3A business processA business process is a set of logically related tasks & behaviors that organization develop to produce specific business results and the manner in which these activities are organized and coordinated.” these activities are designed to produce a specific output for a particular customer or market” and give the firm a competitive advantage in order to generate revenue.
4Some core Business Processes Sales/Marketing:Customer Strategy & Relationships (Marketing)Customer Acquisition (Sales)Finance and accountingFinancial Analysis, Reporting, & Capital ManagementManagement ResponsibilityAccounting Management
5Some core business processes H.R.Employee Development & SatisfactionProductionProduct DevelopmentProduct/Service DeliveryTechnology Management
6The Digital FirmA company/organisation/firm in which all business process with customers, suppliers and employees are digitally “managed”.Corporate assets: intellectual property and core competencies (activities and resources that could give a competitive advantage), financial and human assets are digitally managed.These firms sense and respond to environmental changes rapidly as any information is available anytime and anywhere.
7The digital firm Two implications are: Time shifting refers to business being conducted continuously, 24x7, rather than in narrow "work day" time bands of 9 a.m. to 5 p.m.Space shifting means that work takes place in a global workshop, as well as within national boundaries.
8Strategic Business Objectives of IS Ideally the objectives of Information's systems are the Interdependence between a firm’s ability to:Use information technologyImplement corporate strategies and achieve corporate goals
9Strategic Business Objectives of IS Six Strategic Business objectives include:Operational ExcellenceNew products, services and business modelsImprove customer and supplier relationsImproved decision makingCompetitive advantageSurvival
10Operational Excellence Improvement of efficiency to attain higher profitabilityInformation systems, technology an important tool in achieving greater efficiency and productivityCompanies that pursue operational excellence provide consumers with products at the lowest total cost but the same quality.—operational excellence demands zero defects.Procedures for manufacturing pursue the highest level of efficiency, often using IT to track inventory and orders.A “Customer service” product pursues the highest level of convenience, with the goal of making every customer interaction easy, pleasant, quick, and accurateWal-Mart, McDonalds, Dell, and Ryanair are examples of companies that pursue, arguably, operational excellence.
11Operational excellence example Retaillink Walmart’s system used to tracks and store all point of sales data for the company. Walmart handles more than 1m customer transactions every hour and stores of over 2.5 petabytes (1000 terabyte) of dataA large amount of this data is available to Walmart supplier who can register for access to their companies information.This allows companies to accurately track sales, manage inventory, review forecasts, and perform a variety of granular analysis to improve their business.
12New products, services, and business models: Describes how company produces, delivers, and sells product or service to create wealth [ensure a competitive advantage]Information systems and technology are major enabling tools for “new products, services, business models”E.g. Apple’s iPod, iTunes and Netflix’s Internet-based DVD rentalsCan you think of any other examples?
13Customer and supplier intimacy: Serving customers well leads to customers returning, which raises revenues and profitsE.g. large hotels that use computers to track customer preferences and subsequently use to monitor and customize environmentIntimacy with suppliers allows them to provide vital inputs, which lowers costsE.g. Wal Marts or that of most big retail firms’ information system which links sales records to contact manufacturer. Can assist in “just in time” production
14Improved decision-making Without accurate information:Managers must use forecasts, best guesses, luckLeads to:Overproduction, underproduction of goods and servicesMisallocation of resourcesPoor response timesPoor outcomes raise costs, lose customers
15Competitive advantage Delivering better performanceCharging less for superior productsResponding to customers and suppliers in real timeOften achieved when firm achieves one of first four advantagesE.g. Dell: Consistent profitability over 25 years; Dell remains one of the most efficient producer of PCs in world.But Dell has lost some of its advantages to fast followers-- HP
16Survival Information technologies as necessity of business May be: Industry-level changes, e.g. Citibank’s introduction of ATMsGovernmental regulations requiring record-keeping
17Information SystemsInformation Technology: All hardware and software that a firm needs to achieve business objectives.Information SystemSet of interrelated components that collect, process, store and distribute information to support decision making, coordination & control of organizations.Also help in analyzing problems, visualize complex subjects and create new products.2
18Information Systems Information Systems contain information about: PeoplePlacesThings
19Data, Information, and Systems Data vs. InformationDataA “given” or fact: a number, a statement, or a pictureThe raw materials in the production of informationInformationData that have meaning within a contextRaw data or data that have been manipulated
20Data Manipulation Raw data Manipulated Data Time-consuming to read Difficult to understandManipulated DataProvides useful information
21Generating Information Raw data are processed in an IS to create final useful informationProcess: Manipulation of dataComputer-based ISs: process data to produce information
22Information: Important Resource Information must be usefulRelevantCompleteAccurateCurrentCost effective in business
23The Four Stages of Data Processing Input: Data are collected and entered into computerData processing: Data are manipulated into information using mathematical, statistical, and other toolsOutput: Information is displayed or presentedStorage: Data and information are maintained for later use
25Computer Equipment for Information System Input devices: introduce data into the ISProcessor: manipulates data through the ISOutput devices: display informationStorage devices: store data and information
27Dimensions of Information Systems Computer Literacy: Knowledge of information technologyInformation Systems Literacy: Understanding:OrganizationManagementInformation Technology (technical)
28Organisational Dimension of information systems Hierarchy of authority, responsibilitySenior managementMiddle managementOperational managementKnowledge workersData workersProduction or service workers
30Organisational Dimension of information systems (2) Separation of business functionsSales and marketingHuman resourcesFinance and accountingProduction and manufacturing)Unique business processesUnique business cultureOrganizational politics
31Management dimension of information systems Managers set organizational strategy for responding to business challengesIn addition, managers must act creatively:Creation of new products and servicesOccasionally re-creating the organization
32Technology dimension of information systems Computer hardware and softwareData management technologyNetworking and telecommunications technologyNetworks, the Internet, intranets and extranets, World Wide WebIT infrastructure: provides platform that system is built on
33Business Perspective on IS Investment in information Technology & systems must provide economic value to businessReturn on investment must be justifiedRoI must be better than other investments in other tangible assetsIncrease productivityIncrease revenuesStrategic positioningHigh stocks value
34Business Perspective on IS Creating VALUE for the firmDecrease costsImprove decision makingImprove execution of business processesProvide solution to a problem or a challenge
35Business information value chain Raw data acquired and transformed through stages that add value to that informationValue of information system determined in part by extent to which it leads to better decisions, greater efficiency, and higher profits
37Variation in Returns on Information Technology Investment
38Investing in information technology does not guarantee good returns Considerable variation in the returns firms receive from systems investmentsFactors:Adopting the right business modelInvesting in complementary assets (organizational and management capital)
39Complementary assetsAssets required to derive value from a primary investmentFirms supporting technology investments with investment in complementary assets receive superior returnsE.g.: invest in technology and the people to make it work properly
40Complementary assets include Organizational investments, e.g.Appropriate business modelEfficient business processesManagerial investments, e.g.Incentives for management innovationTeamwork and collaborative work environmentsSocial investments, e.g.The Internet and telecommunications infrastructureTechnology standards