Management Information Systems

Chapter 1
Information systems in global
business today

Prof. Tagelsir Mohamed

tagelsir@hotmail.com
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 THE ROLE OF INFORMATION SYSTEMS IN
BUSINESS TODAY
• $540 billion investment on information
systems hardware, software, and
telecommunications equipment and $650
billion on business and management
consulting and services.
• much of which involves redesigning firms’
business operations to take advantage of
these new technologies.

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 FIGURE 1.1NFORMATION TECHNOLOGY CAPITAL INVESTMENT

Information technology capital investment, defined as hardware, software, and communications equipment, grew from 32 percent to 52 percent of all invested
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capital between 1980 and 2011.
Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, 2012.
 THE ROLE OF INFORMATION SYSTEMS IN
BUSINESS TODAY
• As managers, most of you will work for firms
that are intensively using information systems
and making large investments in information
technology.
• Wise investment: your firm can outperform
competitors.
• Poor investment: you will be wasting valuable
capital.

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 HOW INFORMATION SYSTEMS ARE
TRANSFORMING BUSINESS
• More wireless cell phone accounts were
opened in 2012 than telephone landlines
installed.
• Smart phones, texting, e-mail, and online
conferencing have all become essential tools
of business
• Million people access the Internet using
mobile devices.

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 HOW INFORMATION SYSTEMS ARE
TRANSFORMING BUSINESS
• By June 2012, more than 104 million
businesses worldwide had dot-com Internet
sites registered.
• Today, 184 million Americans shop online, and
150 million have purchased online.
• Every day about 67 million Americans go
online to research a product or service.

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 HOW INFORMATION SYSTEMS ARE
TRANSFORMING BUSINESS
• Businesses focus: to sense and respond to
rapidly changing customer demand, reduce
inventories to the lowest possible levels, and
achieve higher levels of operational efficiency.
• Supply chains have become more fast-paced,
with companies of all sizes depending on just-
in-time inventory to reduce their overhead
costs and get to market faster.

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 HOW INFORMATION SYSTEMS ARE
TRANSFORMING BUSINESS
• Watching videos online, reading and posting
blogs, creating an explosion of new writers
and new forms of customer feedback.
• Businesses are starting to use social
networking tools to connect their employees,
customers, and managers worldwide.
• E-commerce and Internet advertising continue
to expand.

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 WHAT’S NEW IN MANAGEMENT
INFORMATION SYSTEMS?
• What makes management information
systems the most exciting topic in
business is:
1. the continual change in technology
2. management use of the technology
3. the impact on business success.

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 WHAT’S NEW IN MANAGEMENT
INFORMATION SYSTEMS?
• There are three interrelated changes in
the technology area:
1. the emerging mobile digital platform,
2. the growing business use of "big data,"
and
3. the growth in “cloud computing,”
where more and more business
software runs over the Internet.
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 WHAT’S NEW IN MANAGEMENT
INFORMATION SYSTEMS?
• I Phones, iPads, Blackberries, and Android tablets
and smart phones are new emerging computing
platforms based on an array of new hardware
and software technologies.
• Moving from PCs and desktop machines to
mobile devices to coordinate work, communicate
with employees, and provide information for
decision making.
• We call these developments the “emerging
mobile digital platform.”
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 WHAT’S NEW IN MANAGEMENT
INFORMATION SYSTEMS?
• Managers routinely use online collaboration and
social technologies in order to make better, faster
decisions.
• Change of management behavior changes how
work gets organized, coordinated, and measured.
• By connecting employees working on teams and
projects, social network is where works gets
done, where plans are executed, and where
managers manage.
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 WHAT’S NEW IN MANAGEMENT
INFORMATION SYSTEMS?
• Cloud computing and the growth of the mobile
digital platform allow organizations to rely more
on telework, remote work, and distributed
decision making.
• Firms can outsource more work, and rely on
markets (rather than employees) to build value.
• Firms can collaborate with suppliers and
customers to create new products, or make
existing products more efficiently.
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 GLOBALIZATION CHALLENGES AND
OPPORTUNITIES
• Management and control in a global
marketplace
• Competition in world markets
• Global workgroups
• Global delivery systems

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 Rise of the Information Economy
• Knowledge- and information-based
economies
• New products and services
• Knowledge: a central productive and
strategic asset
• Time-based competition
• Shorter product life
• Turbulent environment
• Limited employee knowledge base

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The growth of the information economy

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 Flattening organizations
Toward the Digital Firm

Figure 1-12
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Redesigned workflow for insurance
Toward the Digital Firm
underwriting

Figure 1-13
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 Transformation of the Business
Enterprise
• Flattening
• Decentralization
• Flexibility
• Location independence
• Low transaction and coordination costs
• Empowerment
• Collaborative work and teamwork

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 Information technology capital
investment 1980-2003

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 Emergence of the Digital Firm
• A digital firm is one in which nearly all of the
organization’s significant business
relationships with customers, suppliers, and
employees are digitally enabled and
mediated.
• Core business processes are accomplished
through digital networks spanning the entire
organization or linking multiple organizations.

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 Business Process
• “Business processes refer to the set of logically related
tasks and behaviors that organizations develop over
time to produce specific business results and the
unique manner in which these activities are organized
and coordinated.
• Developing a new product, generating and fulfilling an
order, creating a marketing plan, and hiring an
employee are examples of business processes.
• The ways organizations accomplish their business
processes can be a source of competitive strength.

