Chap 1
Why Information System
• Today it is widely recognized that information system
knowledge is essential for managers because most
organizations need information systems to survive and
prosper. Information systems can help companies extend
their reach to faraway locations, offer new products and
services, reshape jobs and workflows, and profoundly change
the way they conduct business.
The Changing Contemporary Business Environment
• Four powerful worldwide changes have altered the business
environment.
Globalization
Transformation of the Enterprise
Management and control in a global
marketplace
Competition in world markets
Global work group
Global delivery systems
Flattening
Decentralization
Flexibility
Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork
Transformation of Industrial Economics
Emergence of Digital Firm
Knowledge- and information-based economics
New products and services
Knowledge: a central productive and strategic
asset
Time-based competition
Shorter products life
Turbulent environment
Limited employee knowledgebase
Digitally enabled relationships with customers,
supplies, and employees
Core business processes accomplished via
digital networks
Digital management of key corporate assets
Rapid sensing and responding to environmental
changes
Digital Firm
• Organization where nearly all significant business processes
and relationships with customers, suppliers, and employees
are digitally enabled, and key corporate assets are managed
through digital means.
• Business process refer to the unique manner in which work is
organized, coordinated, and focused to produce a valuable
product and service. The way organizations accomplish their
business process can be a source of competitive strength.
Four Major Systems for Digital Firm
• There are four major systems that help define the digital firm.
• Supply chain management systems
– Information system that automate the relationship between a firm and its
suppliers in order to optimize the planning, sourcing, manufacturing, and
delivery of products and services
• Customer relationship management systems
– Information systems for creating a coherent integrated view of all of the
relationships a firm maintains with its customers
• Enterprise systems
– Integrated enterprise-wide information systems that coordinate key
internal processes of the firm, integrating data from manufacturing and
distribution, finance, sales, and human resource
• Knowledge management systems
– Systems that support the creation, capture, storage, and dissemination of
firm expertise and knowledge
What is an Information System
• Integrated components working together to collect, process,
store, and disseminate information to support decision
making, coordination, control, analysis, and visualization in an
organization
Environment
Suppliers
Customers
Organization
Information System
Input
Regulatory Agencies
Processing
Classify
Arrange
Calculate
Stockholders
Output
Competitors
Business Perspective on Information Systems
• Businesses are not in the business of processing information
for its own sake. Instead they process information in order to
improve organizational performance and produce profits.
• Every business has an information value chain in which raw
information is systematically acquired, and then transformed
through various stages that add value to that information
Supply Chain
Management
Data
Collection and
Storage
Transformation
into Business
Systems
Enterprise
Management
Customer
Management
Knowledge
Management
Dissemination
Planning
Information Processing Activities
Business Value Chain
Coordinating
Controlling
Management Activities
Modeling and
Decision
Making
Firm
Productivity
and Strategic
Position
Organization
• Information systems are integral part of organization. The major
business functions or specialized tasks performed by business
organization consist of sales and marketing, manufacturing,
financing, accounting, and human resource.
• Standard operating procedure(SOPs) are formal rules that have
been developed over a long time for accomplish tasks, and many
business process and SOPs are incorporated into information
systems, such as how to pay a supplier or to correct erroneous bill.
Major Business Functions
Function
Purpose
Sales and marketing
Selling the organization’s products and services
Manufacturing and production
Producing products and services
Finance
Maintaining the organization’s financial assets (cash, stocks, bonds,
etc.)
Accounting
Maintaining the organization’s financial records (receipt,
disbursement, paychecks, etc.) accounting of the flow of funds
Human resources
Attracting, developing, and maintaining the organization’s labor
force, maintaining employee records
Information Technology Infrastructure
• The information technology infrastructure provides the
foundation or platform on which the firm can build its specific
information systems. Organization must carefully design and
manage its information technology infrastructure so that it
has the set of technology services it needs for the work its
want to accomplish with information systems.
Network Revolution and the Internet
• 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
information systems are being used in business and providing
special interest to organization and managers.
