Information Systems in Global Business Today Chapter 1

Explain why information systems are so essential in business today. Management Information Systems Chapter 1 Information Systems in Global Business Today In this lecture Understanding the effects of information systems on business and their relationship to globalization. Explain why information systems are so essential in business today. Define an information system and describe its management, organization, and technology components. Define complementary assets and explain how they ensure that information systems provide genuine value to an organization.

IPL Team Make a Slam Dunk with Information Technology Management Information Systems Chapter 1 Information Systems in Global Business Today IPL Team Make a Slam Dunk with Information Technology IPL Cricket is also a business, INR 20 lakh, Problem: Traditional cricket game statistic failed to provide all the details associated with every play, Lack of hard data usable in decision-making processes, costly and competitive market. Solutions: Developed a new system designed to collect and organize data using video clips of games, (sports mechanics) by Ramki Synergy Sports Technology tags video of each game with hundreds of descriptive categories and allows coaches and players to stream game footage from the Web. Demonstrates IT’s role in innovation and improving business processes. Illustrates how the Web has allowed businesses to use new tools to analyze critical data.

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today How information systems are transforming business Information systems are the foundation for conducting business today. In many industries, survival and even existence is difficult without extensive use of information technology. No longer can we imagine going to work and conducting business without them. As a society we have come to rely extensively on the use of information appliances such as cell phones, BlackBerry's, handhelds, and other hardware. Communicating and conducting business is increasingly being carried out through the use of e-mail, online conferencing, and international teleconferencing. Internet technologies have become essential business tools

Management Information Systems Chapter 1 Information Systems in Global Business Today In the emerging, fully digital firm A digital firm is one in which nearly all of the organization’s significant business relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means. A truly digital firm has several characteristics that distinguish it from most of the firms claiming to be digitized: Significant business relationships with customers, suppliers, and employees are digitally enabled. Core business processes are accomplished through digital networks and span the entire organization or link multiple organizations. Key corporate assets — intellectual property, core competencies, and financial and human assets are managed through digital means. Internal and external environments are quickly recognized and dealt with. Digital firms offer greater flexibility in organization and management Time shifting 24/7, space shifting eBay, General Motors

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today Business firms invest heavily in information systems to achieve six strategic business objectives: Operational excellence (Wal-Mart) Improvement of efficiency to attain higher profitability Information systems, technology an important tool in achieving greater efficiency and productivity Wal-Mart’s RetailLink system links suppliers to stores for superior replenishment system

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today 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

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today 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 iPod, iTunes, and iPhone, Netflix’s Internet- based DVD rentals

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today 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 Example: Verizon’s Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc.

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today Competitive advantage Delivering better performance Charging less for superior products Responding to customers and suppliers in real time Example: Toyota and TPS (Toyota Production System) enjoy a considerable advantage over competitors – information systems are critical to the implementation of TPS

The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today Survival Information technologies as necessity of business Example: Industry-level changes, e.g. Citibank’s introduction of ATMs

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Data and Information Information vs. data Data are streams of raw facts Information is data shaped into meaningful form Raw data from a supermarket checkout counter can be processed and organized to produce meaningful information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales territory.

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems What is an Information system? Set of interrelated components Collect, process, store, and distribute information Support decision making, coordination, and control OR A group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process (dynamic system).

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Information system: Three activities 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 Feedback: Output returned to appropriate members of organization to help evaluate or correct input stage

Perspectives on Information Systems Functions of an Information System Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Functions of an Information System

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Dimensions of Information Systems: These three themes (Organizations, Management and Technology) will reappear throughout the course. Understanding the interaction between these factors and information systems is known as information system literacy. Knowing how to optimize the relationship between technology, organizations, and management is the purpose of this course.

