1. 1.1 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm 1 1 MANAGING THE DIGITAL FIRM DIGITAL FIRM Chapter

2. 1.2 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm What is the role of information systems in today’s competitive business environment?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?What exactly is an information system? What do managers need to know about information systems? How are information systems transforming organizations and management?How are information systems transforming organizations and management? Management Information Systems 8/e Chapter 1 Managing the Digital Firm OBJECTIVES

3. 1.3 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm How has the Internet and Internet technology transformed business?How has the Internet and Internet technology transformed business? What are the major management challenges to building and using information systems?What are the major management challenges to building and using information systems? Management Information Systems 8/e Chapter 1 Managing the Digital Firm OBJECTIVES (cont.)

4. 1.4 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm 1. Design competitive and effective systems 2. Understand system requirements of global business environment 3. Create information architecture that supports organization’s goal Management Information Systems 8/e Chapter 1 Managing the Digital Firm MANAGEMENT CHALLENGES

5. 1.5 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm 4. Determine business value of information systems 5. Design systems people can control, understand and use in a socially, ethically responsible manner Management Information Systems 8/e Chapter 1 Managing the Digital Firm MANAGEMENT CHALLENGES (cont.)

6. 1.6 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm The Competitive Business Environment and the Emerging Digital Firm WHY INFORMATION SYSTEMS? Four powerful worldwide changes that have altered the business environment: 1.Emergence of the Global Economy 2.Transformation of Industrial Economies 3.Transformation of the Business Enterprise 4.The Emerging Digital Firm

7. 1.7 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Emergence of the Global Economy Management and control in a global marketplaceManagement and control in a global marketplace Competition in world marketsCompetition in world markets Global work groupsGlobal work groups Global delivery systemsGlobal delivery systems The Competitive Business Environment and the Emerging Digital Firm

8. 1.8 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Transformation of Industrial Economies Knowledge- and information-based economiesKnowledge- and information-based economies ProductivityProductivity New products and servicesNew products and services Knowledge: a central productive and strategic assetKnowledge: a central productive and strategic asset The Competitive Business Environment and the Emerging Digital Firm

9. 1.9 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Transformation of Industrial Economies Time-based competitionTime-based competition Shorter product lifeShorter product life Turbulent environmentTurbulent environment Limited employee knowledge baseLimited employee knowledge base The Competitive Business Environment and the Emerging Digital Firm

10. 1.10 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS?

11. 1.11 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Transformation of the Business Enterprise FlatteningFlattening DecentralizationDecentralization FlexibilityFlexibility Location independenceLocation independence Low transaction and coordination costsLow transaction and coordination costs EmpowermentEmpowerment Collaborative work and teamworkCollaborative work and teamwork The Competitive Business Environment and the Emerging Digital Firm

12. 1.12 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Emergence of the Digital Firm Digitally-enabled relationships with customers, suppliers, and employeesDigitally-enabled relationships with customers, suppliers, and employees Core business processes accomplished via digital networksCore business processes accomplished via digital networks Digital management of key corporate assetsDigital management of key corporate assets Rapid sensing and responding to environmental changesRapid sensing and responding to environmental changes The Competitive Business Environment and the Emerging Digital Firm

13. 1.13 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Four Major Systems Defining the Digital Firm Supply chain management systemsSupply chain management systems Customer relationship management systemsCustomer relationship management systems Enterprise systemsEnterprise systems Knowledge management systemsKnowledge management systems The Competitive Business Environment and the Emerging Digital Firm

14. 1.14 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm A set of interrelated components that collect (or retrieve), process, store, and distribute (or retrieve), process, store, and distribute information to support decision making and control in an organization Management Information Systems 8/e Chapter 1 Managing the Digital Firm What Is an Information System? WHY INFORMATION SYSTEMS?

15. 1.15 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Data: Streams of raw facts representing events such as business transactionsData: Streams of raw facts representing events such as business transactions Information: Clusters of facts that are meaningful and useful to human beings in the processes such as making decisionsInformation: Clusters of facts that are meaningful and useful to human beings in the processes such as making decisions Management Information Systems 8/e Chapter 1 Managing the Digital Firm What Is an Information System? WHY INFORMATION SYSTEMS?

16. 1.16 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? What Is an Information System?

17. 1.17 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm INPUTOUTPUTPROCESS FEEDBACK Management Information Systems 8/e Chapter 1 Managing the Digital Firm Activities in an Information System WHY INFORMATION SYSTEMS?

18. 1.18 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS?

19. 1.19 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Rely on computer hardware and softwareRely on computer hardware and software Processing and disseminating informationProcessing and disseminating information Management Information Systems 8/e Chapter 1 Managing the Digital Firm Computer-Based Information System (CBIS) WHY INFORMATION SYSTEMS?

20. 1.20 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Fixed definitions of data, proceduresFixed definitions of data, procedures Collecting, storing, processing, disseminating, using dataCollecting, storing, processing, disseminating, using data Management Information Systems 8/e Chapter 1 Managing the Digital Firm Formal Systems WHY INFORMATION SYSTEMS?

21. 1.21 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm An organizational and management solution based on information technology to a challenge posed by the environmentAn organizational and management solution based on information technology to a challenge posed by the environment An important instrument for creating value for the organizationAn important instrument for creating value for the organization Stages in the business information value chain add value to informationStages in the business information value chain add value to information Management Information Systems 8/e Chapter 1 Managing the Digital Firm A Business Perspective on Information Systems WHY INFORMATION SYSTEMS?

