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INFORMATION CONCEPTS

Foundation Concepts
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Why study information systems and information technology?

Vital

component of successful businesses Helps businesses expand and compete Improves efficiency and effectiveness of business processes Facilitates managerial decision making and workgroup collaboration

What is a System?
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A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives

Data vs. Information

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Data: raw facts Information: collection of facts organized in such a way that they have value beyond the facts themselves

Fundamentals of Information Systems, Second Edition

The Process of Transforming Data into Information

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Fundamentals of Information Systems, Second Edition

The Components of an Information System

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Fundamentals of Information Systems, Second Edition

Information System
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A set of interrelated components that collect, manipulate & disseminate data & information & provide feedback to meet an objective.

Examples: ATMs; airline reservation systems; course reservation systems

Fundamentals of Information Systems, Second Edition

What is an Information System?

Communication networks Policies and procedures

People

Any organized combination of

Data resources
Hardware and software
Stores, retrieves, transforms, and disseminates information in an organization

Early Information Systems

They werent computerized

Smoke

signals Library card catalogs Book bag, day planner, and notebooks Cash registers Accounting ledger

What is an Information System?

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An organized combination of
People
Hardware

and software Communication networks Data resources Policies and procedures

This system
Stores,

retrieves, transforms, and disseminates information in an organization

Information Technologies
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Information Systems
All

the components and resources necessary to deliver information and functions to the organization Could be paper based

Information Technologies
Hardware,

software, networking, data management

Our focus will be on computer-based information systems (CBIS)

What Should Business Professionals Know?

What should a Business Professional know about IS?

Foundation Concepts: fundamental behavioral, technical, business and managerial concepts Information Technology: Hardware, software, networks, data management and Internetbased technology Business Applications: Major uses of the IS in the organization Development Processes: How to plan, develop and implement IS to meet business opportunities Management Challenges: The challenges of effectively and ethically managing IT

Fundamental Roles of IS in Business

Support of business processes and operations. Support of decision making by employees and managers. Support of strategies for competitive advantage.

Characteristics of Valuable Information

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Fundamentals of Information Systems, Second Edition

Computer-Based Information Systems (CBIS)

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Fundamentals of Information Systems, Second Edition

Components of a CBIS
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Fundamentals of Information Systems, Second Edition

Components of a CBIS
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Hardware - computer equipment used to perform input, processing, and output activities. Software - computer programs that govern the operation of the computer.

Database - an organized collection of facts and information, typically consisting of two or more related data files.
People - the most important element in most computer-based information systems. Procedures - include the strategies, policies, methods, and rules for using the CBIS.
Fundamentals of Information Systems, Second Edition

Telecommunications, Network, and the Internet

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Telecommunications - the electronic transmission of signals for communications. Networks - used to connect computers and computer equipment in a building, around the country, or around the world to enable electronic communications. Internet - the worlds largest computer network, actually consisting of thousands of interconnected networks
Fundamentals of Information Systems, Second Edition

The Role of Information Systems in Business Today

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 Presents both challenges and opportunities

The Role of Information Systems in Business Today

Information Technology Capital Investment

Information technology investment, defined as hardware, software, and communications 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

The Role of Information Systems in Business Today

In the emerging, fully digital firm

Significant business relationships are digitally enabled and mediated Core business processes are accomplished through digital networks Key corporate assets are managed digitally

Digital firms offer greater flexibility in organization and management

Time shifting, space shifting

The Role of Information Systems in Business Today

Virtual Meetings: Smart Management Read the Interactive Session and then discuss the following questions:

What are the advantages of using videoconferencing technologies? What are the disadvantages? What is telepresence and what sorts of companies are best suited to use it as a communications tool? What kinds of companies could benefit from using videoconferencing? Are there any companies that might not derive any benefits from this technology?

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: IT Strategic Role

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

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 Wal-Marts RetailLink system links suppliers to stores for superior replenishment system

The Role of Information Systems in Business Today

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: Apples iPod, iTunes, and iPhone, Netflixs Internetbased DVD rentals

The Role of Information Systems in Business Today

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 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

The Role of Information Systems in Business Today

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: Verizons Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc.

