Business Information Systems Chapter 1

Chapter 1: Business Information Systems in Your Career

• UPS uses information technology (I.T.) to compete globally
• Videos are available to learn about how UPS uses big data and overnight shipping
• Input, processing, and outputs of UPS package tracking system are discussed

Dimensions of UPS tracking system

• Organizational: Procedures for tracking packages, managing inventory, and providing information
• Management: Monitoring service levels, and costs
• Technology: Handheld computers, bar-code scanners, networks, desktop computers, and more

Information Technology Capital Investment

• Information technology (IT) capital investment (hardware, software, and communications equipment) grew from 32% to 52% of all invested capital between 1980 and 2009

The Interdependence Between Organizations and Information Technology

• A growing interdependence exists between a firm's information systems and its business capabilities.
• Changes in strategy, rules, and business processes often require changes in hardware, software, databases, and telecommunications.
• What an organization wants to do can be affected by the capabilities of its systems.

Technology dimension of information systems

• Computer hardware and software
• Data management technology
• Networking and telecommunications technology (networks, the internet, intranets, extranets, World Wide Web)
• IT infrastructure (platform on which systems are built)

Information system

• Set of interrelated components
• Collects, processes, stores, and distributes information; supports decision-making, coordination, and control
• Data are raw facts, whereas information is data shaped into a meaningful form.

Data and Information

• Raw data from a supermarket checkout counter can be processed and organized into meaningful information (e.g., total unit sales of a specific store).

Three Activities of Information Systems

• Input: Capturing raw data from an organization or external environment
• Processing: Converting raw data into meaningful form
• Output: Transferring processed information to people or activities that use it

Feedback

• Output returned to appropriate organization members for evaluating and correcting the input stage.

Functions of an Information System

• Information systems contain information about an organization and its surrounding environment.
• Input, processing, and output produce the information organizations need.
• Feedback is returned to appropriate people or activities to evaluate and refine input.
• Environmental actors (customers, suppliers, competitors, stockholders, and regulatory agencies) interact with the organization's systems.

Levels in a Firm

• Business organizations are hierarchies consisting of senior management, middle management and operational management.
• Information systems serve each of these levels.

Functional Managers

• Separation of business functions (sales, marketing, human resources, finance, accounting, manufacturing, and production).
• Unique business processes.

Management Dimension of Information Systems

• Managers set organizational strategies to respond to business challenges.
• Managers are evaluated based on performance.
• In addition, managers must act creatively (creation of new products, services, re-creating the organization, etc.)

Business perspective on information systems

• Information systems are instruments for value creation.
• Investments in information technologies lead to superior returns (productivity, revenue increases, etc.)

Business Information Value Chain

• Raw data acquired and transformed through steps adding value to information.
• Value of information systems based on better decisions, efficiency, and higher profits.
• Calls attention to the organizational and managerial nature of information systems.

The Role of Information Systems in Business Today

• Growing interdependence between the ability to use information technology and implementing corporate strategies (to achieve corporate objectives)
• Businesses invest heavily in I.T. systems to achieve specific business objectives. (operational excellence, new products/services/business models, greater customer/supplier intimacy, improved decision making, competitive advantages, and survival)

Operational Excellence

• Improvement of efficiency to attain higher profitability
• Information systems, technology an important tool in achieving greater efficiency and productivity.
• Walmart's Retail Link system links suppliers to stores for superior replenishment.

New Products, Services, and Business Models

• Business model describes how a company produces, delivers, and sells a product or service to create wealth.
• Information systems and technology are tools for creating new products, services, and business models (e.g., Apple's iPad, Google's Android OS, Netflix, etc.)

Customer and Supplier Intimacy

• Serving customers well leads to returning customers, increasing revenues and profits.
• Intimacy with suppliers allows them to provide vital inputs, which lowers costs (e.g., JCPenney's information system).

Improved Decision Making

• Without accurate information, managers rely on forecasts, best guesses, and luck; leading to over/under production, misallocation of resources, poor response times, poor outcomes, and loss of customers (e.g., Verizon's Web-based digital dashboard).

Competitive Advantage

• Delivering better performance and superior products.
• Responding to customers and suppliers in real time (e.g., Apple, Walmart, and UPS).

Survival

• Information technologies are becoming increasingly necessary for business (industry-level changes).
• Examples include Citibank's ATMs and governmental regulations requiring record-keeping.

Investing in Technology

• Investing in information technology doesn't guarantee good returns.
• There is variability in returns from system investments.
• Factors include adopting the right business model and investing in complementary assets (organizational and management capital).

Explore the role of information technology in enhancing business operations, particularly through the case study of UPS. This chapter discusses the interdependence between organizations and I.T., highlighting its impact on tracking systems and management strategies.