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Week 2

MANAGING THE

DIGITAL FIRM

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A set of interrelated components that collect

(or retrieve), process, store, and distribute

information to support decision making and

control in an organization

What Is an Information System?

Its relevance to MIT?

WHY INFORMATION SYSTEMS?

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Data: Streams of raw facts representingevents such as business transactions

Information: Clusters of facts that aremeaningful and useful to human beings in

the processes such as making decisions

Knowledge?

What Is an Information System?

WHY INFORMATION SYSTEMS?

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INPUT OUTPUTPROCESS

FEEDBACK

Activities in an Information System

WHY INFORMATION SYSTEMS?

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Information Systems & MIT

ORGANIZATIONS TECHNOLOGY

MANAGEMENT

IT

Management

WHY INFORMATION SYSTEMS?

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What is the difference between IT

and IS?

Or is there a difference?

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Sales and marketing

Manufacturing

Finance

Accounting

Human resources

Major Business Functions

WHY INFORMATION SYSTEMS?

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Key Elements:

People: Managers, knowledge workers,data workers, production or service

workers

Structure: Organization chart , groups of

specialists, products, geography

Organizations

WHY INFORMATION SYSTEMS?

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Operating procedures: Standard operatingprocedures (SOP, rules for action)

Politics: Power to persuade, get things done

Culture: Customs of behavior

Organizations

WHY INFORMATION SYSTEMS?

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TOWARD THE DIGITAL FIRM

The Interdependence Between Organizations and Information Systems

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Flattening organizations

Separating work from location

Reorganizing work-flows

Increasing flexibility

Redefining organizational boundaries

TOWARD THE DIGITAL FIRM

New Options for Organizational Design

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Figure 1-10

TOWARD THE DIGITAL FIRM

Flattening Organizations & Information Systems

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Electronic commerce

Electronic business

Digital market: Information systems links,

buyers and sellers to exchange

information, products, services, payments

TOWARD THE DIGITAL FIRM

The Digital Firm

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Internet links buyers, sellers

Lower transaction costs

Goods and services advertised, bought,exchanged worldwide

Business-to-business transactionsincreasing

TOWARD THE DIGITAL FIRM

Electronic Commerce

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Constitutional IS

TPS

MIS

DSS

ESS

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WHY INFORMATION SYSTEMS?

4 Major Systems Defining the Digital Firm

Supply chain management systems

Customer relationship management

systems

Enterprise systems

Knowledge management systems

The Competitive Business Environment and the Emerging Digital Firm