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Welcome to the Information Age

The Evolution of the Information Age

Senn, Information Technology, 3rd


Edition

MANAGEMENT INFORMATION
SYSTEMS

What is a SYSTEM?

A system is a group of interrelated components working


together toward a common goal by accepting inputs and
producing outputs in an organized transformation
process.

Systems structure

Components and their attribution


Systems structure: relationship between components
Subsystems

Environment and Boundary


Input and Output

Subsystems

S1

S2

Systems Boundary
Systems Input

S4

S3

Output

Environment

Abstract Concept of a Systems

INPUT

PROCESS

FEEDBACK

OUTPUT

What is an Information Systems?

An information system can be any


organized combination of people,
hardware, software, communications
network, and data resources that collects,
transforms, and disseminates information
in an organization

Functions of an Information System

Computer-based Information System


An Information System is an organized combination of people,
hardware, software, communication networks and the data resources that
collects, transforms and disseminates information in a organization.

Computer-Based Information
Systems

CBIS components

Hardware: computer equipment used to perform input,


processing, and output activities
Software: computer programs that govern the operation
of the computer
Database: organized collection of facts and information
Telecommunications: electronic transmission of signals
for communications
Networks: connect computers and equipment in a
building, around the country, and around the world

Senn, Information Technology, 3rd


Edition

IS Vs IT

Payroll
System

INFORMATION
TECHNOLOGY

Inventory
System

Hardware
Software
Databases
Networks
Other related
components

are used to build


INFORMATION
SYSTEMS
Marketing
System

Customer
Service
System

What is an Information System


Organized combination of
1. Hardware
2. Software
3. Communications Networks
4. Data
5. People

Computer Hardware Technologies

Examples

Dell PowerEdge 2600 File Server


Apple iMac
Sony LCD Flat Panel Monitor
iPod
IDAutomation USB Barcode Scanner
RFID Chip

Computer Software Technology

Examples

Windows XP
Graphics Card Driver Software
PowerPoint
mySAP Customer Relationship Management
Peachtree Accounting
iTunes Software

Data Resource Management


Technologies

Examples

IBM DB2 8.2


Microsoft SQL Server 2000
Oracle Database 10g
MySQL
Data Mining Software

Telecommunications Network
Technologies

Examples

Ethernet
Netgear Wireless Router
Cable Modem
Cell Phone
WiFi, WiMax card
Bluetooth device

People Technology

People are the 5th component of an


Information System
Everyone forgets the importance of people
in an information system.
Example: End User, Data Entry Person,
Manager, Programmer, DB Administrator,
Cashier, Secretary, Professor.

Data

Data are raw facts and


figures that on their
own have no meaning

These can be any


alphanumeric
characters i.e. text,
numbers, symbols

Data Examples

Yes, Yes, No, Yes, No, Yes, No, Yes


42, 63, 96, 74, 56, 86
111192, 111234
None of the above data sets have any
meaning until they are given a CONTEXT
and PROCESSED into a useable form

Data Into Information

To achieve its aims the organisation will


need to process data into information.
Data needs to be turned into meaningful
information and presented in its most
useful format
Data must be processed in a context in
order to give it meaning

Data vs. Information

Data: 51007
Information:

5/10/07 The date of your final exam.


$51,007 The average starting salary of an
accounting major.
51007 Zip code of Bronson Iowa.

Figure 1.1 Transforming data into information using a data process

Data vs. Information


Data
raw facts
no context
just numbers and text

Information
data with context
processed data
value-added to data

summarized
organized
analyzed

Data vs. information:


What is the difference?

What is data?

Data can be defined in


many ways. Information
science defines data as
unprocessed information.

What is information?

Information is data that


have been organized and
communicated in a coherent
and meaningful manner.
Data is converted into
information, and information
is converted into
knowledge.
Knowledge; information
evaluated and organized so
that it can be used
purposefully.

Data vs. Information

6.34
6.45
6.39
6.62
6.57
6.64
6.71
6.82
7.12
7.06

Information
SIRIUS SATELLITE RADIO INC.
$7.20
$7.00
$6.80
Stock Price

Data

$6.60
$6.40
$6.20
$6.00
$5.80
1

Last 10 Days

10

Data and Information

Example 1
Raw Data

Yes, Yes, No, Yes, No, Yes,


No, Yes, No, Yes, Yes

Context

Responses to the market


research question Would you
buy brand x at price y?

