Management Information Systems: Business

2/5/2013
Management Information Systems

Chapter 1 Chapter 1 Information Systems in Global Business Today
LEARNING OBJECTIVES
• Understanding the effects of information systems

on business and their relationship to
globalization.
Information Systems
• Explain why information systems are so essential
in Global Business in business today.
Today
• Define an information system and describe its
management, organization, and technology
components.
1.1 © 2010 by Prentice Hall 1.2 © 2010 by Prentice Hall
Management Information Systems Management Information Systems

Chapter 1 Information Systems in Global Business Today Chapter 1 Information Systems in Global Business Today
LEARNING OBJECTIVES (Continued) NBA Teams Make a Slam Dunk with Information Technology
• Problem: Lack of hard data usable in decision-making

• Define complementary assets and explain how processes, costly and competitive market.
they ensure that information systems provide • Solutions: Developed a new system designed to collect
genuine value to an organization. and organize data using video clips of games.
• Synergy Sports Technology tags video of each game with
• Describe the different academic disciplines used
hundreds of descriptive categories and allows coaches
to study information systems and explain how
and players to stream game footage from the Web.
each contributes to our understanding of them.
• Demonstrates IT’s role in innovation and improving
• Explain what is meant by a sociotechnical business processes.
systems perspective. • Illustrates how the Web has allowed businesses to use
new tools to analyze critical data.

The Role of Information Systems in Business Today The Role of Information Systems in Business Today
Information Technology Capital Investment

• How information systems are transforming
business
• Increase in wireless technology use, Web sites
• Shifts in media and advertising
• New federal security and accounting laws
• Globalization opportunities
• Internet has drastically reduced costs of operating on
global scale
Information technology investment, defined as hardware, software, and communications
• Presents both challenges and opportunities equipment, grew from 32% to 51% between 1980 and 2008.
Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income
and Product Accounts, 2008.
Figure 1-1
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The Role of Information Systems in Business Today

Virtual Meetings: Smart Management
• In the emerging, fully digital firm
Read the Interactive Session and then discuss the following questions:
– Significant business relationships are digitally enabled
and mediated • What are the advantages of using videoconferencing
– Core business processes are accomplished through technologies? What are the disadvantages?
digital networks • What is telepresence and what sorts of companies are best
– Key corporate assets are managed digitally suited to use it as a communications tool?
• What kinds of companies could benefit from using
videoconferencing? Are there any companies that might
• Digital firms offer greater flexibility in not derive any benefits from this technology?
organization and management
– Time shifting, space shifting

• Growing interdependence between ability to use

information technology and ability to implement • Operational excellence:
corporate strategies and achieve corporate goals – Improvement of efficiency to attain higher profitability
– Information systems, technology an important tool in
• Business firms invest heavily in information achieving greater efficiency and productivity
systems to achieve six strategic business
objectives: – Wal-Mart’s RetailLink system links suppliers to stores
for superior replenishment system
– Operational excellence
– New products, services, and business models
– Customer and supplier intimacy
– Improved decision making
– Competitive advantage
– Survival

• New products, services, and business • Customer and supplier intimacy:

models: – Serving customers well leads to customers returning,
which raises revenues and profits
– Business model: describes how company produces,
• Example: High-end hotels that use computers to track
delivers, and sells product or service to create wealth customer preferences and use to monitor and customize
– Information systems and technology a major enabling environment
tool for new products, services, business models
• Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s – Intimacy with suppliers allows them to provide vital
Internet-based DVD rentals inputs, which lowers costs
• Example: J.C.Penney’s information system which links sales
records to contract manufacturer
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• Improved decision making • Operational excellence:

– Without accurate information: – Improvement of efficiency to attain higher profitability
• Managers must use forecasts, best guesses, luck • New products, services, and business models:
• Leads to: – Enabled by technology
– Overproduction, underproduction of goods and services
– Misallocation of resources
• Customer and supplier intimacy:
– Poor response times – Serving customers raises revenues and profits
• Poor outcomes raise costs, lose customers – Better communication with suppliers lowers costs
– Example: Verizon’s Web-based digital dashboard to • Improved decision making
provide managers with real-time data on customer – More accurate data leads to better decisions
complaints, network performance, line outages, etc.

• Competitive advantage • Survival

– Delivering better performance – Information technologies as necessity of
– Charging less for superior products business
– Responding to customers and suppliers in – May be:
real time • Industry-level changes, e.g. Citibank’s introduction
of ATMs
– Example: Toyota and TPS (Toyota Production
• Governmental regulations requiring record-keeping
System) enjoy a considerable advantage over
– Examples: Toxic Substances Control Act, Sarbanes-
competitors – information systems are critical Oxley Act
to the implementation of TPS


Perspectives on Information Systems
The Interdependence Between Organizations and
Information Technology
• Information system:
– Set of interrelated components
– Collect, process, store, and distribute information
– Support decision making, coordination, and
control
• Information vs. data
– Data are streams of raw facts
In contemporary systems there is a growing interdependence between a firm’s information systems
– Information is data shaped into meaningful form
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.
Figure 1-2
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Perspectives on Information Systems Perspectives on Information Systems
Data and Information

• Information system: Three activities
produce information organizations need
– Input: Captures raw data from organization
or external environment
– Processing: Converts raw data into
meaningful form
– Output: Transfers processed information
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.
to people or activities that use it
Figure 1-3


Functions of an Information System
• Feedback:
– Output returned to appropriate members of
organization to help evaluate or correct input
stage
• Computer/Computer program vs.
information system
– Computers and software are technical foundation
and tools, similar to the material and tools used to
build a house An information system contains information about an organization and its surrounding environment. Three basic activities—input,
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

