ITM 100 Lecture Notes PDF

adapted from Kenneth C. Laudon, Jane P. Laudon, Management Information Systems: Managing the Digital Firm, 17th Edition  Learning Objectives 1-1 How are information systems transforming business, and why are th...

adapted from Kenneth C. Laudon, Jane P. Laudon, Management Information Systems: Managing the Digital Firm, 17th Edition  Learning Objectives 1-1 How are information systems transforming business, and why are they so essential for running and managing a business today? 1-2 What is an information system? How does it work? What are its management, organization, and technology components? 1-3 What academic disciplines are used to study information systems, and how does each contribute to an understanding of information systems? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems Figure 1.1: Information Technology Capital Investment Global spending on information technology (IT) and IT services: nearly $3.8 trillion in 2019; $160 billion spent on management consulting and services Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved  What is New in Management Information Systems  Continuous changes in technology, management, and business processes  IT Innovations Cloud computing, mobile digital platforms, big data, AI, the Internet of Things (IoT)  New Business Models Viewers are unplugging from cable and using only the Internet for entertainment (Netflix)  E-Commerce Expanding Selling services, not only goods  Management Changes Online collaboration, Business Intelligence, Virtual meetings  Changes in Firms and Organizations More collaborative, social media to listen to consumers, more aware of technologies Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 4  Globalization Challenges and Opportunities: A Flattened World  Globalization: Internet and global communications have greatly changed how and where business is done Internet has drastically reduced costs of operating on global scale Increases in foreign trade, outsourcing Competition for jobs, markets, resources, ideas Growing interdependence of global economies Requires new understandings of markets and opportunities Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 5  The Emerging Digital Firm  In a 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  Many firms are close to becoming digital firms Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 6  Strategic Business Objectives of Information Systems  Growing interdependence between: Ability to use information technology and Ability to implement corporate strategies and achieve corporate goals Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  The Interdependence Between Organizations and Information Systems Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 8  Strategic Business Objectives of Information Systems  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 Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  The Role of Information Systems in Business Today  Operational excellence Improvement in efficiency to attain higher profitability Information systems and technologies  The most important tools in achieving greater productivity Example: Walmart – Over $524 billion in sales in 2019 – Retail Link System – Links suppliers to stores for superior replenishment system Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 10  The Role of Information Systems in Business Today (Cont.)  New products, services, and business models Business model?  How company produces, delivers, and sells product or service to create wealth Information systems are a major enabling tool to create  New products  New services  Entirely new business models Example  Apple – Old business model: records, tapes, CDs – New business model: online, iPad, iTunes Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 11  The Role of Information Systems in Business Today (Cont.)  Customer and supplier intimacy Serving customers well leads to customers returning  It raises revenues and profits  Example – Personalized services in high-end hotels – Mandarin Oriental hotel – Room temperature, lights, music Intimacy with suppliers result in lower costs  It allows them to provide vital inputs – Example – JCPenney’s Information System – Enhances relationship with supplier in Hong Kong Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 12  The Role of Information Systems in Business Today (Cont.)  Improved decision making Managers do not have the right information at the right time  Needle in haystack Without accurate information:  They rely on forecasts, best guesses and luck – Results in: – Misallocation of resources; – Poor response times  Poor outcomes raise costs, lose customers  Real-time data improves ability to make decisions. Example: Verizon’s web-based digital dashboard  Real-time data on customer complaints, network performance, and so on Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 13  The Role of Information Systems in Business Today (Cont.)  Competitive advantage Delivering better performance Charging less for superior products Responding to customers and suppliers in real time Examples  Industry leaders (i.e., Apple, Walmart, UPS) – They know how to use information systems for this purpose  Competitive advantage often results from achieving previous business objectives Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 14  The Role of Information Systems in Business Today (Cont.)  Survival Information technologies as necessity of business Keeping up with competitors (e.g., industry-level changes)  Citibank’s introduction of ATMs Governmental regulations requiring record-keeping  Toxic Substances Control Act  Sarbanes-Oxley Act  Dodd-Frank Act Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 15  What is an Information System?  Information system Set of interrelated components Collect, process, store, and distribute information Support decision making, coordination, and control  Information technology  The hardware and software that a firm needs to achieve business objectives  Hardware and software are technical foundation and tools, similar to the material and tools used to build a house. Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 16  Data and Information  Information vs. data Data are streams of raw facts Information is data shaped into meaningful form Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 17  Functions of an Information System Input Processing Raw data or information from Converts raw data (or one form of organization, external environment information) into more meaningful or other IS information Output Feedback Information to be supplied to people, Output returned to members of the activities (or other IS) that use it organization to help them evaluate or correct the input and/or processing Sharp distinction between computer or computer program versus information system Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 18  Functions of an Information System (Cont.) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 19  Dimensions of Information Systems  Organization: Hierarchy of authority, responsibility; Separation of business functions; Unique business processes; Unique business culture; Organizational politics  Management: Managers set organizational strategy Managers must act creatively:  Creation of new products and services  Occasionally re-creating the organization  Technology: Hardware/software Infrastructure Data management Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 20  It Isn’t Just Technology: A Business Perspective on Information Systems  Information system is instrument for creating value  Investments in information technology will result in superior returns  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 Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  The Business Information Value Chain Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 22  A Business Perspective on Information Systems (Cont.)  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  Assets required to derive value from a primary investment – Organizational assets (e.g., efficient business processes) – Managerial assets (e.g., incentives for management innovation) – Social assets (e.g., Internet and telecommunications infrastructure) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Examples of Complementary Assets Firms supporting technology investments with investment in complementary assets receive superior returns Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 24  Contemporary Approaches to Information Systems  Technical Approach Emphasizes mathematically based models The disciplines are  Computer science, management science, operations research  Behavioral approach Behavioral issues (strategic business integration, implementation, etc.) The disciplines are  Psychology, economics, sociology  Approach of our Book/Class: Sociotechnical Optimal organizational performance achieved by jointly optimizing both social and technical systems used in production Helps avoid purely technological approach Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 25  Contemporary Approaches to Information Systems Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 26