Chapter 01 Ed 11

5/20/2018 Chapter 01 Ed 11

1/46

1.1 2010 by Prentice Hall

1

Chapter

Information Systemsin Global Business

Today

5/20/2018 Chapter 01 Ed 11

2/46


LEARNING OBJECTIVES

Management Information SystemsChapter 1 Information Systems in Global Business Today

Understanding 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 itsmanagement, organization, and technology

components.

5/20/2018 Chapter 01 Ed 11

3/46


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.

LEARNING OBJECTIVES (Continued)


5/20/2018 Chapter 01 Ed 11

4/46


NBA Teams Make a Slam Dunk with Information Technology

Problem:Lack of hard data usable in decision-making

processes, costly and competitive market.

Solutions: Developed a new systemdesigned to collect

and organize data using video clips of games. Synergy Sports Technologytags video of each game with

hundreds of descriptive categories and allows coaches

and players to stream game footage from the Web.

Demonstrates ITs role in innovation and improvingbusiness processes.

Illustrates how the Web has allowed businesses to use

new tools to analyze critical data.


5/20/2018 Chapter 01 Ed 11

5/46


The Role of Information Systems in Business Today

How information systems are transforming

business

Increase in wireless technology use, Web sites

Shifts in media and advertising

New federal security and accounting laws

Globalizationopportunities

Internet has drastically reduced costs of operating onglobal scale

Presents both challenges and opportunities


5/20/2018 Chapter 01 Ed 11

6/46


5/20/2018 Chapter 01 Ed 11

7/461.7 2010 by Prentice Hall



Information Technology Capital Investment

Figure 1-1

Information technology investment, defined as hardware, software, and communicationsequipment, grew from 32% to 51% between 1980 and 2008.Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income

and Product Accounts, 2008.

5/20/2018 Chapter 01 Ed 11


In the emerging, fully digital firm Significant business relationships are digitally enabled

and mediated

Core business processes are accomplished throughdigital networks

Key corporate assets are managed digitally

Digital firms offer greater flexibility inorganization and management Time shifting, space shifting



5/20/2018 Chapter 01 Ed 11


Read the Interactive Session and then discuss the following questions:

What are the advantages of using videoconferencing

technologies? What are the disadvantages? What is telepresence and what sorts of companies are best

suited to use it as a communications tool?

What kinds of companies could benefit from using

videoconferencing? Are there any companies that might

not derive any benefits from this technology?

Virtual Meetings: Smart Management



5/20/2018 Chapter 01 Ed 11


Growing interdependence between ability to useinformation technology and ability to implementcorporate strategies and achieve corporate goals

Business firms invest heavily in informationsystems to achieve six strategic businessobjectives: IT Strategic Role

Operational excellence

New products, services, and business models Customer and supplier intimacy

Improved decision making

Competitive advantage

Survival



5/20/2018 Chapter 01 Ed 11


Operational excellence:

Improvement of efficiency to attain higher profitability

Information systems, technology an important tool in

achieving greater efficiency and productivity

Wal-Marts RetailLink system links suppliers to stores

for superior replenishment system



5/20/2018 Chapter 01 Ed 11


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

Examples: Apples iPod, iTunes, and iPhone, Netflixs

Internet-based DVD rentals



5/20/2018 Chapter 01 Ed 11


Customer and supplier intimacy:

Serving customers well leads to customers returning,

which raises revenues and profits

Example: High-end hotels that use computers to trackcustomer preferences and use to monitor and customize

environment

Intimacy with suppliers allows them to provide vital

inputs, which lowers costs

Example: J.C.Penneys information system which links sales

records to contract manufacturer



5/20/2018 Chapter 01 Ed 11


Improved decision making

Without accurate information:

Managers must use forecasts, best guesses, luck

Leads to:

Overproduction, underproduction of goods and services

Misallocation of resources

Poor response times

Poor outcomes raise costs, lose customers Example: Verizons Web-based digital dashboard to

provide managers with real-time data on customer

complaints, network performance, line outages, etc.



