1. The use of Information systems in business processes
Lecture 2
The use of Information systems in business processes

2. The Organisation

3. A business process
A 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.

4. Some core Business Processes
Sales/Marketing:
Customer Strategy & Relationships (Marketing)
Customer Acquisition (Sales)
Finance and accounting
Financial Analysis, Reporting, & Capital Management
Management Responsibility
Accounting Management

5. Some core business processes
H.R.
Employee Development & Satisfaction
Production
Product Development
Product/Service Delivery
Technology Management

6. The Digital Firm
A 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.

7. The 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.

8. Strategic Business Objectives of IS
Ideally the objectives of Information's systems are the Interdependence between a firm’s ability to:
Use information technology
Implement corporate strategies and achieve corporate goals

9. Strategic Business Objectives of IS
Six Strategic Business objectives include:
Operational Excellence
New products, services and business models
Improve customer and supplier relations
Improved decision making
Competitive advantage
Survival

10. Operational Excellence
Improvement of efficiency to attain higher profitability
Information systems, technology an important tool in achieving greater efficiency and productivity
Companies 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 accurate
Wal-Mart, McDonalds, Dell, and Ryanair are examples of companies that pursue, arguably, operational excellence.

11. Operational 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 data
A 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. 

12. New 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 rentals
Can you think of any other examples?

13. Customer and supplier intimacy:
Serving customers well leads to customers returning, which raises revenues and profits
E.g. large hotels that use computers to track customer preferences and subsequently use to monitor and customize environment
Intimacy with suppliers allows them to provide vital inputs, which lowers costs
E.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

14. 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

15. Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and suppliers in real time
Often achieved when firm achieves one of first four advantages
E.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

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

17. Information Systems
Information Technology: All hardware and software that a firm needs to achieve business objectives.
Information System
Set 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

18. Information Systems Information Systems contain information about:
People
Places
Things

19. Data, Information, and Systems
Data vs. Information
Data
A “given” or fact: a number, a statement, or a picture
The raw materials in the production of information
Information
Data that have meaning within a context
Raw data or data that have been manipulated

20. Data Manipulation Raw data Manipulated Data Time-consuming to read
Difficult to understand
Manipulated Data
Provides useful information

21. Generating Information
Raw data are processed in an IS to create final useful information
Process: Manipulation of data
Computer-based ISs: process data to produce information

22. Information: Important Resource
Information must be useful
Relevant
Complete
Accurate
Current
Cost effective in business

23. The Four Stages of Data Processing
Input: Data are collected and entered into computer
Data processing: Data are manipulated into information using mathematical, statistical, and other tools
Output: Information is displayed or presented
Storage: Data and information are maintained for later use

24. Components of an Information System

25. Computer Equipment for Information System
Input devices: introduce data into the IS
Processor: manipulates data through the IS
Output devices: display information
Storage devices: store data and information

26. Information systems are more than computers

27. Dimensions of Information Systems
Computer Literacy: Knowledge of information technology
Information Systems Literacy: Understanding:
Organization
Management
Information Technology (technical)

28. Organisational Dimension of information systems
Hierarchy of authority, responsibility
Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers

29. Levels in an organisation

30. Organisational Dimension of information systems (2)
Separation of business functions
Sales and marketing
Human resources
Finance and accounting
Production and manufacturing)
Unique business processes
Unique business culture
Organizational politics

31. 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

32. 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

33. Business Perspective on IS
Investment in information Technology & systems must provide economic value to business
Return on investment must be justified
RoI must be better than other investments in other tangible assets
Increase productivity
Increase revenues
Strategic positioning
High stocks value

34. Business Perspective on IS
Creating VALUE for the firm
Decrease costs
Improve decision making
Improve execution of business processes
Provide solution to a problem or a challenge

35. Business information value chain
Raw data acquired and transformed through stages that add value to that information
Value of information system determined in part by extent to which it leads to better decisions, greater efficiency, and higher profits

36. Business information value chain

37. Variation in Returns on Information Technology Investment

38. 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)

39. 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

40. 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