CHAPTER 1
The Modern Organization
in the Global, Web-Based Environment
1
Opening Case
Can Payment Technology Match the Needs of Organizations
and Consumers?
The purchasing world is changing. Newspaper circulation is down, music sales
are down, while on-line sales are up. How can organizations sell on-line
products for a few cents or a dollar when bank charges often add up to the
same amount for each deposit?
The Business Problem
For example, Jane is downtown at a new electronics store and would like to
buy a laptop computer, but there is not enough money in her chequing
account. She heads to the nearest automated teller machine (ATM) to transfer
money from her savings account to her chequing account and finds that it is
out of service, so the laptop remains in the store.
2
Opening Case
The IT Solution
Enter portable banking services and payment methods focused on
the cellular telephone. For example, TD Bank launched applications
for iPhone and iPod devices on April 14, 2010. In the first two
weeks of its service, the bank estimated that it had more than
10,000 downloads per day. TD and the other major Canadian banks
now allow most banking activity to be done on a cellular phone
(such as checking account balances, paying bills, transferring funds,
and sending money to another bank account).
The Canadian payment network known as Interac can also be used
to complete an e-mail money transfer, perhaps to pay a friend for
lunch.
3
Opening Case
Discussion

Think about the effect of multiple payment methods. Can every
retail organization accept every type of payment method? How
does this affect competition?

Should all banks and credit unions offer the applications describe
here? Why or why not?
4
Opening Case
What we learned from this case?


The opening case illustrated the importance of having low-cost
electronic payment systems. Depending upon the banking
arrangements that organizations make, they could be paying up to
$1.98 for each banking deposit. Without the use of new payment
methods, organizations cannot accept small payments, known as
micropayments.
The opening case illustrates that IT is having a pervasive effect on
payment methods and purchasing methods. Other examples of the
societal and environmental effects of IT are provided throughout
this book.
5
Agenda
1.1 Importance of Planning for IT
1.1.1 Definitions and concepts
1.1.2 IT planning
1.1.3 The IT strategic plan
1.2 Business Processes and Business Process Management
1.2.1 Definition and examples
1.2.2 The importance of BPM
1.3 Information Systems: Concepts and Definitions
1.3.1 Data, information, and knowledge
1.3.2 Information technology architecture
1.3.3 Information technology infrastructure
Agenda continues to next slide
6
1.4 The Global, Web-Based Platform
1.4.1 The global, web-based platform
1.4.2 The three stages of globalization
1.5 Business Pressures, Organizational Responses, and IT Support
1.5.1 Business pressures
1.5.2 Organizational responses
1.6 Why Are Information Systems Important to Me?
1.7 The Plan of the Book
7
LEARNING OBJECTIVES
1.
2.
3.
4.
5.
6.
7.
Link effective information technology planning to business
planning. (1.1)
Describe business processes and explain how business process
management helps to improve how businesses function. (1.2)
Explain the role of data, information, and knowledge.
Differentiate between information technology architecture and
information technology infrastructure. (1.3)
Describe the global business environment and how
globalization has affected organizations. (1.4)
Discuss the relationships among business pressures,
organizational responses, and information systems. (1.5)
Provide examples of the relevance of information systems to
individuals and organizations. (1.6)
Describe the plan of this book. (1.7)
8
CHAPTER OVERVIEW
9
1.1 Importance of Planning for IT
1.1.1 Definitions and concepts
1.1.2 IT planning
1.1.3 The IT strategic plan
10
1.1.1 Definitions and concepts

Information technology (IT): relates to any computer-based tool that
people use to work with information and to support the information and
information-processing needs of an organization.

Information system: (IS): collect, process, store, analyze, and
disseminate information for a specific purpose.

The purpose of IS: to get the right information to the right people at the
right time in the right amount and in the right format to support business
process and decision making.

Management information systems (MIS) deal with the planning for—
and the development, management, and use of—information technology
tools to help people perform all of the tasks related to information
processing and management.
11
1.1.2 IT planning

The need for information systems is usually related to
organizational planning and to the analysis of
organizational performance vis-à-vis its competitors.

