Week_3.Information systems in Global Organisation.ppt

Information Systems
Information Systems
in Global Business
in Global Business
Today
Today

The Role of Information Systems in Business Today
• Information meaningful data (facts)
• Societies mainly depend on the information
• Information support to achieve desired objectives
• Planning, organizing, decision making, …
• IS process (handle) the data to be useful information
• Through H/W, S/W, telecommunication, DB
• IS computer systems related to process data and
provide required information
• ATMs, airline reservation systems, course reservation
systems
Information Systems in Global Business Today
Data Process Information

Information Technology Capital Investment
Information Technology Capital Investment
Information technology investment, defined as hardware, software, and communications
equipment, grew from 34% to 50% between 1980 and 2004.
Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income
and Product Accounts, 2006.
• IS play vital role in business today

• How IS transforming business
• Increased technology investments
• IS provide economic value to business
• Increased responsiveness to customer demands
• Shifts in media and advertising and commerce
• New federal security and accounting laws required
• Globalization opportunities
• Internet reduced costs of operating, on global scale
• Customers and firms
• Using foreign markets, easily replicate service
• E.g. Google and ebay

Emerging digital firm
 It’s significant business relationships are digitally
enabled and mediated
 It’s 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

 Business process : tasks, rules, behaviors that been developed
to produce business results.
 eg.
 Developing new product
 Creating market plan
 Hiring an employee
• Considered source of competitive strength
• IS automate many business process

 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

 Operational excellence:
 Improvement of efficiency of operation to attain higher profitability
 Information technology tool to achieving greater efficiency and productivity
>Practice business and management behavior based on IT.
 E.g. Wal-Mart’s RetailLink system links suppliers to stores for superior
replenishment system

 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
 E.g. Apple’s iPod, iTunes and Netflix’s Internet-based DVD rentals

 Customer and supplier intimacy:
 Serving customers well leads to customers returning, which raises
revenues and profits
 E.g. High-end hotels that use computers to track customer preferences and use
to monitor and customize environment
 Intimacy with suppliers allows them to provide vital inputs, which lowers
costs
 E.g. J.C.Penney’s information system which links sales records to contract
manufacturer

Improved decision-making
 Without accurate information:
 Managers must use forecasts, best guesses, luck
 Leads to:
 Overproduction, underproduction of goods and services
 Misallocation of resources
 Poor response times
 Poor outcomes raise costs, lose customers
 IS provide real-time data for making decisions
 E.g. Verizon’s Web-based digital dashboard to provide
managers with real-time data on customer complaints,
network performance, line outages, etc.

Competitive advantage
 Achieve higher sales and profit through using IS by:
 Doing things better
 Charging less for superior products
 real time Responding
 Using the internet is competitive advantage
 E.g. Dell: Consistent profitability over 25 years; Dell
remains one of the most efficient producer of PCs in
world.
 But Dell has lost some of its advantages to fast
followers-- HP

 Survival
 Information technologies are necessity of doing business
 May be:
 Industry-level changes, e.g. Citibank’s introduction of ATMs
 Governmental regulations requiring record-keeping
 E.g. Toxic Substances Control Act, Sarbannes-Oxley Act

 IT: H/W and S/W needed to achieve business objectives
 IS: set of components that handle information to support DM,
problem analysis, control in an organization, coordination and
create new product
 Business: functions, processes, models,

The Interdependence Between Organizations and Information
The Interdependence Between Organizations and Information
Technology
Technology
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

Information system:
 Set of interrelated components
 Collect, process, store, and distribute information
By computers and software as a tool
 Support decision making, coordination, control,
problem analysis and create new product
 Provide solutions to challenges in business Env.
Information vs. data
 Data are streams of raw facts
 Information is data shaped into meaningful form
Perspectives on Information Systems

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
Data and Information

 Information system: activities produce required information
 Input: Captures raw data from organization or
external environment
 Processing: Converts data into meaningful form
 Output: Transfers processed information to people or
activities that use it
 Feedback: Output returned to appropriate members
of organization to help evaluate or correct input stage

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
Functions of an Information System

Computer/Computer program vs.
information system
 Computers and software are technical foundation
and tools to store and process information
 similar to the material and tools used to build a
house
 Cannot produce required information to a particular
organization

Dimensions (boarders) of IS
 Understanding of IS dimensions is IS literacy
 Where computer literacy is focus on primarily on
knowledge of IT
 MIS try to achieve this boarders, deals with
behavioral and technical issues surrounding
development, use and impact of IS in the firm.

