CH 01

Chapter
1 Managing in the Digital World
1-1
If we'd given customers what

they said they wanted, we'd have
built a computer they'd have
been happy with a year after we
spoke to themnot something
they'd want now
Steve Jobs,
Apple Computer
IS Today (Valacich & Schneider) Copyright 2010 Pearson Education, Inc. Published as Prentice Hall 04/03/17
Learning Objectives
1-2
Learning Objectives
1-3
Information Systems Today
1-4
The Knowledge Worker

Term coined by Peter Drucker in 1959
An individual who is relatively well educated and who creates,
modifies, and/or synthesizes knowledge as a fundamental part
of a job
Knowledge Society
New Economy/Digital World
Digital Divide
Information Systems: Definition
1-5
Combination of five
key elements:
People
Hardware
Software
Data
Telecommunications
networks
Data: The Root and Purpose of Information Systems
1-6
Distinction between:
Dataraw, unformatted information
Example: 5433333353
Informationdata that is transformed to have a
meaning
Example: (543) 333-3353
Knowledgebody of governing procedures used to
organize or manipulate data
Wisdomaccumulated knowledge
Data: The Root and Purpose of Information Systems
(contd)
1-7
IT: The Components of Information Systems
1-8
Relationship of
computer-based
information systems
to information
technology and
technology in general
IT: The Components of Information SystemsTechnology
1-9
Any machine that can

supplement or
replace human
manual work
Examples:
Heating system
Surgical laser
IT: The Components of Information SystemsInformation
Technology
1-10
A type of technology that

is controlled by or uses
information
Example: Manufacturing
robot
IT: The Components of Information SystemsComputer-
based IS
1-11
Systems using computers

to provide useful data to
people
Example: Specific software
used to analyze data
IS Today (Valacich & Schneider) Copyright 2010 Pearson Education, Inc. Published as Prentice Hall 1-11
04/03/17
Learning Objectives
1-12
Best Jobs for the Next Decade
1-13
Careers and Salaries in the IS Field
(National Average)
1-14
What Makes IS Personnel Valuable?
1-15
Integrated knowledge and skills in three areas:

Technical Competencyskills in hardware, software,
networking, and security
Business Competencyunderstanding of the nature
of the business; this is key in addition to technical
competency
Systems Competencyunderstanding of how to
build and integrate large scale systems
Hot Skills for 2010 and Beyond
1-16
Learning Objectives
1-17
The Dual Nature of IS
1-18
IS can make you or break you

London HeathrowThe failure
Baggage handling system: original cost of $500 million
Disaster on opening day, costing $ 50 million due to over
28,000 bags being misrouted
FedExThe success
$ 38 billion family of companieslargest express
transportation company
Information hub for business where managing information is
the business
IS for Competitive Advantage
1-19
Both FedEx and London Heathrow were

developing strategic information systems
Only strategic information systems can help
sustain competitive advantage
Why Information Systems Matter
1-20
Nicholas Carr articleIT Doesnt Matter

IT no longer a source of advantage on the firm level

Companies should focus IT on cost reduction and risk
mitigation
Many experts disagree with his arguments
Abbie LundbergInterview with Carr
Don TapscottThe Engine That Drives Success: The
Best Companies Have the Best Business Models Because
They Have the Best IT Strategies
Many successful companies use IT to support a unique
business strategy
Decision-Making Levels of an Organization
8-21
Operational Level
8-22
Day-to-day business processes

Interactions with customers
Decisions:
Structured ( Procedures is specified).

Recurring
Can often be automated using IS( Inventory System).
BI used to:
Optimize processes
Understand causes of performance problems
Managerial Level
8-23
Functional managers
Monitor and control operational-level activities
Focus: effectively utilizing and deploying resources
Goal: achieving strategic objectives
Managers decisions
Semistructured
Moderately complex
Time horizon of few days to few months
BI can help with:

Performance analytics
Forecasts
Providing key performance indicators on dashboards
Managerial Level (contd)
8-24
Executive Level
8-25
The president, CEO, vice presidents, board of

directors
Decisions
Unstructured
Long-term strategic issues
Complex and nonroutine problems with long-term
ramifications
BI is used to:
Obtain aggregate summaries of trends and projections
Provide KPIs across the organization
Executive Level (contd)
8-26
Providing Inputs into BI Applications
8-27
Decisions made by different departments need to be

based on the same underlying data
Single version of the truth
BI systems access multiple databases or data warehouses
Data aggregated from operational systems
E.g., Transaction processing systems
Transaction Processing Systems (TPS)
8-28
Operational level
Purpose:
Processing of business events and transactions
Increase efficiency
Automation
Lower costs
Increased speed and accuracy
Examples:
Payroll processing
Sales and order processing
Inventory management
Product purchasing, receiving, and shipping
Accounts payable and receivable
Architecture of a TPS
8-29
Architecture of a TPS: Inputs
8-30
Source documents
Different data entry methods
Architecture of a TPS: Processing
8-31
Online processing
Immediate results
Batch processing
Transactions collected and later processed together
Used when immediate notification not necessary
Architecture of a TPS: Outputs
8-32
Counts, summary reports

Inputs to other systems
Feedback to systems operator
Summary of TPS Characteristics
8-33
Management Information Systems
8-34
Managerial level
Purpose:
Produce reports

