Management of Information Systems week 1

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Week 1 Learning Objectives

Explain why information systems are essential to business

Describe how computers process data into useful information for problem solving and decision making

Identify the functions of different types of information systems in business

Learning objectives of this week are to :

Understand why information system are critical to business

Understand the difference between data and useful information and how computers process data into useful information

Describe how different information systems support business functions

Describe IT careers

Identify ethical and societal concern related to the widespread use of IT

Explain what business strategy and strategic moves are

Demonstrate how information systems can provide a competitive advantage to businesses

Understand basic requirements for developing strategic information systems

Understand situations that make one IT strategy a success and another fail

The Purpose of Information Systems

Businesses use information systems to:

Make sound decisions

Solve problems

Problem: any undesirable situation

Decision: arises when more than one solution to problem exists

Both problem solving and decision making require information

Information systems are used in business to organize data into useful information that is used to make decisions and solve problems.

Analysis of information takes place to solve problems and to make decisions.

Data vs. Information

Data: a given or fact

Can be number, statement, or picture

Is the raw material in the production of information

Information: facts or conclusions that have meaning within context

Composed of data that has been manipulated

Data is a fact without context. It can be a number, statement or image. Data is a component in the production of information. The number 5 alone does not give us much information. In the context of a clock 5 PM tells us the time of day.

Information is facts or data within a context. Information systems process data into usable information by managers to make sound business decisions.

Figure 1.1 Input-process-output © Cengage Learning 2015

Information systems take raw material, data, as input and processes it by transforming the data into information as output.

What is a system?

A system is an array of components that work together to achieve a goal.

A system accepts input, processes input, and produces output

A system may have multiple goals and may contain subsystems

A subsystem is a component of a larger system and can have a subgoal that contributes to a main goal

A subsystem can receive input from and transfer output to other subsystems.

Systems can be open or closed.

Open systems interface and interact with other systems. Open systems are often a subsystem of a larger system. Subsystems by definition are open

Closed systems are not connected to other systems

Information system (IS) consist of components that work together to process data and produce information

Information systems within organizations consist of data, hardware, software, telecommunications, people, and procedures. All of theses components work together to process data into useful information.

A computer-based information system includes one or more computers that collect, store, and process data into information, people give computers instructions via computer programs.

Figure 1.4 Components of an information system © Cengage Learning 2015

Information system (IS) consist of components that work together to process data and produce information

A computer-based information system includes one or more computers that collect, store, and process data into information, people give computers instructions via computer programs.

Information Systems in Organizations (cont’d.)

Trends that have made information systems (ISs) important in business

Growing capacity and decreasing costs of data storage devices

Increasing variety and ingenuity of computer programs

Cloud computing capabilities

Relatively new technology trends have made information systems essential in business.

These trends are:

The decreasing costs of data storage

An explosion of ingenious computer programs

Cloud computing

Software as a service

Platform as a service

And Infrastructure as a service

The Four Stages of Processing

Input: enter data into the IS

Transaction: a business event, usually entered as input

Transaction processing system (TPS): a system that records transactions

Input devices include keyboards, bar code readers, voice recognition systems, and touch screens

Processing: changing and manipulating the data

There are four stages of processing,

first input data into the information system - This can be triggered by a transaction or a business event, a transaction processing system, such as an ATM or POS, or input of data through an input device such as a keyboard, mouse, bar code reader, voice recognition system, or touch screen.

Next Processing transforms and manipulates the data

Then information is output from the IS – Output devices may be printers, computer monitors, mobile devices, and speakers

The information is stored after processing – Storage devices may be magnetic hard disk drive or optical discs

From Recording Transactions to Providing Expertise

Different types of information systems serve different functions

Capabilities of applications have been combined and merged

Management Information Systems (MISs) support management activities

Planning, controlling, and making decisions

Different types of information systems serve different business functions.

MIS management information systems support planning, controlling and decision making.