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Examining each of the dimensions of IS: Organizations, organizational structure (three levels)

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Organizational dimension of information systems (cont.) Separation of business functions Sales and Marketing Human Resources Finance and Accounting Manufacturing and Production Unique business processes Unique business culture Organizational politics

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Management dimension of information systems 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

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Technology dimension of information systems 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

Investing in information technology does not guarantee good returns Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Investing in information technology does not guarantee good returns Considerable variation in the returns firms receive from systems investments Factors: Adopting the right business model Investing in complementary assets (organizational and management capital) Connect this slide to the previous slide. Many firms make significant investments in IT for very little benefit to the bottom line. Discuss why companies experience a wide variety of outcomes in their efforts to invest in IT. Consider the factors we use in this book: organizational and management factors.

Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Variation in Returns on Information Technology Investment Quadrant 1 represents firms that invest much less in IT but still receive strong returns. Quadrant 2 represents firms that invest a great deal in IT and receive a great deal in returns. Quadrant 3 represents firms that invest much less in IT and receive poor returns. Quadrant 4 represents firms that invest a great deal in IT but receive poor returns. Emphasize that each quadrant of the graph represents a different type of firm. Quadrant 1 represents firms that invest much less in IT but still receive strong returns. Quadrant 2 represents firms that invest a great deal in IT and receive a great deal in returns. Quadrant 3 represents firms that invest much less in IT and receive poor returns. Quadrant 4 represents firms that invest a great deal in IT but receive poor returns. Although, on average, investments in information technology produce returns far above those returned by other investments, there is considerable variation across firms.

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems 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

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Complementary assets include: Organizational investments, e.g. Appropriate business model Efficient business processes Managerial investments, e.g. Incentives for management innovation Teamwork and collaborative work environments Social investments, e.g. The Internet and telecommunications infrastructure Technology standards

Components of an INFORMATION System

Recourses People Resources Hardware Resources Software Resources Components of an Information System (Continued) Information Systems Recourses & Technology Recourses People Resources End Users IS Specialists Hardware Resources Computer systems Peripherals Software Resources System software (Operating systems) Application software (Payroll program, Word) Procedures (filling out a paper form)

Data Resources Network Resources Components of an Information System (Continued) Information Systems Recourses & Technology Data Resources Data versus Information(Product description, customer records, employee files, inventory database) Network Resources Communication media Network support

Information System (IS) versus Information Technology (IT) IS is all the components and resources necessary to deliver information and functions to the organization IT is hardware, software, networking and data management Definition of IS from prior slide: An organized combination of People Hardware Software Communications networks Data resources Policies and procedures That stores, retrieves, transforms, and disseminates information in an organization In theory, an IS could be pencil and paper based

Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Perspectives on Information Systems Contemporary Approaches to Information Systems The study of information systems deals with issues and insights contributed from technical and behavioral disciplines.

Emphasizes mathematically based models Management Information Systems Chapter 1 Information Systems in Global Business Today Contemporary Approaches to Information Systems Technical approach Emphasizes mathematically based models Computer science, management science, operations research Behavioral approach Behavioral issues (strategic business integration, implementation, etc.) Psychology, economics, sociology You might ask the students whether they think it’s possible to adopt only one of the two approaches to information systems and be successful. Then emphasize that the most accurate position is that there is no single approach that can truly capture the full scope and importance of information systems by itself.

Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today Virtual Meetings: Smart Management Read the Interactive Session and then discuss the following questions: What are the advantages of using videoconferencing technologies? What are the disadvantages? What is telepresence and what sorts of companies are best suited to use it as a communications tool? What kinds of companies could benefit from using videoconferencing? Are there any companies that might not derive any benefits from this technology? You could ask students if they’ve ever used any form of videoconferencing or video chat and whether or not they thought it was useful or effective. You could also ask students to describe the impact of videoconferencing on areas other than the businesses using it, such as the airline industry (negative impact due to reduction in airline travel) or the environment (positive impact). Ask students if they have used Web-based conferencing on their PC to connect with family members or friends. Do they think video conferencing on cell phones would be useful to business?