infs1602 chapter 1

8/6/2019 INFS1602 Chapter 1

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Chapter1:InformationSystemsinGlobalBusinessToday

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1.1TheRoleofInformationSystemsinBusinessToday

TheOldEconomicsofEnterpriseo Land,LaborandCapital

TheOldViewofResourceso Scarce

Valuelinkedtoscarcityo Wealthlinkedtoownership

Accumulateo Marketsfortransfer

Usedbytransfero Buildorganizationstoacquireandstoreresourceso Assetsarenotgivenaway

TheEconomicsofInformation&Knowledgeo Information&knowledgearecentralwealthcreationresource

Havedifferentcharacteristicsthantraditionalresources-Intangible-Scarcity-Use

-Transfer-Value

o ITasanenablingdeviceo Theriseofthedigitaleconomyanddigitalfirm

Google,Youtube,itunes,Myspace

HowInformationSystemsareTransformingBusiness

Increaseinwirelesstechnologyuse,Websites Shiftsinmediaandadvertising Newfederalsecurityandaccountinglaws Informationtechnologyinvestment,definedashardware,software,andcommunicationsequipment,

grewfrom32%to51%between1980and2008.

Globalizationopportunitieso Internethasdrasticallyreducedcostsofoperatingonglobalscaleo Presentsbothchallengesandopportunities


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WhatsNewInManagementInformationSystems?

Oldsystemsarebeingcreativelydestroyed,andentirelynewsystemsaretakingtheirplace. Inthetechnologyareatherearethreeinterrelatedchanges:

1. Emergingmobiledigitalplatform(iPhones,BlackBerrys,andtinyWeb-surfingnetbooks)2. Growthofonlinesoftwareasaservice.3. GrowthincloudcomputingwheremoreandmorebusinesssoftwarerunsovertheInternet.

Allthesechangescontributetoadynamicnewglobalbusinesseconomy

TheEmergingDigitalFirm

Intheemerging,fullydigitalfirm:o Significantbusinessrelationshipswithcustomers,suppliers,andemployeesaredigitallyenabled

andmediated.

o Corebusinessprocessesareaccomplishedthroughdigitalnetworksspanningtheentireorganizationorlinkingmultipleorganizations.

o Keycorporateassetsaremanageddigitally E.g.intellectualproperty,corecompetencies,andfinancial&humanassets

o Businessprocesses Refertothesetoflogicallyrelatedtasksandbehaviorstheorganizationsdevelopovertime

toproducespecificbusinessresultsandthemannerinwhichtheseactivitiesareorganized

andcoordinated.

E.g.developingnewproduct,generatingandfulfillinganorder,creatingamarketingplan Waysorganizationsaccomplishtheirbusinessprocessescanbesourceofcompetitive

strength.

Digitalfirmsoffergreaterflexibilityinorganizationandmanagemento Timeshifting:o Referstobusinessbeingconductedcontinuously24/7,ratherthaninnarrowworkdaytime

bandsof9-5am.

o Spaceshiftingo Meansthatworktakesplaceinaglobalworkshop,aswellaswithinnationalboundaries.o Workaccomplishedphysicallywhereverintheworlditisbestaccomplished.

E.g.CiscoSystems&DellCoputersareclosetobecomingdigitalfirms,usinginternettodriveeveryaspectoftheirbusiness.


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Mostothercompaniesarenotfullydigital,butaremovingclosetobecomingdigitalintegrationwithsuppliers,customers,andemployees.

