STRATEGIC BUSINESS

OBJECTIVES OF INFORMATION

SYSTEMS

By: Zeeshan Ahmed Bhatti

Strategic Business Objectives of IS

Entire sectors of economy are nearly inconceivable w/out substantial investment in ITE.g., Google, Ebay etc.

Today no industry can exist without the use of Information Technology

Finance, Insurance, Real Estate, Aviation etc.

IT has now become the core competence of a firm

E.g., HR, Finance etc.

Strategic Business Objectives of IS

There is an interdependence b/w a firm’s ability to use IT and its ability to implement corporate strategies and goals

Depends on what technology it uses? What is that technology capable of doing?

E.g., Is that technology capable of achieving what the firms wants to achieve in next 5 or 10 years?

Specifically, Businesses invest heavily in IS to achieve 6 strategic business objectives:

Operational excellence, new products, services, Customer and supplier intimacy, decision making and competitive advantage

1) Operational Excellence Businesses continuously seek to improve

efficiency of their operations IS helps managers to achieve that

E.g., Wal-Mart (Rev. $447 Billion) has a RetailLink system – As soon as a customer purchases an item, the supplier monitoring the item knows to ship a replacement

2) New Products, Services, and Business Models

IS – a major tool for firms to create new products & services

Apple Inc. transformed an old business model of music distribution based on vinyl records, tapes, and CDs into an online, legal distribution model based on its own iPod technology platform.

Blockbuster and Netflix !!

3) Customer & Supplier Intimacy

Business wants Customer Loyalty – Repurchase behavior

Ex. Mandarin Oriental Hotels use IS to keep track of their guest preferences – Room temp., Lights; frequently dialed nos. etc

Similarly, Business needs to be engaged with suppliers – more engagement : less costs

JC Penney stores in US sales’ record appear in Hong Kong (Supplier). They know what sizes, colors and styles are needed.

4) Improved Decision Making

Many business mgrs operate on an information fog bank Never having right info at the right time to make the right

decision○ E.g., Consider the outage of your Broadband or Cellular Connection

Result: Over or Under-production of goods & services, misallocation of resources, and poor response times

IS makes it possible to use real-time data E.g., Verizon’s Web-based digital dashboard for customer

complaints, network performance, line outages etc.

5) Competitive Advantage

Doing things better than your customersE.g., Toyota’s TPS (Toyota Production System)

focuses on organizing work to eliminate wastes

IS help Toyota implement the TPS and produce vehicles (customized) based on what the customers have actually ordered

6) Survival Necessity of doing business Necessities are driven by industry-level

changesE.g., Citi Bank’s ATM initiative in NYC in 1977 urged

other banks to do so as well

Similarly, some govt. regulations make it necessary e.g., in Pakistan PTA’s initiative about customer SIM cards information

So……What is an IS? Information technology (IT) consists of all

the hardware and software that a firm needs to use in order to achieve its business objectives

An Information system can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization

Information Vs Data

Data: Streams of raw facts

Information: interpretation of data

Functions of an IS Input: Collects raw data from within the organization or

from external environment

Processing: coverts raw data into meaningful form

Output: transfers processed info to its users

Feedback: by the members to evaluate or correct the input stage

E.g., London2012 Website about number of medals; Inputs? Processing? Outputs? W.r.t. Countries, Players etc.

Functions of an IS

Dimensions of IS

Organization / Management First Line, Middle Mgrs, Top Executives, Knowledge workers

Technology: Hardware: Physical equipment for input, processing, and

output activities in an IS Software: pre-programmed instructions that control and

coordinate the computer H/W Networking & Telecommunication Tech: links various

pieces of H/W and transfers data Internet: Network of networks Intranet: internal corporate networks Extranet: private intranet networks extended outside the firm

Contemporary Approaches to IS