Support of midlevel managers decisions
Examples:
Sales forecasting
Financial management and forecasting
Manufacturing, planning and scheduling
Inventory management and planning
Advertising and product pricing
Architecture of an MIS
8-35
Summary of MIS Characteristics
8-36
Decision Support Systems (DSS)
8-37
Decision-making support for recurring problems

Used mostly by managerial level employees
Interactive decision aid
What-if analyses
Analyze results for hypothetical changes
Example: Microsoft Excel
Architecture of a DSS
8-38
Common DSS Models
8-39
Executive Information Systems
8-40
Aka Executive support system

Executive level
Purpose:
Aid in executive decision making

Provide information in highly aggregated form
Examples:
Executive-level decision making
Long-range and strategic planning
Monitoring of internal and external events and resources
Crisis management
Staffing and labor relations
Architecture of an EIS
8-41
Summary of EIS Characteristics
8-42
Business Processes Supported by Functional
Area Information Systems
8-43
Organizational Functions and Representative
Information Systems
8-44
Geographic Information System (GIS)
8-45
Use of geographically
referenced information
Finding optimal location for
a new store
Identification of areas too
wet to fertilize (see figure)
Locating target customers
Infrastructure design
Health information technology
1-46
(HIT) provides the umbrella framework to describe the comprehensive

management of health information across computerized systems and
its secure exchange between consumers, providers, government and
quality entities, and insurers. Health information technology (HIT) is
in general increasingly viewed as the most promising tool for improving
the overall quality, safety and efficiency of the health delivery system
(Chaudhry et al., 2006). Broad and consistent utilization of HIT will:
Improve health care quality;
Prevent medical errors;
Reduce health care costs;
Increase administrative efficiencies
Decrease paperwork; and
Expand access to affordable care.
Health information technology cont.
1-47
Interoperable HIT will improve individual patient

care, but it will also bring many public health benefits
including:
Early detection of infectious disease outbreaks
around the country;
Improved tracking of chronic disease management;
and
Evaluation of health care based on value enabled by
the collection of de-identified price and quality
information that can be compared
End of Chapter Content
1-48
Learning Objectives
8-49
Opening CaseManaging in the Digital World: Apple
Computer
1-50
Apple changed the way in

which everyday people use
computers
Long list of successful

products
Success of iPod: tight

integration with iTunes and
AppStore
Apple Computers
1-51
A companys survival may depend upon those

employees who fail over and over as they try
new ideas (Consultant & author Tom Peters)
Apple has had many failures:

Mac TV, PowerMac G4 Cube, Lisa, Newton, etc.
Apples overall success shows that a company

without an interesting list of failures probably
isnt trying hard enough.
Bionic Contact Lens
1-52
Bionic eye implants for blind and partially

blind people are being developed
Problems that must be solved first:
Plastics for electronic must be
biocompatible
LED must be small enough to fit over the
eye without causing discomfort, and yet
must be functional
Where will the power for the device come
from?
The Two StevesJobs & Wozniak
1-53
Knew each other in high

school
Started selling Apple
computers in 1976
Both left Apple in 1985
In 1996 Jobs returned to
become Apples CEO
Worldwide Internet Usage
1-54
In 2008 about 17 percent of active Internet users were

located in the United States
Internet usage:
HighestNorth America: 74 percent of population
LowestAfrica: 5.3 percent of population
Online Rights Not Always Universal
1-55
Governments in some countries regulate

access to information on the Web (e.g., China)
Reporters Without Borders call this behavior
unethical
What is the role of companies such as
Microsoft in dealing with these governments?
Who owns Web-posted data?
Should the Internet create its own laws?
Guerilla Wi-Fi
1-56
Digital divide is the haves and the have-nots in the

IT world
One Laptop Per Child (OLPC) attempted to overcome
this.
Meraki Network was founded to provide affordable
Wi-Fi for these new computers
$50 Mini (wireless routers about the size of two
stacked iPhones) can be piggy-backed so that one
Mini connected to the Internet can relay the
connection to other Minis, thus forming a large
network
Business Career Outlook
1-57
Globalization trend is increasing the need for

Global SkillsWhat can you do?
Gain international experience
Learn more than one language
Sensitize yourself to global cultural and political
issues
In AdditionImmerse yourself into the culture:
Learn about local food
Watch locally produced television
Read books and newspapers

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Chapter

1 Managing in the Digital World

If we'd given customers what

The Knowledge Worker

Any machine that can

A type of technology that

Systems using computers

Integrated knowledge and skills in three areas:

IS can make you or break you

Both FedEx and London Heathrow were

Nicholas Carr articleIT Doesnt Matter

Companies should focus IT on cost reduction and risk

Day-to-day business processes

Can often be automated using IS( Inventory System).

BI can help with:

The president, CEO, vice presidents, board of

Decisions made by different departments need to be

Counts, summary reports

Decision-making support for recurring problems

Aka Executive support system

Monitoring of internal and external events and resources

Staffing and labor relations

(HIT) provides the umbrella framework to describe the comprehensive

Interoperable HIT will improve individual patient

Apple changed the way in

Long list of successful

Success of iPod: tight

A companys survival may depend upon those

Apple has had many failures:

Apples overall success shows that a company

Bionic eye implants for blind and partially

Knew each other in high

In 2008 about 17 percent of active Internet users were

Governments in some countries regulate

Digital divide is the haves and the have-nots in the

Globalization trend is increasing the need for

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