StrategicBusinessObjectivesofInformationSystems

Growinginterdependencebetweenabilitytouseinformationtechnologyandabilitytoimplementcorporatestrategiesandachievecorporategoals

o E.g.Google,Amazon,eBay,etc. Businessfirmsinvestheavilyininformationsystemstoachievesixstrategicbusinessobjectives:

o Operationalexcellenceo Newproducts,services,andbusinessmodelso Customerandsupplierintimacyo Improveddecisionmakingo Competitiveadvantageo Survival

OperationalExcellence:o Improvementofefficiencytoattainhigherprofitabilityo Informationsystems,technologyanimportanttoolinachievinggreaterefficiencyandproductivityo

Wal-MartsRetailLinksystemlinkssupplierstostoresforsuperiorreplenishmentsystem NewProducts,Services,andBusinessModels:

o Informationsystemsandtechnologyamajorenablingtoolfornewproducts,services,businessmodels

o Businessmodel: Describeshowcompanyproduces,delivers,andsellsproductorservicetocreatewealth

o E.g.ApplesiPod,iTunes,andiPhone,NetflixsInternet-basedDVDrentals Customerandsupplierintimacy:

o Servingcustomerswellleadstocustomersreturning,whichraisesrevenuesandprofits E.g.High-endhotelsthatusecomputerstotrackcustomerpreferencesandusetomonitor

andcustomizeenvironment

Developindividualizedmarketingcampaignsbasedoncustomerpreferences.o Intimacywithsuppliersallowsthemtoprovidevitalinputs,whichlowerscosts

E.g.J.C.Penneysinformationsystemwhichlinkssalesrecordstocontractmanufacturer Reducecostofstoringinventory


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Improveddecisionmakingo Withoutaccurateinformation:

Managersmustuseforecasts,bestguesses,lucko Leadsto:

Overproduction,underproductionofgoodsandservices Misallocationofresources Poorresponsetimes Pooroutcomesraisecosts,losecustomers

o Example:VerizonsWeb-baseddigitaldashboardtoprovidemanagerswithreal-timedataoncustomercomplaints,networkperformance,lineoutages,etc.

o Usingthisinformation,managerscanimmediatelyallocaterepairresourcestoaffectedareas,informconsumersofrepairefforts,andrestoreservicefast

Summaryofaboveobjectives:o Operationalexcellence:

Improvementofefficiencytoattainhigherprofitabilityo Newproducts,services,andbusinessmodels:

Enabledbytechnologyo Customerandsupplierintimacy:

Servingcustomersraisesrevenuesandprofits Bettercommunicationwithsupplierslowerscosts

o Improveddecisionmaking Moreaccuratedataleadstobetterdecisions

Whenfirmsachieveoneormoreoftheabovebusinessobjectivesabove,chancesaretheyhavealreadyachievedacompetitiveadvantage.

Competitiveadvantageo Deliveringbetterperformanceo Charginglessforsuperiorproductso Respondingtocustomersandsuppliersinrealtimeo Alladduptohighersalesandhigherprofitsthatcompetitorscannotmatch.o E.g.ToyotaandTPS(ToyotaProductionSystem)enjoyaconsiderableadvantageovercompetitors

InformationsystemsarecriticaltotheimplementationofTPS Highlevelofefficiency


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o Output: Transfersprocessedinformationtopeopleoractivitiesthatuseit

InformationsystemsalsorequireFeedback:o Outputreturnedtoappropriatemembersoforganizationtohelpevaluateorcorrectinputstage

FunctionsofanInfoSystem:

Aninformationsystemcontainsinformationaboutanorganizationanditssurroundingenvironment.Three

basicactivitiesinput,processing,andoutputproducetheinformationorganizationsneed.Feedbackis

outputreturnedtoappropriatepeopleoractivitiesintheorganizationtoevaluateandrefinetheinput.

Environmentalactors,suchascustomers,suppliers,competitors,stockholders,andregulatoryagencies,

interactwiththeorganizationanditsinformationsystems.

Computer/ComputerProgramvs.InformationSystemo Electroniccomputersandrelatedsoftwareprogramsarethetechnicalfoundation,thetoolsand

materials,ofmoderninformationsystems.

o Computerprograms,orsoftwarearesetsofoperatinginstructionsthatdirectandcontrolcomputerprocessing.

o Knowinghowcomputersandcomputerprogramsworkisimportantindesigningsolutionstoorganizationalproblems,butcomputersareonlypartofaninformationsystemandalonecannot

producetheinformationaparticularorganizationneeds.

o Analogy:housesarebuiltwithhammers,nailsandwood,butthesedonotmakeahouse.