The planning process for new IT applications begins
with analysis of the organizational strategic plan, as shown
in Figure 1.1. The organization’s strategic plan states the
firm’s overall mission, the goals that follow from that
mission, and the broad steps necessary to reach these
goals. The strategic planning process modifies the
organization’s objectives and resources to meet its
changing markets and opportunities.
12
FIGURE 1.1 The information systems planning process
13
1.1.3 The IT strategic plan
The IT strategic plan is a set of long-range goals that
describe the IT infrastructure and identify the major IT
initiatives needed to achieve the organization’s goals. The IT
strategic plan must meet three objectives:
1.
2.
3.
It must be aligned with the organization’s strategic plan.
It must provide for an IT architecture that enables users,
applications, and databases to be seamlessly networked and
integrated.
It must efficiently allocate IS development resources among
competing projects so the projects can be completed on time
and within budget and have the required functionality.
14
1.2 Business Processes and Business
Process Management(BPM)
1.2.1 Definition and examples
1.2.2 The importance of BPM
15
1.2.1 Definition and examples

A business process is a collection of related activities
that produce a product or a service of value to the
organization, its business partners, and/or its customers.

A process has inputs and outputs, and its activities can
be measured. Many processes cross functional areas in
an organization, such as product development, which
involves design, engineering, manufacturing, marketing,
and distribution. Other processes involve only one
functional area.
16
17
FIGURE 1.2 a Business process for ordering e-ticket from airline website
18
1.2.2 The importance of BPM

To a great degree, an organization’s performance depends on how
well it manages its business processes. As a result, organizations
emphasize business process management (BPM), which is a
management technique that includes methods and tools to support
the design, analysis, implementation, management, and optimization
of business processes.

Initially, BPM helps companies improve profitability by decreasing
costs and increasing revenues. Over time, BPM can create a
competitive advantage by improving organizational flexibility.
19
1.3 Information Systems: Concepts and
Definitions
1.3.1 Data, information, and knowledge
1.3.2 Information technology architecture
1.3.3 Information technology infrastructure
20
1.3.1 Data, information, and knowledge

The purpose of IS: to get the right information to the
right people at the right time in the right amount and
in the right format to support business process and
decision making.

Information comes from data and information leads to
knowledge for better business performance.
21

Data items refer to an elementary description of
things, events, activities, and transactions that are
recorded, classified, and stored but not organized to
convey any specific meaning. Data items can be
numbers, letters, figures, sounds, or images. Examples of
data items are a student grade in a class and the number
of hours an employee worked in a certain week, or the
price of a ring tone.
22

Information refers to data that have been organized
so that they have meaning and value to the recipient.
For example, grade point averages (GPA) are data, but a
student’s name coupled with his or her GPA is
information. Similarly, a list of ring tones sold stating the
frequency of sales is also information. The recipient
interprets the meaning and draws conclusions and
implications from the information.
23

Knowledge consists of data and/or information that
have been organized and processed to convey
understanding, experience, accumulated learning, and
expertise as they apply to a current business problem.
For example, a company recruiting at your school has
found over time that students with grade point averages
over 3.0 have had the most success in its management
program.
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1.3.2 Information technology architecture

An organization’s information technology (IT)
architecture is a high-level map or plan of the
information assets in an organization. It is both a guide
for current operations and a blueprint for future
directions.

The IT architecture integrates the entire organization’s
business needs for information, the IT infrastructure
(discussed in the next section), and all applications.
25
FIGURE 1.3 Architecture of an on-line travel agency
26
1.3.3 Information technology infrastructure

An organization’s information technology (IT)
infrastructure consists of the physical facilities, IT
components, IT services, and IT personnel that support
the entire organization.
27
FIGURE 1.4 An organization’s IT components, platform, IT services, and IT infrastructure.
28
1.4 The Global, Web-Based Platform
1.4.1 The global, web-based platform
1.4.2 The three stages of globalization
29
1.4.1 The global, web-based platform

The global, web-based platform that has recently emerged spans
the world and is best represented by the Internet and the
functionality of the World Wide Web.

The platform enables individuals to connect, compute,
communicate, collaborate, and compete everywhere and anywhere,
anytime and all the time; to access limitless amounts of information,
services, and entertainment; to exchange knowledge; and to
produce and sell goods and services. It operates without regard to
geography, time, distance, or even language barriers.

