Information system

Copyright © 2018 Pearson Education Ltd.
Management Information Systems:
Managing the Digital Firm
Fifteenth edition
Chapter 1
Information Systems in
Business Today
12/5/2022 1

Learning Objectives
• 1-1 How are information systems transforming business,
and why are they so essential for running and managing a
business today?
• 1-2 What is an information system? How does it work?
What are its management, organization, and technology
components? Why are complementary assets essential for
ensuring that information systems provide genuine value for
organizations?
• 1-3 What academic disciplines are used to study
information systems, and how does each contribute to an
understanding of information systems?
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2

Video Cases
• Case 1: Business in the Cloud: Facebook and
eBay Data Centers
• Case 2: UPS Global Operations with the DIAD
• Instructional Video: Tour IBM’s Raleigh Data
Center
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3

4
Rugby Football Union Tries Big Data
(1 of 2)
• Problem
– Improving fan engagement through Big Data.
• Solutions
– Provide data visualization and real-time statistics to draw in fans.
– Provide tactical insights to players and coaches that will improve
match play.
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5
Rugby Football Union Tries Big Data (2 of
2)
• Rugby Football Union uses TryTracker to capture
and analyze Big Data that will be useful to both
fans and players.
• Demonstrates IT’s role in increasing value and
revenue in any business.
• Illustrates the potential for technology to improve
customer experience.
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Introduction
 Information systems and technologies are transforming
the global business environment.
 In 2015, global firms and governments spent about €3.4
trillion on information systems hardware, software, and
telecommunications equipment. In addition, they spent
another €544 billion on business and management
consulting and services much of which involves
redesigning firms’ business operations to take advantage
of these new technologies.
 In fact, most of the business value of IT investment
derives from these organizational, management, and
cultural changes inside firms. It is not simply the
technology that is changing.
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6

How Information Systems Are
Transforming Business
– Mobile digital platform
– Systems used to improve customer experience,
respond to customer demand, reduce inventories, and
more
– Growing online newspaper readership
– Expanding e-commerce and Internet advertising
– New federal security and accounting laws
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7

How Information Systems Are Transforming Business
 Some 2.8 billion people worldwide have smartphones (50
percent of the world’s population)
 1.26 billion use their smartphones for Internet access.
 More than 1 billion people use tablet computers, about 15
percent of the global population.
 An estimated 2.34 billion people now use social networks,
with Facebook accounting for 1.7 billion people alone.
 Messaging services like WhatsApp, Facebook Messenger,
and Twitter collectively have over 2 billion monthly users.
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8

 Smartphones, social networking, texting, e-mailing, and
webinars have all become essential tools of business because
that’s where your customers, suppliers, and colleagues can be
found.
 June 2015, more than 150 million businesses worldwide had
dot-com Internet sites registered ( Curtis, 2015 ).
 In 2016 1.62 billion Internet users will purchase online,
generating $1.9 billion in sales.
 In 2015, FedEx moved about 11.5 million packages daily in
220 countries and territories around the world, mostly
overnight, and the United Parcel Service (UPS) moved
more than 18 million packages daily.
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9

 In comparison with the 2.7 billion people who read a print
newspaper, online newspapers are read by one billion people,
growing at 10 percent annually, far faster than print
newspapers (WPT, 2016; Conaghan, 2015).
 An estimated 1.7 billion people watch videos and feature films
online, 100 million post to a blog everyday, and 250 million
read a blog, creating an explosion of new writers and new
forms of customer feedback that did not exist five years ago.
 Global e-commerce and Internet advertising continue to
expand. Google’s online ad revenues surpassed €80 billion in
2016, and Internet advertising continues to grow at more than
20 percent a year, reaching more than €194 billion in revenues
in 2016. That’s about one-third of all advertising in the world.
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10

Figure 1.1: Information Technology Capital
Investment
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11

What’s New In Management Information
Systems (1 of 2)
• Technology
– Cloud computing
– Big data and the Internet of Things (IoT)
– Mobile digital platform
• Management
– Online collaboration and social networking software
– Business intelligence
– Virtual meetings
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12

What’s New In Management Information
Systems (2 of 2)
• Organizations
– Social business
– Telework
– Co-creation of business value
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13

What’s New In Management Information Systems
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14