What we can do on the Internet
Function
Description
Communication and collaboration
Send electronic mail messages; transmit documents
and data: participate in electric conferencing
Access Information
Search for documents, databases; read electronic
brochures, manuals, books, and advertisements
Participate in discussion
Join interactive discussion groups; conduct voice
transmission
Supply information
Transfer computer files of text, computer programs,
graphics, animations, sound, or videos
Find entertainment
Play Interactive video games, view short video clips;
read illustrated and animated magazines and books
Exchange business transactions
Advertise, sell, and purchase goods and services
New Options for Organization Design
• The explosive growth in computing power and networks, including
the Internet, is turning organizations into network enterprise,
allowing information to be instantly distributed within and beyond
the organization.
• Flattening organizations and the changing management process
– In the digital firms, hierarchy and organization levels do not disappear, but
they develop optimal hierarchies that balance the decision-making load
across an organization resulting flatter organization
– AT&T, IBM, and GM are a few of the organizations that have eliminated
more than 30,000 middle managers.
Traditional Hierarchical Organization
Flat Organization
New Options for Organization Design
• Separating Work from Location
– Communication technology has eliminated distance as a factor for
many types of work in many situations. Salespersons can send more
time in field with customers and have more up-to-date information
with them while carrying much less paper. Many employees can work
remotely from their homes, and companies can reserve space at
smaller central offices for employees. Collaborative teamwork across
thousands of miles has become a reality.
• Reorganizing Work Flows
– Information systems have been progressively replacing manual work
procedures with automated work procedures. Electronic work flows
have reduced the cost of operations in many companies.
New Options for Organization Design
• Increasing Flexibility of Organizations
– Companies can use communications technology to organize in more
flexible way, increasing their ability to sense and respond to changes in
marketplace and to take advantage of new opportunities.
The Challenge of Information Systems
• Strategic Business Challenge: How can business use information
technology to become competitive, effective, and digitally enabled?
• The Globalization Challenge: how can firms understand the
business and system requirements of a global economic
environment?
• The Information Architecture and Infrastructure Challenge: how can
organizations develop an information architecture and information
technology infrastructure that can support their goals when
business conditions and technologies are changing so rapidly?
• Information Systems Investment Challenge: how can organizations
determine the business value of information systems?
• The responsibility and Control Challenge: how can organizations
ensure that their information systems are used in an ethnically and
socially responsible manar?
Six Major Types of Systems
System
Description
Transaction Processing System (TPS)
Computerized systems that perform and record the daily routine transactions
necessary to conduct the business.
Office Systems
Computer system such as word processing, electric mail systems, and
scheduling systems that are designed to increase the productivity of data
workers in the office.
Knowledge Work and Office System
Information systems that aid knowledge workers in the creation and integration
of new knowledge in the organization.
Management Information Sys tem
(MIS)
Information systems at management level that serve the function of planning,
controlling, and decision making by providing routine summary and exception
reports.
Decision Support System (DSS)
Information systems at the organization’s management level that combine data
and sophisticated analytical models or data analysis tools to support semi
structured and unstructured decision making.
Executive Support System (ESS)
Information systems at the organization’s strategic level designed to address
unstructured decision making through advanced graphics and communication.
Six Major Types of Systems
Sytem
Information Input
Process
Information Output
Users
Transaction Processing
System (TPS)
Transactions, events
Sorting, listing,
merging, updating
Detailed reports, list,
summaries
Operations personals,
supervisors
Office Systems
Documents, schedules
Documents
managements,
scheduling,
communication
Documents, schedule,
mail
Clerical workers
Knowledge Work and
Office System
Design specifications,
knowledge base
Modeling simulations
Models graphics
Professional, technical
staff
Management
Information System
Summary transaction
data
Routine reports, simple
model
Summary and
exceptional reports
Middle manageress
Decision Support
System
Low-volume data
Iterative, simulation
analysis
Specific report
Professional staff
Executive Support
System
Aggregated data
Graphics, simulations
Projections response to
queries
Senior manager