Processing
Information

???

Example 2
Raw Data

42, 63, 96, 74, 56, 86

Context

Jaynes scores in the six AS/A2


ICT modules

Processing
Information

???

Knowledge

Knowledge is the understanding of rules


needed to interpret information
the capability of understanding the
relationship
between
pieces
of
information and what to actually do
with the information

Knowledge Examples

Using the 2 previous examples:

A Marketing Manager could use this information to decide


whether or not to raise or lower price y

Jaynes teacher could analyse the results to determine


whether it would be worth her re-sitting a module

The Characteristics of Valuable


Information

30

The Characteristics of Valuable


Information (continued)

Types of information processing

Classification: This involves placing data into categories,


for example, categorising an expense as either a fixed or
a variable cost.
Rearranging/sorting: This involves organising data so
that items are grouped together or placed into a particular
order. Employee data, for example, might be sorted
according to last name or payroll number.
Aggregating: This involves summarising data, for
example, by calculating averages, totals or subtotals.
Performing calculations: An example might be
calculating an employees gross pay by multiplying the
number of hours worked by the hourly rate of pay.
Selection: This involves choosing or discarding items of
data on the basis of a set of selection criteria. A sales
organisation, for example, might create a list of potential
customers by selecting those with incomes above a
certain level.

Why do we need a database?

Keep records of our:


Clients
Staff
Volunteers
To keep a record of activities
and interventions;
Keep sales records;
Develop reports;
Perform research

What is the ultimate purpose of


a database management
Is
to
transform
system?
Data

Information

Knowledge

Action

Hierarchy of data

Example
Personel file

Database
Database

Department file

(Project database)

Payroll file

Files
Files

005-10-6321 Johns Francine 10-7-65


549-77-1001 Buckley Bill 2-17-79
098-40-1370 Fiske Steven 1-5-85

Records
Records

098-40-1370 Fiske Steven 1-5-85 598

Fields
Fields

Fiske

Characters
Characters
(bytes)
(bytes)

1000100

(Last name field)

(Letter F in ASCII)

(Personnel file)

(Record containing
SSN, last name,
first name, date of
hire)

Terminology

Database

File

A collection of related fields

Field

A collection of related records

Record

A collection of integrated and related files

A group of characters

Character

Basic building block of information, represented by a byte

Expansion of Yahoo
Yet Another Hierarchical Officious Oracle

Evolution of MIS:
Five phases in the development of
computing technology:
1) Mainframe and minicomputer computing,
2) Personal computers,
3) Client/server networks,
4) Enterprise computing, and
5) Cloud computing.

Management Information Systems


IT Infrastructure

Evolution of IT infrastructure

General-purpose mainframe & minicomputer


era: 1959 to present

Personal computer era: 1981 to present

1981 Introduction of IBM PC


Proliferation in 80s, 90s resulted in growth of personal
software

Client/server era: 1983 to present

39

1958 IBM first mainframes introduced


1965 Less expensive DEC minicomputers introduced

Desktop clients networked to servers, with processing


work split between clients and servers
Network may be two-tiered or multitiered (N-tiered)
Various types of servers (network, application, Web)
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Management Information Systems

IT Infrastructure

40

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Management Information Systems


IT Infrastructure

Evolution of IT infrastructure (cont.)

Enterprise computing era: 1992 to


present

Move toward integrating disparate networks,


applications using Internet standards and
enterprise applications

Cloud Computing: 2000 to present


Refers to a model of computing where firms
and individuals obtain computing power and
software applications over the Internet or other
network
Fastest growing form of computing

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Management Information Systems

IT Infrastructure

Management Information Systems


IT Infrastructure
A MULTITIERED CLIENT/SERVER NETWORK (N-TIER)

44

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Google CEO

Eric Schmidt

Management Information Systems

IT Infrastructure

Technology drivers of infrastructure


evolution

Moores law and microprocessing power


Processing speed, memory capacity, sensors ,
size
Computing power doubles every 18 months
Nanotechnology:
Shrinks

size of transistors to size comparable to size of a

virus

46

Law of Mass Digital Storage


The amount of data being stored each year doubles
PC hard drives have storage densities approaching
1 giga-byte per square inch and total capacities of
over 500 gigabytes.
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Management Information Systems


IT Infrastructure

Technology drivers of
infrastructure evolution (cont.)

