Chapter 2Information Systems and the Modern Orgnization

Copyright © 2012 by John Wiley & Sons, Inc. All rights reserved.

Introduction to Information Systems

Fourth EditionInternational Student Version

R. Kelly Rainer Jr. and Casey G. Cegielski

CHAPTER OUTLINE2.1 Business Processes2.2 Business Process Reengineering and

Business Process Management2.3 Business Pressures, Organizational

Responses, and Information Technology Support

2.4 Competitive Advantage and Strategic Information Systems

2.5 Business – Information Technology Alignment

Learning Objectives1. Understand the concept of business processes, and provide examples of business processes in the functional areas of an organization.2. Differentiate between the terms business process reengineering and business process management.3. List and provide examples of the three

types of business pressures, and describe one IT response to each.

Learning Objectives (continued)4. Identify the five competitive forces described by Porter, and explain how the Web impacts each one.5. Describe the strategies that organizations typically adopt to counter the five competitive forces and achieve competitive advantage.6. Define business – information technology alignment, and describe the

characteristics of effective alignment.

Competitive Advantage

Photodisc/Getty Images, Inc.

2.1 Business ProcessesBusiness Process

Cross-Functional Business Processes

Example of Business Process (Figure 2.1)

The next slide shows an example of a business process: Ordering an E-ticket from an airline Web site

Notify Traveler

Receive Ticket Order

Reserve Seats

Charge Credit Card

Confirm Flight(s)Issue e-Ticket

Plan Trip

Check Flights

Submit Ticket Order

Receive e-Ticket

Seats Availa

ble

Use Credi

t Card?

Charge OK?

Seats Available?

Notify Traveler

Frequent Flyer

Mileage Sufficie

nt?Subtract Mileage

NO

YES

NO

YES

NO

YES

NOYES

Traveler Airline Web Site

YES

NO

Porter’s Competitive Forces ModelThreat of entry of new competitors is high

when it is easy to enter a market and low when significant barriers to entry exist.

A barrier to entry is a product or service feature that customers expect from organizations in a certain industry.

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

SISTEM INFORMASI MANAJEMENMinggu 04 Page 16

Threat of New

Entrants

Rivalry AmongExisting

Competitors

Bargaining Power of Customers

Bargaining Power

of Suppliers

Threat ofSubstitutes

Porter’s Competitive Forces ModelThe bargaining power of suppliers is high

when buyers have few choices and low 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 ModelThe bargaining power of buyers is high

when buyers have many choices and low when buyers have few choices.

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

Internet reduces switching costs, which are the costs, in money and time, to buy elsewhere. This also increases buyer power.

Porter’s Competitive Forces ModelThe threat of substitute products or

services is high when there are many substitutes for an organization’s products or services and low 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 ModelThe threat of substitute products or

services is high when there are many substitutes for an organization’s products or services and low 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.

SISTEM INFORMASI MANAJEMENMinggu 04 Page 21

ImprovingBusinessProcess

PromoteBusinessInnovation

Locking in Customers and Suppliers

Use IT to reduce costs of doing business

•Use IT to improve quality•Use IT to link business to customers and suppliers

Use IT to create new products or services

EnhanceEfficiency

Create NewBusiness Opportunities

Maintain ValuableCustomers and Relationships

Strategy

IT Role

Outcome

SISTEM INFORMASI MANAJEMENMinggu 04 Page 22

RaiseBarriersto Entry

Build aStrategic ITPlatform

Build a Strategic Information Base

Increase amount of investment or complexity of IT needed to compete

Use IT to provide information to support firm’s competitive strategy

Leverage investment in IS resources from operat- ional uses to strategic uses

IncreaseMarket Share

Create NewBusiness Opportunities

EnhanceOrganizational Collaboration

Strategy

IT Role

Outcome

Porter’s Competitive Forces ModelThe rivalry among firms in an industry is

high when there is fierce competition and low 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

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

SISTEM INFORMASI MANAJEMENMinggu 04 Page 29

Marketing And ProductResearch

Sales andDistribution

Support and Customer Feedback

Data for market research, establishes consumer responses

•Access to customer com-ments online•Immediate re-sponse to customer problems

•Low cost distribution•Reaches new customers •Multiplies contact points

Increase Market Share

Lower Cost Margins

Enhanced Customers Satisfaction

InternetCapability

Benefitsto

Company

Opportunityfor

Advantage