The Information Systems Revolution: Transforming Business and Management

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The Information Systems Revolution Transforming
Business and Management
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Why Information Systems?

• To conduct business electronically to make them
  more efficient and competitive
• Creating new opportunities for organizational
  coordination and innovation
• Extend their reach to faraway locations, offer
  new products and services, reshape jobs and work
  flows and change the way they conduct business.

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The Competitive Business Environment

• Emergence of the Global Economy
• Globalization of the worlds industrial economies
  greatly enhance the value of information to the
  firm and offers new opportunities to businesses.
  IS provide the communication and analytic power
  that firms need for conducting trade and managing
  businesses on global scale.

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The Competitive Business Environment

• Emergence of the Global Economy
• Globalization and IT also bring new threats to
  domestic business firms. Customers now can shop
  in a worldwide marketplace, obtaining price and
  quality information reliably, 24 hours a day.
• To become effective and profitable participants
  in international markets, firms need powerful
  information and communication systems

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The Competitive Business Environment

• Transformation of Industrial Economies
• Major industrial powers are being transformed
  from industrial economies to knowledge-based
  service economies, knowledge and information are
  key ingredients in creating wealth.

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The Competitive Business Environment

• Transformation of Industrial Economies
• Most people no longer work on farms or in
  factories, but in sales, education, healthcare,
  banks, insurance firms, and law firms they also
  provide business services like copying, computer
  programming, and making deliveries. These jobs
  involve working with, distributing, or creating
  new knowledge and information.

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The Competitive Business Environment

• Transformation of Industrial Economies
• Knowledge and information are becoming the
  foundation for many new services and products.
  e.g. computer games, credit cards, overnight
  packaging delivery, worldwide reservation
  systems.

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The Competitive Business Environment

• Transformation of the Business Enterprise
• Traditional business firms was and still
  hierarchical, centralized, structured of
  specialist that typically relies on a fixed set
  of standard operating procedures to deliver a
  mass-produced products or services.

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The Competitive Business Environment

• Transformation of the Business Enterprise
• The new style of business firm is a flattened
  (less hierarchical), decentralized, flexible
  arrangement of generalists who rely on nearly
  instant information to deliver mass-customized
  products and services uniquely suited to specific
  markets or customers.

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What is an information system?

• An interrelated components working together to
  collect, process, store, and disseminate
  information to support decision making,
  coordination, control, analysis, and
  visualization in an organization.
• Information data that have been shaped into a
  form that is meaningful and useful to human
  beings.

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What is an information system?

• Data streams of raw facts representing events
  occurring in organizations or the physical
  environment before they have been organized and
  arranged into a form that people can understand.

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What is an information system?

• Input the capture or collection of raw data
  from within the organization or from its external
  environment for processing in an information
  system
• Processing the conversion, manipulation, and
  analysis of raw input into a form that is more
  meaningful to humans.

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What is an information system?

• Output the distribution of processed
  information to the people who will use it or to
  the activities for which it will be used.
• Feedback output that is returned to the
  appropriate members of the organization to help
  them evaluate or correct input.

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ENVIRONMENT
Customers
Suppliers
INFORMATION SYSTEM
Input
Processing
Output
Feedback
Competitors
Regulatory Agencies
Stockholders
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A business perspective on Information Systems
Information Systems
Organization
Technology
Management

• IS are more than computers. Using IS
  effectively requires an understanding of the
  organization, management, and IT shaping the
  systems. All IS can be described as
  organizational and management solutions to
  challenges posed by the environment.

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Organizations

• IS are an integral part of organizations.
• Organizations require many different kinds of
  skills and people.
• An organization coordinates work through a
  structured hierarchy and formal, standard
  operating procedures.

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Major Business Functions

• Sales and marketing
• Selling the organizations products and services
• Manufacturing and productions
• Producing products and services
• Finance
• Managing the organizations financial assets
• Accounting
• Maintaining the organizations financial records
  accounting for the flow of funds
• Human resources
• Attracting, developing, and maintaining the
  organizations labor force maintaining employee
  records.

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Management

• Managers perceive business challenges in the
  environment they set the organizational strategy
  for responding and allocate the human and
  financial resources to achieve the strategy and
  coordinate the work. They must exercise
  responsible leadership. The business information
  system reflect the hopes, dreams, and realities
  of real-world managers.

