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MIS14eCh01
Chapter 1
InformationSystemsin
BusinessToday
VIDEO CASES
Case 1: UPS Global Operations with the DIAD IV
Case 2: Google Data Center Efficiency Best Practices
Instructional Video 1: Green Energy Efficiency in a Data
Center Using Tivoli Architecture
Instructional Video 2: Tour IBMs Raleigh Data Center
LearningObjectives
1. Howareinformationsystemstransforming
business,andwhyaretheysoessentialforrunning
andmanagingabusinesstoday?
2. Whatisaninformationsystem?Howdoesitwork?
Whatareitsmanagement,organization,and
technologycomponents?Whyarecomplementary
assetsessentialforensuringthatinformation
systemsprovidegenuinevaluefororganizations?
3. Whatacademicdisciplinesareusedtostudy
informationsystemsandhowdoeseachcontribute
toanunderstandingofinformationsystems?
1.3 Copyright 2016 Pearson Education, Inc.
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Solutions:
1.TheRoleofInformationSystemsinBusinessToday
Howinformationsystemsaretransforming
business
Emergingmobiledigitalplatform
Growingbusinessuseofbigdata
Growthincloudcomputing
Globalizationopportunities
Internethasdrasticallyreducedcostsofoperating
onglobalscale
Increasesinforeigntrade,outsourcing
Presentsbothchallengesandopportunities
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InformationTechnologyCapitalInvestment
FIGURE 1-1 Information technology capital investment, defined as hardware, software, and communications
equipment, grew from 14 percent to 33 percent of all invested capital between 1999 and 2013.
InteractiveSession:Management
MEETTHENEWMOBILEWORKERSp41
Read the Interactive Session and discuss the following questions
1. Whatkindsofapplicationsaredescribedinthecase?What
businessfunctionsdotheysupport?Howdotheyimprove
operationalefficiencyanddecisionmaking?
2. Identifytheproblemsthatbusinessesinthiscasestudy
solvedbyusingmobiledigitaldevices.
3. Whatkindsofbusinessesaremostlikelytobenefitfrom
equippingtheiremployeeswithmobiledevices?
4. Discusstheimplicationsofthisstatement:TheiPhoneis
notagamechanger,itsanindustrychanger.
1.TheRoleofInformationSystemsinBusinessToday
Intheemerging,fullydigitalfirm:
Significantbusinessrelationshipsaredigitally
enabledandmediated.
Corebusinessprocessesareaccomplishedthrough
digitalnetworks.
Keycorporateassetsaremanageddigitally.
Digitalfirmsoffergreaterflexibilityin
organizationandmanagement.
Timeshifting,spaceshifting
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1.TheRoleofInformationSystemsinBusinessToday
Growinginterdependence
between:
Abilitytouseinformationtechnology
and
Abilitytoimplementcorporate
strategiesandachievecorporategoals
1.TheRoleofInformationSystemsinBusinessToday
Firmsinvestheavilyininformation
systemstoachievesixstrategicbusiness
objectives:
1. Operationalexcellence
2. Newproducts,services,andbusinessmodels
3. Customerandsupplierintimacy
4. Improveddecisionmaking
5. Competitiveadvantage
6. Survival
TheInterdependenceBetweenOrganizationsandInformationTechnology
Figure 1.2 In contemporary systems there is a growing interdependence between a firms information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly require changes in
hardware, software, databases, and telecommunications. Often, what the organization would like to do depends
on what its systems will permit it to do.
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1.TheRoleofInformationSystemsinBusinessToday
1.Operationalexcellence:
Improvementofefficiencytoattainhigher
profitability
Informationsystems,technologyanimportant
toolinachievinggreaterefficiencyand
productivity
WalmartsRetailLinksystemlinkssuppliersto
storesforsuperiorreplenishmentsystem
1.TheRoleofInformationSystemsinBusinessToday
2.Newproducts,services,andbusinessmodels:
Businessmodel:describeshowcompany
produces,delivers,andsellsproductorserviceto
createwealth
Informationsystemsandtechnologyamajor
enablingtoolfornewproducts,services,
businessmodels
Examples:ApplesiPad,GooglesAndroidOS,
andNetflix
1.TheRoleofInformationSystemsinBusinessToday
3.Customerandsupplierintimacy:
Servingcustomerswellleadstocustomersreturning,
whichraisesrevenuesandprofits.
Example:Highendhotelsthatusecomputerstotrack
customerpreferencesandusedtomonitorand
customizeenvironment
Intimacywithsuppliersallowsthemtoprovidevital
inputs,whichlowerscosts.
