Information Systems and Business Strategies

Interdependence of Organizations and Information Technology

• Contemporary systems rely heavily on the connection between an organization's information systems and business capabilities.
• Changes in strategy, rules, and business processes often necessitate changes in hardware, software, databases, and telecommunications.
• An organization's capabilities are often dictated by what their systems permit.

The Role of Information Systems in Business Today

• Information systems play a crucial role in achieving operational excellence.
• This is done by improving efficiency and attaining higher profitability.
• Information systems are a valuable tool for achieving greater efficiency and productivity.
• Walmart's Retail Link system connects suppliers to stores, enabling a superior replenishment system.

New Products, Services, and Business Models

• A business model outlines how a company produces, delivers, and sells products or services to generate wealth.
• Information systems and technology are essential enablers for developing new products, services, and business models.
• Examples include Apple's iPad, Google's Android OS, and Netflix.

Customer and Supplier Intimacy

• Building strong customer relationships leads to repeat business, boosting revenues and profits.
• High-end hotels use computers to track customer preferences and customize their environment, leading to customer satisfaction.
• Intimacy with suppliers allows for vital inputs, minimizing costs.
• JCPenney's information system links sales records to contract manufacturers, fostering collaboration and cost-effectiveness.

Improved Decision Making

• Without accurate information, managers rely on forecasts, guesses, and luck, often resulting in overproduction, underproduction, misallocation of resources, and poor response times.
• These outcomes increase costs and lead to customer dissatisfaction.
• Verizon's web-based digital dashboard provides managers with real-time data on customer complaints, network performance, line outages, and more, enabling informed decision-making.

Competitive Advantage

• Information systems facilitate gaining a competitive advantage by delivering superior performance, charging less for excellent products, and responding to customers and suppliers in real-time.
• Examples of companies leveraging information systems for a competitive edge include Apple, Walmart, and UPS.

Survival

• Information technologies have become a necessity for businesses.
• Industry-level changes, such as Citibank's introduction of ATMs, require businesses to adapt to new technologies.
• Government regulations necessitate record-keeping, as seen in laws like the Toxic Substances Control Act, Sarbanes-Oxley Act, and Dodd-Frank Act.

What Is an Information System?

• Information systems are composed of three interrelated dimensions: organizational, management, and technological.

Organizational Dimension of Information Systems

• Information systems are influenced by the organization's structure and culture.
• The separation of business functions, such as sales and marketing, human resources, finance and accounting, and manufacturing and production, must be considered.
• Unique business processes, culture, and organizational politics also impact information systems.

Management Dimension of Information Systems

• Managers are responsible for setting organizational strategies to address business challenges.
• They must also be creative, innovating new products, services, and organizational structures.

Technology Dimension of Information Systems

• Information systems rely on computer hardware, software, data management technology, and networking and telecommunications technology.
• IT infrastructure is crucial, providing the platform for system development.

Dimensions of UPS Tracking System:

• Organizational: Procedures for tracking packages, managing inventory, and providing information are key.
• Management: Monitoring service levels and costs are managed effectively.
• Technology: Handheld computers, bar-code scanners, networks, desktop computers, and other technologies are utilized.

Business Perspective on Information Systems:

• Information systems are instruments for generating value.
• Investments in information technology lead to superior returns, including productivity increases, revenue increases, and superior long-term strategic positioning.

Business Information Value Chain:

• Raw data is acquired and transformed through various stages, adding value to the information.
• The value of an information system is determined by its ability to improve decision-making, enhance organizational performance, and ultimately increase firm profitability.
• This perspective underscores the organizational and managerial nature of information systems.

Studying Information Systems:

• Various approaches can be applied when studying information systems.
• Technical Approach: Uses mathematically based models, drawing from computer science, management science, and operations research.
• Behavioral Approach: Focuses on behavioral issues, including strategic business integration, implementation, etc., utilizing psychology, economics, and sociology.
• Management Information Systems (MIS): Integrates computer science, management science, operations research, and practical orientation with behavioral issues, considering four main actors:
  • Suppliers of hardware and software
  • Business firms
  • Managers and employees
  • Firm's environment (legal, social, cultural context)

Sociotechnical View:

• This book adopts a sociotechnical view to study information systems.
• This perspective recognizes that optimal organizational performance is achieved by jointly optimizing both social and technical systems involved in production.
• It encourages avoiding purely technological approaches.