final.pptx

ManagementInformation Systems
MANAGINGTHEDIGITALFIRM,16TH EDITION
Chapter1
INFORMATIONSYSTEMSIN
BUSINESSTODA
Y
VIDEOCASES
Case 1: UPS Global Operations with the DIAD IV
Case 2: IBM, Cisco, Google: Global Warming by
Computer

CHAPTER1: INFORMATIONIN BUSINESSSYSTEMSTODAY
2 © Prentice Hall 2011
•
•
•
Understanding the effects of information systems
onbusinessandtheir relationship to globalization.
Explainwhyinformation systemsare soessentialin
businesstoday.
Define aninformation systemanddescribeits
management, organization, andtechnology
components.
LearningObjectives

•
•
•
Define complementaryassetsandexplain how they
ensurethat information systemsprovide genuine
value to anorganization.
Describethe different academicdisciplinesusedto
studyinformation systemsandexplain how each
contributes to our understanding of them.
Explainwhat ismeant bya sociotechnicalsystems
perspective.
LearningObjectives (cont.)

•
•
Howinformation systemsare transforming business
– Increasein wirelesstechnologyuse,Web sites
– Increasedbusinessuseof Web 2.0 technologies
– Cloudcomputing,mobile digital platform allow more
distributed work, decision-making,and collaboration
Globalization opportunities
– Internet hasdrasticallyreducedcostsof operating
onglobal scale
– Presentsboth challengesand opportunities
CHAPTER1: INFORMATIONIN BUSINESSSYSTEMSTODA
Y
TheRoleofInformationSystemsinBusiness Today

Information TechnologyCapital Investment
Information technology capital investment, defined ashardware, software, and communications equipment,
grew from 32 percent to 52 percent of all invested capital between 1980 and 2009.
FIGURE1-1

•
•
In the emerging, fully digital firm
– Significantbusinessrelationships are digitally
enabled and mediated
– Corebusinessprocessesare accomplishedthrough
digital networks
– Keycorporateassetsare manageddigitally
Digital firms offer greater flexibility in organization
and management
– Timeshifting,spaceshifting
Y

6. Survival
•
•
Growing interdependence between ability to use
information technology and ability to implement
corporate strategies andachievecorporate goals
Businessfirmsinvestheavily in information systems
to achievesixstrategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage

• Operational excellence:
–Improvement of efficiency to attain higher
profitability
–Information systems,technologyan
important tool in achievinggreater
efficiency and productivity
–Walmart’s RetailLinksystemlinkssuppliers
to storesfor superiorreplenishment
system
Y

Y
• New products,services,andbusiness
models:
– Businessmodel: describeshow company
produces,delivers, andsellsproductor serviceto
create wealth
– Information systemsandtechnologya major
enablingtool for new products, services,
businessmodels
• Examples:Apple’s iPod, iTunes, iPhone, iPad,
Google’sAndroid OS,andNetflix

Y
• Customerandsupplier intimacy:
– Servingcustomerswell leadsto customers
returning, whichraisesrevenuesand profits
• Example: High-end hotels that usecomputers
to track customer preferences and useto
monitor and customizeenvironment
– Intimacy with suppliersallows them to provide
vital inputs, whichlowers costs
• Example: J.C.Penney’sinformation system
which links salesrecords to contract
manufacturer

•
Improved decision making
– Without accurateinformation:
• Managers must useforecasts, best guesses,luck
• Leads to:
– Overproduction, underproduction of goods andservices
– 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, etc.
Y

•
Operational excellence:
– Improvement of efficiency to attainhigher
profitability
•
•
•
New products, services,andbusiness models:
– Enabled by technology
Customerandsupplier intimacy:
– Serving customers raises revenues and profits
– Better communication with suppliers lowerscosts
Improved decision making
– More accurate data leads to betterdecisions
Y

Y
• Competitive advantage
– Delivering better performance
– Charginglessfor superior products
– Respondingto customersandsuppliersin real
time
– Examples:Apple, Walmart, UPS

Y
• Survival
– Information technologiesasnecessityofbusiness
– May be:
• Industry-level changes,e.g. Citibank’s
introduction ofATMs
• Governmental regulations requiring record-
keeping
– Examples:Toxic Substances Control Act,Sarbanes-
OxleyAct

TheInterdependenceBetweenOrganizationsandInformation Technology
In contemporary systemsthere is agrowing interdependence between afirm’s information systemsand its
businesscapabilities. Changesin strategy, rules, and businessprocessesincreasingly require changesin
hardware, software, databases,and telecommunications. Often, what the organization would like to do
dependson what its systems will permit it to do.
Figure1.2

•
•
Information system:
– Setof interrelated components
– Collect,process,store, anddistribute information
– Supportdecisionmaking,coordination,and control
Information vs.data
– Data are streamsof raw facts
– Information isdata shapedinto meaningful form
Y
Perspectives onInformation Systems

Data and Information
Rawdata from asupermarket checkout counter canbe processedand organized to produce meaningful
information, such asthe total unit sales of dish detergent or the total sales revenue from dish detergent for a
specific store or salesterritory.
Figure1.3

• Threeactivities of information systems
produceinformation organizations need
1. Input: Captures raw data from organizationor
external environment
2. Processing:Converts raw data into meaningful
form
3. Output: Transfers processed information to
people or activities that useit
Y

Y
• Feedback:
– Output returned to appropriate membersof
organization to helpevaluate or correct input stage
• Computer/Computer programvs.
information system
– Computersandsoftware are technical foundation
andtools, similarto the material andtoolsusedto
build a house