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15

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16

A continuing stream of information technology innovations
is transforming the traditional business world.
Examples include the emergence of cloud computing, the
growth of a mobile digital business platform based on
smartphones and tablet computers, big data, business
analytics, and the use of social networks by managers to
achieve business objectives.
For instance, the emergence of online video services like
Netflix for streaming, Apple iTunes, Amazon, and many
others for downloading video has forever changed how
premium video is distributed and even created.
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17

Netflix in 2016 attracted more than 75 million subscribers
worldwide to what it calls the “Internet TV” revolution.
Netflix has moved into premium TV show production with
30 original shows such as House of Cards and Orange Is
the New Black, challenging cable and broadcast producers
of TV shows, and potentially disrupting cable network
dominance of TV show production.
Apple’s iTunes now accounts for 67 percent of movie and
TV show downloads and has struck deals with major
Hollywood studios for recent movies and TV shows. A
growing trickle of viewers are unplugging from cable and
using only the Internet for entertainment.
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E-commerce generated about $600 billion in revenues in
2016 and is estimated to grow to nearly $900 billion by
2020. E-commerce is changing how firms design, produce,
and deliver their products and services.
Facebook and other social networking sites such as
YouTube, Twitter, and Tumblr along with Netflix, Apple
Beats music service, and many other media firms
exemplify the new face of e-commerce in the twenty-first
century. They sell services.
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19

20
Interactive Session: Management
( Report Every Student have different Csae)
• Class Discussion
– What kinds of applications are described here? What
business functions do they support? How do they improve
operational efficiency and decision making?
– Identify the problems that businesses in this case study
solved by using mobile digital devices.
– What kinds of businesses are most likely to benefit from
equipping their employees with mobile digital devices such as
iPhones and iPads?
– One company deploying iPhones has said, “The iPhone is not
a game changer, it's an industry changer. It changes the way
that you can interact with your customers” and “with your
suppliers.” Discuss the implications of this statement.
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Globalization Challenges and
Opportunities: A Flattened World
• Internet has drastically reduced costs of
operating on global scale
• Increases in foreign trade, outsourcing
• Presents both challenges and opportunities
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21

The Emerging Digital Firm
• In a fully digital firm:
– Significant business relationships are digitally enabled and
mediated
– Core business processes are accomplished through digital
networks
– Key corporate assets are managed digitally
• Digital firms offer greater flexibility in organization
and management
– Time shifting, space shifting
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22

Strategic Business Objectives of
Information Systems (1 of 2)
• Growing interdependence between:
– Ability to use information technology and
– Ability to implement corporate strategies and achieve corporate
goals
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23

Strategic Business Objectives of
Information Systems (2 of 2)
• Firms invest heavily in information systems to
achieve six strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
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Figure 1.2: The Interdependence Between
Organizations and Information Systems
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Operational Intelligence
• Improvement of efficiency to attain higher
profitability
• Information systems, technology an important tool
in achieving greater efficiency and productivity
• Walmart’s Retail Link system links suppliers to
stores for superior replenishment system
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26

New Products, Services, and Business
Models
• Business model: describes how company
produces, delivers, and sells product or service to
create wealth
• Information systems and technology a major
enabling tool for new products, services, business
models
– Examples: Apple’s iPad, Google’s Android OS, and Netflix
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Customer and Supplier Intimacy
• Serving customers well leads them to return,
increasing revenue and profits
– Example: High-end hotels that use computers to track customer
preferences and then monitor and customize the environment
• Intimacy with suppliers allows them to provide vital
inputs, which lowers costs
– Example: JCPenney’s information system which links sales
records to contract manufacturer
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28

Improved Decision Making
• Without accurate information:
– Managers must use forecasts, best guesses, luck
– Results in:
 Overproduction, underproduction
 Misallocation of resources
 Poor response times
– Poor outcomes raise costs, lose customers
• Example: Verizon’s web-based digital dashboard
to provide managers with real-time data on
customer complaints, network performance, line
outages, and so on
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29

Competitive Advantage
• Delivering better performance
• Charging less for superior products
• Responding to customers and suppliers in real
time
• Examples: Apple, Walmart, UPS
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30

Survival
• Information technologies as necessity of business
• Industry-level changes
– Example: Citibank’s introduction of ATMs
• Governmental regulations requiring record-
keeping
– Examples: Toxic Substances Control Act, Sarbanes-Oxley Act
– Dodd-Frank Act
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What Is an Information technology?
Information technology (IT) consists of all the hardware
and software that a firm needs to use in order to achieve
its business objectives.
IT includes not only computer machines, storage devices,
and handheld mobile devices but also software, such as
the Windows or Linux operating systems, the Microsoft
Office desktop productivity suite, and the many thousands
of computer programs that can be found in a typical large
firm.
“Information systems” are more complex and can be best
understood by looking at them from both a technology and
a business perspective.
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32