Example:JCPenneys informationsystemwhichlinks
salesrecordstocontractmanufacturer
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1.TheRoleofInformationSystemsinBusinessToday
4.Improveddecisionmaking
Withoutaccurateinformation:
Managersmustuseforecasts,bestguesses,luck
Resultsin:
Overproduction,underproduction
Misallocationofresources
Poorresponsetimes
Pooroutcomesraisecosts,losecustomers
Example:VerizonsWebbaseddigitaldashboardto
providemanagerswithrealtimedataoncustomer
complaints,networkperformance,lineoutages,and
soon
1.16 Copyright 2016 Pearson Education, Inc.
1.TheRoleofInformationSystemsinBusinessToday
5.Competitiveadvantage
Deliveringbetterperformance
Charginglessforsuperiorproducts
Respondingtocustomersandsuppliersin
realtime
Examples:Apple,Walmart,UPS
1.TheRoleofInformationSystemsinBusinessToday
6.Survival
Informationtechnologiesasnecessityofbusiness
Industrylevelchanges
Example:CitibanksintroductionofATMs
Governmentalregulationsrequiringrecord
keeping
Examples:ToxicSubstancesControlAct,
SarbanesOxleyAct
DoddFrankAct
1.18 Copyright 2016 Pearson Education, Inc.
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2.LearningObjectives
1. Howareinformationsystemstransforming
business,andwhyaretheysoessentialforrunning
andmanagingabusinesstoday?
2. Whatisaninformationsystem?Howdoesitwork?
Whatareitsmanagement,organization,and
technologycomponents?Whyarecomplementary
assetsessentialforensuringthatinformation
systemsprovidegenuinevaluefororganizations?
3. Whatacademicdisciplinesareusedtostudy
informationsystemsandhowdoeseachcontribute
toanunderstandingofinformationsystems?
1.19 Copyright 2016 Pearson Education, Inc.
2.WhatIsanInformationSystem?
Informationsystem:
Setofinterrelatedcomponents
Collect,process,store,anddistribute
information
Supportdecisionmaking,coordination,and
control
Informationvs.data
Dataarestreamsofrawfacts.
Informationisdatashapedintomeaningfulform.
1.20 Copyright 2016 Pearson Education, Inc.
DataandInformation
Figure 1.3 Raw data from a supermarket checkout counter can be processed and organized to produce meaningful
information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a
specific store or sales territory.
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2.WhatIsanInformationSystem?
Threeactivitiesofinformationsystems
produceinformationorganizationsneed
Input:Capturesrawdatafromorganizationor
externalenvironment
Processing:Convertsrawdataintomeaningful
form
Output:Transfersprocessedinformationto
peopleoractivitiesthatuseit
2.WhatIsanInformationSystem?
Feedback:
Outputisreturnedtoappropriatemembersof
organizationtohelpevaluateorcorrectinputstage.
Computer/computerprogramvs.
informationsystem
Computersandsoftwarearetechnicalfoundation
andtools,similartothematerialandtoolsusedto
buildahouse.
FunctionsofanInformationSystem
An information system
contains information about an
organization and its
surrounding environment.
Three basic activitiesinput,
processing, and output
produce the information
organizations need. Feedback
is output returned to
appropriate people or activities
in the organization to evaluate
and refine the input.
Environmental actors, such as
customers, suppliers,
competitors, stockholders, and
regulatory agencies, interact
with the organization and its
information systems.
Figure 1.4
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InformationSystemsAreMoreThanComputers
Figure 1.5
2.WhatIsanInformationSystem?
Organizationaldimensionofinformation
systems
Hierarchyofauthority,responsibility
Seniormanagement
Middlemanagement
Operationalmanagement
Knowledgeworkers
Dataworkers
Productionorserviceworkers
LevelsinaFirm
Figure 1.6
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2.WhatIsanInformationSystem?
Organizationaldimensionofinformation
systems(cont.)
Separationofbusinessfunctions
Salesandmarketing
Humanresources
Financeandaccounting
Manufacturingandproduction
Uniquebusinessprocesses
Uniquebusinessculture
Organizationalpolitics
1.28 Copyright 2016 Pearson Education, Inc.
2.WhatIsanInformationSystem?
Managementdimensionofinformation
systems
Managerssetorganizationalstrategyfor
respondingtobusinesschallenges
Inaddition,managersmustactcreatively:
Creationofnewproductsandservices
Occasionallyrecreatingtheorganization
2.WhatIsanInformationSystem?
Technologydimensionofinformation
systems
Computerhardwareandsoftware
Datamanagementtechnology
Networkingandtelecommunicationstechnology
Networks,theInternet,intranetsand
extranets,WorldWideWeb
ITinfrastructure:providesplatformthatsystem
isbuilton
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InteractiveSession:Organizations
UPSCOMPETESGLOBALLYWITHI.T.p55
Read the Interactive Session and discuss the following questions
1. Whataretheinputs,processing,andoutputsof
UPSspackagetrackingsystem?
