305 Chapter 1

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Chapter 1

Managing the Digital Firm

Chapter 1

Managing the Digital Firm

Chapter Objective:

ÈExplain why information systems are so important today for business andmanagement

ÈEvaluate the role of information systems in today¶s competitive businessenvironment.

È Assess the impact of the Internet and Internet technology on business andgovernment.

ÈDefine an information system from both a technical and businessperspective.

È Identify the major management challenges to building and using

information systems.

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Why Information Systems?Why Information Systems?

È An entirely new Internet business culture « new ways of conducting

business.

È Businesspeople working with high-speed Internet connections,wireless networks, cellular phones, hybrid handheld devices.

È Online services for purchasing goods and services are more and more

expected on the western world.

È Business communication with vendors, customers & employees any

time of day or night over the Internet.

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Information Technology (IT):

refers to all of the computer-based information

systems used by organizations and their underlying

technologies.

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Foundation of Doing BusinessFoundation of Doing Business

È In US, millions of managers & workers in the labor force rely on

information systems every day to conduct business.

È In many industries, survival and even existence without extensive use of Information systems is impossible.

È E-commerce and firms like Amazon, eBay, Google, University of

Phoenix would not simply exist without IT.

È Service Industries (finance, insurance, real state) & personal services

(travel, medicine, education) could not operate without IT.

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Strategic Opportunity & AdvantageStrategic Opportunity & Advantage

È To take advantage of new opportunities in markets,

develop new products, and create new services ± big

investment in IT might be required by the firm.

È Information systems also help to achieve a strategic

advantage over competitors.

ProductivityProductivity

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How Much Does IT Matter?How Much Does IT Matter?

IT Matters «

È

not all investments in IT work out or have strategic value.

È Some are just needed to stay in business, to comply with

government reporting requirements and to satisfy the

needs of customers and vendors.

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Digital Convergence and the

Changing Business Environment

Digital Convergence and the

Changing Business EnvironmentFive factors to consider when assessing the growing impact

of IT in business firms:

È Internet growth & technology convergence

È Transformation of the business enterprise

È Growth of a globally connected economy

È Growth of knowledge and information based economies

È Emergence of the digital firm

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The Internet & Technology

Convergence

The Internet & Technology

ConvergenceÈ New business models based on Internet.

È

Cellular phones are becoming Internet access devices.

ÈNew market for online streaming media, music, video

download.

ÈSuppliers of big chains like Wal-Mart, Sears can not do

business unless adopted internet based digital technology.

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Transformation of the Business

Enterprise

Transformation of the Business

EnterpriseÈ Firms are no longer limited by traditional organizational

boundaries or physical locations in how they design,

develop, and produce goods and services.

È There are also changes in the management of the

enterprise. New business Enterprise is flattened (less

hierarchical), decentralized, flexible, location independentand there is more empowerment.

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GlobalizationGlobalization

È Information Systems facilitate imports and exports, foreign

trades.

È Information Systems provide the communication and

analytic power that firms need to conduct trade and manage

businesses on a global scale.

È IS has great role on ± management and control in a global

marketplace, forming global workgroups, managing global

delivery systems.

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Rise of the Information EconomyRise of the Information Economy

È Western and advanced world are being transformed from industrial

economies to knowledge and information based service economies.

È Manufacturing has been moving to lower-wage countries.

È Today most people on the western world no longer work on farms on

in factories. Instead they on sales, education, health care, banks,

insurance firms, law firms and so on.

È In a knowledge and information based economy, knowledge and

information are the sources for creating wealth.

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Emergence of the Digital FirmEmergence of the Digital Firm

Digital Firm:

Internal tasks and most business relationships with

customers, suppliers and employees are digitally enabled.

Digital firms are hoped to be more productive, effective and

efficient.

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Perspectives on Information

Systems

Perspectives on Information

SystemsÈ Data vs. Information

È Informal Information System

È Formal Information System

È Computer based Information System (CBIS)

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Business Perspective on

Information Systems

Business Perspective on

Information SystemsÈ Information systems provide economic value to the

business. That¶s why money is spent on IS / IT

È the result is: more profit, more market share, more return

on investment, increases in revenue, etc.

È Sometimes firms are forced to spend on IT just to stayon business (small banks investing on ATM)

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È Computer Literacy: focuses primarily on knowledge of informationtechnology.

È Information Systems Literacy: IT knowledge, plus understandingabout organization & management.

È Knowledge Workers: design products or services and create newknowledge (engineers, architects, scientists)

È Data Workers: process the organization¶s paperwork (secretaries,bookkeepers, clerks)

È Production / Service Workers: actually produce the organization¶s

products or services.

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È Operational Managers: responsible for monitoring the firm¶s daily

activities.

È Middle Managers: carry out the programs and plans of senior management.

È Senior Managers: make long-range strategic decisions about what

products and services to produce.

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È Computer Hardware

È Computer Software

È Storage Technology

È Communication Technology

È Internet & World Wide Web (WWW)

È IT Infrastructure: provides the foundation, or platform, on which the

firm can build its specific information systems.

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The Challenge of Information

Systems

The Challenge of Information

Systems

È The Information Systems investment challenge

È The Strategic Business challenge

È The Globalization challenge

È The Information Technology Infrastructure challenge

È Ethics and Security challenge

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305 Chapter 1

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