Functionsof an
Information System
Aninformation system
contains information aboutan
organization and its
surrounding environment.
Threebasicactivities—input,
processing,and output—
produce the information
organizations need. Feedback
is output returned to
appropriate people or
activities in the organizationto
evaluate and refine the input.
Environmental actors, suchas
customers, suppliers,
competitors, stockholders,and
regulatory agencies,interact
with the organization and its
information systems.
Figure 1.4

Management InformationSystems
Perspectives on InformationSystems
Information
SystemsAre More
ThanComputers
Usinginformation systems
effectively requires an
understanding of the
organization, management,
and informationtechnology
shapingthe systems.An
information system creates
value for the firm asan
organizational and
management solution to
challenges posedby the
environment.
Figure1.5

Y
Perspectives on Information Systems
• Organizational dimensionof information
systems
– Hierarchyof authority, responsibility
• Senior management
• Middle management
• Operational management
• Knowledge workers
• Data workers
• Production or serviceworkers

Levelsin a Firm
Businessorganizations are
hierarchies consisting of three
principal levels: senior
management, middle
management, and operational
management. Information
systemsserve eachof these
levels. Scientists and
knowledge workers oftenwork
with middle management.
Figure 1.6

Y
• Organizational dimensionof information
systems(cont.)
– Separation of businessfunctions
• Salesand marketing
• Human resources
• Finance and accounting
• Manufacturing andproduction
– Uniquebusinessprocesses
– Uniquebusinessculture
– Organizational politics

Y
• Management dimensionof information
systems
– Managerssetorganizational strategy for
respondingto businesschallenges
– In addition, managersmustact creatively:
• Creation of new products andservices
• Occasionally re-creating the organization

Y
• Technologydimensionof information
systems
– Computerhardware and software
– Data management technology
– Networking andtelecommunications technology
• Networks, the Internet, intranetsand
extranets, World WideWeb
– ITinfrastructure: providesplatform that system
isbuilt on

•
What are the inputs, processing,andoutputs of
UPS’spackagetrackingsystem?
• What technologiesare usedbyUPS?Howare these
technologiesrelated to UPS’sbusinessstrategy?
• What problemsdoUPS’sinformation systems
solve?What would happen if these systemswere
not available?
UPSCOMPETESGLOBALL
YWITHINFORMATIONTECHNOLOGY
Read the Interactive Session and discuss the following questions

Y
• Dimensionsof UPStrackingsystem
– Organizational:
• Procedures for tracking packagesandmanaging
inventory and provide information
– Management:
• Monitor service levels andcosts
– Technology:
• Handheld computers, bar-code scanners,
networks, desktop computers,etc.

Y
• Businessperspectiveoninformation
systems:
– Information systemisinstrument for creating
value
– Investments in information technologywill result
in superior returns:
• Productivity increases
• Revenue increases
• Superior long-term strategicpositioning

Y
• Businessinformation value chain
– Rawdata acquired and transformed through
stagesthat add value to thatinformation
– Value of information system determined inpart
by extent to which it leads to better decisions,
greater efficiency, and higherprofits
• Businessperspective:
– Callsattention to organizational and
managerial nature of informationsystems

TheBusinessInformation ValueChain
From abusinessperspective, information systemsare part of aseries of value-adding activities for acquiring,
transforming, and distributing information that managerscanuseto improve decision making, enhance
organizational performance, and, ultimately, increasefirm profitability.
Figure1-7

Variation inReturns
OnInformation
Technology
Investment
Although, on average,
investments in information
technology produce returnsfar
abovethose returned by other
investments, there is
considerable variation across
firms.
Figure1.8

• Investingin information technologydoesnot
guaranteegoodreturns
• Considerablevariation in the returnsfirms
receive from systemsinvestments
• Factors:
– Adopting the right businessmodel
– Investing in complementaryassets
(organizational andmanagement capital)
Y

• Complementaryassets:
–Assetsrequired to derive value from a
primary investment
–Firms supporting technology investments
with investment in complementary assets
receive superior returns
–E.g.: invest in technology and the people to
makeit workproperly
Y

Y
• Complementaryassetsinclude:
– Organizational assets,e.g.
• Appropriate business model
• Efficient business processes
– Managerial assets,e.g.
• Incentives for managementinnovation
• Teamwork and collaborative work environments
– Socialassets, e.g.
• TheInternet and telecommunicationsinfrastructure
• Technology standards

ContemporaryApproachesto Information Systems
Contemporary
Approachesto
Information Systems
Thestudy of information
systemsdealswith issuesand
insights contributed from
technical and behavioral
disciplines.
Figure 1.9

Y
• Technical approach
– Emphasizesmathematically based models
– Computerscience,management science,
operations research
• Behavioralapproach
– Behavioralissues(strategic businessintegration,
implementation, etc.)
– Psychology,economics, sociology

Y
• Management Information Systems
– Combinescomputer science, management science,
operations research and practical orientation with
behavioral issues
• Fourmain actors
– Suppliersof hardware and software
– Businessfirms
– Managersand employees
– Firm’senvironment (legal, social,cultural context)

• Approachof this book:
Sociotechnicalview
• Optimal organizationalperformance
achievedbyjointly optimizing both
socialandtechnicalsystemsusedin
production
• Helpsavoidpurely technological
approach
Y

ASociotechnicalPerspectiveonInformation Systems
In asociotechnical perspective, the performance of asystemis optimized when both the technology and the
organization mutually adjust to one another until asatisfactory fit is obtained.
Figure1-10

All rights reserved. No part of this publication may be reproduced, stored
in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without the
prior written permission of the publisher.
Printed in the United States of America.
Copyright © 2011 Pearson Education, Inc.
Publishing as Prentice Hall

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