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Management Information Systems: Managing the Digital Firm

Sixteenth Edition • Global Edition

Chapter 1

Information Systems in Global Business Today

Learning Objectives

1.1 How are information systems transforming business, and why are they so essential for running and managing a business today?

1.2 What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations?

What Is a System?

A system is a collection of components form a unified whole that are organized for a common purpose.

Elements of a system:

Components

Dynamics.

Boundary.

Purpose.

Examples: human body, cars, a university.

What Is an Information System?

Information technology: the hardware and software a business uses to achieve objectives

Information system: interrelated components that manage information to:

Support decision making and control

Help with analysis, visualization, and product creation

Data: streams of raw facts

Information: data shaped into meaningful, useful form

What Is an Information System?

I T Infrastructure

Set of physical devices and software required to operate an enterprise

Components of I T Infrastructure

Computer hardware platforms

Operating system platforms

Enterprise software applications

Data management and storage

Networking/telecommunications platforms

Internet platforms

Consulting system integration services

The I T Infrastructure Ecosystem

Figure 5.8, Page 177

Full description: The seven components of the IT ecosystem that must be coordinated include the following. Internet Platforms such as Apache, Microsoft I I S, dot net, Unix, Cisco, and Java. Computer Hardware Platforms such as Dell, I B M, Oracle Sun, H P, and Apple. Operating System Platforms such as Microsoft Windows, Unix, Linux, Mac O S X, Chrome, Android, and i O S. Enterprise Software Applications including middleware such as S A P, Oracle, Microsoft, and I B M. Networking and Telecommunications such as Microsoft Windows Server, Linux, Cisco, A T and T, and Verizon. Consultants and System Integrators such as I B M, H P, and Accenture. Data Management and Storage such as I B M D B 2, Oracle, S Q L Server, Sybase, My S Q L, E M C, Apache, and Hadoop.

Evolution of I T Infrastructure

General-purpose mainframe and minicomputer era: 1959 to present

Personal computer era: 1981 to present

Client/server era: 1983 to present

Enterprise computing era: 1992 to present

Cloud and mobile computing: 2000 to present

Stages in I T Infrastructure Evolution

Illustrated here are the typical computing configurations characterizing each of the five eras of IT infrastructure evolution.

Full description: The first three stages in I T infrastructure evolution include the following. 1, Mainframe or Minicomputer, 19 59 to present. An illustration next to this step shows A mainframe computer hardwired to three personal computers. 2, Personal Computer, 19 81 to present. An illustration next to this step shows Three stand alone personal computers. 3, Client or Server, 19 83 to present. An illustration next to this step shows a Server networked with two clients.

This slide shows the portion of Figure 5-2 that illustrates the last two eras of IT infrastructure evolution discussed two slides previously. The enterprise Internet graphic represents several individual networks linked together into an enterprise-wide network. The cloud computing graph represents several types of technology that are capable of connecting to the Internet and accessing applications and services through a cloud. There is a Learning Track on the stages of IT infrastructure evolution.

Full description: 4, Enterprise Computing, 19 92 to present. An illustration next to this step shows an Enterprise server connected to the Internet. the enterprise server is also connected to three separate client and server networks. 5, Cloud Computing, 2000 to present. An illustration next to this step shows the following. Encompassed within a, cloud, are the Internet, laptops, smartphones, client and server networks, networks of hardware, software, and services.

Multitiered (N-Tier) Client/Server Network

Technology Drivers of Infrastructure Evolution

Moore’s law and microprocessing power

Computing power doubles every 2 years

Quantum Computing

Law of Mass Digital Storage

The amount of data being stored each year doubles

Metcalfe’s Law and network economics

Value or power of a network grows exponentially as a function of the number of network members.

Moore’s Law and Microprocessor Performance

Falling Cost of Chips

What Is an Information System?

Activities in an information system that produce information:

Input

Processing

Output

Feedback

Sharp distinction between computer or computer program versus information system

What is an Information System?

Feedback

Output is returned to appropriate members of organization to help evaluate or correct input stage

Computer/computer program vs. information system

Computers and software are technical foundation and tools, similar to the material and tools used to build a house

Figure 1.4 Functions of an Information System

Data and Information

Dimensions of Information Systems

Organizations

Management

Technology

Dimensions of Information Systems: Organizations (1 of 2)

Hierarchy of authority, responsibility

Senior management

Middle management

Operational management

Knowledge workers

Data workers

Production or service workers

Figure 1.6 Levels in a Firm

Dimensions of Information Systems: Organizations (2 of 2)

Separation of business functions

Sales and marketing

Human resources

Finance and accounting

Manufacturing and production

Unique business processes

Unique business culture

Organizational politics

Dimensions of Information Systems: Management

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

Dimensions of Information Systems: Technology

Computer hardware and software

Data management technology

Networking and telecommunications technology

Networks, the Internet, intranets and extranets, World Wide Web

I T infrastructure: provides platform that system is built on

Strategic Business Objectives of Information Systems (2 of 2)

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

Operational Excellence

Improved efficiency results in higher profits

Information systems and technologies help improve efficiency and productivity

Example: Walmart (Retail Link system)

Power of combining information systems and best business practices to achieve operational efficiency—and over $485 billion in sales in 2017

Most efficient retail store in world as result of digital links between suppliers and stores

Amazon’s recommendation systems.

New Products, Services, and Business Models

Information systems and technologies enable firms to create new products, services, and business models

Business model: how a company produces, delivers, and sells its products and services

Example: Apple

Apple transformed old model of music distribution with iTunes

Google TV.

Amazon web services.

Customer and Supplier Intimacy

Customers who are served well become repeat customers who purchase more

Example: Mandarin Oriental Hotel

Uses I T to foster an intimate relationship with its customers, keeping track of preferences, etc.

Close relationships with suppliers result in lower costs

Examples: Mandarin Oriental Hotel and J C Penney (in text)

J C Penney uses I T to enhance relationship with supplier in Hong Kong

Improved Decision Making (1 of 2)

Without accurate information:

Managers must use forecasts, best guesses, luck

Results in:

Overproduction, underproduction

Misallocation of resources

Poor response times

Improved Decision Making (2 of 2)

Poor outcomes raise costs, lose customers

Real-time data improves ability of managers to make decisions.

Example: Verizon’s web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc.

Competitive Advantage

Often results from achieving previous business objectives

Advantages over competitors

Charging less for superior products, better performance, and better response to suppliers and customers

Examples: Apple, Walmart, U P S are industry leaders because they know how to use information systems for this purpose

Survival

Businesses may need to invest in information systems out of necessity; simply the cost of doing business

Keeping up with competitors

Citibank’s introduction of A T Ms

Federal and state regulations and reporting requirements

It Isn’t Just Technology: A Business Perspective on Information Systems

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

Investing in information technology does not guarantee good returns

Figure 1.8 Variation in Returns on Information Technology

Figure 1.7 The Business Information Value Chain

Complementary Assets: Organizational Capital and the Right Business Model (1 of 2)

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

Complementary Assets: Organizational Capital and the Right Business Model (2 of 2)

Complementary assets

Examples of organizational assets

Appropriate business model

Efficient business processes

Examples of managerial assets

Incentives for management innovation

Teamwork and collaborative work environments

Examples of social assets

The Internet and telecommunications infrastructure

Technology standards

Approach of This Text: Sociotechnical Systems

Sociotechnical view

Optimal organizational performance achieved by jointly optimizing both social and technical systems used in production

Helps avoid purely technological approach

Figure 1.10 A Sociotechnical Perspective on Information Systems

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