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Management

• Senior managers make long-range strategic
  decisions about products and services to produce.
• Middle managers carry out the programs and
  plans of senior management.
• Operational managers are responsible for
  monitoring the firms daily activities.
• Each level of management has different
  information needs and information system
  requirements.

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Technology

• Information Technology is one of many tools
  managers use to cope with change.
• Computer hardware is the physical equipment used
  for input, processing, and output activities in
  an information system.
• Computer software consists of the detailed
  preprogrammed instructions that control and
  coordinate the computer hardware components in an
  information system.

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Technology

• Storage technology includes both the physical
  media for storing data, such as magnetic or
  optical disk or tape, and software governing the
  organization of data on these physical media.
• Communications technology consists of both
  physical devices and software, links the various
  pieces of hardware and transfers data from one
  physical location to another. Computers and
  communications equipment can be connected in
  networks for sharing voice, data, images, sound,
  or even video.

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Technology

• All of these technologies represent resources
  that can be shared throughout the organization
  and constitute the firms Information Technology
  Infrastructure. This IT infrastructure provides
  the foundation or platform on which the firm can
  build its specific information systems. Each
  organizations must carefully design and manage
  its IT infrastructure so that it has the set of
  technology services it needs for the work it
  wants to accomplish with IS.

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Contemporary Approaches to Information Systems
The study of IS is a multidisciplinary fields. No
single theory or perspective dominates, the
field divided into technical and behavioral
approaches.
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Technical Approach

• The technical approach to IS emphasizes
  mathematically based models to study IS, as well
  as the physical technology and formal
  capabilities of these systems.
• The disciplines that contribute to the technical
  approach are computer science, management
  science, and operations research.

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Technical Approach

• Computer science is concerned with establishing
  theories of computability, methods of
  computation, and methods of efficient data
  storage and access.
• Management science emphasizes the development of
  models for decision-making and management
  practices.

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Technical Approach

• Operations research focuses on mathematical
  techniques for optimizing selected parameters of
  organizations such as transportation, inventory
  control, and transaction costs.

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Behavioral Approach

• An important part of IS field is concerned with
  behavioral issues that arise in the development
  and long-term maintenance of IS. Issues such as
• Strategic business integration
• Design
• Implementation
• Utilization
• management

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Behavioral Approach

• Sociologist study information systems with an eye
  toward how groups and organizations shape the
  development of systems and also how systems
  affect individuals, groups, and organizations.

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Behavioral Approach

• Psychologist study information systems with an
  interest in how human decision makers perceive
  and use formal information.
• Economists study information systems with an
  interest in what impact systems have on control
  and cost structures within the firm and within
  markets.

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The New Role of Information Systems in
Organizations

• IS play a critical role in contemporary
  organizations
• Digital technology is transforming business
  organizations
• IS play a strategic role in the life of the firm,
  that is why IS cannot be delegated to technical
  decision makers.

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Widening scope of IS
Hardware
Business Strategy Rules Procedures
Database
Software
Interdependence
Tele- communications
Organization
Information System
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Widening scope of IS

• There is a growing interdependence between
  business strategy, rules and procedures on the
  one hand, and IS software, hardware, databases,
  and telecommunications on the other.
• A change in any of these components often
  requires changes in other components.

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Widening scope of IS

• What a business would like to do in five years
  depends on what its systems will be able to do.
  Increasing market share, becoming the
  high-quality or low-cost producer, developing new
  products, and increasing employee productivity
  depend more and more on the kinds and quality of
  IS in the organization.

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Widening scope of IS

• A second change in the relationship between IS
  and organizations results from the growing
  complexity and scope of system projects and
  applications. Building systems today involves a
  much larger part of the organization than it did
  in the past.

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Widening scope of IS
Information System
Information System
Information System
Technical Changes
Managerial Control
Institutional Core Activities
1950s
1980s 1990s
1960s 1970s
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The Network Revolution the Internet

• The soaring power of computer technology has
  spawned powerful communication networks that
  organizations can use to access vast storehouses
  of information from around the world and to
  coordinate activities across space and time.
  These networks are transforming the shape and
  form of business enterprises and even our society.

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The Network Revolution the Internet

• The Internet is extremely elastic. If networks
  are added or removed or failures occur in parts
  of the system, the rest of the Internet continues
  to operate.
• The Internet is creating a new universal
  technology platform on which to build all sorts
  of new products, services, strategies, and
  organizations. It is reshaping the way IS are
  used in business and daily life.

