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 marketplaceCompetition in world marketsGlobal work groupGlobal delivery systems

FlatteningDecentralizationFlexibilityLocation independenceLow transaction and coordination costsEmpowermentCollaborative work and teamwork

Transformation of Industrial Economics Emergence of Digital Firm

Knowledge- and information-based economicsNew products and servicesKnowledge: a central productive and strategic assetTime-based competitionShorter products lifeTurbulent environmentLimited employee knowledgebase

Digitally enabled relationships with customers, supplies, and employeesCore business processes accomplished via digital networksDigital management of key corporate assetsRapid 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

Information System

OrganizationSuppliers Customers

Regulatory Agencies Stockholders Competitors

Input

ProcessingClassifyArrange

Calculate

Output

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

Data Collection and Storage

Transformation into Business Systems

Dissemination

Supply Chain Management

Enterprise Management

Customer Management

Knowledge Management

Planning Coordinating Controlling Modeling and Decision Making

Information Processing Activities Management Activities

Business Value Chain

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.

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

Major Business Functions

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.

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

What we can do on the Internet

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 SystemsSystem 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