INFORMATION SYSTEMS
1.1
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Why Information Systems Matter
There are four reasons why IT makes a difference to the
success of a business:
• Capital management
• Foundation of doing business
• Productivity
• Strategic opportunity and advantage
1.2
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Capital Management:
• IT is the largest single component of capital
investment in the United States.
• About $1.8 trillion is spent each year by American
businesses.
• Managers and business students need to know how
to invest this capital wisely.
• The success of your business in the future may well
depend on how you make IT investment decisions.
1.3
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Foundation of doing business:
• Most businesses today could not operate without
extensive use of information systems and
technologies.
• IT can increase market share.
• IT can help a business become a high-quality,
low-cost producer.
• IT is vital to the development of new products.
1.4
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
The Interdependence between Organizations and
Information 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.
1.5
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Productivity:
• IT is one of the most important tools managers
have to increase productivity and efficiency of
businesses.
• According to the Federal Reserve Bank, IT has
reduced the rate of inflation by 0.5 to 1% in the
last decade. For firms this means IT is a major
factor in reducing costs.
• It is estimated that IT has increased productivity
in the economy by about 1% in the last decade.
For firms this means IT is a major source of labor
and capital efficiency.
1.6
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Strategic Opportunity and Advantage:
• Create competitive advantage: IT makes it
possible to develop competitive advantages.
• New Business Models: Dell Computer has built its
competitive advantage on an IT enabled
build-to-order business model that other firms
have not been able to imitate.
1.7
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Strategic Opportunity and Advantage:
• Create new services: eBay has developed the
largest auction trading platform for millions of
individuals and businesses. Competitors have
not been able to imitate its success.
• Differentiate yourself from your competitors:
Amazon has become the largest book retailer in
the United States on the strength of its huge
online inventory and recommender system. It has
no rivals in size and scope.
1.8
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Why IT Now? Digital Convergence and the Changing
Business Environment
Growing impact of IT in business firms can be
assessed from the following five factors:
• Internet growth and technology convergence
• Transformation of the business enterprise
• Growth of a globally connected economy
• Growth of knowledge and information-based
economies
• Emergence of the digital firm
1.9
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
The Internet and Technology Convergence:
• Growth in e-business, e-commerce, and
e-government
• Internet is bringing about rapid changes in
markets and market structure: financial services
and banking such as eTrade.com.
• The Internet is making many traditional
business models obsolete: the corner music
store and video store.
1.10
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Rise of the Information Economy:
• Time-based competition
• Shorter product life
• Turbulent environment
• Limited employee knowledge base
1.11
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Emergence of the Digital Firm:
• Digital firm-All of org’s significant business
relationships with customers, suppliers, and
employees are digitally enabled
• Core business processes accomplished using
digital networks
• Agile sensing and responding to environmental
changes
• Seamless flow of information within the firm, and
with strategic partners
• Cisco & Dell computers – Digital firms
1.12
The Emerging Digital Firm
1.13
Management Information Systems
Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Business processes:
Refer to the set of logically related tasks & behaviors that
organizations develop over time to produce specific business
results & the unique manner in which these activities are
organized & coordinated.
• Eg: Developing a new product, generating & fulfilling order,
creating marketing plan, hiring an employee
1.14
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
What Is an Information System?
Technology perspective: A set of interrelated
components that collect (or retrieve), process, store,
and distribute information to support decision
making and control in an organization
1.15
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
What is an Information System? (Continued)
• Data: Streams of raw facts representing events such
as business transactions
• Information: data that have been shaped into a form
that is meaningful and useful to human beings in
the processes such as making decisions
1.16
Management Information Systems
Managing the Digital Firm
Perspectives on 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.
1.17
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Functions of an Information System
1.18
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Functions of an Information System
• I/p captures raw data from within the org. or from its external
environment
• Processing – converts raw i/p into a meaningful form
• O/P – transfers the processed information to the users
• Feedback – used to evaluate or correct the i/p stage
1.19
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Computer-Based Information System (CBIS)
• Rely on computer hardware and software
• Processing and disseminating information
• Fixed definitions of data and procedures
• Collecting, storing, and using information
1.20
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
A Business Perspective on Information Systems
Information systems are more than just technology.
Businesses invest in IS in order to create value and increase
profitability.
• Information systems are an organizational and management
solution to business challenges that arise from the business
environment.
• Based on information technology but also require
significant investment in organizational and management
changes and innovations
• IS create value primarily by changing business processes
and management decision making
1.21
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
The Business Information Value Chain
1.22 Figure 1-7
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
Major Business Functions Rely on Information Systems
• Sales and marketing
• Manufacturing
• Finance
• Accounting
• Human resources
Dimensions of Information Systems
Three Important Dimensions of Information Systems
Organizations
Managers
Technology
You will need to understand and balance these
dimensions of information systems in order to create
business value.
1.23
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
The Organizational Dimension of Information Systems
• People ,Structure, Business processes, Culture, Politics
The Management Dimension of Information Systems
Managers are:
• Sense makers
• Decision makers
• Planners
Roles
• Senior managers - long term strategic decisions
• Middle managers - carry out the programs & plans of senior
managers
• Operational managers - monitor the firm’s daily activities
1.24
Management Information Systems
Managing the Digital Firm
PERSPECTIVES ON INFORMATION SYSTEMS
The Technology Dimension of Information Systems
Information technology is one of the tools managers
use to cope with change:
• Hardware: Physical equipment
• Software: Detailed preprogrammed instructions
that control h/w components
• Storage: Physical media for storing data and the software
• Communications technology: Transfers data from one
physical location to another
• Networks: Links computers to share data or resources
All these technologies represent resources that can be shared
throughout the organization & constitutes the firm’s IT infrastructure
(platform for building specific IS)
1.25