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The Network Revolution the Internet

• It eliminates many technical, geographic, and
  cost barriers obstructing the global flow of
  information, the Internet is accelerating the
  information revolution, inspires new use of IS
  and new business models.

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The Network Revolution the Internet

• Communication and collaborate
• Send electronic mail messages transmit documents
  and data participate in electronic conferences
• Access information
• Search for documents, databases, and library card
  catalogs read electronic brochures, manuals,
  books, and advertisements.

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The Network Revolution the Internet

• Participate in discussions
• Join interactive discussions groups conduct
  voice transmission
• Supply information
• Transfer computer files of text, computer
  programs, graphics, animations, sound, or videos.

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The Network Revolution the Internet

• Find entertainments
• Play interactive video games view short video
  clips listen to sound and music clips read
  illustrated and even animated magazines and books
• Exchange business transactions
• Advertise, sell, and purchase goods and services

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New Options for Organizational Design The
Networked Enterprise

• The explosive growth in computing power and
  networks, including the Internet, is turning
  organizations into networked enterprise, allowing
  information to be instantly distributed within
  and beyond the organization. This capability can
  be used to redesign and reshape organizations,
  transforming their structure, scope of
  operations, reporting and control mechanisms,
  work practices, work flows, products, and
  services. New ways of conducting business
  electronically have emerged.

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Flattening Organizations

• A traditional hierarchical organization with
  many levels of management

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Flattening Organizations

• An organization that has been flattened by
  removing of management

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Flattening Organizations

• Flattened organizations have fewer levels of
  management, with lower level employees being
  given greater decision-making authority.
• Those employees are empowered to make more
  decisions than in the past they no longer work
  standard 8 hours, and they no longer work in an
  office, maybe scattered geographically, sometimes
  working half a world away from the manager.

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Flattening Organizations

• Contemporary IT has made such change possible. It
  can make more information available to line
  workers so they can make decisions that
  previously has been made by managers only.
  Networked computers have made it possible for
  employees to work as a team, a feature of
  flattened organizations.

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Flattening Organizations

• With emergence of global networked such as the
  Internet, team members can collaborate closely
  even from distant locations. These changes mean
  that the management span of control has also been
  broadened, allowing high-level managers to manage
  and control more workers spread over greater
  distances.

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Virtual Organizations
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Virtual Organizations

• Companies are not limited to physical locations
  or their own organizational boundaries for
  providing products and services. Networked IS are
  allowing companies coordinate their geographical
  distributed capabilities and even coordinate with
  other organizations.

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Virtual Organizations

• Virtual organizations use networks to link
  people, assets, and ideas, allying with suppliers
  and customers, and sometimes even competitors, to
  create and distribute new products and services
  without being limited by traditional boundaries
  or physical location.

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Key Terms

• Electronic commerce the process of buying and
  selling goods services electronically involving
  transactions using the internet, networks, and
  other global technologies.
• Intranet an internal network based on internet
  and WWW technology and standards.

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Key Terms

• Electronic Business the use of the internet and
  other digital technology for organizational
  communication and coordination and the management
  of the firm.
• Information architecture the particular design
  that information technology takes in a specific
  organization to achieve selected goals or
  functions.

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Key Terms

• Management Information Systems the study of
  information systems focusing on their use in
  business and management.

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Examples of electronic commerce electronic
business

• Electronic Commerce
• Drugstore.com operates in a virtual pharmacy on
  the internet selling prescription medicine and
  over-the counter health, beauty, and wellness
  products. Customers can input their orders via
  Drugstore.coms website and have their purchases
  shipped to them.

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Examples of electronic commerce electronic
business

• Electronic Commerce
• Travelocity provides a Web site that can be used
  by consumers for travel and vacation planning.
  Visitors find information on airlines, hotels,
  vacation packages, and other travel and leisure
  topics, and then can make airline and hotel
  reservations on-line through the web site.

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Examples of electronic commerce electronic
business

• Electronic Commerce
• Gilbarco Inc. created an order management system
  based on internet technology that allows its
  distributors to purchase orders on-line for gas
  pumps, pump controllers, and other gas station
  supplies. Distributors can order parts, check on
  an orders status, and look up equipment training
  data and technical documentation.

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Examples of electronic commerce electronic
business

• Electronic Business
• Roche Bioscience scientists worldwide use an
  internet to share research results and discuss
  findings. The intranet also provides a company
  telephone directory and newsletter.

