Chapter 1

INFORMATION SYSTEMS
IN BUSINESS TODAY
TOPIC 1
THE ROLE OF INFORMATION SYSTEMS IN
BUSINESS TODAY

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 The Role of Information
Systems in Business Today
• How information systems are transforming business
– Increase in wireless technology use, Web sites, and Mobile Apps
– Increased business use of Web 3.0 technologies
– Cloud computing, mobile digital platform allow more distributed
work, decision-making, and collaboration
• Globalization opportunities
– Internet has drastically reduced costs of operating on global
scale
– Presents both challenges and opportunities.

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Information Technology Capital
Investment

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 Information System
Information system is a collection of
– people
– procedures
– and resources (Hardware, Software,
Telecommunication etc.)
joined together for
– data collection,
– transformation of data into information
– and dissemination of information
within organization for decision making purposes.
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 Information System
• In the emerging, fully digital firm
– Significant business relationships are digitally enabled and
mediated (external)
– Core business processes are accomplished through digital
networks (internal)
– Key corporate assets are managed digitally
• Digital firms offer greater flexibility in organization and
management
– Time shifting, 24/7
– space shifting, no geographical boundaries
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The Interdependence Between
Organizations and Information Technology

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 Information System
• 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. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
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 Information System
• Operational excellence:
– Improvement of efficiency to attain higher
profitability
– Information systems, technology an important tool
in achieving greater efficiency and productivity
– Walmart’s RetailLink system links suppliers to its
more than 5000 stores worldwide for superior
replenishment system
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 Information System

• New products, services, and business

models:
– 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: Apple’s iPod, iTunes, iPhone, iPad,
Google’s Android OS, and Netflix, YouTube
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 Information System
• Customer and supplier intimacy:
– Serving customers well leads to customers returning,
which raises revenues and profits
• Example: High-end hotels that use computers to track
customer preferences (room temperature, TV channels,
Food)and use to monitor and customize environment.
– Intimacy with suppliers allows them to provide vital inputs,
which lowers costs
• Example: [Link]’s information system which links
sales records to contract manufacturer
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 Information System
• Improved decision making
– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Leads to:
– Overproduction, underproduction of goods and services
– Misallocation of resources
– Poor response times
• Poor outcomes raise costs, lose customers
– Example: Verizon’s Web-based digital dashboard to provide
managers with real-time data on customer complaints,
network performance, line outages, etc.
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 Information System
• Operational excellence:
– Improvement of efficiency to attain higher profitability
• New products, services, and business models:
– Enabled by technology
• Customer and supplier intimacy:
– Serving customers raises revenues and profits
– Better communication with suppliers lowers costs
• Improved decision making
– More accurate data leads to better decisions
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 Information System

• Competitive advantage
– Delivering better performance (Apple)

– Charging less for superior products (Walmart)

– Responding to customers and suppliers in real time

(UPS)
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 Information System

• Survival
– Information technologies as necessity of business
– May be:
• Industry-level changes, e.g. Citibank’s
introduction of ATMs
• Governmental regulations requiring record-
keeping
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TOPIC 2
PERSPECTIVES ON INFORMATION SYSTEMS

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 Perspectives on
Information Systems
• 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
– Information is data shaped into meaningful form
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Data and Information

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 Perspectives on
Information Systems
• Three activities of information systems produce
information organizations need
1. Input: Captures raw data from organization or
external environment
2. Processing: Converts raw data into meaningful form
3. Output: Transfers processed information to people
or activities that use it
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Functions of an Information System

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 Perspectives on
Information Systems
• 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
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Information Systems Are More
Than Computers

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 Perspectives on
Information Systems
• Organizational dimension of information systems
– Hierarchy of authority, responsibility
• Senior management
• Middle management
• Operational management
• Knowledge workers
• Data workers
• Production or service workers
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Information Systems Are More
Than Computers

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 Perspectives on
Information Systems
• 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
– Organizational politics

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

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

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The Business Information
Value Chain

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Variation in Returns On
Information Technology Investment

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 Perspectives on
Information Systems
• Investing in information technology does not
guarantee good returns
• Considerable variation in the returns firms
receive from systems investments
• Factors:
– Adopting the right business model
– Investing in complementary assets (organizational and
management capital)
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 Perspectives on
Information Systems
• Complementary assets:
– Assets required to derive value from a primary
investment
– Firms supporting technology investments with
investment in complementary assets receive
superior returns
– E.g.: invest in technology and the people to
make it work properly
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A Sociotechnical Perspective
on Information Systems

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