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
Information Systems Are More Than Computers

 Organizational dimension of IS
 structure: different levels and specialties
 hierarchy of authority, responsibility: Senior Middle Operational
management, Knowledge service Data workers
 business process: Organization coordinate its work through its
hierarchy and business process
 Culture : ways of doing things, part is embedded in IS.

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
Levels in a Firm

Organizational dimension (cont.)
 Experts are employed and trained for different
business functions (tasks):
 Sales and marketing
 Human resources
 Finance and accounting
 Production and manufacturing)

 Management dimension
 Make decisions, formulate action plan and solve organizational
problem
 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

Technology dimension
 Computer hardware
 Software: instructions that control H/W
 Data management technology: S/W governing data
 Networking and telecommunications technology
 H/W and S/W link pieces of H/W and transfer data: Network,
Internet, intranets and extranets, WWW
 IT infrastructure: platform that the firm can built on
its IS

 Business perspective on IS:
 IS instrument for creating value to firms
 Investments in IS result in superior returns:
 Increases productivity and revenue
 IS provides information that helps managers making better decisions
and improve the execution of business process
 Value of IS

Business information value chain
 Raw data acquired and transformed through stages
that add value to that information
 Value of information system determined by its ability
to result in better decisions, greater efficiency of
business process, and higher profits
Business perspective: Calls attention to
organizational and managerial nature of
information systems

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
The Business Information Value Chain

Although, on average, investments in information technology produce returns far above
those returned by other investments, there is considerable variation across firms.
Figure 1-8
Variation in Returns on
Variation in Returns on
Information Technology Investment
Information Technology Investment

Investing in information technology does not
guarantee good returns
Considerable variation in the returns firms
receive from systems investments
Factors:
 Adopting right business model according (suite) to
new technology
 complementary investments (business processes,
models, management behavior and culture)

 Complementary assets:
 Assets required to derive value from a primary investment
 Firms supporting their technology investments with investment in
complementary assets receive superior returns
 E.g.: invest in technology and the people to make it work properly

Complementary assets include:
 Organizational investments, e.g.
 Appropriate business model
 Efficient business processes
 Managerial investments, e.g.
 Incentives for management innovation
 Teamwork and collaborative work environments
 Social investments, e.g.
 The Internet and telecommunications infrastructure
 Technology standards

The study of information systems deals with issues and insights contributed from technical
and behavioral disciplines.
Figure 1-9
Contemporary Approaches to Information Systems

• Technical approach: Emphasizes
mathematically based models
• Computer science theories of commutation ,data storage
• management science: models of DM and practices
• operations research: optimizing selected parameters of
org.
• Behavioral approach: Behavioral issues such
strategic business integration, implementation...
• Psychology: how decision makers use formal information
• Economics: how IS change the control and cost structures
• Sociology: how system affect individuals and groups

• Management Information Systems
• Use of computer-based information systems in
business firms
• Combines work of CS, management, and operating
research toward developing system solutions to real
word problems
• Concerned with behavioral issues of development,
use and impact of IS
• main actors : Suppliers of hardware and software,
Business firms, Managers and employees, Firm’s
environment (legal, social, cultural context)

• 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

In a sociotechnical perspective, the performance of a system is optimized when both the
technology and the organization mutually adjust to one another until a satisfactory fit is
obtained.
Figure 1-10
A Sociotechnical Perspective on Information Systems
A Sociotechnical Perspective on Information Systems

Important concepts
Effectiveness : achieved output / expected output
Efficiency : achieved output / consumed input

 Management Information System: A Global Digital Enterprise
 Laudon,Kenneth C.; Laudon,Jane P.(2009).Management
Information Systems: Managing the Digital Firm (11 ed.).Prentice
Hall.
 Laudon, K.,&Laudon, J. (2010). Management information
systems: Managing the digital firm. (11th ed.). Upper Saddle
River, NJ: Pearson Prentice Hall.

Week_3.Information systems in Global Organisation.ppt

More Related Content

Similar to Week_3.Information systems in Global Organisation.ppt (20)

Recently uploaded (20)

Week_3.Information systems in Global Organisation.ppt