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InformationSystemsAreMoreThanComputers

Usinginformationsystemseffectivelyrequiresanunderstandingoftheorganization,management,and

informationtechnologyshapingthesystems.Aninformationsystemcreatesvalueforthefirmasanorganizationalandmanagementsolutiontochallengesposedbytheenvironment.

DimensionsofInformationSystems

InformationSystemsLiteracyo Understandingofthemanagementandorganizationaldimensionsofsystemsaswellasthe

technicaldimensionsofsystems.

oAndtheirpowertoprovidesolutionstochallengesandproblemsinthebusinessenvironment.

ComputerLiteracyo Focusesprimaryonknowledgeofinformationtechnology

ManagementInformationSystems(MIS)o Triestoachievethisbroaderinformationsystemsliteracyo Dealswithbehavioralissuesaswellastechnicalissuessurroundingthedevelopment,use,and

impactofinformationsystemsusedbymanagersandemployeesinthefirm.

Organizationaldimensionofinformationsystemso Hierarchyofauthority,responsibility

Seniormanagement- Makeslong-rangestrategicdecisionsaboutproductsandservicesaswellasensures

financialperformanceofthefirm.

Middlemanagement- Carriesouttheprogramsandplansofseniormanagement

Operationalmanagement- Responsibleformonitoringdailyactivitiesofthebusiness


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Knowledgeworkers- Engineers,scientists,orarchitects,designproductsorservicesandcreatenew

knowledgeforthefirm

Dataworkers- Secretariesorclerks,assistwithpaperworkatalllevelsofthefirm.

Productionorserviceworkers- Producetheproductanddelivertheservice

Businessorganizationsarehierarchiesconsistingofthreeprincipallevels:seniormanagement,middle

management,andoperationalmanagement.Informationsystemsserveeachoftheselevels.

o Expertsareemployedandtrainedforseparatebusinessfunctionso MajorBusinessFunctions(chapter5)

Specializedtasksperformedbybusinessorganizations Consistof:

- Salesandmarketing- Humanresources- Financeandaccounting- Manufacturingandproduction- Uniquebusinessprocesses- Uniquebusinessculture- Organizationalpolitics


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o Mostorganizationsbusinessprocessesincludeformalrulesthathavebeendevelopedoveralongtimeforaccomplishingtasks.

Guideemployeesinavarietyofprocedures Othersareinformalworkpractices Informationsystemsautomatemanybusinessprocesses.

o Eachorganizationhasauniqueculture Fundamentalsetofassumptions,values,andwaysofdoingthings,thathasbeenaccepted

bymostofitsmembers.

E.g.Universityculturethatprofessorsknowmorethanstudents Managementdimensionofinformationsystems

o Managerssetorganizationalstrategyforrespondingtobusinesschallengeso Recognizechallenges,makedecisions,formulateactionplanstosolveorganizationproblems.o Allocatethehumanandfinancialresourcestocoordinatetheworkandachievesuccesso Inaddition,managersmustactcreatively:

Creationofnewproductsandservices Occasionallyre-creatingtheorganization

Technologydimensionofinformationsystemso Computerhardware

Physicalequipmentusedforinput,processing,andoutputactivitiesinaninformationsystem.

Computersofvariousshapesandsizes,handheldmobiledevices;variousinput,output,andstoragedevices;andtelecommunicationsdevicesthatlinkcomputerstogether.

o ComputerSoftware Consistsofthedetailed,preprogrammedinstructionsthatcontrolandcoordinatethe

computerhardwarecomponentsinaninformationsystem.

o Datamanagementtechnology(chapter6) Consistsofthesoftwaregoverningtheorganizationofdataonphysicalstoragemedia

o Networkingandtelecommunicationstechnology Consistingofbothphysicaldevicesandsoftware,linksthevariouspiecesofhardwareand

transfersdatafromonephysicallocationtoanother.

Computersandcommunicationsequipmentcanbeconnectedinnetworksforsharingvoice,data,images,sound,andvideo.