2. WhattechnologiesareusedbyUPS?Howarethese
technologiesrelatedtoUPSsbusinessstrategy?
3. WhatbusinessobjectivesdoUPSsinformation
systemsaddress?
4. Whatwouldhappenifthesesystemswerenot
available?
1.31 Copyright 2016 Pearson Education, Inc.
2.WhatIsanInformationSystem?
DimensionsofUPStrackingsystem
Organizational:
Proceduresfortrackingpackagesandmanaging
inventoryandprovideinformation
Management:
Monitorservicelevelsandcosts
Technology:
Handheldcomputers,barcodescanners,networks,
desktopcomputers,andsoon
2.WhatIsanInformationSystem?
Businessperspectiveoninformation
systems:
Informationsystemisinstrumentforcreating
value
Investmentsininformationtechnologywillresult
insuperiorreturns:
Productivityincreases
Revenueincreases
Superiorlongtermstrategicpositioning
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2.WhatIsanInformationSystem?
Businessinformationvaluechain
Rawdataacquiredandtransformedthroughstages
thataddvaluetothatinformation
Valueofinformationsystemdeterminedinpartby
extenttowhichitleadstobetterdecisions,greater
efficiency,andhigherprofits
Businessperspective:
Callsattentiontoorganizationalandmanagerial
natureofinformationsystems
TheBusinessInformationValueChain
Figure 1-7 From a business perspective, information systems are part of a series of value-adding activities for acquiring,
transforming, and distributing information that managers can use to improve decision making, enhance
organizational performance, and, ultimately, increase firm profitability.
2.WhatIsanInformationSystem?
Investingininformationtechnologydoesnot
guaranteegoodreturns.
Thereisconsiderablevariationinthereturns
firmsreceivefromsystemsinvestments.
Factors:
Adoptingtherightbusinessmodel
Investingincomplementaryassets(organizational
andmanagementcapital)
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VariationinReturnsonInformationTechnologyInvestment
Although, on average,
investments in information
technology produce returns far
above those returned by other
investments, there is
considerable variation across
firms.
Figure 1.8
2.WhatIsanInformationSystem?
Complementaryassets:
Assetsrequiredtoderivevaluefromaprimary
investment
Firmssupportingtechnologyinvestmentswith
investmentincomplementaryassetsreceive
superiorreturns
Example:Investintechnologyandthepeopleto
makeitworkproperly
2.WhatIsanInformationSystem?
Complementaryassetsinclude:
Organizationalassets,forexample:
Appropriatebusinessmodel
Efficientbusinessprocesses
Managerialassets,forexample:
Incentivesformanagementinnovation
Teamworkandcollaborativeworkenvironments
Socialassets,forexample:
TheInternetandtelecommunicationsinfrastructure
Technologystandards
1.39 Copyright 2016 Pearson Education, Inc.
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3.LearningObjectives
1. Howareinformationsystemstransforming
business,andwhyaretheysoessentialforrunning
andmanagingabusinesstoday?
2. Whatisaninformationsystem?Howdoesitwork?
Whatareitsmanagement,organization,and
technologycomponents?Whyarecomplementary
assetsessentialforensuringthatinformation
systemsprovidegenuinevaluefororganizations?
3. Whatacademicdisciplinesareusedtostudy
informationsystemsandhowdoeseachcontribute
toanunderstandingofinformationsystems?
1.40 Copyright 2016 Pearson Education, Inc.
ContemporaryApproachestoInformationSystems
Figure 1.9
3.StudyingInformationSystems
Technicalapproach
Emphasizesmathematicallybasedmodels
Computerscience,managementscience,operations
research
Behavioralapproach
Behavioralissues(strategicbusinessintegration,
implementation,etc.)
Psychology,economics,sociology
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3.StudyingInformationSystems
ManagementInformationSystems
Combinescomputerscience,managementscience,
operationsresearch,andpracticalorientationwith
behavioralissues
Fourmainactors
Suppliersofhardwareandsoftware
Businessfirms
Managersandemployees
Firmsenvironment(legal,social,culturalcontext)
3.StudyingInformationSystems
Approachofthisbook:Sociotechnicalview
Optimalorganizationalperformanceachievedby
jointlyoptimizingbothsocialandtechnicalsystems
usedinproduction
Helpsavoidpurelytechnologicalapproach
ASociotechnicalPerspectiveonInformationSystems
Figure 1-10 In a sociotechnical perspective, the performance of a system is optimized when both the technology and the
organization mutually adjust to each other until a satisfactory fit is obtained.
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