5/20/2018 Chapter 01 Ed 11


Operational excellence: Improvement of efficiency to attain higher profitability

New products, services, and business models: Enabled by technology

Customer and supplier intimacy: Serving customers raises revenues and profits

Better communication with suppliers lowers costs Improved decision making

More accurate data leads to better decisions



5/20/2018 Chapter 01 Ed 11


Competitive advantage

Delivering better performance

Charging less for superior products

Responding to customers and suppliers in

real time

Example: Toyota and TPS (Toyota Production

System) enjoy a considerable advantage overcompetitorsinformation systems are critical

to the implementation of TPS



5/20/2018 Chapter 01 Ed 11


Survival

Information technologies as necessity of

business

May be:

Industry-level changes, e.g. Citibanks introduction

of ATMs

Governmental regulations requiring record-keeping

Examples: Toxic Substances Control Act, Sarbanes-

Oxley Act



5/20/2018 Chapter 01 Ed 11




The Interdependence Between Organizations and

Information Technology

In contemporary systems there is a growing interdependence between a firms information systems

and its business capabilities. Changes in strategy, rules, and business processes increasingly

require changes in hardware, software, databases, and telecommunications. Often, what the

organization would like to do depends on what its systems will permit it to do.

Figure 1-2

5/20/2018 Chapter 01 Ed 11


Information system:

Set of interrelated components

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

Perspectives on Information Systems


5/20/2018 Chapter 01 Ed 11


5/20/2018 Chapter 01 Ed 11




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 salesrevenue from dish detergent for a specific store or sales territory.

Figure 1-3

Data and Information

5/20/2018 Chapter 01 Ed 11


Information system: Three activities

produce information organizations need

Input: Captures raw data from organizationor external environment

Processing: Converts raw data into

meaningful form

Output: Transfers processed information

to people or activities that use it



5/20/2018 Chapter 01 Ed 11


Feedback:

Output returned to appropriate members oforganization to help evaluate or correct inputstage

Computer/Computer program vs.information system

Computers and software are technical foundationand tools, similar to the material and tools used tobuild a house



5/20/2018 Chapter 01 Ed 11




An information system contains information about an organization and its surrounding environment. Three basic activitiesinput,processing, and outputproduce 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

Functions of an Information System

5/20/2018 Chapter 01 Ed 11

25/46




Using information systems effectively requires an understanding of the organization,

management, and information technology shaping the systems. An information systemcreates value for the firm as an organizational and management solution to challenges posed

by the environment.

Figure 1-5

Information Systems Are More Than Computers

5/20/2018 Chapter 01 Ed 11

26/46


Organizational dimension of

information systems

Hierarchy of authority, responsibility

Senior management

Middle management

Operational management

Knowledge workers Data workers

Production or service workers



5/20/2018 Chapter 01 Ed 11

27/46




Business organizations are hierarchies consisting of three principal levels: seniormanagement, middle management, and operational management. Information systems serve

each of these levels. Scientists and knowledge workers often work with middle management.

Figure 1-6

Levels in a Firm

5/20/2018 Chapter 01 Ed 11

28/46


Organizational dimension of information

systems (cont.)

Separation of business functions

Sales and marketing

Human resources

Finance and accounting

Manufacturing and production

Unique business processes Unique business culture

Organizational politics



5/20/2018 Chapter 01 Ed 11

29/46


Management dimension of

information systems

Managers set organizational strategy forresponding to business challenges

In addition, managers must act creatively:

Creation of new products and services

Occasionally re-creating the organizationorganizational restructuring



5/20/2018 Chapter 01 Ed 11

30/46


Technology dimension of informationsystems

Computer hardware and software Data management technology

Networking and telecommunications technology

Networks, the Internet, intranets and extranets, WorldWide Web

IT infrastructure: provides platform that system isbuilt on



5/20/2018 Chapter 01 Ed 11

31/46


Read the Interactive Session: Technology, and then

discuss the following questions:

What are the inputs, processing, and outputs of

UPSs package tracking system?

What technologies are used by UPS? How are these

technologies related to UPSs business strategy?