SCM Supply chain management systems support activities related to producing and selling services, purchasing raw materials, manufacturing, assembly, packaging, shipping, billing, collection, after-purchase services, and marketing. SCM support supply chain activities also know as ERP, enterprise resource planning systems

CRM customer relationship management - Used in combination with telephones to provide customer service - Often linked to Web applications that track online transactions – CRM is valuable because retaining loyal customers is less expensive than acquiring new one

BI business intelligence systems glean relationships and trends from raw data to help businesses compete. BI systems often contain statistical models and access large pools of data

Data warehouse is a large database that usually stores transactional records

DSS Decision Support System: supports decision making - Relies on models to produce tables - Extrapolates data to predict outcomes - Helps answer “What if?” questions

ES Expert system: supports knowledge-intensive decision making - Uses artificial intelligence techniques - Can preserve the knowledge of retired experts

GIS: ties data to physical locations - Represents data on a map in different formats - May reflect demographic information in addition to geographic information - May use information from global positioning system (GPS) satellites

Examples: Google Earth, Mapquest

Careers in Information Systems

Information technology professionals are increasingly in demand

U.S. Bureau of Labor Statistics estimates a 22 percent increase in demand for computer and information technology specialists for the decade 2010–2020

IT careers are:

Systems analyst

Database administrator

Network Administrator

Systems administrator

Mobile applications developer

Webmaster

CSO – Chief Security Officer

CIO – Chief information officer

CTO - Chief Technology Officer

Strategy and Strategic Moves

Strategy: framework, or approach, to obtaining an advantageous position

Business strategy: a plan to help an organization outperform its competitors

Often done by creating new opportunities, not beating rivals

Information system may be built to solve a problem or to seize an opportunity

Strategy is a framework or approach to obtain an advantageous position

Business strategy is a plan to assist an organization in outperforming its competitors

Information systems may be built to solve a problem or to seize an opportunity – A Strategic information system (SIS): an information system that helps seize opportunities

Strategic advantage: using strategy to maximize a company’s strengths

Competitive advantage is having maximized an organization’s strengths to beat its rivals

Innovative companies battle to create “got-to-have-it” technology Competitive advantage is achieved when a company increases its profits significantly, usually through increased market share

Many initiatives can be used to gain competitive advantage - Strategic moves often combine two or more initiatives - The essence of strategy is innovation ─ something no one has tried before

Achieving a Competitive Advantage

Eight ways to gain competitive advantage

Reduce costs

Raise barriers to market entrants

Establish high switching costs

Create new products or services

Differentiate products or services

Enhance products or services

Establish alliances

Lock in suppliers or buyers

Figure 2.2 Many strategic moves can work together to achieve a competitive advantage © Cengage Learning 2015

Creating and Maintaining Strategic Information Systems

Many opportunities to accomplish competitive edge with information technology

Innovative software can establish a competitive advantage

Strategic information systems can be created from scratch, by modifying a previous system, or through “discovery” of existing capabilities

Creating an SIS

Top management must be involved throughout the process

Strategic information system must be part of the overall organizational strategic plan

Management should ask questions to determine whether to develop a new SIS

Estimating the financial benefits of SIS is extremely difficult

Many fundamental business changes may be involved

When creating an SIS, the information system must:

Serve an organization goal and collaborate with functional units of the company

Top management must be involved throughout the process

A strategic information system must be part of the overall organizational strategic plan

Management should ask questions to determine whether to develop a new SIS

Estimating the financial benefits of SIS is extremely difficult

Many fundamental business changes may be involved

To implement an SIS, organizations must rethink the way they operate

Reengineering may take place eliminating and rebuilding operations from the ground up

Often it involves new machinery and elimination of management layers

Frequently it involves information technology

Goal is to achieve huge efficiency improvements

A new SIS requires revamping business processes

Competitive Advantage as a Moving Target

Competitive advantage is often short-lived

Competitors soon imitate the leader, diminishing the advantage

Increased IT availability

SIS quickly becomes a standard business practice

Must continually modify and enhance technology to sustain competitive advantage

Competitive advantage is often short-lived.

