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1. 1.1 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
1
MANAGING THE
DIGITAL FIRM
Chapter

2. 1.2 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• What is the role of information systems in
today’s competitive business environment?
• What exactly is an information system?
What do managers need to know about
information systems?
• How are information systems transforming
organizations and management?
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
OBJECTIVES

3. 1.3 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• How has the Internet and Internet technology
transformed business?
• What are the major management challenges
to building and using information systems?
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
OBJECTIVES

4. 1.4 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
1. Design competitive and effective systems
2. Understand system requirements of
global business environment
3. Create information architecture that
supports organization’s goal
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
MANAGEMENT CHALLENGES

5. 1.5 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
4. Determine business value of information
systems
5. Design systems people can control,
understand and use in a socially, ethically
responsible manner
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
MANAGEMENT CHALLENGES

6. 1.6 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
The Competitive Business Environment and the Emerging Digital Firm
WHY INFORMATION SYSTEMS?
Four powerful worldwide changes that
have altered the business environment:
1. Emergence of the Global Economy
2. Transformation of Industrial Economies
3. Transformation of the Business Enterprise
4. The Emerging Digital Firm

7. 1.7 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Emergence of the Global Economy
• Management and control in a global
marketplace
• Competition in world markets
• Global work groups
• Global delivery systems
The Competitive Business Environment and the Emerging Digital Firm

8. 1.8 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Transformation of Industrial Economies
• Knowledge- and information-based
economies
• Productivity
• New products and services
• Knowledge: a central productive and
strategic asset
The Competitive Business Environment and the Emerging Digital Firm

9. 1.9 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Transformation of Industrial Economies
• Time-based competition
• Shorter product life
The Competitive Business Environment and the Emerging Digital Firm

10. 1.10 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Transformation of the Business Enterprise
• Decentralization
• Flexibility
• Location independence
• Low transaction and coordination costs
• Empowerment
• Collaborative work and teamwork
The Competitive Business Environment and the Emerging Digital Firm

11. 1.11 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Emergence of the Digital Firm
• Digitally-enabled relationships with
customers, suppliers, and employees
• Core business processes accomplished
via digital networks
• Digital management of key corporate
assets
• Rapid sensing and responding to
environmental changes
The Competitive Business Environment and the Emerging Digital Firm

12. 1.12 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
4 Major Systems Defining the Digital Firm
• Supply chain management systems
• Customer relationship management
systems
• Enterprise systems
• Knowledge management systems
The Competitive Business Environment and the Emerging Digital Firm

13. 1.13 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
A set of interrelated components that collect
(or retrieve), process, store, and distribute
information to support decision making and
control in an organization
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
What Is an Information System?
WHY INFORMATION SYSTEMS?

14. 1.14 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Data: Streams of raw facts representing
events such as business transactions
• Information: Clusters of facts that are
meaningful and useful to human beings in
the processes such as making decisions
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
What Is an Information System?
WHY INFORMATION SYSTEMS?

15. 1.15 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Figure 1-2
Data and Information
WHY INFORMATION SYSTEMS?
What Is an Information System?

16. 1.16 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
INPUT OUTPUT
PROCESS
FEEDBACK
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Activities in an Information System
WHY INFORMATION SYSTEMS?

17. 1.17 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Functions of an Information System
WHY INFORMATION SYSTEMS?
Figure 1-3

18. 1.18 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Rely on computer hardware and
software
• Processing and disseminating
information
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Computer-Based Information System (CBIS)
WHY INFORMATION SYSTEMS?

19. 1.19 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Fixed definitions of data, procedures
• Collecting, storing, processing,
disseminating, using data
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Formal Systems
WHY INFORMATION SYSTEMS?

20. 1.20 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• An organizational and management
solution based on information
technology to a challenge posed by the
environment
• An important instrument for creating
value for the organization
• Stages in the business information
value chain add value to information
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
A Business Perspective on Information Systems
WHY INFORMATION SYSTEMS?

21. 1.21 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Information Systems
ORGANIZATIONS TECHNOLOGY
MANAGEMENT
INFORMATION
SYSTEMS
Figure 1-5
WHY INFORMATION SYSTEMS?