Information Systems Are More Than Computers

• Organizational dimension of
information systems
– Hierarchy of authority, responsibility
• Senior management
• Middle management
• Operational management
• Knowledge workers
• Data workers
•
Using information systems effectively requires an understanding of the organization,
management, and information technology shaping the systems. An information system
creates value for the firm as an organizational and management solution to challenges posed
Production or service workers
by the environment.
Figure 1-5
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Levels in a Firm
• Organizational dimension of information
systems (cont.)
– Separation of business functions
• Sales and marketing
• Human resources
• Finance and accounting
• Manufacturing and production
– Unique business processes
– Unique business culture
Business organizations are hierarchies consisting of three principal levels: senior
management, middle management, and operational management. Information systems serve
each of these levels. Scientists and knowledge workers often work with middle management.
– Organizational politics
Figure 1-6

• Management dimension of • Technology dimension of information

information systems systems
– Managers set organizational strategy for – Computer hardware and software
responding to business challenges – Data management technology
– In addition, managers must act creatively: – Networking and telecommunications technology
• Creation of new products and services
• Networks, the Internet, intranets and extranets, World
• Occasionally re-creating the organization Wide Web
– IT infrastructure: provides platform that system is
built on

UPS Competes Globally with Information Technology

• Dimensions of UPS tracking system
• Read the Interactive Session: Technology, and then
– Organizational:
discuss the following questions:
• Procedures for tracking packages and managing
• What are the inputs, processing, and outputs of inventory and provide information
UPS’s package tracking system?
– Management:
• What technologies are used by UPS? How are these • Monitor service levels and costs
technologies related to UPS’s business strategy?
– Technology:
• What problems do UPS’s information systems solve?
• Handheld computers, bar-code scanners, networks,
What would happen if these systems were not
desktop computers, etc.
available?
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• Business perspective on information • Business information value chain

systems: – Raw data acquired and transformed through
stages that add value to that information
– Information system is instrument for
– Value of information system determined in part by
creating value extent to which it leads to better decisions, greater
– Investments in information technology will efficiency, and higher profits
result in superior returns:
• Productivity increases • Business perspective: Calls attention to
• Revenue increases organizational and managerial nature of
• Superior long-term strategic positioning information systems

The Business Information Value Chain Variation in Returns on

Information Technology Investment
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 Although, on average, investments in information technology produce returns far above
profitability. those returned by other investments, there is considerable variation across firms.
Figure 1-7 Figure 1-8


• Investing in information technology does not

guarantee good returns • Complementary assets:
– Assets required to derive value from a
• Considerable variation in the returns firms primary investment
receive from systems investments
– Firms supporting technology investments
with investment in complementary assets
• Factors:
– Adopting the right business model receive superior returns
– Investing in complementary assets (organizational – E.g.: invest in technology and the people to
and management capital) make it work properly
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Contemporary Approaches to Information Systems

• Complementary assets include:
– Organizational investments, e.g.
• Appropriate business model
• Efficient business processes
– Managerial investments, e.g.
• Incentives for management innovation
• Teamwork and collaborative work environments
– Social investments, e.g.
• The Internet and telecommunications infrastructure The study of information systems deals with issues and insights contributed from technical
• Technology standards and behavioral disciplines.
Figure 1-9

Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems
• Technical approach • Management Information Systems

• Emphasizes mathematically based models • Combines computer science, management science,
operations research and practical orientation with
• Computer science, management science, behavioral issues
operations research • Four main actors
• Behavioral approach • Suppliers of hardware and software
• Business firms
• Behavioral issues (strategic business
• Managers and employees
integration, implementation, etc.) • Firm’s environment (legal, social, cultural context)
• Psychology, economics, sociology

Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems
A Sociotechnical Perspective on Information Systems

• Approach of this book: Sociotechnical
view
• Optimal organizational performance
achieved by jointly optimizing both social and
technical systems used in production
• Helps avoid purely technological approach

In a sociotechnical perspective, the performance of a system is optimized when both the
technology and the organization mutually adjust to one another until a satisfactory fit is
obtained.
Figure 1-10
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2/5/2013
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mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
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2/5/2013

Management Information Systems

• Understanding the effects of information systems

1.1 © 2010 by Prentice Hall 1.2 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

• Problem: Lack of hard data usable in decision-making

1.3 © 2010 by Prentice Hall 1.4 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Information Technology Capital Investment

Management Information Systems Management Information Systems

The Role of Information Systems in Business Today

1.7 © 2010 by Prentice Hall 1.8 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

• Growing interdependence between ability to use

1.9 © 2010 by Prentice Hall 1.10 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

• New products, services, and business • Customer and supplier intimacy:

1.11 © 2010 by Prentice Hall 1.12 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

• Improved decision making • Operational excellence:

1.13 © 2010 by Prentice Hall 1.14 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

• Competitive advantage • Survival

1.15 © 2010 by Prentice Hall 1.16 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

The Role of Information Systems in Business Today

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

Data and Information

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

Information Systems Are More Than Computers

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

• Management dimension of • Technology dimension of information

1.27 © 2010 by Prentice Hall 1.28 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

UPS Competes Globally with Information Technology

1.29 © 2010 by Prentice Hall 1.30 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

• Business perspective on information • Business information value chain

1.31 © 2010 by Prentice Hall 1.32 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

The Business Information Value Chain Variation in Returns on

From a business perspective, information systems are part of a series of value-adding

Figure 1-7 Figure 1-8

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

• Investing in information technology does not

1.35 © 2010 by Prentice Hall 1.36 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

Contemporary Approaches to Information Systems

• Technology standards and behavioral disciplines.

Management Information Systems Management Information Systems

Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems