Definitions:

Information technology (IT): relates to any computer-based tool that people use to
work with information and to support the information and information-processing
needs of an organization.
Information system: (IS): collects, processes, stores, analyzes, and disseminates
information for a specific purpose. The purpose of IS to get the right information to
the right people at the right time in the right amount and in the right format to
support business process and decision making.
1.1 Why study IS?
Why study IS when you are homo Conexus: most connected generation in history,
practice continuous computing and are surrounded by a personal, movable
information network.
You study IS to become an informed user (a person knowledgeable about IS and IT).
Reasons why you should be an informed user:

You will benefit more from your organizations IT applications because you will
understand what is behind those applications.
You will be in a position to enhance the quality of your organizations IT
applications with your input.
Even as a new graduate, you will quickly be in a position to recommend the IT
applications that your organization will use.
Being an informed user will keep you abreast of both new information
technologies and rapid developments in existing technologies.
You will understand how using IT can improved your organizations performance
and teamwork as well as your own productivity.

IT offers Career Opportunities

IT is vital to the operation of modern business, it offers many employment
opportunities such as:

Chief Information Officer (CIO), IS Director, Project Manager, Systems Analyst,

Database Administrator, Operations Manager, Webmaster

IT Manages Information Resources

Managing IS in modern organizations is a difficult because
IS have strategic value to organizations. Firms rely on them so heavily that when
these systems are not working, the firm cannot function. (called being hostage
to information systems.)
IS are very expensive to acquire, operate, and maintain.
The evolution of the management information systems (MIS) function within the
organization. MIS department used to owned the only computing resource in
the organization (the mainframe) and the end users did not interact directly with
the mainframe. In contrast, in the modern organization, computers are located in

all departments. This situation, known as end user computing, has led to a
partnership between the MIS department and the end users. The MIS
department now acts as more of a consultant to end users, viewing them as
customers. In fact, the main function of the MIS department is to use IT to solve
end users business problems.
As a result of these developments, the responsibility for managing information
resources is now divided between the MIS department and the end users. There is
no standard way to divide responsibility for developing and maintaining information
resources between the MIS department and the end users. Instead, that division
depends on several factors: the size and nature of the organization, the amount and
type of IT resources, the organizations attitudes toward computing, the attitudes of
top management toward computing, the maturity level of the technology, the
amount and nature of outsourced IT work, and even the countries in which the
company operates.
The users come in:
Traditional Functions of MIS Department
Example: manage systems development and systems project
management
Consultative Functions of MIS Department
Example: create business alliances with business partners
1.2 Overview of computer-based IS
Data Items. Elementary description of things, events, activities and transactions
that are recorded, classified and stored but are not organized to convey any specific
meaning.
Information. Data organized so that they have meaning and value to the recipient.
Knowledge. Data and/or information organized and processed to convey
understanding, experience, accumulated learning and expertise as they apply to a
current problem or activity.
Computer-based information systems are information systems that use computer
technology to perform some or all of their intended tasks.
The basic components of computer-based information systems are:

Hardware is a device such as a processor, monitor, keyboard or printer

Software is a program or collection of programs that enable hardware to
process data.
Database is a collection of related files or tables containing data.
Network is a connecting system (wireline or wireless) that permits different
computers to share resources.
Procedures are the set of instructions about how to combine the above
components in order to process information and generate the desired output.

People are those individuals who use the hardware and software, interface
with it, or uses its output.

Starting at the bottom, IT components of hardware, software, networks (wireline and

wireless), and databases form the information technology platform. IT personnel use
these components to develop information systems, oversee security and risk, and
manage data. These activities cumulatively are called information technology
services. The IT components plus IT services comprise the organizations
information technology infrastructure. At the top of the pyramid are the various
organizational information systems.
Capabilities of IS systems:

Information technology (IT): word processing and excel

Information system: (IS): point of sale system
Computer-based Information system: automated teller machine
An application (or app) is a computer program designed to support a specific task or
business process. (A synonymous term is application program, such as payroll
cheque payment system).
The collection of application systems in a single department is usually referred to as
a departmental information system (also known as a functional area information
system). For example, the collection of application systems in the human resources
area is called the human resources information system (HRIS).

Types of computer-based IS

Breadth of Support of Information Systems

Functional area information systems (FAIS, groups of application systems) are
supporting pillars for the information systems, namely, business intelligence
systems and dashboards.
Enterprise resource planning systems are designed to correct a lack of
communication among the functional area ISs.
Transaction processing systems support the monitoring, collection, storage,
and processing of data for a particular functional area.
Interorganizational information systems connect two or more organizations
Supply chain is the flow of materials, information, money, and services from
suppliers of raw materials through factories and warehouses to the end
customers.
Electronic commerce (e-commerce) systems are another type of
interorganizational information system. E-commerce systems typically are
Internet-based.
Support for organizational employees
Knowledge workers are professional employees such as financial and
marketing analysts, engineers, lawyers, and accountants. All knowledge
workers are experts in a particular subject area. They create information and
knowledge, which they integrate into the business.
Office automation systems typically support the clerical staff, lower and
middle managers, and knowledge workers, enabling them to develop
documents, schedule resources, and communicate.
Business intelligence systems provide computer-based support for complex,
non-routine decisions, primarily for managers and knowledge workers.
Expert systems attempt to duplicate the work of human experts by applying
reasoning capabilities, knowledge, and expertise within a specific domain.
Dashboards provide rapid access to timely information and access to
structured information in the form of reports.

1.3 How does IT Impact Organization

Reduces the number of middle managers

Changes the managers job
May eliminate jobs
Impacts employees at work
Impacts employees health & safety
Provides opportunities for people with disabilities

1.4 Importance of IT to society

IT is important to our society as a whole:
IT Affects Our Quality of Life
Robot Revolution on the Way
Improvements in Healthcare

Competitive advantage is an advantage over competitors in some measure such

as cost, quality, or speed; leads to control of a market and to larger-than-average
profits.
2.1 Business Process
A business process is an ongoing collection of related activities that create a
product or a service of value to the organization, its business partners, and/or its
customers. A process is comprised of three fundamental elements:
Inputs: Materials, services, and information that flow through and are transformed
as a result of process activities
Resources: People and equipment that perform process activities
Outputs: The product or a service created by the process
Functional processes
Accounting: managing accounts payable & receivable
Finance: Producing business forecasts
Marketing: Handling customer complaints
POM: Processing physical inventory
Human Resources: Overseeing workplace safety
MIS: Training computer users
Cross-functional business processes such as procurement where no single functional
area is responsible for for their execution. Rather, multiple functional areas
collaborate to perform the process.
2.2 Business Process Reengineering & Business Process Management
Excellence in executing business processes is widely recognized as the underlying
basis for all significant measures of competitive performance in an organization.
Consider these measures, for example:
Customer satisfaction: The result of optimizing and aligning business processes to
fulfill customers needs, wants, and desires.
Cost reduction: The result of optimizing operations and supplier processes.
Cycle and fulfillment time reduction: The result of optimizing the manufacturing
and logistics processes.
Quality: The result of optimizing the design, development, and production
processes.
Differentiation: The result of optimizing the marketing and innovation processes.
Productivity: The result of optimizing each individuals work processes.
How does an organization ensure business process excellence?
Business Process Reengineering (BPR) is a strategy for improving the efficiency
and effectiveness of an organizations business processes.
Business Process Management (BPM) is a management technique that includes
methods and tools to support the design, analysis, implementation,
management, and optimization of business processes
2.3 Business Pressures, Organizational Responses, and Information Technology
Support
Business Pressure - The business environment is the combination of social, legal,
economic, physical, and political factors that affect business activities.

Significant changes in any of these factor are likely to create business pressure on
the organization.
The three types of business pressures faced are: market, technology, and societal
pressures.
Market: pressures are generated by the global economy, intense competition,
the changing nature of the workforce, and powerful customers
Technology: pressures involving Technological Innovation and Obsolescence and
Information Overload
Societal: includes social responsibility, government regulation/deregulation,
spending for social programs, spending to protect against terrorism, and ethics
Market Pressure
Market pressures are generated by the global economy, intense competition, the changing nature
of the workforce, and powerful customers.