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Examples of electronic commerce electronic
business

• Electronic Business
• EDS Corporation uses an intranet to provide
  70,000 employees with access to personalized
  health benefits information based on location,
  age, salary, and family status. Employees can
  compare benefits of different medical plans
  before enrolling.

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Examples of electronic commerce electronic
business

• Electronic Business
• Dream Works SKG uses an intranet to check the
  daily status of projects, including animation
  objects, and to coordinate movie scenes.

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EB EC in the Networked Enterprise Electronic
Business Electronic Commerce
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Key Management Issues/ Challenges of Information
Systems

• The Strategic Business Challenge
• How can business use information technology to
  design organizations that are competitive and
  effective?
• .

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Key Management Issues/ Challenges of Information
Systems

• The Strategic Business Challenge
• The power of computer hardware and software has
  grown much more rapidly ability of organizations
  to apply and use this technology. To stay
  competitive or realize genuine productivity
  benefits from information technology, many
  organizations actually need to be redesigned.

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Key Management Issues/ Challenges of Information
Systems

• The Strategic Business Challenge
• To fully benefit from information technology,
  including the opportunities the Internet
  provides, organizations need to rethink and
  redesign the way they design, produce, deliver,
  and maintain goods and services.

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Key Management Issues/ Challenges of Information
Systems

• The Globalization Challenge
• How can firms understand the business and system
  requirements of a global economic environment?
• The rapid growth in international trade and the
  emergence of a global economy call for
  information systems that can support producing
  and selling goods in many different countries.

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Key Management Issues/ Challenges of Information
Systems

• The Information Architecture and Infrastructure
  Challenge
• How can organizations develop an information
  architecture and information technology
  infrastructure that support their business goals?

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Key Management Issues/ Challenges of Information
Systems

• The Information Architecture and Infrastructure
  Challenge
• Creating a new system now means much more than
  installing a new machine in the basement. New
  systems today often require redesigning the
  organization and building a new information
  architecture and information technology
  infrastructure.

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Key Management Issues/ Challenges of Information
Systems

• The Information Systems Investment Challenge
• How can organizations determine the business
  value of information systems?
• How can organizations obtain a sizable payoff
  from their investment in information systems?

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Key Management Issues/ Challenges of Information
Systems

• The Information Systems Investment Challenge
• A major problem raised by the development of
  powerful, inexpensive computers involves not
  technology but management and organizations. Its
  one thing to use information technology to
  design, produce, deliver, and maintain new
  products. Its another thing to make money doing
  it.

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Key Management Issues/ Challenges of Information
Systems

• The Information Systems Investment Challenge
• Are we receiving the kind of return on investment
  from our systems that we should be?
• Do our competitors get more?

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Key Management Issues/ Challenges of Information
Systems

• The Responsibility and Control Challenge
• How can organizations ensure that their
  information systems are used in an ethically and
  socially responsible manner?
• How can we design information systems that people
  can control and understand?
• Although IS have provided enormous benefits and
  efficiencies they have also introduced new
  problems and challenges.

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Positive Negative Impacts of Information Systems

• Benefits
• Information systems can perform calculations or
  process paperwork much faster than people.

• Negative
• By automating activities that were previously
  performed by people, information systems may
  eliminate jobs.

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Positive Negative Impacts of Information Systems

• Benefits
• Information systems can help companies learn more
  about the purchase patterns and preferences of
  their customers.

• Negative
• Information systems may allow organizations to
  collect personal details about people that
  violate their privacy.

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Positive Negative Impacts of Information Systems

• Benefits
• Information systems provide new efficiencies
  through services such as ATM, telephone systems
  or computer-controlled airplanes and air
  terminals.

• Negative
• Information systems are used in so many aspects
  of everyday life that system outages can cause
  shutdowns of business or transportation services,
  paralyzing communities.

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Positive Negative Impacts of Information Systems

• Benefits
• Information systems have made possible new
  medical advances in surgery, radiology, and
  patient monitoring.

• Negative
• Heavy users of information systems may suffer
  repetitive stress injury, technostress, and other
  health problems.

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Positive Negative Impacts of Information Systems

• Benefits
• The Internet distributes information instantly to
  millions of people across the world.

• Negative
• The Internet can be used to distribute illegal
  copies of software, books, articles, and other
  intellectual property.