employees be digitally enabled.

Ordering deliveries, assigning deliveries, managing

employees and assignments could certainly be digitally
enabled; using cell phones, information systems, and
handheld devices to connect customers, delivery
management, and bike messengers.
Reasons to Go for
paperless-Digital
 impact on the
PRODUCTIVITY,
PROFITABILITY AND
COMPETITIVENESS

The actual cost of paper processes goes beyond the cost of paper, ink,
fax machines, and storage.

The costs of using paper in the office can run up to 31 times the cost of purchasing the
paper and also consumes 35-50% of time in searching documents which are lost in huge
files

Companies with paper based processes incur higher costs resulting in slower growth rate
due to longer turnaround time to customer requests.
 Why do
information
systems exist?

Ans: to help organizations achieve

their strategies
The Role of Information Systems in
Business Today
• Strategic Business Objectives of Information Systems:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. 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
• Walmart the largest retailer on earth, exemplifies the
power of information systems to achieve $524 billion in
sales – nearly one-tenth of retail sales in the USA in 2019.
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: Apple’s iPod, iTunes, iPhone, iPad, Google’s
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: JCPenney's 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: Verizon’s 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.
Citibank’s introduction of ATMs
• Governmental regulations
requiring record-keeping
• Examples: Toxic Substances Control
Act, Sarbanes-Oxley Act
Perspectives on 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
Perspectives on Information Systems
Data and Information

Figure 1.3
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.
Perspectives on Information Systems
• Three activities of information systems produce
information organizations need
1. Input: Captures raw data from organization or external
environment
2. Processing: Converts raw data into meaningful form
3. 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

Figure 1.4
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.
Perspectives on Information Systems
• 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
Perspectives on Information Systems
Information Systems Are More Than Computers

Figure 1.5
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.
Perspectives on Information Systems
• Organizational dimension of information systems
• Hierarchy of authority, responsibility
• Senior management
• Middle management
• Knowledge workers (information systems)
• Scientists (operations)
• Operational management
• Data workers (information systems)
• Production or service workers (operations)
Organizational dimension of information systems
Hierarchy Of Authority Responsibility

Knowledge Design Products Or Services And Create

Workers New Knowledge (Engineers Architects
Scientists SEO experts)

Data Workers Process The Organization’s Paperwork

(Secretaries Bookkeepers Clerks)

Production Or Actually Produce The Organization’s

Service Workers Products Or Services.
Perspectives on Information Systems
Levels in a Firm

Figure 1.6
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.
Perspectives on Information Systems
• 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 and policies
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
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
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 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
Perspectives on Information Systems
The Business Information Value
Chain

Figure 1.7
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.
Perspectives on Information Systems
Variation in Returns On
Information Technology
Investment

Figure 1.8
Although, on average, investments in
information technology produce
returns far above those returned by
other investments, there is
considerable variation across firms.
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 the right business model
• Investing in complementary assets (organizational and
management capital)
Perspectives on Information Systems
• Complementary assets:
• Assets required to derive value from a primary investment
• Firms supporting 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
Contemporary Approaches to
Information Systems

Figure 1.9
The study of information systems deals
with issues and insights contributed
from technical and behavioral
disciplines.
 4 STEP
MODEL OF
THE
PROBLEM-
SOLVING
PROCESS
 Problem solving in daily life seems to be perfectly
straightforward: a machine breaks down, parts and oil spill
all over the floor, and, obviously, somebody has to do
RATIONAL OF something about it.

THIS
Some problems in business are this straightforward, but few
THE PROBLEM- problems are this simple in the real world of business.
SOLVING
APPROACH In real-world business firms, a number of major factors are
simultaneously involved in problems.

These major factors can usefully be grouped into three

categories: organization, technology, and people.
Summery: Apply a four-step method for business problem
solving to solve information system-related problems.

• Problem identification involves understanding what kind of problem is being

presented and identifying people, organizational, and technology factors.
• Solution design involves designing several alternative solutions to the
problem that has been identified.
• Evaluation and choice entail selecting the best solution, taking into account
its cost and the available resources and skills in the business.
• Implementation of an information system solution entails purchasing or
building hardware and software, testing the software, providing employees with
training and documentation, managing change as the system is introduced into
the organization, and measuring the outcome.
• Problem solving requires critical thinking in which one suspends judgment to
consider multiple perspectives and alternatives.
Man vs Robot
in Future
(Automation)
Working with
or
Against
Describe the information system skills and knowledge that
are essential for business careers.
• Business careers in accounting, finance, marketing, operations management, and
management all rely heavily on information systems.
• The information systems field is one of the most dynamic and fast-growing because
information technologies are among the most important tools for achieving business
firms' key objectives.
• Although the Internet has created new opportunities for outsourcing many information
system jobs, it has also increased demand domestically for employment in a wide variety of
IS positions.
• The most important skills for IS majors to focus on developing include an in-depth
knowledge of new and emerging hardware and software tools, as well as the ability
to take a leadership role in the design and implementation of new information
systems.
• No matter their intended career, all students need to understand how information systems
and technologies help firms achieve business objectives and respond to changes in the
ethical, social, and legal environment; develop data analytic skills; and be able to
communicate effectively and collaborate with others.
Why MIS Career?
Management Information Systems (MIS) is designed to prepare
students for challenging careers in the application of IT to solve various
business problems.

MIS professionals are the “communication bridges” between IT and the

business community.

They analyze design implement and manage IT applications and

strategies to help solve business problems. MIS students first learn
business processes and then analyze how to improve the processes
using IT.
MIS Careers
Website/app
Database
Data Analysis Data analytics design and
expert
development

security risk internet

consulting audit control
assessment marketing

business CRM
eCommerce E-governance
analysis consulting

medical enterprise
supply chain
legal forensics records resource
automation.
automation planning
 Sample Q
• 1. Order data for T20 World cup Cricket tickets and
bar code data are the examples of ____. • 3. Engineers scientists architects business analysts
• Raw Input who design new products or services for a firm are
• Customer and Product data known as __________.
• Sales Information • Operation manager
• Knowledge workers
• 2. Which of the following roles in a firm will be least • Senior Executive
affected by using mobile device to access firm ? • Middle management
• Operation manager
• Production worker • 4. City bank introduced their ATM machine by
• Senior Executive implementing their MIS resources to achieve which
• Sales Executive business objective ?
• Survival
• Customer Supplier Intimacy
• Improved efficiency
Sample Q
1. Example of a Raw data from a Fast food Chain Store would be _______________.

 6 piece boneless chicken sold at 12.45 PM on  An average of400 piece boneless chicken are sold
January 1 2015 in banani Dhaka daily in Banani

 10% sale dropped in boneless chicken sale in  None of the above

January in Banani shop.

2. Psychologists study Information system with an eye to understanding ____________________.

 How system effect individual and organization  How decision makers perceive and use formal
Information

 The production of digital goods  How new information system change the control
and cost structure within the firm.

3. An example of a business using information technology to create new products and service is _____.

 A 5 Star Hotel’s customer preference tracking  Wordpress’s digital dashboard

system

 Walmart’s Retail-Link system.  Apple’s Ipad 6

Thank you
Chapter 1