INFORMATION SYSTEMS IN BUSINESS TODAY

Chapter Objective

• How are information systems transforming business – relationship to globalization.

• Why are information systems so essential for running and managing a business

• What exactly is an Information System? How does it work?

• Complementary assets for information systems

• Identify the major management challenges to building and using information systems.

How Info Systems are Transforming Business

• Increase in wireless technology use, Web sites• More online shopping & purchasing • More online based research.• Fast paced Supply Chain.• Social Networking (Facebook, Twitter) becoming so popular.• Online advertising is booming

Role of Info. Systems in Business

• Many managers work in firms that are intensively using information systems and making large investments for information systems.

• IT knowledge for managers is required for better management of resources / capital.

• More cell phones, iPhones, email, phones with Android (samsung galaxy), BlackBerry, online conferencing, etc.

Globalization Challenges & Opportunities – Flattened World

• Internet has drastically reduced costs of operating on global scale• More global buy & sell. • More global jobs, remote assistance, remote collaboration.• Presents both challenges and opportunities

What’s New in MIS?

The Emerging Mobile Digital Platform (high tech cell phones like iPhone, phones with Android, and tiny web-surfing). YouTube, iPhones, etc are not just gadgets or entertainment outlets, in many cases adopted by corporations as business tools. Millions of managers rely heavily on the mobile digital platform to coordinate vendors, customers and employees

The growth of online software as a service and ‘cloud computing’ (Cloud computing is defined as a type of computing that relies on sharing computing resources rather than having local servers or personal devices to handle applications.)where more and more business software runs over the Internet.

Social Networking – where the employees meet one another – where the job / work is organized and done.

More dependency on telework, remote work.

Digital Firm

• In the emerging, 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

Strategic Business Objectives of Information System

• In most US firms information systems are essential for conduction day-to-day business. These are MUST for survival & prosper.

• E-Commerce firms such as Amazon, eBay, Google would not exist without systems/ internet.

• Business firms invest heavily in information systems to achieve six strategic business objectives:1. Operational excellence2. New products, services, and business models3. Customer and supplier intimacy4. Improved decision making5. Competitive advantage6. Survival

Operational Excellence

• In most cases information systems can provide more productivity and operational excellence.

• Wal-Mart has achieved sales of more than $28 per square foot, when the closest competitor has achieved $23/ sq. foot.

New products, services, and business models

• Business model: describes how company produces, delivers, and sells product or service to create wealth

• Truly new Business Models are invented which are internet based, such as Music Industry in USA.

Customer and Supplier Intimacy

– Serving customers well leads to customers returning, which raises revenues and profits .• Example: High-end hotels that use computers to track customer

preferences and use to monitor and customize environment– Intimacy with suppliers allows them to provide vital inputs, which

lowers costs .• Example: J.C.Penney’s information system which links sales records

to contract manufacturer

Improved decision making

– Without accurate information:• Managers must use forecasts, best guesses, luck• Leads to:

– Overproduction, underproduction of goods and services– Misallocation of resources– Poor response times

• Poor outcomes raise costs, lose customers

Competitive Advantage

– Delivering better performance

– Charging less for superior products

– Responding to customers and suppliers in real time

Ekhanei.com is a great example

Survival

• Information technologies as necessity of business• Industry-level changes, e.g. Citibank’s introduction of ATMs• Governmental regulations requiring record-keeping

Information Systems

Information System:Set of interrelated components – collect (or retrieve), process, store &

distribute information to support decision making and control in an organization.

• Input• Processing• Output• Storage• Feedback

Information Systems

• Five activities of information systems produce information organizations need

1. Input: Captures raw data from organization or external environment2. Processing: Converts raw data into meaningful form3. Output: Transfers processed information to people or activities that

use it4. Storage: Store the processed information for future references5. Feedback: Output returned to appropriate members of organization

to help evaluate or correct input stage

Computer Literacy & Information Systems Literacy

Computer Literacy: focuses primarily on knowledge of information technology.

Information Systems Literacy: IT knowledge, plus understanding about organization & management.

Organizational dimension of information systems

• Organizational dimension of information systems– Hierarchy of authority, responsibility

• Senior management: make long-range strategic decisions about what products and services to produce.

• Middle management : carry out the programs and plans of senior management.

• Operational management : responsible for monitoring the firm’s daily activities.

• Knowledge workers : design products or services and create new knowledge (engineers, architects, scientists)

• Data workers: process the organization’s paperwork (secretaries, bookkeepers, clerks)

• Production or service workers : actually produce the organization’s products or services.

Organizational dimension of information systems

– Different Business Functions like (Sales & Marketing, Manufacturing & Production, Finance & Accounting, Human Resource) and also other factors of the organization like (Unique business processes, Unique business culture and Organizational politics) influence the Information System at the organization.

Business Perspective on Information Systems

• Information systems provide economic value to the business. That’s why money is spent on IS / IT

• The result is: more profit, more market share, more return on investment, increases in revenue, etc.

Why every investment in IS does not work?

• Investing in information technology does not guarantee good returns• Considerable variation in the returns firms receive from systems

investments

Complementary assets

• Complementary assets– Assets required 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 make it work properly

Complementary assets

• Complementary assets include: – Organizational assets, e.g.

• Appropriate business model• Efficient business processes

– Managerial assets, e.g.• Incentives for management innovation• Teamwork and collaborative work environments

– Social assets, e.g.• The Internet and telecommunications infrastructure• Technology standards

Thank You