What problems do UPSs information systems solve?

What would happen if these systems were not

available?

UPS Competes Globally with Information Technology



f S

5/20/2018 Chapter 01 Ed 11

32/46


Dimensions of UPS tracking system

Organizational:

Procedures for tracking packages and managinginventory and provide information

Management:

Monitor service levels and costs

Technology:

Handheld computers, bar-code scanners, networks,desktop computers, etc.



M t I f ti S t

5/20/2018 Chapter 01 Ed 11

33/46


Business perspective on informationsystems:

Information system as an instrument forcreating value

Investments in information technology willresult in superior returns: (short, long strategic run)

Productivity increases Revenue increases

Superior long-term strategic positioning



M t I f ti S t

5/20/2018 Chapter 01 Ed 11

34/46


Business information value chain Raw data acquired and transformed through

stages that add value to that information

Value of information system determined in part byextent to which it leads to better:

1- decisions, 2- greater efficiency, 3- higher profits

Business perspective: Calls attention toorganizational and managerial nature ofinformation systems



M t I f ti S t

5/20/2018 Chapter 01 Ed 11

35/46




From a business perspective, information systems are part of a series of value-addingactivities for acquiring, transforming, and distributing information that managers can use to

improve decision making, enhance organizational performance, and, ultimately, increase firm

profitability.

Figure 1-7

The Business Information Value Chain

M t I f ti S t

5/20/2018 Chapter 01 Ed 11

36/46



Value creation

Value Creation

M t I f ti S t

5/20/2018 Chapter 01 Ed 11

37/46




Although, on average, investments in information technology produce returns far above those returned by

other investments, there is considerable variation across firms.

Figure 1-8

Variation in Returns on

Information Technology Investment

Management Information S stems

5/20/2018 Chapter 01 Ed 11

38/46


Investing in information technology does notguarantee good returns

Considerable variation in the returnsa firmsreceive from systems investments

Factors:

Adopting the right business model Investing in & assets (organizational and

management capital)



Management Information Systems

5/20/2018 Chapter 01 Ed 11

39/46


Complementary assets:

Assets required to derive value from a

primary investment Firms supporting technology investments

with investment in complementary assets

receive superior returns

E.g.: invest in technology and the people to

make it work properly




5/20/2018 Chapter 01 Ed 11

40/46


Complementary assets include:

Organizational investments, e.g.

Appropriate business model Efficient business processes BP

Managerial investments, e.g.

Incentives for management innovation

Teamworkand collaborative work environments

Social investments, e.g.

The Internet and telecommunications infrastructure

Technology standards




5/20/2018 Chapter 01 Ed 11

41/46




The study of information systems deals with issues and insights contributed from technicaland behavioral disciplines.

Figure 1-9

Contemporary Approaches to Information Systems


5/20/2018 Chapter 01 Ed 11

42/46


Technical approach

Emphasizes mathematically based models

Computer science, management science,operations research

Behavioral approach

Behavioral issues (strategic businessintegration, implementation, etc.)

Psychology, economics, sociology




5/20/2018 Chapter 01 Ed 11

43/46


Management Information Systems Combines computer science, management science,

operations research and practical orientation with

behavioral issues

Four main actors Suppliers of hardware and software

Business firms

Managers and employees Firms environment (legal, social, cultural context)




5/20/2018 Chapter 01 Ed 11

44/46


Approach of this book: Sociotechnical

view

Optimal organizational performanceachieved by jointly optimizing both social and

technical systems used in production

Helps avoidpurely technological approach




5/20/2018 Chapter 01 Ed 11

45/46




In a sociotechnical perspective, the performance of a system is optimized

when both the technology and the organization mutually adjust to one

another until a satisfactory fit is obtained.

Figure 1-10

A Sociotechnical Perspective on Information Systems

5/20/2018 Chapter 01 Ed 11

46/46

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.

Copyright 2010 Pearson Education, Inc.Publishing as Prentice Hall

Chapter 01 Ed 11

Documents

Transcript of Chapter 01 Ed 11