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Chapter1PPT2.pptInformation Systems in Business Today
Chapter 1
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Understand the effects of information systems on business and their relationship to globalization.
- Explain why information systems are so essential in business today.
- Define an information system and describe its management, organization, and technology components.
Learning Objectives
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Define complementary assets and explain how they ensure that information systems provide genuine value to an organization.
- Describe the different academic disciplines used to study information systems and explain how each contributes to our understanding of them.
- Explain what is meant by a sociotechnical systems perspective.
Learning Objectives (cont.)
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- How information systems are transforming business
- Emerging mobile digital platform
- Growing business use of “big data”
- Growth in cloud computing
- Globalization opportunities
- Internet has drastically reduced costs of operating on global scale
- Increases in foreign trade, outsourcing
- Presents both challenges and opportunities
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
Information technology capital investment, defined as hardware, software, and communications equipment, grew from 32 percent to 52 percent of all invested capital between 1980 and 2009.
FIGURE 1-1
Information Technology Capital Investment
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- In the emerging, fully digital firm:
- Significant business relationships are digitally enabled and mediated.
- Core business processes are accomplished through digital networks.
- Key corporate assets are managed digitally.
- Digital firms offer greater flexibility in organization and management.
- Time shifting, space shifting
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Growing interdependence between ability to use information technology and ability to implement corporate strategies and achieve corporate goals
- Business firms invest heavily in information systems to achieve six strategic business objectives:
Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
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
The Interdependence Between Organizations and Information Technology
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Operational excellence:
- Improvement of efficiency to attain higher profitability
- Information systems, technology an important tool in achieving greater efficiency and productivity
- Walmart’s Retail Link system links suppliers to stores for superior replenishment system
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- New products, services, and business models:
- Business model: describes how company produces, delivers, and sells product or service to create wealth
- Information systems and technology a major enabling tool for new products, services, business models
- Examples: Apple’s iPad, Google’s Android OS, and Netflix
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Customer and supplier intimacy:
- Serving customers well leads to customers returning, which raises revenues and profits.
- Example: High-end hotels that use computers to track customer preferences and used to monitor and customize environment
- Intimacy with suppliers allows them to provide vital inputs, which lowers costs.
- Example: JCPenney’s information system which links sales records to contract manufacturer
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Improved decision making
- Without accurate information:
- Managers must use forecasts, best guesses, luck
- Results in:
- Overproduction, underproduction
- Misallocation of resources
- Poor response times
- Poor outcomes raise costs, lose customers
- Example: Verizon’s Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, and so on
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Competitive advantage
- Delivering better performance
- Charging less for superior products
- Responding to customers and suppliers in real time
- Examples: Apple, Walmart, UPS
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Survival
- Information technologies as necessity of business
- Industry-level changes
- Example: Citibank’s introduction of ATMs
- Governmental regulations requiring record-keeping
- Examples: Toxic Substances Control Act, Sarbanes-Oxley Act
The Role of Information Systems in Business Today
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Information system:
- Set of interrelated components
- Collect, process, store, and distribute information
- Support decision making, coordination, and control
- Information vs. data
- Data are streams of raw facts.
- Information is data shaped into meaningful form.
Perspectives on Information Systems
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
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 1.3
Data and Information
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.
Figure 1.4
Functions of an Information System
Input captures or collects raw data from within
the organization or from its external environment. Processing converts this
raw input into a meaningful form. Output transfers the processed information
to the people who will use it or to the activities for which it will be used.
Information systems also require feedback, which is output that is returned to
appropriate members of the organization to help them evaluate or correct the
input stage.
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment.
Figure 1.5
Information Systems Are More Than Computers
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.
Figure 1.6
Levels in a Firm
Senior management makes long-range strategic decisions about products
and services as well as ensures financial performance of the firm. Middle
management carries out the programs and plans of senior management,
and operational management is responsible for monitoring the daily activities
of the business. Knowledge workers, such as engineers, scientists, or
architects, design products or services and create new knowledge for the firm,
whereas data workers, such as secretaries or clerks, assist with scheduling
and communications at all levels of the firm.
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Dimensions of United Parcel Service (UPS) tracking system Web based package tracking system
- Organizational:
- Procedures for tracking packages and managing inventory and provide information
- Management:
- Monitor service levels and costs
- Technology:
- Handheld computers, bar-code scanners, networks, desktop computers, and so on
Perspectives on Information Systems
industry leaders
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- 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
- Business perspective:
- Calls attention to organizational and managerial nature of information systems
Perspectives on Information Systems
During this and the next slide, emphasize that the end result of the business information value chain will always be profitability.
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability.
Figure 1-7
The Business Information Value Chain
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Investing in information technology does not guarantee good returns.
- There is considerable variation in the returns firms receive from systems investments.
- Factors:
- Adopting the right business model
- Investing in complementary assets (organizational and management capital)
Perspectives on Information Systems
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Complementary assets:
- Assets required to derive value from a primary investment
- Firms supporting technology investments with investment in complementary assets receive superior returns
- Example: Invest in technology and the people to make it work properly
Perspectives on Information Systems
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Complementary assets include:
- Organizational assets, for example:
- Appropriate business model
- Efficient business processes
- Managerial assets, for example:
- Incentives for management innovation
- Teamwork and collaborative work environments
- Social assets, for example:
- The Internet and telecommunications infrastructure
- Technology standards
Perspectives on Information Systems
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
The study of information systems deals with issues and insights contributed from technical and behavioral disciplines.
Figure 1.9
Contemporary Approaches to Information Systems
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Technical approach
- Emphasizes mathematically based models
- Computer science, management science, operations research
- Behavioral approach
- Behavioral issues (strategic business integration, implementation, etc.)
- Psychology, economics, sociology
Contemporary Approaches to Information Systems
You might ask the students whether they think it’s possible to adopt only one of the two approaches to information systems and be successful. Then emphasize that the most accurate position is that there is no single approach that can truly capture the full scope and importance of information systems by itself.
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
- Approach of this book: Sociotechnical view
- Optimal organizational performance achieved by jointly optimizing both social and technical systems used in production
- Helps avoid purely technological approach
Contemporary Approaches to Information Systems
The sociotechnical systems perspective was also discussed briefly in slide 3, which you could revisit to give students a refresher. The critical aspect of this view is the balance between technological and social/behavioral concerns. Sometimes a lesser form of technology may be the best option because it is more suited to the personal needs of the individual, for example.
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
In a sociotechnical perspective, the performance of a system is optimized when both the technology and the organization mutually adjust to each other until a satisfactory fit is obtained.
Figure 1-10
A Sociotechnical Perspective on Information Systems
This graphic illustrates the interplay between technology and the organization. The two continue to grow closer together until an approach satisfying both perspectives is reached. Ensure that students understand that the two sides do not always need to form an equal compromise. Sometimes highly advanced technology may be more acceptable than at other times. As they will see with packaged software solutions and enterprise systems, firms are often required to change greatly in order to make the software applications work.
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Copyright © 2014 Pearson Education, Inc.
Management Information Systems
Chapter 1: Information Systems in Global Business Today
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