47

Declining communication costs and


the Internet
An estimated 1.5 billion people
worldwide have Internet access
As communication costs fall toward a
very small number and approach 0,
utilization of communication and
computing facilities explodes
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Management Information Systems

IT Infrastructure

Technology drivers of
infrastructure evolution (cont.)

48

Standards and network effects


Technology standards:
Technology standards are specifications
that establish the compatibility of
products and the ability to communicate
in a network
Unleash powerful economies of scale
and result in price declines as
manufacturers focus on the products
built to a single standard
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Management Information Systems

Infrastructure Components

IT Infrastructure has 7 main


components
1.
2.
3.
4.
5.

6.
7.
49

Computer hardware platforms


Operating system platforms
Enterprise software applications
Data management and storage
Networking/telecommunications
platforms
Internet platforms
Consulting system integration services
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Management Information Systems

IT Infrastructure components

Management Information Systems

Infrastructure Components

Computer hardware platforms

Client machines

Desktop PCs, mobile devices PDAs, laptops

Servers
Blade servers: ultrathin computers stored in racks
web servers , Proxy servers ,on-line game servers

Mainframes:

51

IBM mainframe equivalent to thousands of blade


servers

Top chip producers: AMD, Intel, IBM


Top firms: IBM, HP, Dell, Sun Microsystems
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Management Information Systems

Infrastructure Components

Operating system platforms

Operating systems
Server level: 75% run Windows; 25% run Unix or
Linux
Client level:

Enterprise software applications

53

90% run Microsoft Windows (XP, 2000, CE,7 etc.)


Handheld device OSs (Android, iPhone OS)
Cloud computing OSs (Googles Chrome OS)

Enterprise application providers: SAP and


Oracle
Middleware providers: BEA
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Management Information Systems

Infrastructure Components

Data management and storage

54

Database software:
IBM (DB2), Oracle, Microsoft (SQL Server),
Sybase (Adaptive Server Enterprise), MySQL
Physical data storage:
EMC Corp (large-scale systems), Seagate,
Maxtor, Western Digital
Storage area networks (SANs):
Connect multiple storage devices on
dedicated network
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Management Information Systems


Infrastructure Components

Networking/telecommunications
platforms

55

Telecommunication services
Telecommunications, cable, telephone
company charges for voice lines and Internet
access
AT&T, Verizon
Network operating systems:
Windows Server, Novell, Linux, Unix
Network hardware providers:
Cisco, Alcatel-Lucent, Nortel, Juniper Networks
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Management Information Systems


Infrastructure Components

Internet platforms

56

Hardware, software, management


services to support company Web sites,
intranets, extranets
Internet hardware server market: Dell,
HP/Compaq, IBM
Web development tools/suites:
Microsoft (FrontPage, .NET) IBM
(WebSphere) Sun (Java), independent
software developers: Adobe, RealMedia
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WHY INFORMATION SYSTEMS?


Why Information Systems Matter
There are four reasons why IT makes a difference to the
success of a business:
Capital management
Foundation of doing business
Productivity
Strategic opportunity and advantage

WHY INFORMATION SYSTEMS?

Capital Management:
IT is the largest single component of capital investment in the
United States.
About $1.8 trillion is spent each year by American businesses.
Managers and business students need to know how to invest
this capital wisely.
The success of your business in the future may well depend on
how you make IT investment decisions.

WHY INFORMATION SYSTEMS?

Foundation of doing business:


Most businesses today could not operate without extensive use of
information systems and technologies.
IT can increase market share.
IT can help a business become a high-quality,
low-cost producer.
IT is vital to the development of new products.

WHY INFORMATION SYSTEMS?

The Interdependence between Organizations and


Information Systems

WHY INFORMATION SYSTEMS?

Productivity:
IT is one of the most important tools managers have to
increase productivity and efficiency of businesses.
According to the Federal Reserve Bank, IT has reduced
the rate of inflation by 0.5 to 1% in the last decade.
For firms this means IT is a major factor in reducing
costs.
It is estimated that IT has increased productivity in the
economy by about 1% in the last decade. For firms this
means IT is a major source of labor and capital
efficiency.