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o Network Linkstwoormorecomputerstosharedataorresources,suchasaprinter.

o TheInternet Worldslargestandmostwidelyusednetwork Aglobalnetworkofnetworksthatusesuniversalstandardstoconnectmillionsof

differentnetworkswithmorethan1.4billionsusersinover230countriesaroundthe

world.

o Intranets Internalcorporatenetworks Linksdifferentsystemsandnetworkswithinthefirm

o Extranets Privateintranetsextendedtoauthorizedusersoutsidetheorganization Usedtocoordinatetheiractivitieswithotherfirmsformakingpurchases,collaboratingon

design,andotherinterorganizationalwork.

o WorldWideWeb ServiceprovidedbytheInternetthatusesuniversallyacceptedstandardsforstoring,

retrieving,formatting,anddisplayinginformationinapageformatontheInternet.

o InformationTechnology(IT)infrastructure Providesplatform,orfoundation,onwhichthefirmcanbuilditsspecificinformation

systems.

Firmmustcarefullydesignandmanageitsinformationtechnologyinfrastructuresothatithasthesetoftechnologyservicesitneedsfortheworkitwantstoaccomplishwith

informationsystems.

Example:DimensionsofUPStrackingsystemo Organizational:

Proceduresfortrackingpackagesandmanaginginventoryandprovideinformation Satisfytheneedsofmanagersandworkers Trainedinbothpackagedeliveryproceduresandpickupandhowtousepackage-tracking

systemsothattheycanworkefficientlyandeffectively.

o Management: Monitorservicelevelsandcosts Promotingcompanysstrategyofcombininglowcostandsuperiorservice.


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o Technology: Handheldcomputers,bar-codescanners,wiredandwirelesscommunicationsnetworks,

desktopcomputers,UPScentralcomputer,storagetechnologyforthepackagedelivery

data,UPSin-housepackagetackingsoftware,etc.

ItIsntJustTechnology:ABusinessPerspectiveonInformationSystems

Businessperspectiveoninformationsystems:o Informationsystemisinstrumentforcreatingvalueo Investmentsininformationtechnologywillresultinsuperiorreturns:

Improvedecision-making Improvesexecutionofbusinessprocesses Productivityincreases Revenueincreases Superiorlong-termstrategicpositioning

Businessinformationvaluechaino Rawdataacquiredandtransformedthroughstagesthataddvaluetothatinformationo Valueofinformationsystemdeterminedinpartbyextenttowhichitleadstobetterdecisions,

greaterefficiency,andhigherprofits Businessperspective:

o Callsattentiontoorganizationalandmanagerialnatureofinformationsystems Aninformationsystemrepresentsanorganizationalandmanagementsolution,basedon

IT,toachallengeorproblemposedbytheenvironment.

Fromabusinessperspective,informationsystemsarepartofaseriesofvalue-addingactivitiesforacquiring,

transforming,anddistributinginformationthatmanagerscanusetoimprovedecisionmaking,enhance

organizationalperformance,and,ultimately,increasefirmprofitability.


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ComplementaryAssets:OrganizationalCapital&theRightBusinessModel

Awarenessoftheorganizationalandmanagerialdimensionsofinformationsystemscanhelpusunderstandwhysomefirmsachievebetterresultsfromtheirinformationsystemsthanothers.

VariationinReturnsonInformationTechnologyInvestment

o Although,onaverage,investmentsininformationtechnologyproducereturnsfarabovethosereturnedbyotherinvestments,thereisconsiderablevariationacrossfirms.

Someinvestagreatdealandreceiveagreatdeal(2ndquadrant);othersinvestanequalamountandreceivefewreturns(4thquadrant).

o Investingininformationtechnologydoesnotguaranteegoodreturnso Considerablevariationinthereturnsfirmsreceivefromsystemsinvestmentso Factors:

Adoptingtherightbusinessmodel Investingincomplementaryassets(organizationalandmanagementcapital)


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1.3ContemporaryApproachestoInformationSystems

Thestudyofinformationsystemsdealswithissuesandinsightscontributedfromtechnicalandbehavioraldisciplines.

