Information Systems in Business Today PDF

Chapter 1 Information Systems in Business Today  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Learning Objectives Understand the effects of information systems on bus...

Chapter 1 Information Systems in Business Today  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Learning Objectives Understand the effects of information systems on business and their relationship to globalization. Explain why information systems are so essential in business today. Define an information system and describe its management, organization, and technology components. 1.2  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Learning Objectives (cont.) Define complementary assets and explain how they ensure that information systems provide genuine value to an organization. Describe the different academic disciplines used to study information systems and explain how each contributes to our understanding of them. Explain what is meant by a sociotechnical systems perspective. 1.3  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today What’s New in Information Systems? Three interrelated changes are affecting companies worldwide: Emerging mobile digital platform Growing business use of “big data” Growth in cloud computing Globalization opportunities – Internet has drastically reduced costs of operating on global scale – Increases in foreign trade, outsourcing – Presents both challenges and opportunities 1.4  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today The Emerging Digital Firm A digital firm is one in which nearly all of the organization’s significant business relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means. When a firm goes digital, it’s not about just adding a computer system to the mix – Throwing a computer system at outdated business processes is exactly the wrong thing to do 1.5  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today The Emerging Digital Firm A truly digital firm has several characteristics that distinguish it from most of the firms claiming to be digitized: – Significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. – Core business processes are accomplished through digital networks and span the entire organization or link multiple organizations. – Key corporate assets—intellectual property, core competencies, and financial and human assets—are managed through digital means. – Internal and external environments are quickly recognized and dealt with. Digital firms offer greater flexibility in organization and management. 1.6  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives of Information Systems Growing interdependence between ability to use information technology and ability to implement corporate strategies and achieve corporate goals Business 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 1.7  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives (cont.) 1. Operational excellence: – Improvement of efficiency to attain higher profitability – Information systems, technology an important tool in achieving greater efficiency and productivity – Example: Walmart’s Retail Link system links suppliers to stores for superior replenishment system 1.8  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives (cont.) 2. 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 As successful as Apple Inc., BestBuy, and Walmart were in their traditional brick-and-mortar existence, they have all introduced new products, services, and business models that have made them even more competitive and profitable 1.9  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives (cont.) 3. 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 used 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 1.10 10  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives (cont.) 4. Improved decision making – Without accurate information: Managers must use forecasts, best guesses, luck Results in: – Overproduction, underproduction – 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, and so on 1.11  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives (cont.) 5. Competitive advantage – Delivering better performance – Charging less for superior products – Responding to customers and suppliers in real time Examples: Apple, Toyota, Walmart, UPS 1.12  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Strategic Business Objectives (cont.) 6. Survival – Information systems are not a luxury; in most businesses, information systems and technology are the core to survival – Industry-level changes Example: Citibank’s introduction of ATMs – Governmental regulations requiring record- keeping Examples: Toxic Substances Control Act, Sarbanes-Oxley Act 1.13  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Perspectives on Information Systems Information system: – Set of interrelated components The hardware, software, and “persware” triangle – 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. 1.14  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today 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. 1.15  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Perspectives on Information Systems Three activities of information systems produce information organizations need – Input: Captures raw data from organization or external environment – Processing: Converts raw data into meaningful form – Output: Transfers processed information to people or activities that use it 1.16  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Perspectives on Information Systems Input-Process-Output Example 1.17  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Perspectives on Information Systems 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. 1.18  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Functions of an Information System 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. Figure 1.4 1.19  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Information Systems Are More Than Computers 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 solution to challenges posed by the environment. Figure 1.5 1.20  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Organizational dimension of information systems The key elements of an organization are its: – People – Structure – Business processes – Politics – Culture An organization’s culture is often an integral part of its information system Example: UPS’s culture focuses on customer service while Walmart’s culture is centered on being a low-cost retailer 1.21  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Organizational dimension of information systems (cont.) Hierarchy of authority, responsibility – Senior management – Middle management – Operational management – Knowledge workers – Data workers – Production or service workers 1.22  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Levels in a Firm 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. Figure 1.6 1.23  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Organizational dimension of information systems (cont.) Separation of business functions – Sales and marketing – Human resources – Finance and accounting – Manufacturing and production 1.24  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today 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 1.25  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Technology dimension of information systems Computer hardware and software Data technology – Software that is designed to organize the information so that you can readily retrieve what you are looking for Networking and telecommunications technology – Networks, the Internet, intranets and extranets, World Wide Web The World Wide Web allows big companies to act “small,” and small companies to act “big” IT infrastructure: provides platform that system is built on – Not only is it expensive to buy the hardware and the software, but the costs of installing, maintaining, updating, integrating, and training must all be taken into account 1.26  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today 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 There are three ways an information system can add value to a business: – Help managers make better decisions – Help make business processes more efficient – Increase profitability 1.27  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Perspectives on Information Systems 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 capital) 1.28  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Contemporary Approaches to Information Systems Technical approach – Emphasizes mathematically based models – Computer science, science, operations research Behavioral approach – Behavioral issues (strategic business integration, implementation, etc.) – Psychology, economics, sociology 1.29  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Contemporary Approaches to Information Systems (cont.) Information Systems – Combines computer science, 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) 1.30  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today Contemporary Approaches to Information Systems Approach of this book: Sociotechnical view – Optimal organizational performance achieved by jointly optimizing both social and technical systems used in production – Helps avoid purely technological approach 1.31  Foundations of Information Systems Chapter 1: Information Systems in Global Business Today A Sociotechnical Perspective on Information Systems Figure 1-10 In a sociotechnical perspective, the performance of a system is optimized when both the technology and the organization mutually adjust to each other until a satisfactory fit is obtained. 1.32