WHY INFORMATION SYSTEMS?

Strategic Opportunity and Advantage:


Create competitive advantage: IT makes it possible to
develop competitive advantages.
New Business Models: Dell Computer has built its
competitive advantage on an IT enabled build-to-order
business model that other firms have not been able to
imitate.

WHY INFORMATION SYSTEMS?

Strategic Opportunity and Advantage:

Create new services: eBay has developed the largest


auction trading platform for millions of individuals and
businesses. Competitors have not been able to imitate
its success.
Differentiate yourself from your competitors: Amazon
has become the largest book retailer in the United
States on the strength of its huge online inventory and
recommender system. It has no rivals in size and scope.

WHY INFORMATION SYSTEMS?

Transformation of the Business Enterprise:


Flattening
Decentralization
Flexibility

WHY INFORMATION SYSTEMS?

Transformation of the Business Enterprise (Continued):

Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork

WHY INFORMATION SYSTEMS?

The Emerging Digital Firm

Management Information Systems


Business Processes and Information Systems

Information technology enhances


business processes in two main ways:
1.

2.

67

Increasing efficiency of existing


processes
Automating steps that were manual
Enabling entirely new processes that are
capable of transforming the businesses
Change flow of information
Replace sequential steps with parallel steps
Eliminate delays in decision making

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Managers and Information

The management pyramid

The Traditional
Organizational Pyramid

Many organizations follow pyramid model


CEO at top
Small group of senior managers, one level down
Larger number of middle managers, reporting to senior
managers
Many more lower-level managers who report to middle
managers

Clerical and Shop Floor Workers


Bottom of organizational pyramid
Operational Management
In charge of small groups of front-line workers

The Traditional
Organizational Pyramid

Tactical Management

Also called middle managers


Make decisions for subordinates, affecting the
near and somewhat more distant future

Strategic Management

Decisions affect entire or large parts of the


organization; what to do decisions

Business Processes and Information Systems


Business processes:

Manner in which work is organized, coordinated,


and focused to produce a valuable product or service
Concrete work flows of material, information, and
knowledgesets of activities
Unique ways to coordinate work, information, and
knowledge
Ways in which management chooses to coordinate
work

Examples of Business Processes


Manufacturing and production:
Assembling product, checking quality, producing bills
of materials
Sales and marketing:
Identifying customers, creating customer awareness,
selling
Finance & accounting:
Paying creditors, creating financial statements,
managing cash accounts
Human resources:
Hiring employees, evaluating performance, enrolling
employees in benefits plans

Types of information system


1.Types based on functional perspective
2.Types based on constituency perspective

Human resource Information


System

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Human Resource Systems :An Employee Recordkeeping System

Finance and Accounting


Information system

Manufacturing Information
System

SYSTEMS FROM A FUNCTIONAL PERSPECTIVE

Overview of an Inventory System

Sales and Marketing Information


System

Types of Information Systems

Managers and Their Information


Systems

Types of information systems typically used at different levels of an organizations


hierarchy

Managers and Their Information


Systems

Transaction-Processing Systems (TPS)

Capture and process raw materials for


information
Interfaced with applications to provide up-todate information
Clerical workers use TPS for routine
responsibilities
Operation managers also use TPS

Managers and Their Information


Systems

Decision Support Systems (DSS) and


Expert Systems (ES)

DSS and ES support more complex and


nonroutine decision-making and problemsolving activities
Used by middle managers as well as senior
managers

Managers and Their Information


Systems

Executive Information Systems (EIS)

Provide timely, concise information about


organization to top managers
Used by Strategic management
Provide internal as well as external information
Economic indices
Stock and commodity prices
Industry trends

Managers and Their Information


Systems

Customer Relationship management Systems


(CRM)

Help collect data about customers


Analyze the data into useful information to help serve
customers better
Help middle level managers to find effective and
efficient marketing strategies
Challenge

