1. Managing the Digital Firm
Chapter 1
Managing the Digital Firm

2. Why Information Systems?
Information technology capital investment
As managers, many of you will work for firms that are intensively using information systems and making large investments in information technology. You will certainly want to know how to invest this money wisely. If you make wise choices, your firm can outperform competitors. If you make poor choices, you will be wasting valuable capital. This book is dedicated to helping you make wise decisions about IT and information systems.
Figure 1-1

3. Some Words of the Book(P5)
As managers, many of you will work for firms that are intensively using information systems and making large investments in information technology
You will certainly want to know how to invest this money wisely
If you make wise choices, your firm can outperform competitors
If you make poor choices, you will be wasting valuable capital
This book is dedicated to helping you make wise decisions about IT and information systems.
作为管理者，你们很多人都会为公司的工作正在深入地利用信息系统，并在信息技术的大量投资 你一定想知道如何投资这笔钱明智 如果你作出明智的选择，你的公司可以超越竞争对手 如果你做出错误的选择，你会浪费宝贵的资本 这本书是专门帮助您对IT和信息系统的明智决定。

4. Toward the Digital Firm
The interdependence between organizations and information systems
In contemporary systems there is a growing interdependence between a firm’s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.
Figure 1-2

5. Some Words of the Book (p6)
In contemporary systems there is a growing interdependence between a firm’s information systems and its business capabilities
Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications
Often, what the organization would like to do depends on what its systems will permit it to do.

6. Why Information Systems?
The Competitive Business Environment and the Emerging Digital Firm
Four powerful worldwide changes that have
altered the business environment:
Transformation of the Business Enterprise
Globalization
Rise of the Information Economy
Emergence of the Digital Firm
P9~P13

7. Why Information Systems?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of the Business Enterprise(P9)
Flattening
Decentralization
Flexibility
Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork

8. Why Information Systems?
The Competitive Business Environment and the Emerging Digital Firm
Globalization(P10)
Management and control in a global marketplace
Competition in world markets
Global workgroups
Global delivery systems

9. Why Information Systems?
The Competitive Business Environment and the Emerging Digital Firm
Rise of the Information Economy(P11)
Knowledge- and information-based economies
New products and services
Knowledge: a central productive and strategic asset
Time-based competition
Shorter product life
Turbulent environment
Limited employee knowledge base

10. Why Information Systems?
The growth of the information economy
Figure 1-3

11. Why Information Systems?
The Competitive Business Environment and the Emerging Digital Firm
Emergence of the Digital Firm(P11)
Digitally enabled relationships with customers, suppliers, and employees
Core business processes accomplished via networks
Digital management of key corporate assets
Rapid sensing and responding to environmental changes

12. Why Information Systems?
What Is an Information System?
A set of interrelated components that collect
(or retrieve), process, store, and distribute
information to support decision making and
control in an organization (p13)

13. Why Information Systems?
What Is an Information System?(p13)
Data: Streams of raw facts representing events such as business transactions
Information: Clusters of data that are meaningful and useful to human beings

14. Why Information Systems?
Data and information
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.
Figure 1-5

15. Some Words of the Book (p15)
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.

16. Why Information Systems?
Functions of an information system
Figure 1-4(P16)

17. Why Information Systems?
What Is an Information System?(P15-P16)
Formal Systems
Fixed definitions of data and procedures for collecting, storing, processing, disseminating, and using these data
Can be computer-based or manual
Computer-based Information Systems
Use computer hardware and software to process and disseminate information

18. Why Information Systems?
Window on Technology (P17)
UPS Competes Globally with
Information Technology
What are the inputs, processing, and outputs of UPS’s package tracking system?
What technologies are used?
How are these technologies related to UPS’s business strategy? How do they provide value for the company?
What would happen if these technologies were not available?

19. UPS技术之窗 UPS在中国启用第四代速递资料收集器（DIAD IV），
集成了可视化签名、蓝牙、Wi-Fi和广域无线网络功能（GPRS或CDMA）的手持电脑装置。该电脑还使用了最新的全球卫星定位（GPS）技术以进一步提升递送服务质量，并可立即上传客户的签收信息。

20. UPS技术要点 终端设备：DIAD IV 通信技术：蓝牙、Wi-Fi和广域无线网络功能（GPRS或CDMA）、全球卫星定位（GPS）
系统：自动化包裹追踪（Key; Bar Code）；Web客户服务；与Cisco接口；Campus Ship;UPS Supply Chain;

21. UPS 的服务延伸和创新 Supply Chain design & management Freight Forwarding (货运)
Customs brokerage (海关代理)
Mail Service
Multimode transportation
Financial service
Logistics service

22. UPS 的服务案例

25. Why Information Systems?
The business information value chain
Figure 1-7

26. Some Words of the Book (p19)
From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information
managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability.

27. Why Information Systems?
Information systems are more than computers
Figure 1-6

28. Why Information Systems?
A Business Perspective on Information Systems
Information systems literacy: Broad-based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems and technical knowledge about computers
Computer literacy: Knowledge about information technology, focusing on understanding how computer-based technologies work
P19

29. Why Information Systems?
A Business Perspective on Information Systems
Major Business Functions
Sales and marketing
Manufacturing
Finance
Accounting
Human resources

30. Why Information Systems?
A Business Perspective on Information Systems
Key Elements of an Organization
People
Structure
Operating Procedures
Politics
Culture

31. Why Information Systems?
A Business Perspective on Information Systems
Management Levels
Senior managers: make long-range strategic decisions about products and services
Middle managers: carry out the programs and plans of senior management
Operational managers: monitor the firm’s daily activities

32. Why Information Systems?
A Business Perspective on Information Systems
Information Technology (IT) Infrastructure
Computer hardware
Computer software
Storage technology
Communications technology

33. Why Information Systems?
A Business Perspective on Information Systems
Complementary Assets
Assets required to derive value from a primary investment
Can be organizational, managerial, or social assets
Technology investments supported by investment in complementary assets receive superior returns
Complementary assets are those assets required to derive value from a primary investment (Teece, 1998). For instance, to realize value from automobiles requires substantial complementary investments in highways, roads, gasoline stations, repair facilities, and a legal regulatory structure to set standards and control drivers.

34. Complementary assets(P24)
Complementary assets are those assets required to derive value from a primary investment (Teece, 1998)
For instance, to realize value from automobiles requires substantial complementary investments in highways, roads, gasoline stations, repair facilities, and a legal regulatory structure to set standards and control drivers.

35. Why Information Systems?
Variation in returns on information technology investment
Although, on average, investments in information technology produce returns far above those returned by other investments, there is considerable variation across firms.
Figure 1-9(P24)

36. Why Information Systems?
A Business Perspective on Information Systems
Organizational Assets
Supportive organizational culture valuing efficiency and effectiveness
Efficient business processes
Decentralized authority
Distributed decision-making rights
Strong IS development team
支持性组织文化重视效率和效益 高效的业务流程 权力下放 分布式决策权 强者开发团队

37. Why Information Systems?
A Business Perspective on Information Systems
Managerial Assets
Strong senior management support for technology investment and change
Incentives for management innovation
Teamwork and collaborative work environments
Management training programs
Management culture valuing flexibility and knowledge-based decision making
强有力的高级管理层的支持投资改变技术， 奖励的管理创新 团队精神和协作的工作环境 管理培训课程 管理文化的重视灵活性和知识为基础的决策

38. Why Information Systems?
A Business Perspective on Information Systems
Social Assets
The Internet and telecommunications infrastructure
IT-enriched educational programs
Governmental and private-sector standards
Laws and regulations creating fair, stable market environments
Technology and service firms in adjacent markets to assist implementation
联网和电信基础设施 利用资讯科技的教育方案 政府和私营部门的标准 创造公平的法律和法规，稳定的市场环境 技术和服务公司在相邻的市场，以协助执行

39. Contemporary Approaches to Information Systems
A Business Perspective on Information Systems
Technical approach: emphasizes mathematically based models, physical technology, and formal capabilities of systems
Behavioral approach: studies issues arising from development and maintenance of systems, such as business integration and utilization