What Is an Information System? (1 of 3)
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.
In addition to supporting decision making, coordination,
and control, information systems may also help managers
and workers analyze problems, visualize complex
subjects, and create new products.
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Information systems contain information about significant
people, places, and things within the organization or in the
environment surrounding it. By information we mean data
that have been shaped into a form that is meaningful and
useful to human beings.
Data, in contrast, are streams of raw facts representing
events occurring in organizations or the physical
environment before they have been organized and
arranged into a form that people can understand and use.
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• Information system
– Set of interrelated components
– Collect, process, store, and distribute information
– Support decision making, coordination, and control
• Information vs. data
– Data are streams of raw facts
– Information is data shaped into meaningful form
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Figure 1.3: Data and Information
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• Three activities of information systems produce
information organizations need
Input: Captures raw data from organization or external
environment
Processing: Converts raw data into meaningful form
Output: Transfers processed information to people or
activities that use it
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• Feedback
– Output is returned to appropriate members of
organization to help evaluate or correct input stage
• Computer/computer program vs. information
system
– Computers and software are technical foundation and
tools, similar to the material and tools used to build a
house
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Figure 1.4: Functions of an Information
System
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Dimensions of Information Systems
• Organizations
• Management
• Technology
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Figure 1.5: Information Systems Are More
Than Computers
41

Dimensions of Information Systems:
Organizations (1 of 2)
• Hierarchy of authority, responsibility
– Senior management
– Middle management
– Operational management
– Knowledge workers
– Data workers
– Production or service workers
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Figure 1.6: Levels in a Firm
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Organizations (2 of 2)
• Separation of business functions
– Sales and marketing
– Human resources
– Finance and accounting
– Manufacturing and production
• Unique business processes
• Unique business culture
• Organizational politics
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Organizations
•
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45

Management
• Managers set organizational strategy for
responding to business challenges
• In addition, managers must act creatively
– Creation of new products and services
– Occasionally re-creating the organization
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Technology
• Computer hardware and software
• Data management technology
• Networking and telecommunications technology
– Networks, the Internet, intranets and extranets, World Wide Web
• IT infrastructure: provides platform that system
is built on
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47

48
Interactive Session: Technology:
( Report Every Student have different Csae)
• Class Discussion
– What technologies are used by JurongHealth? What
purpose do they serve?
– Search the web for RFID. Suggest an example of using
RFID for locating and tracking people.
– What information systems are implemented by
JurongHealth? Describe the input, processing, and
output of any one such system.
– Why are information systems important for
JurongHealth?
12/5/2022 48

It Isn’t Just Technology: A Business
Perspective on Information Systems (1 of 3)
• Information system is instrument for
creating value
• Investments in information technology
will result in superior returns
–Productivity increases
–Revenue increases
–Superior long-term strategic positioning
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• Business information value chain
– Raw data acquired and transformed through stages that add value
to that information
– Value of information system determined in part by extent to which
it leads to better decisions, greater efficiency, and higher profits
• Business perspective
– Calls attention to organizational and managerial nature of
information systems
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• Investing in information technology does not
guarantee good returns
• There is considerable variation in the returns firms
receive from systems investments
• Factors
– Adopting the right business model
– Investing in complementary assets (organizational and
management capital)
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Figure 1.7: The Business Information Value
Chain
52

Figure 1.8: Variation in Returns on
Information Technology
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Figure 1.9: Contemporary Approaches to
Information Systems
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Technical Approach
• Emphasizes mathematically based models
• Computer science, management science,
operations research
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55

Behavioral Approach
• Behavioral issues (strategic business integration,
implementation, etc.)
• Psychology, economics, sociology
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Approach of This Text: Sociotechnical
Systems (1 of 2)
• Management information systems
– Combines computer science, management science,
operations research, and practical orientation with
behavioral issues
• Four main actors
– Suppliers of hardware and software
– Business firms
– Managers and employees
– Firm’s environment (legal, social, cultural context)
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57

Approach of This Text: Sociotechnical
Systems (2 of 2)
• Sociotechnical view
– Optimal organizational performance achieved by jointly
optimizing both social and technical systems used in
production
– Helps avoid purely technological approach
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58

Figure 1.10: A Sociotechnical Perspective
on Information Systems
59

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