In essence, this platform makes globalization possible.
30
31
1.4.2 The three stages of globalization

The first era, Globalization 1.0, lasted from 1492 to 1800. During
this era, the force behind globalization was how much muscle,
horsepower, wind power, or steam power a country had and could
deploy. Globalization 1.0 focuses on countries

The second era, Globalization 2.0, lasted from 1800 to 2000. In this
era, the force behind globalization was multinational companies.
Globalization 2.0 focuses on companies

Around the year 2000, we entered Globalization 3.0, which was
driven by the convergence of 10 forces that Friedman calls
“flatteners” (discussed below). In era 3.0, the global, web-based
platform has emerged. Globalization 3.0 focuses on groups and
individuals
32
1.5 Business Pressures, Organizational
Responses, and IT Support
1.5.1 Business pressures
1.5.2 Organizational responses
33
1.5.1 Business pressures

Business Pressure - The business environment is the
combination of social, legal, economic, physical, and
political factors that affect business activities. Significant
changes in any of these factor are likely to create
business pressure on the organization. The three types
of business pressures faced are:
◦ Market Pressures
◦ Technology Pressures
◦ Social/Political/Legal Pressures
34
FIGURE 1.5 Business pressures, organizational performance and responses, and IT support.
35
Market Pressures
•
•
•
•
The global economy and strong competition
The need for Real-time operations
The changing nature of the workforce
Powerful customers
36
Technology Pressures
• Technological innovation and obsolescence
• Information overload
• Example: how was old analog camera replaced by digital cameras
Innovation: “Credit
card” digital camera
Obsolescence: old analog
camera
37
Social/Political/Legal Pressures
•
•
•
•
Social responsibility
Government regulation and deregulation
Ethical issues
Protection against terrorist attacks
One Laptop per Child initiative
38
1.5.2 Organizational responses
Organizational Responses
• Strategic Systems
• Customer Focus
• Make-to-Order and mass customization
• Reebok
• Video: Bodymetrics
• E-business and E-commerce
39
1.6 Why Are Information Systems
Important to You?

Information systems and information technologies are integral
to your lives

IT is used by all departments. Simply put, organizations cannot
operate without information technology. For this reason, every
manager and professional staff member should learn about IT
within his or her specialized field as well as across the entire
organization and among organizations.
40
1.7 The Plan of the Book

A major objective of this book is to help you understand the roles
of information technologies in today’s organizations.

The book is also designed to help you think strategically about
information systems. That is, we want you to be able look into the
future and see how these information technologies can help you,
your organization, and your world.

Finally, the book demonstrates how IT supports all of the functional
areas of the organization.
41
Closing Case
Pippalily.com
Victoria Turner had started a new small business: the production of
comfortable baby slings. The slings were customized to the size of
the parent and the child, and also had multiple colours available.
The Business Problem
Victoria was trying to grow the business. Using word-of-mouth,
Victoria gradually increased sales to friends and local businesses.
However, she felt that she lacked the expertise in some areas, such
as marketing and fashion design, and many tasks took her long
hours. How would she obtain these resources without hiring
expensive contractors or committing to long-term costs?
42
Closing Case
Discussion
• What business pressures affect Pippalily.com? How could
Victoria deal with these pressures?
• What are some additional methods that Pippalily.com
could use to market its products using current
technology?
43
Closing Case
The results
Since products are manufactured only for confirmed orders,
inventory is kept low, as are costs. The use of on-line payment
methods helps ensure that products are paid for before they are
manufactured, reducing the need to borrow money to finance the
production of goods.
Using outsourcing for specialized help reduces costs and means
that the company does not need to hire full-time staff, paying only
for work that needs to be done. Pippalily.com has been so
successful with marketing the idea that other organizations are
now available selling these types of slings, such as www.lussobaby.ca.
44
Copyright
Copyright © 2011 John Wiley & Sons Canada, Ltd. All rights reserved.
Reproduction or translation of this work beyond that permitted by
Access Copyright (the Canadian copyright licensing agency) is unlawful.
Requests for further information should be addressed to the
Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser
may make back-up copies for his or her own use only and not for
distribution or resale. The author and the publisher assume no
responsibility for errors, omissions, or damages caused by the use of
these files or programs or from the use of the information contained
herein.
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