Address the right customer at the right time with the right
offer

Types of Information Systems


based on constituency perspective

Management Information Systems

Types of Information Systems

Transaction processing systems

87

Perform and record daily routine


transactions necessary to conduct
business
Examples: sales order entry, payroll, shipping
Allow managers to monitor status of
operations and relations with external
environment
Serve operational levels
Serve predefined, structured goals and
decision making
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Transaction Processing System (TPS)

Supports Operations
Updates Operational Databases
Examples:

ATM Machine System Banking Transactions


Cash Register System Point of Sale Transactions
Accounting System Checking Account Transactions
Airline Reservation System
Payroll Processing System
Transport Ticket Reservation System
Purchase Order Entry System
Markets Tabulation System

Management Information Systems

Types of Information Systems

FIGURE 2-2

89

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Process Control Systems (PCS)

Supports Operations
Monitor and Control
Industrial/Manufacturing Process
Examples:

Petroleum Refining
Power Generation
Automobile Manufacturing

Enterprise Collaboration Systems (ECS)


ECS is a combination of groupware, tools, Internet,
extranets and other networks needed to support
enterprise-wide communications, such as the
sharing of documents and knowledge to specific
teams and individuals within the enterprise.
Examples:

E-mail
Chat
Video Conferencing
Workflow
File Sharing

Management Information System (MIS)

Supports Management
Analysis & Reporting
Charts, Graphs, Summary Tools
Examples:

Spreadsheet (Excel) One of the first and most basic


Oracle's Corporate Performance Management

Management Information Systems

Types of Information Systems

Management information systems

93

Serve middle management

Provide reports on firms current


performance, based on data from TPS

Provide answers to routine questions


with predefined procedure for
answering them

Typically have little analytic capability


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Management Information Systems


Types of Information Systems
How Management Information Systems Obtain Their Data from the Organizations TPS

94

Management Information Systems

Types of Information Systems


Sample MIS Report

95

Decision Support System (DSS)

Support Management
What-if Analysis, Decision Modeling, Scenario
Building, Highly interactive.
Examples

Enterprise Decision Manager 2.0 Fair Isaac


Corporation
AIMMS 3.6

Most DSSs are custom developed for specific


companies; very few out-of-the-box products.

Management Information Systems


Types of Information Systems

Decision support systems

Serve middle management


Support non-routine decision making

Example: What is impact on production schedule if


December sales doubled?

Often use external information as well from


TPS and MIS
DSS applications are not single information
resources, such as a database or a program
that graphically represents sales figures,
but the combination of integrated
resources working together.
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Management Information Systems

Types of Information Systems


Voyage-Estimating Decision Support System

FIGURE

98

This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.

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For example: a national on-line book seller wants to


begin selling its products internationally but first
needs to determine if that will be a wise business
decision.
The vendor can use a DSS to gather information
from its own resources (using a tool such as OLAP)
to determine if the company has the ability or
potential ability to expand its business and also
from external resources, such as industry data, to
determine if there is indeed a demand to meet.
The DSS will collect and analyze the data and then
present it in a way that can be interpreted by
humans

Executive Information Systems (EIS)

Supports high-level strategic management


Provides critical info from other systems (MIS and DSS).
Portal Concept: one place with links to all information
EISs integrate external information such as economic
developments and news about related markets and
competitors. Helps strategic decision making, not
necessarily tactical.

Tactical doing things the right way right


Strategic doing the right things

Management Information Systems


Types of Information Systems

Executive Information systems

Support senior management


Address non-routine decisions

101

Requiring judgment, evaluation, and insight

Incorporate data about external events (e.g.


new tax laws or competitors) as well as
summarized information from internal MIS
and DSS
Example: Digital dashboard with real-time view of
firms financial performance: working capital,
accounts receivable, accounts payable, cash flow,
and inventory
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Management Information Systems

Enterprise Application Architecture

103

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Management Information Systems


Types of Information Systems

Enterprise system or Enterprise


resource planning

Collects data from different firm functions


and stores data in single central data
repository
Resolves problem of fragmented, redundant
data sets and systems
Enable:
Coordination of daily activities
Efficient response to customer orders (production,
inventory)
Provide valuable information for improving
management decision making

104

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Enterprise Systems

Management Information Systems


Types of Information Systems

Supply chain management (SCM)


systems
Manage firms relationships with
suppliers
Share information about
Orders, production, inventory levels,
delivery of products and services
Goal:

