Introduction to Information Management – IIM, NCKU
• Define complementary assets and explain how
they ensure that information systems provide
genuine value to an organization.
• Describe the different academic disciplines used
to study information systems and explain how
each contributes to our understanding of them.
• Explain what is meant by a sociotechnical
systems perspective.
Based on Chapter 1 of Laudon and Laudon (2010). Management
Information Systems: Managing the Digital Firm (11th edition),
Pearson/PrenticeHall
1.1
1
© 2010 by Prentice Hall
3
1.3
• Understanding the effects of information systems
on business and their relationship to
globalization.
© 2010 by Prentice Hall
• How information systems are transforming
business
• Increase in wireless technology use, Web sites
• Shifts in media and advertising
• New federal security and accounting laws
• Explain why information systems are so essential
in business today.
• Globalization opportunities
• Internet has drastically reduced costs of operating on
global scale
• Presents both challenges and opportunities
• Define an information system and describe its
management, organization, and technology
components.
1.2
2
© 2010 by Prentice Hall
1.4
4
© 2010 by Prentice Hall
Information Technology Capital Investment
z
Growing interdependence between ability to use
information technology and ability to implement
corporate strategies and achieve corporate goals
z
Business firms invest heavily in information
y
to achieve six strategic
g business
systems
objectives:
Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival
z
z
z
z
Information technology investment, defined as hardware, software, and communications
equipment, grew from 32% to 51% between 1980 and 2008.
z
Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income
and Product Accounts, 2008.
z
Figure 1-1
5
1.5
© 2010 by Prentice Hall
z
In the emerging, fully digital firm
z
z
z
z
1.6
© 2010 by Prentice Hall
z
Significant business relationships are digitally
enabled and mediated
Core business processes are accomplished
through digital networks
Key corporate assets are managed digitally
Operational excellence:
z
z
z
Digital firms offer greater flexibility in
organization and management
z
7
1.7
Improvement of efficiency to attain higher
profitability
Information systems,
systems technology an important tool
in achieving greater efficiency and productivity
Wal-Mart’s RetailLink system links suppliers to
stores for superior replenishment system
Time shifting, space shifting
6
© 2010 by Prentice Hall
1.8
8
© 2010 by Prentice Hall
z
z
New products, services, and business
models:
z
z
z
Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s
Internet-based DVD rentals
9
1.9
© 2010 by Prentice Hall
z
Delivering better performance
z Charging less for superior products
z Responding to customers and suppliers in
real time
z Example: Toyota and TPS (Toyota
Production System) enjoy a considerable
advantage over competitors – information
systems are critical to the implementation of
TPS
Example: High-end hotels that use computers to track
customer preferences and use to monitor and customize
environment
Example: J.C.Penney’s information system which links sales
records to contract manufacturer
10
© 2010 by Prentice Hall
Competitive advantage
z
Intimacy with suppliers allows them to provide vital
inputs, which lowers costs
z
11
© 2010 by Prentice Hall
z
Serving customers well leads to customers returning,
which raises revenues and profits
z
Without accurate information:
z Managers must use forecasts, best guesses, luck
z Leads to:
z Overproduction,
Overproduction underproduction of goods and
services
z Misallocation of resources
z Poor response times
z Poor outcomes raise costs, lose customers
Example: Verizon’s Web-based digital dashboard to provide
managers with real-time data on customer complaints,
network performance, line outages, etc.
1.11
Customer and supplier intimacy:
z
1.10
z
Business model: describes how company produces,
delivers and sells product or service to create
delivers,
wealth
Information systems and technology a major
enabling tool for new products, services, business
models
z
z
Improved decision making
1.12
12
© 2010 by Prentice Hall
z
Survival
z
Information technologies as necessity of
business
z May be:
z
z
z
Industry-level changes, e.g. Citibank’s
introduction of ATMs
z Governmental regulations requiring recordkeeping
z Examples: Toxic Substances Control Act,
Sarbanes-Oxley Act
z
z
z
z
© 2010 by Prentice Hall
15
© 2010 by Prentice Hall
Data and Information
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.
In contemporary systems 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
Data are streams of raw facts
Information is data shaped into meaningful form
1.15
The Interdependence Between Organizations and
Information Technology
1.14
Set of interrelated components
Collect, process, store, and distribute
information
Support decision making, coordination, and
control
Information vs. data
z
13
1.13
Information system:
Figure 1-3
14
© 2010 by Prentice Hall
1.16
16
© 2010 by Prentice Hall
Functions of an Information System
z
Information system: Three activities
produce information organizations
need
z
Input: Captures raw data from
organization or external environment
z
Processing: Converts raw data into
meaningful form
z
Output: Transfers processed information
to people or activities that use it
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.