Competitors soon imitate the leader diminishing the advantage.

If the advantage was spurred by IT, increased IT availability takes place and the strategic information system quickly becomes a standard business practice.

Companies must continually modify and enhance technology to sustain competitive advantage.

Late Mover Advantage

Late mover: enters the market later than other competitors

Can be viewed as advantage

Implements latest available technologies

Not burdened with legacy systems

JetBlue used 40% beta software

Late movers enter the market later than other competitors

This can be viewed as an advantage

Late movers can implement next generation of the technologies without the burden of legacy systems

Bleeding edge: failure occurring when a company attempts to be on leading edge of new technology

No prior experience from which to learn

Implementation costs are greater than anticipated

Technology ends up losing money for company

Due to bleeding edge, companies often wait before implementing newer technologies

Microsoft’s approach is to seize an existing idea, improve it, and promote it with marketing power

Also known as competing by emulating and improving

Summary

Some information systems have become strategic tools as a result of strategic planning; others have evolved into strategic tools

Strategic information systems help companies gain strategic advantage

Company achieves strategic advantage by using strategy to maximize its strength, resulting in a competitive advantage

Various initiatives for establishing strategic advantage:

Cost reduction, raising barriers to competitors, establishing high switching costs, new products, differentiating products, enhancing products, alliances, and locking in clients or suppliers

Creating standards often establishes strategic advantage in software industry

Reengineering: the process of redesigning a business process from scratch to significantly reduce costs

Strategic advantages from information systems are short-lived; new opportunities must always be sought

Must keep systems on the leading edge to maintain strategic advantage

Bleeding edge is the undesirable result of a failed innovation effort

Summary

Business professionals are expected to know how to develop and use IT

Computer-based information systems pervade almost every aspect of our lives

A system is a set of components that work together to achieve a common goal

Subsystem: a system performs a limited task that produces an end result, which must be combined with other products from other systems to reach an ultimate goal

Business professionals are expected to know how to develop and use IT

Computer-based information systems pervade almost every aspect of our lives

A system is a set of components that work together to achieve a common goal

Subsystem is a system that performs a limited task that produces a result that must be combined with products from other systems to reach an ultimate goal

Data processing has four stages, data input into the system, data processing, information output and information storage

Any information system that helps in management, is a management information system (MIS)

There are any different types of ISs

Enterprise application systems such as Supply Chain Management SCM or Enterprise Resource Planning ERP tie different functional areas of a business together

ISs are used in many business functions, including accounting, finance, marketing, and human resources

Summary

Some information systems have become strategic tools as a result of strategic planning; others have evolved into strategic tools

Strategic information systems help companies gain strategic advantage

Company achieves strategic advantage by using strategy to maximize its strength, resulting in a competitive advantage

Some information systems have become strategic tools as a result of strategic planning

Strategic information systems help companies gain strategic advantage

Company achieves strategic advantage by using strategy to maximize its strength, resulting in a competitive advantage

Summary (cont'd.)

Various initiatives for establishing strategic advantage:

Cost reduction, raising barriers to competitors, establishing high switching costs, new products, differentiating products, enhancing products, alliances, and locking in clients or suppliers

Creating standards often establishes strategic advantage in software industry

Summary (cont'd.)

Reengineering: the process of redesigning a business process from scratch to significantly reduce costs

Strategic advantages from information systems are short-lived; new opportunities must always be sought

Must keep systems on the leading edge to maintain strategic advantage

Bleeding edge is the undesirable result of a failed innovation effort

Reengineering is redesigning a business process from scratch to significantly reduce costs

Strategic advantages from information systems are short-lived; new opportunities must always be sought

To maintain strategic advantage systems must remain on the leading edge

However, implementation of leading edge system without prior knowledge of these systems can result in an undesirable a bleeding edge circumstance

This concludes this lecture.

Have a good week!