22. 1.22 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS? Toyoda ETC

23. 1.23 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm WHY INFORMATION SYSTEMS?

24. 1.24 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Information systems literacy: Broad- based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems and technical knowledge about computersInformation 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 workComputer literacy: Knowledge about information technology, focusing on understanding how computer-based technologies work Management Information Systems 8/e Chapter 1 Managing the Digital Firm A Business Perspective on Information Systems WHY INFORMATION SYSTEMS?

25. 1.25 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Sales and marketingSales and marketing ManufacturingManufacturing FinanceFinance AccountingAccounting Human resourcesHuman resources Management Information Systems 8/e Chapter 1 Managing the Digital Firm Major Business Functions WHY INFORMATION SYSTEMS?

26. 1.26 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Key Elements: People: Managers, knowledge workers, data workers, production or service workersPeople: Managers, knowledge workers, data workers, production or service workers Structure: Organization chart, groups of specialists, products, geographyStructure: Organization chart, groups of specialists, products, geography Management Information Systems 8/e Chapter 1 Managing the Digital Firm Organizations WHY INFORMATION SYSTEMS?

27. 1.27 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Operating procedures: Standard operating procedures (SOP, rules for action)Operating procedures: Standard operating procedures (SOP, rules for action) Politics: Power to persuade, get things donePolitics: Power to persuade, get things done Culture: Customs of behaviorCulture: Customs of behavior Management Information Systems 8/e Chapter 1 Managing the Digital Firm Organizations WHY INFORMATION SYSTEMS?

28. 1.28 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Levels: Senior managers: make long-range strategic decisions about products and servicesSenior managers: make long-range strategic decisions about products and services Middle managers: Carry out the programs and plans of senior managementMiddle managers: Carry out the programs and plans of senior management Operational managers: monitor the firm’s daily activitiesOperational managers: monitor the firm’s daily activities Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management WHY INFORMATION SYSTEMS?

29. 1.29 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Tools managers use to cope with change Hardware: Physical equipmentHardware: Physical equipment Software: Detailed preprogrammed instructionsSoftware: Detailed preprogrammed instructions Storage: Physical media for Storage: Physical media for storing data and the software Management Information Systems 8/e Chapter 1 Managing the Digital Firm Computer Technology WHY INFORMATION SYSTEMS?

30. 1.30 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Communications Technology: transfers data from one physical location to anotherCommunications Technology: transfers data from one physical location to another Networks: link computers to share data or resourcesNetworks: link computers to share data or resources Management Information Systems 8/e Chapter 1 Managing the Digital Firm Computer Technology WHY INFORMATION SYSTEMS?

31. 1.31 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

32. 1.32 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Optimize systems performance: Technology and organizationTechnology and organization Organizations mutually adjust to one another until fit is satisfactoryOrganizations mutually adjust to one another until fit is satisfactory Management Information Systems 8/e Chapter 1 Managing the Digital Firm Sociotechnical Systems CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

33. 1.33 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

34. 1.34 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM

35. 1.35 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm 1950s: Technical changes1950s: Technical changes 1960s-70s: Managerial controls1960s-70s: Managerial controls 1980s-90s: Institutional core activities1980s-90s: Institutional core activities Today: Digital information webs extending beyond the enterpriseToday: Digital information webs extending beyond the enterprise Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM The Widening Scope of Information Systems

36. 1.36 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM

37. 1.37 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm International network of networksInternational network of networks Universal technology platform: Any computer can communicate with any other computerUniversal technology platform: Any computer can communicate with any other computer World Wide Web and Web sitesWorld Wide Web and Web sites Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM The Internet

38. 1.38 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Communicate and collaborateCommunicate and collaborate Access informationAccess information Participate in discussionsParticipate in discussions Supply informationSupply information Find entertainmentFind entertainment Exchange business transactionsExchange business transactions Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM What You Can Do on the Internet?

39. 1.39 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Flattening organizationsFlattening organizations Separating work from locationSeparating work from location Reorganizing work-flowsReorganizing work-flows Increasing flexibilityIncreasing flexibility Redefining organizational boundariesRedefining organizational boundaries Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM New Options for Organizational Design

40. 1.40 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM

41. 1.41 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM

42. 1.42 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Electronic commerceElectronic commerce Electronic businessElectronic business Digital market: Information systems links, buyers and sellers to exchange information, products, services, paymentsDigital market: Information systems links, buyers and sellers to exchange information, products, services, payments Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM The Digital Firm

43. 1.43 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM

44. 1.44 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Internet links buyers, sellersInternet links buyers, sellers Lower transaction costsLower transaction costs Goods and services advertised, bought, exchanged worldwideGoods and services advertised, bought, exchanged worldwide Business-to-business transactions increasingBusiness-to-business transactions increasing Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM Electronic Commerce

45. 1.45 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Electronic Business: Executing all the firm’s business processes with Internet technologyElectronic Business: Executing all the firm’s business processes with Internet technology Intranet: Business builds private, secure network based on Internet technologyIntranet: Business builds private, secure network based on Internet technology Extranet: Extension of intranet to authorized external usersExtranet: Extension of intranet to authorized external users Management Information Systems 8/e Chapter 1 Managing the Digital Firm Electronic Business TOWARD THE DIGITAL FIRM

46. 1.46 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm Management Information Systems 8/e Chapter 1 Managing the Digital Firm TOWARD THE DIGITAL FIRM

47. 1.47 © 2004 by Prentice Hall Management Information Systems 8/e Chapter 1 Managing the Digital Firm 1 1 MANAGING THE DIGITAL FIRM DIGITAL FIRM Chapter