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 Emergence of the Digital Firm
• Key corporate assets—intellectual property,
core competencies, and financial and
human assets—are managed through
digital means.

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 Emergence of the Digital Firm
• In digital firms, both time shifting and space
shifting are the norm.
• Time shifting refers to business being
conducted continuously, 24/7.
• Space shifting means that work takes place in
a global workshop, as well as within national
boundaries.
• Work is accomplished physically wherever in
the world it is best accomplished.
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 STRATEGIC BUSINESS OBJECTIVES OF
INFORMATION SYSTEMS
• Firms could not operate without information
systems and information technology is a
foundation for business.
• There is a growing interdependence between
a firm’s ability to use informa- tion technology
and its ability to implement corporate
strategies and achieve corporate goals

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 THE INTERDEPENDENCE BETWEEN
ORGANIZATIONS AND INFORMATION SYSTEMS

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 Operational Excellence
• Information systems and technologies are
some of the most important tools available to
managers for achieving higher levels of
efficiency and productivity in business
operations, especially when coupled with
changes in business practices and
management behavior.

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 New Product s, Service s, and
Business Models
• Information systems and technologies are a
major enabling tool for firms to create new
products and services, as well as entirely new
business models.
• A business model describes how a company
produces, delivers, and sells a product or
service to create wealth.

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 Customer and Supplier Intimacy
• Information systems enable a business to
knows its customers, and serves them
well, the customers generally respond by
returning and purchasing more.
• They also allow a business to engage its
suppliers who can provide vital inputs.
This lowers costs.

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 Improved Decision Making
• having the right information at the right time
to make an informed decision.
• Instead, managers rely on forecasts, best
guesses, and luck. The result is over- or
underproduction of goods and services,
misallocation of resources, and poor response
times.
• These poor outcomes raise costs and lose
customers.

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 Competitive Advantage
• Using information systems to achieve
business objectives (operational
excellence; new products, services, and
business models; customer/supplier
intimacy; and improved decision making)
enable to achieve a competitive
advantage.

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 WHAT IS AN INFORMATION SYSTEM?

• An information system can be defined

technically as a set of interrelated
components that collect (or retrieve),
process, store, and distribute information
to support decision making and control in
an organization.

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 WHAT IS AN INFORMATION SYSTEM?

• Data: Streams of raw facts representing

events such as business transactions

• Information: Clusters of data that are

meaningful and useful to human beings

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 Data and information

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Functions of an information system

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 DIMENSIONS OF INFORMATION SYSTEMS

Formal Systems
Fixed definitions of data and procedures for collecting, •
storing, processing, disseminating, and using these data
Can be computer-based or manual •

Computer-based Information Systems

Use computer hardware and software to process and •
disseminate information

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 The business information value
Why Information Systems?
chain

Figure 1-5
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 Information systems are more than
computers

Figure 1-6
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 A Business Perspective
Why Information Systems? on
Information Systems

• Information systems literacy: Broad-based

understanding of information systems that includes
behavioral knowledge about organizations and
individuals using information systems and technical
knowledge about computers

• Computer literacy: Knowledge about information

technology, focusing on understanding how computer-
based technologies work

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 A Business Perspective on Information
Why Information Systems?
Systems

Major Business Functions

• Sales and marketing
• Manufacturing
• Finance
• Accounting
• Human resources

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 A BusinessWhy
Perspective on Information
Information Systems?
Systems

Key Elements of an Organization

• People
• Structure
• Operating Procedures
• Politics
• Culture

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A Business Perspective on Information
Why Information Systems?
Systems

Management Levels
• Senior managers: make long-range strategic
decisions about products and services
• Middle managers: carry out the programs and plans
of senior management
• Operational managers: monitor the firm’s daily
activities

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A Business Perspective onSystems?
Why Information Information Systems

Information Technology (IT) Infrastructure

• Computer hardware
• Computer software
• Storage technology
• Communications technology

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A Business Perspective on Information Systems
Why Information Systems?

Complementary Assets
• Assets required to derive value from a primary
investment
• Can be organizational, managerial, or social assets
• Technology investments supported by investment in
complementary assets receive superior returns

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Variation in returns on information technology
Why Information Systems?
investment

Figure 1-7
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 Organizational Assets
• Supportive organizational culture
valuing efficiency and effectiveness
• Efficient business processes
• Decentralized authority
• Distributed decision-making rights
• Strong IS development team

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 Managerial Assets
Why Information Systems?
• Strong senior management support for
technology investment and change
• Incentives for management innovation
• Teamwork and collaborative work
environments
• Management training programs
• Management culture valuing flexibility
and knowledge-based decision making

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 Social Assets
Why Information Systems?
• The Internet and telecommunications
infrastructure
• IT-enriched educational programs
• Governmental and private-sector
standards
• Laws and regulations creating fair, stable
market environments
• Technology and service firms in adjacent
markets to assist implementation
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 Contemporary approaches to information
systems
• Technical approach: emphasizes
mathematically based models, physical
technology, and formal capabilities of
systems
• Behavioral approach: studies issues
arising from development and
maintenance of systems, such as
business integration and utilization

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Contemporary approaches to information
systems

Figure 1-8
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 Sociotechnical approach
Contemporary Approaches to Information Systems

• Management Information Systems

(MIS)
• System performance optimized
when technology and organization
adjust to each other for a
satisfactory fit

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 A sociotechnical perspective on
Contemporary Approaches to Information Systems
information systems

Figure 1-9
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