17
1.17
© 2010 by Prentice Hall
1.19
Figure 1-4
19
© 2010 by Prentice Hall
Information Systems Are More Than Computers
z
Feedback:
z
z
Computer/Computer program vs.
information system
z
1.18
Output returned to appropriate members of
organization to help evaluate or correct input
stage
Computers and software are technical
foundation and tools, similar to the material and
tools used to build a house
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.
18
© 2010 by Prentice Hall
Figure 1-5
1.20
20
© 2010 by Prentice Hall
z
z
Organizational dimension of
information systems
z
Organizational dimension of
information systems (cont.)
z
Hierarchy of authority, responsibility
Sales and marketing
z Human
H
resources
z Finance and accounting
z Manufacturing and production
z
Senior
S
i managementt
z Middle management
z Operational management
z Knowledge workers
z Data workers
z Production or service workers
z
Unique business processes
z Unique business culture
z Organizational politics
z
21
1.21
Separation of business functions
© 2010 by Prentice Hall
23
1.23
© 2010 by Prentice Hall
Levels in a Firm
z
Management dimension of
information systems
z
z
Managers set organizational strategy
f responding
for
di to b
business
i
challenges
h ll
In addition, managers must act
creatively:
z
z
Creation of new products and services
Occasionally re-creating the organization
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
1.22
22
© 2010 by Prentice Hall
1.24
24
© 2010 by Prentice Hall
z
Technology dimension of information
systems
z
Computer hardware and software
z
D t managementt technology
Data
t h l
z
Networking and telecommunications technology
z
Business information value chain
z
z
z
z
Networks, the Internet, intranets and extranets,
World Wide Web
z
IT infrastructure: provides platform that system
is built on
25
1.25
© 2010 by Prentice Hall
Raw data acquired and transformed through
stages that add value to that information
Value of information system determined in part
by extent to which it leads to better decisions,
greater efficiency, and higher profits
Business perspective: Calls attention to
organizational and managerial nature of
information systems
27
1.27
© 2010 by Prentice Hall
The Business Information Value Chain
z
Business perspective on
information systems:
Information system
y
is instrument for
creating value
z Investments in information technology
will result in superior returns:
z
Productivity increases
z Revenue increases
z Superior long-term strategic positioning
z
1.26
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.
26
© 2010 by Prentice Hall
Figure 1-7
1.28
28
© 2010 by Prentice Hall
Variation in Returns on
Information Technology Investment
z
Complementary assets:
Assets required to derive value from a
primary investment
z Firms supporting technology investments
with investment in complementary assets
receive superior returns
z E.g.: invest in technology and the people
to make it work properly
z
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
1.29
29
© 2010 by Prentice Hall
z
31
1.31
© 2010 by Prentice Hall
z
Investing in information technology does not
guarantee good returns
Complementary assets include:
z
Organizational investments, e.g.
z
z
z
Considerable variation in the returns firms
receive from systems investments
z
M
Managerial
i l iinvestments,
t
t e.g.
z
z
z
Factors:
z
z
z
Adopting the right business model
Investing in complementary assets
(organizational and management capital)
z
30
© 2010 by Prentice Hall
1.32
Incentives for management innovation
Teamwork and collaborative work environments
Social investments, e.g.
z
1.30
Appropriate business model
Efficient business processes
The Internet and telecommunications
infrastructure
Technology standards
32
© 2010 by Prentice Hall
Contemporary Approaches to Information Systems
• Management Information Systems
• Combines computer science, management science,
operations research and practical orientation with
behavioral issues
• Four main actors
•
•
•
•
Suppliers of hardware and software
Business firms
Managers and employees
Firm’s environment (legal, social, cultural context)
The study of information systems deals with issues and insights contributed from technical and behavioral disciplines.
Figure 1-9
1.33
33
© 2010 by Prentice Hall
1.35
• Technical approach
• Emphasizes mathematically based models
• Computer
p
science, management
g
science,
operations research
• Behavioral approach
• Behavioral issues (strategic business
integration, implementation, etc.)
• Psychology, economics, sociology
1.34
35
© 2010 by Prentice Hall
• 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
34
© 2010 by Prentice Hall
1.36
36
© 2010 by Prentice Hall
A Sociotechnical Perspective on Information Systems
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
1.37
37
© 2010 by Prentice Hall