Globalization is the integration and interdependence of economic, social, cultural,

and ecological facets of life, made possible by rapid advances in information
technology.
The stages of globalization (From THOMAS FRIEDMAN IN THE WORLD IS
FLAT)
Globalization 1.0
1492 to 1800
large to medium-size
firms

Globalization 2.0
1800 to 2000
medium to small-size

All about countries and

muscles

First
half:
global
integration powered by
falling
transportation
costs
(steam engine
and railroad)
Second
half:
global
integration powered by
falling
telecommunications costs
(telephone, PC, satellites,
fiber-optic cable, Internet
& WWW)
Key agent of change:
multinational companies

Key agents of change:

wind power and
horsepower
Focus on Countries

Focus on Companies

Globalization 3.0
2000 now
World is tiny (everyone is
everyone elses close
neighbor)
Competitive playing field
is being leveled
Enabling people to
collaborate and compete
globally

Key agent of change:

software, in conjunction
with the global fiber-optic
network
Focus on Groups &
Individuals

THOMAS FRIEDMAN 10 Flatteners

The changing name of the workforce

The workforce, particularly in developed countries, is becoming more diversified. Increasing
numbers of women, single parents, minorities, and persons with disabilities are now employed in

all types of positions. IT is easing the integration of these employees into the traditional
workforce. IT is also enabling people to work from home, which can be a major benefit for parents
with young children and for people confronted with mobility and/or transportation issues.
Powerful Customers. Consumer sophistication and expectations increase as customers become

more knowledgeable about the products and services they acquire. Customers can use the
Internet to find detailed information about products and services, to compare prices, and to
purchase items at electronic auctions.
Organizations recognize the importance of customers and they have increased their efforts to
acquire and retain them. Modern firms strive to learn as much as possible about their customers
to better anticipate and address their needs. This process, called customer intimacy, is an
important component of customer relationship management (CRM), an organization-wide effort
toward maximizing the customer experience.

Technology Pressures
Technological Innovation and Obsolescence. New and improved technologies
rapidly create or support substitutes for products, alternative service options, and
superb quality.
Information Overload. The amount of information available on the Internet
doubles approximately every year, and much of it is free.
Societal/ Political/ Legal Pressure
Social Responsibility. Social issues that affect businesses and individuals range
from the state of the physical environment, to company and individual philanthropy,
to education.
IT executives listed four areas where IT is particularly valuable for going green:
1. Facilities design and management.
2. Carbon management.
3. International and Canadian environmental laws
4. Energy management.
Digital divide refers to the wide gap between those who have access to
information and communications technology and those who do not. This gap exists
both within and among countries.
Compliance with Government Regulations. Another major source of business
pressures is government regulations regarding health, safety, environmental
protection, and equal opportunity.
Protection against Fraud or Terrorist Attacks. Computer systems can be used
to create fraudulent or fictitious transactions that are used to steal funds from
banks or other organizations, or to engage in identity theftthe use of another
persons identity for financial gain.
Organizational Responses
Strategic Systems provide organizations with advantages that enable them to
increase their market share or profits, to better negotiate with suppliers, and to
prevent competitors from entering their markets.
Customer Focus Organizational attempts to provide superb customer service can
make the difference between attracting and keeping customers and losing them to
competitors.
Make-to-Order is a strategy of producing customized products and services.
Mass Customization is producing a large quantity of items, but customizing them
to fit the desire of each customer.

E-commerce: Buying and selling products and services electronically.

