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Information Technology: The Challenge and Potential

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A Quick Review - Week 1 What is an Information System?

• Evolutionary concept

• Early emphasis on support of operations, management, analysis, and decision-making in organizations.

• Today technology provides support for not only for decision-making, but support for communication and information access.

• Our emphasis will be on the support of work systems that use information technology to capture, transmit, store, retrieve, manipulate, and display information.

Gorry and Scott-Morton’s Framework• 1971 Framework talked of looking at information systems in a

decision-making framework. Although limited to just decision-making, it provides a perspective on the wide range of opportunity for information systems support.

Work-Centered Analysis Framework

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The WCA Framework A useful way of thinking about information systems

and their relationship to customers and participants from the perspective of a business professional.

A work system is a system that produces products for internal and external customers through a business process performed by human participants with the help of information technology.

An information system is a particular type of work system that uses information technology to capture transmit store, retrieve, manipulate, or display information, thereby supporting one or more other work systems.

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Amazon.com

The point of this case is not about technology essentially, rather it is about how information systems and information technology can transform business operations.

How does Amazon.com provide value for its customers?

What has “transformed” in this business? How has competitive advantage changed to

competitive necessity?

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Some Common Themes The nature of business is changing.

• New combinations of product and services.

• Limitations of geography are disappearing

• technology is changing rapidly

• organizations are flatter and less hierarchical. Business professional must participate in all the major

phases of building and maintaining IT-enabled systems.

Advances in IT will drive business innovation. The success of IT-enabled systems is not guaranteed

by using the latest technology.

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Questions?

Identify some new products or services that have changed due to information technology?

Identify some organizations that have become less hierarchical.

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Information Technology:The Challenge and Potential

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Key Point

Business Professionals participate in all the major phases of building and maintaining IT-enabled systems, and therefore need knowledge and skills necessary for that participation.

Next Question then….

• How are Information Systems Developed?

Phases in Building and Maintaining Systems

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Phases in Building and Maintaining Systems

Initiation

• Define the need to change a work system. Development

• Acquire and configure necessary hardware, software, and other resources for IT-related and non-IT related functions.

Implementation

• Make the system operational in the organization. Operation and Maintenance

• On-going operation and maintenance of the work system and the information system.

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IT Based Innovations in Every Business Function

Product Design Procurement Systems Manufacturing Systems Sales and Marketing Delivery Systems Customer Service Systems Finance Systems

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IT-Based Innovation

TelecommutingValue ChainProduct Design• computer aided design (CAD)

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Computer-Aided Design

Enable designers to visualize how a product will look.

The need to produce physical mock-ups has been significantly reduced.

Originally applied in engineering and architecture, it is now being applied in other areas such as surgery, clothes design, and hairdressing.

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CAD inunexpected places

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Electronic Data Interchange

Changing the entire model of supply chain management in businesses.

The cost of processing simple transactions can be reduced by more than an order of magnitude (e.g. purchase orders from $55 ea. To $2.50 ea.).

SCM and EDI are essential ingredients to the transformation of relationships between suppliers and customers.

The most famous first was at Baxter Healthcare where hospital supplies were ordered directly.

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Customers link to suppliers using EDI

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Manufacturing

Computer-integrated manufacturing (CIM) integrates the use of technology across the manufacturing process, not just the design phases.

The information content of a product is the value that is added through use of information systems rather than not using them.

Mass production techniques allows for mass customization.

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Mass Customization:Building a customized bicycle

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Sales and Marketing IT has drastically changed the approach to

marketing. Amazon.com capitalizes on electronic commerce. Point of Sales (POS) systems provide new ways to

affect marketing - e.g. linking information about the customer with the sale.• Loyalty Cards at Supermarkets

• Ask for your Home Zip code

• Discreet observation and collection.

• BJ’s Wholesale Club product recall.

All to better improve the addressability in marketing.

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The Four P’s of Marketing at Amazon.com

PRODUCTAmazon.com offers 2.5 million books for sale.

PRICEAlthough Amazon.com charges for delivery, it can offer deep discounts for some books because it does not have to pay forrent for retail stores and because its inventory costs are low.

PLACECustomers buy books from their homes or offices instead of going to a book store.

PROMOTIONAmazon.com provides extensive background information about some books. It promotes its business be advertising on other Web sites and through traditional media such as radio.

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Delivery and Logistics Systems

Delivery (logistics) Systems transport materials where they are needed.

The need for accurate and accessible information on where a product is located.• U.S. Army experience in Gulf War

• Federal Express

New products are being developed: Instead of delivering physical goods such as paper and forms, consider what can be delivered over the network.

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Customer Service

The need for information on a customer’s current status.

Work is still needed to integrate some voice-response systems with customer databases (e.g. Bank Help Centers).

Have the right information available when you need it.• Optical Scan relevant documents

Be able to initiate transactions and process them immediately.• E.g. Car Rental Returns

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Finance Systems

Consider how technology is being used to replace currency as a form of barter.

Direct Deposit Payroll. Smart cards. Electronic stock trading. Eliminate the “middleman” and commissions.

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Question?

How have any of these innovations affected you?

Can you identify any IT-based innovations that have affected business functions?

Why does the technology provide such innovation?

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Data Processing Progress

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Dramatic Progress in Processing Data

Data Processing functions: capture, transmit, store, retrieve, manipulate, display

Greater Miniaturization, Speed, and Portability Greater Connectivity and Convergence of

Computing and Communications Greater Use of Digitization and Multimedia Better Software Techniques and Interfaces with

People

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Six Data Processing Functions Performed by IT FUNCTION: CAPTURE

Definition: Obtain a representation of information in a form permitting it to be transmitted or stored

Example: Keyboard, bar code scanner, document scanner, optical character recognition, sound recorder, video camera, voice recognition software

FUNCTION: TRANSMIT

Definition: Move information from one place to another

Example: Broadcast radio, broadcast television via regional transmitters, cable TV, satellite broadcasts, telephone networks, data transmission networks for moving business data, fiber optic cable, fax machine, electronic mail, voice mail, internet

FUNCTION: STORE

Definition: Move information to a specific place for later retrieval

Example: Paper, computer tape, floppy disk, hard disk, optical disk, CD-ROM, flash memory

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Six Data Processing Functions Performed by IT

FUNCTION: RETRIEVE

Definition: Find the specific information that is currently needed

Example: Paper, computer tape, floppy disk, hard disk, optical disk,

CD-ROM, flash memory

FUNCTION: MANIPULATE

Definition: Create new information from existing information through summarizing, sorting, rearranging, reformatting, or other types of calculations

Example: Computer (plus software)

FUNCTION: DISPLAY

Definition: Show information to a person

Example: Laser printer, computer screen

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Miniaturization:Comparison of a vacuum tube and

an integrated circuit

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Progress in Memory Chip Capacity Since 1973

1973197619791982198519881991199419972000

1 kilobit4 kilobit

16 kilobit64 kilobit

256 kilobit1 megabit4 megabit

16 megabit64 megabit

256 megabit

1,0244,096

16,38465,536

262,1441,048,5764,194,304

16,777,21667,108,864

268,435,456

Approximate dateof widespreadcommercial availability Type of chip

Capacity in number of bits

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Using a portable computer to give parking tickets

Convergence: GPS

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A leading edge flat panel monitor and a computer terminal from the

1980s

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The positive and negative impacts of technical change

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Obstacles When Applying IT

Unrealistic Expectations and Techno-Hype Difficulty Building and Modifying IT-Based

Systems Difficulty Integrating IT-Based Systems Organizational Inertia and Resistance to Change Genuine Difficulty anticipating what will Happen