40. Contemporary Approaches to Information Systems
Figure 1-8(P26)

41. Contemporary Approaches to Information Systems
Socio-technical Systems
Management Information Systems (MIS)
System performance optimized when technology and organization adjust to each other for a satisfactory fit

42. Contemporary Approaches to Information Systems
A socio-technical perspective on information systems
Figure 1-9

43. Toward the Digital Firm
The Widening Scope of Information Systems
1950s: Technical changes
1960s-70s: Managerial controls
1980s-90s: Institutional core activities
Today: Digital information webs extending beyond the enterprise

44. Toward the Digital Firm
The widening scope of information systems
Figure 1-11

45. Toward the Digital Firm
The Network Revolution and the Internet
The Internet
International network of networks
Universal technology platform: Any computer can communicate with any other computer
World Wide Web and Web sites(万维网)

46. Toward the Digital Firm
The Network Revolution and the Internet
What You Can Do on the Internet
Communicate and collaborate
Access information
Participate in discussions
Supply information
Find entertainment
Exchange business transactions

47. Toward the Digital Firm
New Options for Organizational Design:
The Digital Firm and the Collaborative Enterprise
Flattening organizations
Separating work from location
Reorganizing workflows
Increasing flexibility
Redefining organizational boundaries

48. Toward the Digital Firm
Flattening organizations
Figure 1-12

49. Toward the Digital Firm
Redesigned workflow for insurance underwriting
Figure 1-13

50. Toward the Digital Firm
Electronic commerce
Electronic business
Digital market: Information system that links buyers and sellers to exchange information, products, services, payments

51. Toward the Digital Firm
Window on Organizations
Cemex：A Digital Firm In Making（P14）
How did the GPS change the way Cemex ran its business?
How did the Web site provide value for this company?

55. Toward the Digital Firm
Electronic business and electronic commerce in the emerging digital firm
Figure 1-14

56. Toward the Digital Firm
Electronic Commerce (e-commerce): buying and selling goods and services electronically
Electronic Business: executing all the firm’s business processes with Internet technology
Intranet: private, secure business network based on Internet technology
Extranet: extension of intranet to authorized external users

57. Learning to Use Information Systems
The Challenges of Information Systems: Key Management issues
Positive Impacts of Information Systems
Faster calculations and paperwork
Analysis of customer purchase patterns and preferences
More efficient business services
Medical advances
Instant global distribution of information

58. Learning to Use Information Systems
The Challenges of Information Systems: Key Management issues
Negative Impacts of Information Systems
Automation leading to job elimination
Privacy concerns
System outages and shutdowns
Health problems, repetitive stress injury
Illegal distribution of intellectual property

59. How are information systems transforming organizations and management?
Objectives
What is the role of information systems in today’s competitive business environment?
What exactly is an information system? What do managers need to know about information systems?
How are information systems transforming organizations and management?

60. Objectives
How have the Internet and Internet technology transformed business and government?
What are the major management challenges to building and using information systems?

61. Management Challenges
Design competitive and effective systems.
Understand system requirements of global business environment.
Create information architecture that supports organization’s goal.

62. Management Challenges
Determine business value of information systems.
Design systems people can control, understand and use in a socially, ethically responsible manner.

63. The Essentials of the Book（P25）
Throughout the book we emphasize a framework of analysis that considers technology, management, and organizational assets and their interactions.
Managers need to consider the broader organization and management dimensions of information systems to understand current problems as well as to derive substantial above-average returns from their information technology investments

64. 第一次 作业 Case-1: UPS Competes Globally with Information Technology(p17)
•How do UPS’s systems provide value for the company and its customers?  •What would happen if these technologies were not available?  

65. What technologies are used?
Chapter 1 Case Study
What are the inputs, processing, and outputs of UPS’s package tracking system?
What technologies are used?
How are these technologies related to UPS’s business strategy?

66. 第一次 作业 Case-2: HAWORTH OVERHAULS SUPPLY CHAIN MANAGEMENT(P59)
1. How did these supply chain management systems change the way Haworth worked?  2. What value do they provide?