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TRANSCRIPT
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1.1
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1.2
LEARNING OBJECTIVES
Explain why information systems are so essentialin business today.
Define an information system from both atechnical and a business perspective. Identify and describe the three dimensions of
information systems.
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1.3
Assess the complementary assets required forinformation technology to provide value to a
business.
Identify and describe contemporary approachesto the study of information systems and
distinguish between computer literacy and
information systems literacy.
LEARNING OBJECTIVES (Continued)
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1.4
Smart Systems and Smart Ways of Working Help Toyota Become Number One
Problem: Tough competition and demanding customers. Solutions: Redesigned order and production processes
reduce costs, increase revenue, and improve customer
service.
Oracle E-Business Suite makes it possible to build carsto order and forecast demand and production
requirements more accurately.
Demonstrates ITs role in analyzing market trends andmonitoring quality, efficiency, and costs.
Illustrates the emerging digital firm landscape wherebusinesses can use tools to analyze critical data.
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The Role of Information Systems in Business Today
How information systems are transformingbusiness
Increased technology investments Increased responsiveness to customer demands: A
Fed-Ex economy
Shifts in media and advertising New federal security and accounting laws
Globalizationopportunities Internet has drastically reduced costs of operating on
global scale
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The Role of Information Systems in Business Today
Figure 1-1
Information technology investment, defined as hardware, software, and communications
equipment, grew from 34% to 50% between 1980 and 2004.Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis,National Incomeand Product Accounts, 2006.
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In the emerging, fully digital firm Significant business relationships are digitally enabled
and mediated
Core business processes are accomplished throughdigital networks
Key corporate assets are managed digitally Digital firms offer greater flexibility in
organization and management Time shifting, space shifting
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1.8
Read the Interactive Session and then discuss the following questions:
What are the advantages of working in a virtualenvironment like the one created by Accenture? What are
the disadvantages?
Would you like to work at a company like Accenture? Whyor why not? Explain your answer.
What kinds of companies could benefit from being runvirtually like Accenture? Could all companies be run
virtually like Accenture?
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Growing interdependence between ability to use informationtechnology and ability to implement corporate strategies andachieve corporate goals
Business firms invest heavily in information systems toachieve six strategic business objectives:
Operational excellence New products, services, and business models Customer and supplier intimacy Improved decision making Competitive advantage Survival
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Operational excellence:Improvement of efficiency to attain higher
profitability
Information systems, technology an importanttool in achieving greater efficiency andproductivity
E.g. Wal-Marts RetailLink system linkssuppliers to stores for superior replenishmentsystem
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New products, services, and businessmodels:Business model: describes how company
produces, delivers, and sells product orservice to create wealth
Information systems and technology a majorenabling tool for new products, services,
business models E.g. Apples iPod, iTunes and Netflixs Internet-based DVD rentals
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Customer and supplier intimacy:Serving customers well leads to customers
returning, which raises revenues and profits
E.g. High-end hotels that use computers to trackcustomer preferences and use to monitor and
customize environment
Intimacy with suppliers allows them to providevital inputs, which lowers costs E.g. J.C.Penneys information system which links
sales records to contract manufacturer
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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
E.g. Verizons Web-based digital dashboard toprovide managers with real-time data on customer
complaints, network performance, line outages, etc.
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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
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Competitive advantage Delivering better performance Charging less for superior products Responding to customers and suppliers in real time Often achieved when firm achieves one of first four
advantages
E.g. Dell: Consistent profitability over 25 years; Dellremains one of the most efficient producer of PCs inworld.
But Dell has lost some of its advantages to fastfollowers-- HP
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SurvivalInformation technologies as necessity of
business
May be: Industry-level changes, e.g. Citibanks introduction
of ATMs
Governmental regulations requiring record-keeping E.g. Toxic Substances Control Act, Sarbannes-Oxley Act
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The Role of Information Systems in Business Today
There is a growing interdependence between a firms information systems and its business
capabilities. Changes in strategy, rules, and business processes increasingly require
changes in hardware, software, databases, and telecommunications. Often, what theorganization would like to do depends on what its systems will permit it to do.
Figure 1-2
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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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Perspectives on Information Systems
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.
Figure 1-3
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Information system: Three activitiesproduce information organizations need
Input: Captures raw data from organizationor external environment
Processing: Converts raw data intomeaningful form
Output: Transfers processed informationto people or activities that use it
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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 foundationand tools, similar to the material and tools used to
build a house
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Perspectives on Information Systems
An information system contains information about an organization and its surrounding environment. Three basic activitiesinput,
processing, and outputproduce 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 regulatoryagencies, interact with the organization and its information systems.
Figure 1-4
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Perspectives on Information Systems
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 posedby the environment.
Figure 1-5
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Organizational dimension ofinformation systems
Hierarchy of authority, responsibility Senior management Middle management Operational management Knowledge workersData workers
Production or service workers
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Perspectives on Information Systems
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.
Figure 1-6
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Organizational dimension of informationsystems (cont.)
Separation of business functionsSales and marketing
Human resources Finance and accounting Production and manufacturing)
Unique business processes
Unique business culture
Organizational politics
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Management dimension ofinformation system
Managers set organizational strategy forresponding to business challenges
In addition, managers must act creatively: Creation of new products and services Occasionally re-creating the organization
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Technology dimension of informationsystems
Computer hardware and software Data management technology Networking and telecommunications
technology
Networks, the Internet, intranets and extranets,World Wide Web
IT infrastructure: provides platform thatsystem is built on
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UPS Competes Globally with Information Technology
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Dimensions of UPS tracking system Organizational:
Procedures for tracking packages and managinginventory and provide information
Management: Monitor service levels and costs
Technology: Handheld computers, bar-code scanners, networks,
desktop computers, etc.
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Business perspective on informationsystems:Information system is instrument for
creating value
Investments in information technology willresult in superior returns:
Productivity increases Revenue increases Superior long-term strategic positioning
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Business information value chain Raw data acquired and transformed through
stages that add value to that information
Value of information system determined in part byextent to which it leads to better decisions, greaterefficiency, and higher profits
Business perspective: Calls attention toorganizational and managerial nature ofinformation systems
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Perspectives on Information Systems
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 firmprofitability.
Figure 1-7
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Perspectives on Information Systems
Although, on average, investments in information technology produce returns far above
those returned by other investments, there is considerable variation across firms.
Figure 1-8
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Investing in information technology does notguarantee good returns
Considerable variation in the returns firmsreceive from systems investments
Factors: Adopting the right business model
Investing in complementary assets (organizationaland management capital)
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Complementary assets:Assets required to derive value from a
primary investmentFirms supporting technology investments
with investment in complementary assets
receive superior returns
E.g.: invest in technology and the people tomake it work properly
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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 Technology standards
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Perspectives on Information Systems
The study of information systems deals with issues and insights contributed from technical
and behavioral disciplines.
Figure 1-9
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Technical approach Emphasizes mathematically based models Computer science, management science,
operations research
Behavioral approach Behavioral issues (strategic business
integration, implementation, etc.)
Psychology, economics, sociology
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Management Information Science Combines computer science, management science,
operations research and practical orientation with
behavioral issues Four main actors
Suppliers of hardware and software Business firms Managers and employees Firms environment (legal, social, cultural context)
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Approach of this book:Sociotechnical view Optimal organizational performance
achieved by jointly optimizing bothsocial and technical systems used in
production
Helps avoid purely technologicalapproach
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Perspectives on Information Systems
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