Right

amount of products to destination


with least amount of time and lowest cost

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Management Information Systems


Types of Information Systems

Customer relationship management


systems:

Provide information to coordinate all of


the business processes that deal with
customers in sales, marketing, and
service to optimize revenue, customer
satisfaction, and customer retention

Integrate firms customer-related


processes and consolidate customer
information from multiple communication
channels

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Management Information Systems

Types of Information Systems

Knowledge management systems


(KMS)

Support processes for acquiring, creating,


storing, distributing, applying, integrating
knowledge
How

to create, produce, distribute products


and services

108

Collect internal knowledge and experience


within firm and make it available to
employees

Link to external sources of knowledge


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Management Information Systems


Types of Information Systems

Alternative tools that increase


integration and expedite the flow of
information

Intranets:
Internal

company Web sites accessible only


by employees

Extranets:
Company

Web sites accessible externally


only to vendors and suppliers

Often
109

used to coordinate supply chain


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Management Information Systems


Types of Information Systems

E-business

E-commerce

Subset of e-business
Buying and selling goods and services through
Internet

E-government:

110

Use of digital technology and Internet to drive


major business processes

Using Internet technology to deliver information


and services to citizens, employees, and
businesses
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Information Flow

Information
Exchange/
Communication

Enterprise Collaboration System

System
Information
Flow

Executives

Executive Information System


Managers

DSS

MIS
TPS
PCS

Operational Systems and Staff

Other categories
a) Expert systems
b) End user computing systems
c) Business information systems
d) Strategic information systems
a) Expert Systems are knowledge-based systems that provides
expert advice and act as expert consultants to the users
b) End user computing systems support the direct, hands on use of
computers by end users for operational and managerial
applications
c) Business information systems support the operational and
managerial applications of the basic business functions of a firm
d) Strategic information systems provide a firm which strategic
products, services, and capabilities for competitive advantage

Management Information Systems


The Role of Information Systems in Business Today

Growing interdependence between ability to


use information technology and ability to
implement corporate strategies and achieve
corporate goals

Business firms invest heavily in information


systems to achieve six strategic business
objectives:
1.
2.
3.
4.
5.
6.

113

Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival

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Management Information Systems


The Role of Information Systems in Business Today

Operational excellence:
Improvement of efficiency to attain
higher profitability
Information systems, technology
an important tool in achieving
greater efficiency and productivity
Walmarts RetailLink system links
suppliers to stores for superior
replenishment system

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Management Information Systems


The Role of Information Systems in Business
Today

New products, services, and


business models:

115

Business model: describes how


company produces, delivers, and sells
product or service to create wealth
Information systems and technology
a major enabling tool for new
products, services, business models
Examples: Apples iPod, iTunes, iPhone,
iPad, Googles Android OS
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Management Information Systems


The Role of Information Systems in Business Today

Customer and supplier intimacy:

116

Serving customers well leads to customers


returning, which raises revenues and
profits
Example: High-end hotels that use computers
to track customer preferences and use to
monitor and customize environment
Intimacy with suppliers allows them to
provide vital inputs, which lowers costs
Example: J.C.Penneys information system
which links sales records to contract
manufacturer
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Management Information Systems


The Role of Information Systems in Business Today

Improved decision making

Without accurate information:


Managers must use forecasts, best guesses, luck
Leads to:

117

Overproduction, underproduction of goods and services

Misallocation of resources

Poor response times

Poor outcomes raise costs, lose customers

Example: Verizons Web-based digital


dashboard to provide managers with realtime data on customer complaints, network
performance, line outages, etc.
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Management Information Systems


The Role of Information Systems in Business
Today

118

Competitive advantage

Delivering better performance

Charging less for superior products

Responding to customers and


suppliers in real time

Examples: Apple, Walmart

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Management Information Systems


The Role of Information Systems in Business Today

Survival

Information technologies as
necessity of business
May be:
Industry-level changes, e.g. Citibanks
introduction of ATMs
Governmental regulations requiring
record-keeping
Examples:

Toxic Substances Control Act,


Sarbanes-Oxley Act

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Management Information Systems


The Role of Information Systems in Business Today
The Interdependence Between Organizations and Information Technology

120

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