foundations of information systems

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MODULE 3MODULE 3

Business Information Systems

3.1 Business Information Systems

So far in this subject we have considered the very basics—systems,

information systems, data, information, knowledge—and how these

things fit into the bigger picture. Remember that whatever we discuss in

this subject has a context and that that context is the foundation (indeed,

the bigger picture) you need to be sure to be across. Like we have

suggested a few times before, it is never about technology for

technology’s sake or systems for systems’ sake, but always in the pursuit

of fostering organisational ends and helping to increase efficiency. We

now move into discussing more applied concepts, such as business

information systems.

The (first) industrial revolution that took place in the 18th century in

Britain was responsible for seismic shifts in the way that the economy at

the time operated. Beforehand, the economy consisted of what we will

call ‘mum and dad’ shops—bakers, shoe-makers, apothecaries, candlestick

makers, blacksmiths and so on—that provided the basic goods and

services for the community to operate. These merchants might have

employed one or two workers to help but were, essentially, simple shops

that operated only in the local community. The industrial revolution

brought new technologies that allowed manufacturing on a larger scale;

factories were thus born and displaced the mum-and-dad shops that were

suddenly unable to compete with the efficiencies the industrial revolution

bore. It can be said that the industrial revolution had a domino effect on

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the economy as ever since then, the drive to run a business efficiently is

paradoxically both the cause and the effect of technological advancement.

We are still feeling the effects as we turn our attention to IS in the

contemporary enterprise.

We know from the second module that enterprises collect and store a

multitude of data, churning it into information on a daily (if not hourly)

basis. The collection of data feeds a cycle as shown in the following figure.

Figure 3.1 shows the business collecting data, churning that data into

information, making decisions from that information, and then

implementing the decision. The cycle starts again when business data on

what has been implemented is collected. Let us consider the following

real-life example.

Coles Supermarkets was the first Australian supermarket chain to create a strategic alliance with a petroleum retail business, Shell Service Stations, in 2003. The alliance created a new business, Coles Express, which operated the retail aspect while Shell retained the exclusive supply of the petroleum. Coles Supermarkets immediately moved to capitalise on its investment by coaxing existing customers to buy their petroleum and, they hoped, something else at the Coles Express store. They did this by offering vouchers that offered 4 cents off a litre of petroleum to customers who spent a certain amount in the Coles Supermarket (the amount is not important for this exercise). We know already that supermarkets collect and store transactional data so that they know what items sell the best. However, the vouchers offered to customers created a new opportunity to observe their behaviour. Vouchers contained a barcode that were linked to the supermarket transaction; if the customer took the offer and received 4 cents off a litre of petrol at their next fill-up, Coles then had more opportunities to use its data. If customers used their ‘fly buys’ card, there would be even more opportunity to observe customers. For example, the fact that that customer filled their car with petrol at Coles Express is itself a piece of information that Coles is interested in because they can now introduce customised offers to that customer.

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Figure 3.1: The Virtuous Cycle of Data Collection in Business

The example of Coles Supermarkets and Coles Express highlights how the

virtuous cycle of data collection (illustrated in figure 3.1) is self-

perpetuating. The original decision to ally with Shell Service Stations

started the cycle and the fuel vouchers allowed data collection. The

information it produced allowed Coles Express to identify the items that

customers were buying with their fuel. Popular items were displayed more

prominently whereas slower-selling items were retired. The cycle allows

Coles and Coles Express to operate most efficiently and most profitably.

This data collection is one element of the huge array of interesting and

complex concepts we explore in this module. For example, once the

business decision is made, implementing that decision may involve IS that

go throughout the enterprise or even transcend its boundaries. In the

latter case, a new level of complexity is introduced, and we will consider

that complexity in this module. Of course, you will do well to integrate this

newfound knowledge with things you already know. Consider your

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experience, the businesses you have worked at in the past and even your

experiences as a customer of large, well-known businesses to help you

understand and apply these key concepts. Use the university library to

supplement your learning—and, using your initiative—by seeking out case

studies, readings and anything else that may enrich your learning

experience.

Like the previous module, module two is divided into two sections and,

depending on the length of this study period, you will dedicate either of

half or a full week to studying each of them. As always, be prepared to do

your pre-reading before you go to class or before you attend the

webinars. Be sure you attend class ready to contribute and enrich your

understanding.

Learning Outcomes

Reading and studying this module and fully attempting all of the learning

activities will help you to:

use the functional view of business to map and critically evaluate

the IS used in a firm of your choice;

synthesise the advantages and disadvantages of core business IS,

incorporating high-quality sources into your argument;

justify the use of business IS, defending the drive of contemporary

firms to pursue continuous improvements and efficiency;

create recommendations for firms considering implementing

modern accounting systems so that they can appropriate resource

their requirements;

critically evaluate academic sources using thematic analysis and

using those as the basis for creating a risk analysis and risk

mitigation plan;

conceptualise the links between abstract concepts—such as

multiple business and enterprise IS—in diagrammatic form; and

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argue the high-level case for enterprise systems to management.

In order to attain these learning outcomes, be sure to come to class (or

attend webinars when scheduled) having read the module content—

including the readings—and having made a solid attempt of the activities.

It is essential that you do this as your classes are not designed to instruct,

but to enrich your understanding of your self-directed learning through

collaborative exercises, getting formative feedback and challenging your

assumptions. You should come to class (or the webinars) fully prepared to

contribute to the learning of others as well. You should discuss this

approach with the learning facilitator if you’re unsure.

Contents in the Module

There are two parts to this module, 3.1 and 3.2. In the first part we

introduce business information systems that exist and operate inside a

single firm with the purpose of helping it operate at its most efficient. In

the second part we move beyond the scope of a single enterprise and

focus our attention on what happens when two businesses want to

interact or cooperate.

C L I C K H E R E T O R E T U R N T O M O D U L E T O PC L I C K H E R E T O R E T U R N T O M O D U L E T O P