Majordisciplinesthatcontributeproblems,issuesandsolutionsinthestudyofinformationsystems. Fieldcanbedividedintotechnicalandbehavioralapproaches. Informationsystemsaresociotechnicalsystems.

Technicalapproach

Emphasizesmathematicallybasedmodelstostudyinformationsystems,aswellasthephysicaltechnologyandformalcapabilitiesofthesesystems.

Disciplinesthatcontributetothetechnicalapproach:o Computerscience

Concernedwithestablishingtheoriesofcomputability,methodsofcomputation,andmethodsofefficientdatastorageandaccess.

o Managementscience Emphasizesthedevelopmentofmodelsfordecision-makingandmanagementpractices.

o Operationsresearch Focusesonmathematicaltechniquesforoptimizingselectedparametersoforganizations,

suchastransportation,inventorycontrol,andtransactioncosts.


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Behavioralapproach

Behavioralissuesthatariseinthedevelopmentandlong-termmaintenanceofinformationsystems.o Strategicbusinessintegration,design,implementation,utilization,andmanagemento Cannotbeexploredusefullywiththemodelsinthetechnicalapproach.o Doesnotignoretechnologybutconcentratesonchangesinattitudes,managementand

organizationalpolicy,andbehavior

o Informationsystemstechnologyisoftenstimulusforbehavioralproblemorissue. Differentwaystostudyinformationsystems:

o Psychologyhowhumandecisionmakersperceiveanduseformalinformationo Economicsunderstandingtheproductionofdigitalgoods,dynamicsofdigitalmarkets,andhow

newinformationsystemschangethecontrolandcoststructureswithinthefirm.

o Sociologyhowgroupsandorganizationsshapethedevelopmentandlong-termmaintenanceofinformationsystems

ManagementInformationSystems(MIS)

Combinescomputerscience,managementscienceandoperationsresearchwithpracticalorientationtowarddevelopingsystemsolutionstorealworldproblemsandmanaginginformationtechnology

resources.

Alsoconcernedwithbehavioralissuessurroundingthedevelopment,use,andimpactofinformationsystems,whicharetypicallydiscussedinthefieldsofsociology,economicsandpsychology.

Fourmainactorso Suppliersofhardwareandsoftware(thetechnologists);o Businessfirms(makinginvestmentsandseekingtoobtainvaluefromthetechnology);o Managersandemployees(seekingtoachievebusinessvalueandothergoals)o Firmsenvironment(legal,social,culturalcontext)

Nosingleapproacheffectivelycapturestherealityofinformationsystems. Thesuccessesandfailuresofinformationarerarelyalltechnicalorallbehavioral


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ApproachofthisBook:SociotechnicalView

Optimalorganizationalperformanceachievedbyjointlyoptimizingbothsocialandtechnicalsystemsusedinproduction

Helpsavoidpurelytechnologicalapproacho E.g.,factthatfirmhasrecentlyinstalledanenterprise-widefinancialreportingsystemdoesnot

necessarilymeanitwillbeused,orusedeffectively.

Needtooptimizethefirmsperformanceasawhole. Bothtechnicalandbehavioralcomponentsneedattention.

o Meansthattechnologymustbechangedanddesignedinsuchawayastofitorganizationalandindividualneeds.

o Sometimestechnologymayhavetobede-optimizedtoaccomplishthisfito E.g.mobilephoneusersadaptthistechnologytotheirpersonalneeds,andasaresult

manufacturerquicklyseektoadjustthetechnologytoconformwithuserexpectations.

o Organizationsandindividualsmustalsobechangesthroughtraining,learning,andplannedorganizationalchangetoallowthetechnologytooperateandprosper.

Inasociotechnicalperspective,theperformanceofasystemisoptimizedwhenboththetechnologyandthe

organizationmutuallyadjusttooneanotheruntilasatisfactoryfitisobtained.

infs1602 chapter 1

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