CHAPTER 1 and MODULE A

The Information Age in Which You Live:

Changing the Face of Business&

Computer Hardware and Software

Why do we need to Study MIS?

TelecommutingAdvantages?Disadvantages?

Who can telecommute?Who cannot telecommute?

INTRODUCTIONInformation age

Knowledge worker

Outnumber all other types of workers at least four-to-one

Opening Case: Cell Phones Doom Phone Revenues for Hotels

Opening Case: Cell Phones Doom Phone Revenues for Hotels

The year 2000 – typical hotel could budget annual revenue of $1,274 per room for in-room phone charges

The year 2009 – typical hotel could budget annual revenue of only $178 per room for in-room phone charges

Cell phones and technologies of all kinds are transforming entire industries

INTRODUCTION Technology can have unintended consequences that can transform an industry’s cost basis and revenue model

Technology can create new industries. You live in a digital age Average American relies on more than 250 computers

per day Radio took 38 years to reach 50 million years, iPod

took 3 years, FaceBook 2 yearsMIS – Management Information Systems: People use IS to work with information.

Three Key Resources1. Information2. People3. Information Technology/Information

Systems

MIS Resource #1: Information Intellectual asset hierarchy – data,

information (data in context), business intelligence (making decisions with information), knowledge (using past intelligence to get new information)

Information Resource

Information is often aggregated data that has meaning such as average age, youngest and oldest customer, and a histogram of customer ages

Information Resource Business intelligence (BI) – collective

information about… Customers Competitors Business partners Competitive environment

BI can help you make important, strategic decisions

Information Resource

Information Resource – Quality Attributes Timeliness

When you need it Describing the right time period

Location (no matter where you are) Form (audio, text, animation, etc) Validity (credibility)

Information Resource – Organizational Perspective

Information Resource – Flows of InformationUpward

Downward

Horizontal

Outward/Inward

Information Resource – What It DescribesInternal: Internal operational informationExternal: Information on environment of

businessObjective: Measurable, verifiable

informationSubjective: Speculative, forecasting type

information

Employment Information & Social Media: Employers use social media to screen employee applicants. Applicants can use social media feeds of companies to see what is going on with them. Also, use sites like LinkedIn to network and get jobs that-a-way.

MIS Resource #2: People People are the most important resource in any

organization, with a focus on Technology literacy: HOW (which technology to

use and how to use it) and WHEN (should we use technology at all for this or is ther another way?)

Information literacy: What information do I need to solve my problem? Diaper & Beer example.

Ethical responsibilities: Principles and standards to guide behavior. Illegal copies, cheating, hiding information that can alter someone’s decisions.

People Resource - EthicsYou always want your actions to fall in Quadrant I – both ethical and legal.

MIS Resource #3: IT/ISInformation technology (IT) :

Infrastructure available to everyone and offers no competitive advantage.

Information Systems( IS): Applications that run on infrastructure and give us competitive advantage.

Six Categories of Hardware

Keyboard (input) CDs (storage)

Video card (connecting)

CPUCable modem (telecommunications)

Monitor (output)

Information Technology – SoftwareTwo types of software:1. Application software: MS Office (excel,

word, Powerpoint, Access), email server and client, web server and browser

2. System software Operating system software Utility software

Analyzing Whether to Get a New TechnologyFixed Cost, Variable Cost and Revenue are

needed for break even analysis. How many movie posters do I need to sell to break even if my fixed cost is $1500, variable cost is $6 and revenue per unit is $9? 500 posters a year!

Sometimes companies invest in IT/IS even if they lose money, because of fear of obsolescence or keeping up with the competition.

Can Technology Help Reduce These Costs & Increase Revenue?Fixed Costs: Digital Storefronts (cheap store),

Telecommuting (no office), VOIP (cheap communications to customers, Cloud Computing (host your website for cheap and pay as it grows).

Variable Costs: Send goods virtually if you can (music, books). CrowdSourcing: Get people like your customers to do your work for free!

Revenue: Recommendation Engines to enhance sales. Long Tailed Economics.

Long Tail What is the Long Tail:

Niche, specialty products that enjoy distributed, educated markets

30-40% of Amazon sales are with titles that would not be found in a regular bookstore. What does this tell us?

What other products fit this long tail?-Music www.cdbaby.com-Movies www.netflix.com-Specialty foods http://www.uplandscheese.com/-Tube amplifiers www.vista-audio.comAny others?

Discussion: What are the implications on this for industry? What kind of companies will benefit from this? How can IT help? Improved product scope.

Drivers of the Long Tail Supply Side:

-Etailers have unlimited shelf space-Print on demand allows books to be printed economically.

CNN & Fox News can cover stories across the globe more economically,leading to more diverse stories.

Consumer side:-Sophisticated search capabilities allow mature tastes to develop- www.cdbaby.com search feature-netflix search capabilities www.netflix.com-Amazon search capabilities www.amazon.comThe role of forums and reviews in changing tastes

http://audioroundtable.com/General/messages/4317.html

Long Term Effects of the Long Tail -Specialized products, mass customized

-Lowering of breakeven points due to lower production costs in music, movies, books

-Increased differentiation of consumer tasteshttp://www.espressozone.com/

-Change in the concept of fame/superstar? -Reduction in blockbuster products designed to appeal to all?-Allow distributed niche markets as opposed to geographically focused marketing

Is the Long Tail here to stay?Speculation: Reduce urban centers?

Porter’s Five Forces Model

• Bargaining power of buyers• Bargaining power of suppliers• Threat of substitute products or services• Threat of new entrants• Competitive intensity in industry

Discussion: What are example industries of each type? Overall, how helpful is this model?

-Bargaining power of buyers: Loyalty programs, lock customers in-Bargaining power of suppliers: multiple suppliers, reverse auctions-Switching costs are usually switching to another competitor but same productOR switching to another similar product. E.g., DVDs, VHS & downloads- Threat of new entrants: Can IT help or hurt here?

Discussion: Movie Rental Industry. What HBO Go& Netflix do?How about a new entrant: what strategy should they follow? Redbook?

Porter’s Three Strategies

• Cost Leadership: Walmart model. Need very tight operations for this. • Differentiation: Offer products that are unique and different. iPhone or Nest.

• Focus or Niche: Find a small segment that is underserved and make a specialized product for them. Simplisafe.com

Run/Grow/TransformManagers must decide how much to allocate to Run: Improve existing infrastructure and IS. Grow: Try to use technology to get into new markets or develop new product linesTransform: Transform your business model. HBO?

Where do we go from here in IT/IS?

Four Phases of Technology in Business:

1950-1980: Automate on large mainframes

1980-1995: Push information onto employee PCs.

1995-2010: Use the Internet to connect companies and customers to drive down costs.

2010- Present: Mobile Computing so Technology is available anywhere.

Future: Artificial Intelligence and Robots, Augmented Reality.