E-business is a broader concept than e-commerce. In addition to the buying and
selling of goods and services, e-business also refers to servicing customers,
collaborating with business partners, and performing electronic transactions within
an organization.
2.4 Competitive Advantage and Strategic Information Systems
Competitive Advantage: helps a company function profitably within a market and
generate larger-than-average profits.
Strategic Information Systems (SIS) provide a competitive advantage by
helping an organization implement its strategic goals and improve its performance
and productivity.
Porters Competitive Forces Model
The best-known framework for analyzing competitiveness is Michael Porters
competitive forces model (Porter, 1985).
1. Threat of entry of new competitors The threat that new competitors will
enter your market is high when entry is easy and low when there are
significant barriers to entry.
2. The bargaining power of suppliers is high when buyers have few choices
from whom to buy and low when buyers have many choices.
3. Threat of entry of new competitors The threat that new competitors will
enter your market is high when entry is easy and low when there are
significant barriers to entry.
4. The bargaining power of suppliers is high when buyers have few choices
from whom to buy and low when buyers have many choices.
5. The rivalry among firms in an industry is high when there is intense
competition among many firms in an industry. The threat is low when the
competition is among fewer firms and is not as intense.
Porters model identifies five major forces that can endanger or enhance a
companys position in a given industry. Although the web has changed the nature of
competition, it has not changed Porters five fundamental forces. In fact, what
makes these forces so valuable as analytical tools is that they have not changed for
centuries.
1. An entry barrier is a product or service feature that customers have learned to
expect from organizations in a certain industry. For most organizations, the Internet
increases the threat that new competitors will enter a market.
2. Internet impact is mixed. Buyers can find alternative suppliers and compare
prices more easily, reducing power of suppliers. On the other hand, as companies
use the Internet to integrate their supply chains, suppliers can lock in customers.
3. Internet increases buyers access to information, increasing buyer power. In
contrast, loyalty programs reduce buyer power. As their name suggests, loyalty
programs reward customers based on the amount of business they conduct with a
particular organization (for example, airlines, hotels, and rental car companies).

Information technology enables companies to track the activities and accounts of

millions of customers, thereby reducing buyer power.
4. Information-based industries are in the greatest danger from this threat (e.g.,
music, books, software). The Internet can convey digital information quickly and
efficiently.
5. In the past, proprietary information systemssystems that belong exclusively to
a single organizationhave provided strategic advantage to firms in highly
competitive industries. Today, however, the visibility of Internet applications on the
web makes proprietary systems more difficult to keep secret. In simple terms, when
a company sees its competitors new system on-line, it will rapidly match those
features in order to remain competitive. The result is fewer differences among
competitors, which leads to more intense competition in an industry.
Poters Value Chain Model
A firms value chain is part of a larger stream of activities, which Porter calls a
[KT]value system. A value system, or an industry value chain, includes the suppliers
that provide the inputs necessary to the firm along with their value chains.
Primary activities are those business activities that relate to the production and
distribution of the firms products and services, thus creating value for which
customers are willing to pay.
Primary activities include inbound logistics,
operations, outbound logistics, marketing and sales, and customer service.
Support activities do not add value directly to a firms products and services, but
support the primary activities. Support activities include the firms infrastructure
(accounting, finance, administration & management), human resources
management, product and technology development (R&D), and procurement.
Strategies for competitive advantage
Cost Leadership. Produce products and/or services at the lowest cost in the
industry. [Walmart]
Differentiation. Offer different products, services or product features. [Westjet,
Dell]
Innovation. Introduce new products and services, add new features to existing
products and services or develop new ways to produce them. [CITI]
Operational Effectiveness. Improve the manner in which internal business
processes are executed so that a firm performs similar activities better than its
rivals. [Deloitte]
Customer-orientation. Concentrate on making customers happy. [Amazon]
2.5 Business-Information Technology Alignment
Businessinformation technology alignment is the tight integration of the IT
function with the strategy, mission, and goals of the organization. That is, the IT
function directly supports the business objectives of the organization.

Organizations:

view IT as an engine of innovation that continually transforms the business,

often creating new revenue streams.

view their internal and external customers and their customer service function
as supremely important.

rotate business and IT professionals across departments and job functions.

provide overarching goals that are completely clear to each IT and business
employee.

ensure that IT employees understand how the company makes (or loses) money.

create a vibrant and inclusive company culture.