CHAPTER 2

Information Systems and the Modern Organization

CHAPTER OUTLINE

2.1 Types of Information Systems2.2 Competitive Advantage and Strategic

Information Systems2.3 Why Are Information Systems Important to

Organizations and Society?2.4 Managing Information Resources

LEARNING OBJECTIVES

• Describe the components of computer-based information systems.

• Describe the various types of information systems by breadth of support.

• Identify the major information systems that support each organizational level.

• Describe strategic information systems (SISs), and explain their advantages.

Learning Objectives (continued)

• Describe porter’s competitive forces model and his value chain model, and explain how IT helps companies improve their competitive positions.

• Describe five strategies that companies can use to achieve competitive advantage in their industries.

• Describe how information resources are managed, and discuss the roles of the information systems department and the end users.

Chapter Opening Case

Expansion

2.1 Types of Information Systems

Computer-based information systems (CBIS) use computer technology to perform some or all of their tasks and are composed of:– Hardware– Software– A Database– A Network– Procedures– People

Capabilities of Information Systems

• Perform high-speed, high-volume numerical computations• Provide fast, accurate communication and collaboration within and

among organizations• Store huge amounts of information in small space• Allow quick, inexpensive access to vast amounts of information

worldwide• Interpret vast amounts of data quickly and efficiently• Increase effectiveness and efficiency of people working in groups in

one place or around the world• Automate semiautomatic business process and manual tasks

Table 2.1

Application Programs

An application program is a computer program designed to support a specific task, a business process or another application program.

Breadth of Support of Information Systems

• Functional area information systems• Enterprise resource planning systems• Transaction processing systems• Interorganizational information systems

Information Systems Support for Organization Employees

• Office automation systems• Functional area information systems• Business intelligence systems• Expert Systems• Dashboards

2.2 Competitive Advantage and Strategic Information Systems

• Competitive Advantage

• Strategic Information Systems

Porter’s Competitive Forces Model

The best-known framework for analyzing competitiveness is Michael Porter’s competitive forces model (Porter, 1985).

Porter’s Competitive Forces Model

• Threat of entry of new competitors

• A barrier to entry

• For most organizations, the Internet increases the threat that new competitors will enter a market.

Porter’s Competitive Forces Model

• The bargaining power of suppliers is ____ when buyers have few choices and ____ when buyers have many choices.

• Internet impact is mixed. Buyers can find alternative suppliers and compare prices more easily, reducing power of suppliers.

• On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in customers.

Porter’s Competitive Forces Model

• The bargaining power of buyers is ____ when buyers have many choices and ____ when buyers have few choices.

• Internet increases buyers’ access to information, increasing buyer power.

• Internet reduces switching costs

Porter’s Competitive Forces Model

• The threat of substitute products or services is _____ when there are many substitutes for an organization’s products or services and _____ where there are few substitutes.

• Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The Internet can convey digital information quickly and efficiently.

Porter’s Competitive Forces Model

• The rivalry among firms in an industry is ____ when there is fierce competition and ____ when there is not.

Porter’s Value Chain Model

This model identifies specific activities where organizations can use competitive strategies for greatest impact.– Primary activities:

– Support activities:

Strategies for Competitive Advantage

• Cost Leadership

• Differentiation

• Innovation

• Operational Effectiveness

• Customer-orientation

2.3 Why are Information Systems Important to Organizations & Society

• IT will reduce the number of _____________.

• IT will change the _____________.• IT impacts ________________.• IT provides ______________

improvements.

Enabling People with Disabilities to Work with Computers

Improvements in Health Care

Roving Robot Camera

The Pill Cam

daVinci Surgical Robot

Medical Simulations

Managing Information Resources

• Which IT Resources are Managed and By Whom?

• The Role of the IS Department

Traditional Major IS Functions

• Managing systems development and systems project management

• Managing computer operations• Staffing, training, developing IS skills• Providing technical services• Infrastructure planning, development, control

New (Consultative) IS Functions• Initiating and designing strategic information systems• Incorporating the Internet and e-commerce into the business• Managing system integration• Educating non-IS managers about IT• Educating IS staff about the business• Supporting end-user computing• Partnering with executives• Managing outsourcing• Innovate• Ally with vendors and IS departments in other organizations

Supporting End Users

One form of end-user support is the help desk, where IS staffers

help users troubleshoot problems with their systems.