BUSI 1401: IS, IT, AI Impact & Business Processes

• BUSI 1401 Foundations of Information Systems covers organizational strategy, competitive advantage, and information systems

Last Session's Review

• The importance of learning IS
• Differentiating IS from IT and IS components
• The impact of IS/IT on organizations and society

Last Session's Activity

• IT may eliminate some jobs, but more will be created
• Generative AI can spread incorrect or harmful information unintentionally
• Some negative impacts on society and culture can be the use of AI to use a real person’s likeness without their consent
• AI raises ethical concerns about bias, transparency, and misuse

Interesting Discussions

• AI could save, not destroy, education
• AI could empower businesses

Chapter Outline

• Business processes are discussed
• Differentiation between business process reengineering, business process improvement, and business process management is key
• Identification of effective IT responses to business pressures
• Strategies to counter Porter's five competitive forces

Introduction

• Organizations face various business pressures in today's high-tech world
• Information systems can help if used properly
• Competitive advantage includes assets that give an organization an edge in cost, quality, or speed

2.1 Business Processes

• A business process is an ongoing collection of related activities creating value for the organization, its partners, and customers
• Business processes comprises of three elements:
  • Inputs
  • Resources
  • Outputs
• Measuring business processes in successful organizations includes:
  • Efficiency (doing things right)
  • Effectiveness (doing the right thing)
• Cross-functional business processes: Multiple areas of an organization are responsible and no single functional area

Information Systems and Business Processes

• ISs have a vital role in three areas of business processes:
  • Executing the process
  • Capturing and storing process data
  • Monitoring process performance
• IS helps execute processes by:
  • Informing employees of tasks
  • Providing data and means to complete tasks
• Processes generate transaction data: dates, times, product numbers, etc
• IS capture and store the data automatically, entering data from the outside
• Advantages of Data Capturing include:
  • Data entry is only done once
  • Data access is easy
  • Real-time feedback is immediate
• IS evaluates information at two levels:
  • Process (as a whole)
  • Instance (task or activity)
• Monitoring identifies problems for process improvement

2.2 Business Process Improvement, Business Process Reengineering, and Business Process Management

• Excellence in executing business processes is the basis for competitive performance
• Measures include customer satisfaction, cost reduction, quality, differentiation, and productivity

Business Process Reengineering (BPR)

• BPR is a strategy for making business processes more productive and profitable
• BPR involves a radical redesign of processes using a "clean sheet" approach
• Some organizations find it overly difficult, radical, lengthy, and comprehensive

Business Process Improvement (BPI)

• BPI is a systematic approach for enhancing efficiency, effectiveness, and overall performance
• Utilizes an incremental approach; focused on reducing variation by identifying the underlying causes
• The five basic phases of BPI include:
  • Define
  • Measure
  • Analyze
  • Improve
  • Control

Business Process Management (BPM)

• BPM is a management system that supports ongoing BPI initiatives for core business processes
• BPM is a holistic approach with important components of business activity monitoring (BAM) and process modeling
• BPM activities are supported by business process management suites (BPMS)

2.3 Business Pressures, Organizational Responses, and Information Technology Support

• The competitive environment is challenging which makes it necessary for organizations to respond rapidly

Business Pressures

• The business environment is a combination of social, legal, economic, physical, and political components
• Three types of pressure include:
  • Market
  • Technology
  • Societal/political/legal
• Market pressures include globalization, changing workforce, and powerful customers
• Rapid IT advances have enabled globalization resulting in competition
• IT enables telecommuting with a diversified workforce
• Consumer expectations and sophistication increasing
• Knowledgeable consumers conduct price comparisons and participate in electronic auctions
• Customer intimacy is also important

Technology Pressures

• Two major technology pressures: -Technological innovation and obsolescence
  • Information overload
• Vast data stores increase difficulties in managing data for decision-making

Societal/Political/Legal Pressures

• Range of social issues include environmental concerns and education
• Environmental concerns: Green IT, Facilities design and management, Carbon management
• Compliance with government regulations is required
• Examples of compliance includes Canadian Sarbanes-Oxley Act (C-SOX), and PIPEDA
• IT can identify patterns of behavior associated with terrorist activities and cyberattacks following terrorist attacks
• It requires compliance with general standards of right and wrong
• Information ethics issues arise from monitoring employee email and customer data privacy

2.4 Competitive Advantage and Strategic Information Systems

• Competitive strategy identifies a business' approach to compete, goals, and policies
• SISs provide a competitive advantage by helping an organization to implement strategic goals and improve its performance and productivity

Porter's Competitive Forces Model

• This model is the framework for analyzing competitiveness by identifying five major foces

  • Supplier power
  • Buyer power
  • Threat of new entrants
  • Threat of substitute products or services
  • Rivalry among existing firms

• Threat of new entrants

  • High when low barriers to enter exist

• The bargaining power of suppliers

• High when buyers have few choices from whom to buy

• Threat of substitute products or services.

• High when there are many alternatives to existing products

• Switching costs can reduce this threat

• Bargaining power of customers includes:

  • High when buyers have many choices
  • Loyalty programs reduce this power

• Rivalry among existing firms

  • High when there is competition

Porter's Value Chain Model

• Designs general strategies using Porter's competitive strategy model in mind
• Identifies activities to use competitive strategies
• The value chain is a sequence of activities transforming inputs into valuable outputs

Value Chain Model

• There are two types of activities included in value chain model:
  • Primary activities -Relate to production and distribution of products and services
  • Support activities -Support primary activities contributing to competitive advantage
• Strategies for competitive advantage: Determine what strategies to respond with the five foces of Porter's competitive model in mind

Five Common Competitive Strategies

• Cost Leadership Strategy
• Differentiation Strategy
• Innovation Strategy
• Operational Effectiveness Strategy
• Customer Orientation Strategy

Business/Information Technology Alignment

• Maximizing strategic value of IT happens by achieving business-IT alignment
• Business-IT alignment occurs with tight integration of the IT function
• The IT's function directly supports the business objectives for the company
• 27% of participated organizations had adequate alignment in a McKinsey survey
• Business and IT managers may encounter problems implementing the business strategy due to:
  • Differing objectives
  • Ignorance of the other's knowledge base
  • Lack of communication
• IT governance helps organizations effectively manage their IT operations to align with business strategies
• IT investments should align with business strategies

Review of BUSI 1401 covering the importance of information systems (IS), differentiating IS from IT, and the impact of IS/IT on organizations and society. Discussions on AI's potential in education and business are highlighted. Key topics include business processes, reengineering, improvement, management, and IT responses to business pressures.