The Information Systems
Revolution: Transforming
Business and Management
1
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.
2
The Competitive Business
Environment
• Emergence of the Global Economy
– Globalization of the world’s 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.
3
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
4
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.
5
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.
6
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.
7
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 massproduced products or services.
8
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.
9
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.
10
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.
11
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.
12
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.
13
ENVIRONMENT
Customers
Suppliers
INFORMATION SYSTEM
Input
Processing
Output
Feedback
Regulatory
Agencies
Stockholders
Competitors
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A business perspective on Information Systems
Organization
Information
Systems
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.
15
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 organization’s products and services
• Manufacturing and productions
– Producing products and services
• Finance
– Managing the organization’s financial assets
• Accounting
– Maintaining the organization’s
accounting for the flow of funds
financial
records;
• Human resources
– Attracting,
developing,
and
maintaining
the
organization’s labor force; maintaining employee
records.
17
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.
18
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 firm’s daily activities.
Each level of management has different
information needs and information system
requirements.
19
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.
20
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. 21
Technology
All of these technologies represent resources
that can be shared throughout the
organization and constitute the firm’s
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. 22
Contemporary Approaches to Information Systems
Computer
Science
Management
Science
Management
Information
Systems
Operations
Research
Sociology
Psychology
Economics
The study of IS is a multidisciplinary fields. No single theory
or perspective dominates, the field divided into technical
23
and behavioral approaches.
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.
24
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.
25
Technical Approach
• Operations
research
focuses
on
mathematical techniques for optimizing
selected parameters of organizations such as
transportation, inventory control, and
transaction costs.
26
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
27
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.
28
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.
29
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.
30
Widening scope of IS
Hardware
Business
Strategy
Database
Software
Interdependence
Rules
Procedures
Organization
Telecommunications
Information System
31
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.
32
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.
33
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.
34
Widening scope of IS
Information
System
Information
System
Information
System
Technical Changes
Managerial Control
Institutional
Core Activities
1960s
1980s
1950s
1970s
1990s
35
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.
36
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.
37
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.
38
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.
39
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.
40
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
41
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.
42
Flattening Organizations
A traditional hierarchical organization with
many levels of management
43
Flattening Organizations
An organization that has been “flattened” by
removing of management
44
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.
45
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.
46
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.
47
Virtual Organizations
Manufacturing
Company
Design Company
CORE
COMPANY
Sales and Marketing
Company
Logistics Company
Finance Company
48
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.
49
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.
50
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.
51
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.
52
Key Terms
• Management Information Systems – the
study of information systems focusing on
their use in business and management.
53
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.com’s
website and have their purchases shipped to
them.
54
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.
55
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 online for gas pumps, pump controllers, and
other gas station supplies. Distributors can
order parts, check on an order’s status, and
look up equipment training data and
technical documentation.
56
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.
57
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.
58
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.
59
EB & EC in the Networked Enterprise
Electronic Business
Electronic Commerce
Factories
Just-in-time production
Continuous inventory replenishment
Production Planning
Customers
On-line marketing
On-line sales
Built-to-order products
Customer Service
Sales force automation
The FIRM
Remote offices & Work groups
Communicate plans & policies
Group Collaboration
Electronic Communication
Scheduling
Business Partners
Joint Design
Outsourcing
Suppliers
Procurement
Supply Chain
Management
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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?
.
61
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.
62
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.
63
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.
64
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?
65
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.
66
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?
67
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.
It’s one thing to use information technology to
design, produce, deliver, and maintain new
products. It’s another thing to make money
doing it.
68
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?
69
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.
70
Positive & Negative Impacts of
Information Systems
Benefits
Negative
• Information systems • By
automating
can
perform
activities that were
calculations or process
previously performed
paperwork much faster
by people, information
than people.
systems may eliminate
jobs.
71
Positive & Negative Impacts of
Information Systems
Benefits
Negative
• Information systems • Information systems
can help companies
may
allow
learn more about the
organizations
to
purchase patterns and
collect personal details
preferences of their
about people that
customers.
violate their privacy.
72
Positive & Negative Impacts of
Information Systems
Negative
Benefits
• Information systems • Information systems
are used in so many
provide
new
aspects of everyday
efficiencies
through
life
that
system
services such as ATM,
outages can cause
telephone systems or
shutdowns of business
computer-controlled
or
transportation
airplanes
and
air
services,
paralyzing
terminals.
communities.
73
Positive & Negative Impacts of
Information Systems
Benefits
Negative
• Information systems • Heavy
users
of
have made possible
information systems
new medical advances
may suffer repetitive
in surgery, radiology,
stress
injury,
and
patient
technostress, and other
monitoring.
health problems.
74
Positive & Negative Impacts of
Information Systems
Benefits
Negative
• The
Internet • The Internet can be
distributes information
used to distribute
instantly to millions of
illegal
copies
of
people across the
software,
books,
world.
articles, and other
intellectual property.
75