1.Information Systems in Global Business Today
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Transcript of 1.Information Systems in Global Business Today
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Information Systems in Global Business Today
Chapter 1
Usman Naeem
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Introduction
• Explain why information systems are so important today for business and management
• Evaluate the role of information systems in today’s competitive business environment
• Assess the impact of complementary assets
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Opening Case Study
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Role of Information Systems in Business Today
• In 2009, Asia-Pacific spent $153 billion on IT and Telecom, that is more than 50 % of spending
• Information technology capital grew from 35 % to 54 % of all invested capital
• By june 2008, >80 million businesses had registered dot-com sites (in US only)
• E-commerce and internet advertising is booming
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• IT is the largest single component of capital investment in the United States.
• About $1.8 trillion is spent each year by American businesses.
• Managers and business students need to know how to invest this capital wisely.
• The success of your business in the future may well depend on how you make IT investment decisions.
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Globalisation
• Opportunities:• Management and control in a global marketplace• Competition in world markets• Global workgroups• Global delivery systems
• Challenges:• Outsourcing processes = job loss• Obtaining/Maintaining competitive advantage
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Strategic Objectives of Information Systems
• Create new services: • eBay has developed the largest auction trading
platform for millions of individuals and businesses. Competitors have not been able to imitate its success.
• Differentiate yourself from your competitors: • Amazon has become the largest book retailer in the
United States on the strength of its huge online inventory and recommender system. It has no rivals in size and scope.
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• Businesses invest in Information system to achieve six strategic business objectives:– Operational Excellence
• Example: Wal-Mart
– New products, Services and Business models• Online music, Apple
– Customer and supplier intimacy• Junaid Jamshed
– Improved decision making– Competitive advantage– Survival
• Example: Banks
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What is Information System?Technology Perspective
• A set of interrelated software and hardware components that collect, process, store, and distribute information to support decision making and control in an organization • Data: Streams of raw facts representing events such
as business transactions• Information: Clusters of facts meaningful and useful to
human beings in the processes such as making decisions• The IPL example
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Information Systems:Business Perspective
• Information systems are more than just technology. Businesses invest in IS in order to create value and increase profitability.
• Information systems are an organizational and management solution to business challenges that arise from the business environment.
• Based on information technology but also require significant investment in organizational and management changes and innovations
• IS create value primarily by changing business processes and management decision making.
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Information Systems are more than just computers
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Dimensions of Information System
• Three Important Dimensions of Information Systems • Organizations• Management• Technology
• You will need to understand and balance these dimensions of information systems in order to create business value.
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Organisational Dimension• People
• Structure
• Business processes
• Culture
• Politics
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Management Dimension• Personalities• managers must act creatively:– Creation of new products and services– Occasionally re-creating the organization
• Managers who can understand the role of information systems in creating business value are the key ingredient to success with systems, and cannot easily be replicated by your competitors.
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Technology Dimension• Hardware: Physical equipment
• Software: Detailed preprogrammed instructions
• Storage: Physical media for storing data and the software
• Communications technology: Transfers data from one physical location to another
• Networks: Links computers to share data or resources
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Information Systems transforming Business
• Technology– Emerging mobile digital platform– Growth of online software
• Management– Adopting online collaboration and social networking software
to improve knowledge sharing– Adopting mobile tools to accelerate decision making
• Organisations– Web 2.0 applications adopted by firms– Telework gaining momentum– Outsourcing production
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Complementary Assets
• Awareness of organisational and management dimensions can help us understand why some firms achieve better results than others.
• Complementary Assets are those that derive value from a primary investment. For example, automobiles
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Complementary Assets(organisational)
• Supportive business culture that values efficiency and effectiveness
• Efficient business processes, decentralization of authority• Highly distributed decision rights
• A strong information system (IS) development team
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Complementary Assets(Managerial)
• Strong senior management support for technology investment and change
• Incentives for innovation by management• Teamwork environment• Training programs to enhance management
decision skills• Management culture that values flexibility and
knowledge-based decision making
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Complementary Assets(Technological / Social)
• Internet and telecommunication infrastructure• IT enriched educational programs raising
computer literacy• Laws and regulations creating fair, stable
market environment (?)• Technology firms in adjacent market to assist
implementation
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• Investing in information technology does not guarantee good returns
• Considerable variation in the returns firms receive from systems investments
• Factors: – Adopting the right business model– Investing in complementary assets (organizational
and management capital)
* Firms supporting technology investments with investment in complementary assets receive superior returns
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Contemporary Approaches to IS
• Technical Approach:– Emphasis on mathematical models– Computer science– Management science– Operations research
• Behavioural Approach– Strategic business integration, design,
implementation, utilisation and management – Information system technology is often a stimulus for
a behavioural issue
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Sociotechnical Approach
• This textbook takes on a socio-technical approach where it discusses four actors that shape up a Management Information System– Suppliers of hardware and software– Business firms making investments to obtain value– Managers and employees seeking to achieve value– Social and cultural context (firm’s environment)
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Summary
• How Information System is transforming business and what is their relation to globalisation.
• Importance of information system for managing a business today
• What is an information system• What are complementary assets