Purpose of Information Systems

1
Chapter 2

• Purpose of Information Systems

2
Agenda

• Information Systems Purposes
• Information Systems and Competitive Advantage
• Information Systems and Problem Solving
• Information Systems and Decision Making
• Discussion and Case Study

3
Information Systems Purposes

• Gain competitive advantage
• Solve problems
• Assist in decision making

4
Competitive Advantage - I

• Products
• Create a new product or service
• Enhance new products or services
• Differentiate products or services
• creation of barriers
• Lock in customers or buyers
• Lock in suppliers
• Raises barriers to market entry

5
Competitive Advantage - II

• Establishing alliances
• Establish standards
• Promote product awareness and needs
• Develop market size
• Reduce purchasing costs
• Reducing costs
• Reduce prices
• Increase profitability

6
Information System and Competitive Advantage

• ABC information system features
• Store customer data, shipping identity, and
  location
• Print shipping label and bar code (package
  delivery system)
• Reduce paper work and error
• Provide email to sender, receiver, and other
  (information delivery system)
• Competitive Advantages
• Enhances an existing product
• Differentiates the ABC package delivery product
  from competitors
• Locks customers into the ABC system (switching
  cost)
• Raises the barrier to market entry
• Reduces costs

7
Problem Definition

• A perceived difference between what is and what
  is not
• The differences between what is and what ought to
  be by describing both the current and desired
  situations
• Different information systems for different
  problem definitions
• A complete, accurate, and agreed-upon problem
  definition by every user for the development of a
  good and useful information system

8
Information Systems and Problem Solving

• Three different information systems for solving
  computer lap top problem
• Customer relationship management (CRM) system
• Knowledge management system (KMS)
• Manufacturing Quality-Control Information System

9
Customer Relationship Management System

• Maintain data about customers and all of their
  interactions with the system
• Sales activity
• Purchase
• Return
• Training
• Support call
• Service
• Repair
• Vary in the size and complexity

10
Knowledge Management System

• Store and retrieve organizational knowledge in
  the form of data, documents, or employee know-how
• Make the organization knowledge available to
• Employees
• Vendors
• Customers
• Investors
• Press
• Other individual needs the knowledge

11
Manufacturing Quality-Control System

• The optimal way to provide customer service is to
  eliminate the need for it
• Improve customer service is to improve
  manufacturing quality, planning, and scheduling

12
Decision Making Dimension - Level

• Operational decisions concern day-to-day
  activities
• Transaction processing systems (TPS)
• Managerial decisions concern the allocation and
  utilization of resources
• Management information systems (MIS)
• Strategic decision making concern broader-scope
  organizational issues
• Executive information systems (EIS)

13
Decision Making Dimension - Process

• Structured decision process an understood and
  accepted method for making the decision
• Unstructured process no agreed on decision
  making process
• Structured and unstructured refers to the
  decision process-not the underlying subject.

14
Decision-Making Dimension
15
Information Systems Type

• Automated information systems the computer
  hardware and program components do most of the
  work
• Humans start the programs and use the results
• Augmentation information systems humans do the
  bulk of the work
• To aid the management decision process (email,
  instant messaging, video-conferencing, etc.)

16
Automated vs. Augmentation IS
17
Information Systems and Decision Making

• Intelligence gathering
• Alternative formulation
• Choice
• Implementation
• Review

18
Discussion

• Security (27a-b)
• Name the competitive advantages for a financial
  institution by implementing a security system
• The cost of no security for a financial institute
• Ethics (29a-b)
• Social impact of the digital divide
• Social responsibility of the business and
  government to improve the situation
• Opposing forces (31a-b)
• Can a business survive without any IS today?
• Egocentric vs. empathetic thinking (33a-b)
• How to apply this concept in developing and using
  IS?

19
Case Study

• Case study 2-1(41-42)
• Questions 1, 2, 7, 8, 10, and 11

20
Points to Remember

• Information Systems Purposes
• Information Systems and Competitive Advantage
• Information Systems and Problem Solving
• Information Systems and Decision Making
• Discussion and Case Study