22. 1.22 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Information systems literacy: Broad-
based understanding of information systems
that includes behavioral knowledge about
organizations and individuals using
information systems and technical
knowledge about computers.
• Computer literacy: Knowledge about
information technology, focusing on
understanding how computer-based
technologies work
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
A Business Perspective on Information Systems
WHY INFORMATION SYSTEMS?

23. 1.23 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Sales and marketing
• Manufacturing
• Finance
• Accounting
• Human resources
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Major Business Functions
WHY INFORMATION SYSTEMS?

24. 1.24 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Key Elements:
• People: Managers, knowledge workers,
data workers, production or service
workers
• Structure: Organization chart , groups of
specialists, products, geography
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Organizations
WHY INFORMATION SYSTEMS?

25. 1.25 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Operating procedures: Standard operating
procedures (SOP, rules for action)
• Politics: Power to persuade, get things done
• Culture: Customs of behavior
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Organizations
WHY INFORMATION SYSTEMS?

26. 1.26 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Levels:
• Senior managers: make long-range
strategic decisions about products and
services
• Middle managers: Carry out the programs
and plans of senior management
• Operational managers: monitor the firm’s
daily activities
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management
WHY INFORMATION SYSTEMS?

27. 1.27 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Tools managers use to cope with change
• Hardware: Physical equipment
• Software: Detailed preprogrammed
instructions
• Storage: Physical media for
storing data and the software
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Computer Technology
WHY INFORMATION SYSTEMS?

28. 1.28 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Communications Technology:
transfers data from one physical location
to another
• Networks: link computers to share data
or resources
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Computer Technology
WHY INFORMATION SYSTEMS?

29. 1.29 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
Figure 1-6
Technical
Approaches
Behavioral
Approaches
Management
Science
Operations
Research
Sociology
Economics
Computer
Science
Psychology

30. 1.30 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Interdependence Between Organizations and Information Systems
Figure 1-8

31. 1.31 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• 1950s: Technical changes
• 1960s-70s: Managerial controls
• 1980s-90s: Institutional core activities
• Today: Digital information webs
extending beyond the enterprise
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Widening Scope of Information Systems

32. 1.32 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Figure 1-9
TOWARD THE DIGITAL FIRM
The Widening Scope of Information Systems

33. 1.33 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• International network of networks
• Universal technology platform: Any
computer can communicate with any other
computer
• World Wide Web and Web sites
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Internet

34. 1.34 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Communicate and collaborate
• Access information
• Participate in discussions
• Supply information
• Find entertainment
• Exchange business transactions
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
What You Can Do on the Internet?

35. 1.35 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Separating work from location
• Reorganizing work-flows
• Increasing flexibility
• Redefining organizational boundaries
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
New Options for Organizational Design

36. 1.36 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Figure 1-10
TOWARD THE DIGITAL FIRM
Flattening Organizations & Information Systems

37. 1.37 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Figure 1-11
Redesigned Work Flow For Insurance Underwriting
TOWARD THE DIGITAL FIRM

38. 1.38 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Electronic commerce
• Electronic business
• Digital market: Information systems links,
buyers and sellers to exchange
information, products, services, payments
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Digital Firm

39. 1.39 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Customers
• On-line marketing
• On-line sales
• Built-to-order products
• Customer service
• Sales force automation
Suppliers
• Procurement
• Supply chain management
Business partners
• Joint design
• Outsourcing
Remote offices and work groups
• Communicate plans and policies
• Group collaboration
• Electronic communication
• Scheduling
Factories
• Just-in-time production
• Continuous inventory
replenishment
• Production planning
ELECTRONIC BUSINESS
Electronic Commerce
THE EMERGING DIGITAL FIRM
Figure 1-12

40. 1.40 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Internet links buyers, sellers
• Lower transaction costs
• Goods and services advertised, bought,
exchanged worldwide
• Business-to-business transactions
increasing
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Electronic Commerce

41. 1.41 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
• Electronic Business: Executing all the
firm’s business processes with Internet
technology
• Intranet: Business builds private, secure
network based on Internet technology
• Extranet: Extension of intranet to
authorized external users
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Electronic Business
TOWARD THE DIGITAL FIRM

42. 1.42 © 2004 by Prentice Hall
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Management Information Systems 8/e
Chapter 1 Managing the Digital Firm
Information Architecture and Information Technology Infrastructure
TOWARD THE DIGITAL FIRM
Figure 1-13