The Role of Information Systems in Business Today

Operational excellence:

Improvement of efficiency to attain higher profitability Enabled by technology

New products, services, and business models:

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

The Role of Information Systems in Business Today

Competitive advantage
Delivering

better performance Charging less for superior products Responding to customers and suppliers in real time Example: Toyota and TPS (Toyota Production System) enjoy a considerable advantage over competitors information systems are critical to the implementation of TPS

The Role of Information Systems in Business Today

Survival
Information
May

technologies as necessity of business

changes, e.g. Citibanks introduction of

be:

Industry-level

ATMs Governmental regulations requiring record-keeping

Examples: Toxic Substances Control Act, Sarbanes-Oxley Act

The Role of Information Systems in Business Today

The Interdependence Between Organizations and Information Technology

In contemporary systems 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 the organization would like to do depends on what its systems will permit it to do.

Figure 1-2

Perspectives on Information Systems

Functions of an Information System

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 regulatory agencies, interact with the organization and its information systems.

Figure 1-4

Perspectives on Information Systems

Information Systems Are More Than Computers

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 by the environment.

Figure 1-5

Perspectives on Information Systems

Organizational dimension of information systems

Hierarchy
Senior

of authority, responsibility

management Middle management Operational management Knowledge workers Data workers Production or service workers

Perspectives on Information Systems

Levels in a Firm

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

WHY Information SYSTEMS ? Levels: Senior managers: make longrange strategic decisions about products and services

Management

Middle managers: Carry out

the programs and plans of senior management

Operational managers:

monitor the firms daily activities

TOWARD THE DIGITAL FIRM

The Interdependence Between Organizations and Information Systems

TOWARD THE DIGITAL FIRM

The Widening Scope of Information Systems

1950s: Technical changes

1960s-70s: Managerial controls 1980s-90s: Institutional core activities
Today: Digital information webs extending beyond the enterprise

TOWARD THE DIGITAL FIRM

The Widening Scope of Information Systems

WHY IS IT IMPORTANT FOR MANAGERS TODAY TO CONSIDER THE STRATEGIC ROLE OF INFORMATION SYSTEMS?

Strategic Advantage and IT

Important Managerial Questions

What

is strategy? What is strategic advantage? Information Systems as a strategic resource How do we use Information Systems to achieve some form of strategic advantage over competitors?

WHAT IS STRATEGY?

What is Strategy?
Strategy Definitions

Strategy
A

plan Early 1990s definition:

A well coordinated set of objectives, policies, and plans aimed at securing a long-term competitive advantage. A vision for the organization that is implemented.

Websters

Dictionary

a careful plan or method the art of devising or employing plans toward a goal the art and science of military command exercised to meet the enemy in combat under advantageous

What is Strategy?
Strategy Definitions

Strategy

Henry Mintzberg:

Explicitly planned: Intended Strategy

Realized: planned and succeed Unrealized: planned but fail

Implicit, not explicitly planned yet executed: Emergent Strategy

Planned Strategy

Executed Strategy

Failed Strategy

Emergent Strategy

STRATEGIC ADVANTAGE

Strategic Advantage and IT

Evolution of Strategy Concepts

Competitive Strategy

Competitive Advantage

Strategy Speeding Up

Sustainable Competitive Advantage

defensible market position, unique core competence long-term barriers to competition, non-competitive profits (>0)

Temporary (Non-Sustainable) Competitive Advantage

Sustainable Strategic Advantage

Strategic Advantage

long-term, dominant strategy, strategic systems, strategic structural changes

Temporary Strategic Advantage Leverageable Strategic Advantage

dominant strategy is only a stepping-stone to future dominant strategies

Strategic Advantage and IT

Evolution of Strategy Concepts

Three eras of approaches for achieving strategic advantage

Portfolio of Business (1970s)

performance a result of businesses you pick to be in motivated by economies of scale performance a result of internal processes and routines, which provide distinctive capabilities motivated by economies of scale and scope

Portfolio of Capabilities (mid 1980s)

Portfolio of Relationships (mid 1990s)

performance a result of building a wide array of relationships with external companies that possess hard-to-imitate capabilities motivated by economies of scale, scope, and expertise

INFORMATION SYSTEMS AS A STRATEGIC RESOURCE

Strategic Advantage and IT

Does the infrastructure (and how it is operated) support the strategy?

Business Pressures/ Threats

Strategy/ Strategic Response

Information Architecture
(Conceptual Model)

Information Infrastructure
(Specific Resources Actually Put In Place)

Knowledge of Configurations of I.T.

Knowledge of Hardware, Software, Databases, Networks

Classification of types of I.T. (Taxonomies) Engineers must know and the performance characteristics Understanding of relationship specific I.T. resources of between I.T. types and capabilities/performance

Information Systems as a Strategic Resource

Inwardly Strategic
focused

Outwardly Strategic
aimed

on internal processes
lower costs increase employee productivity improve teamwork enhance communication

at direct competition beat competitors

new services new knowledge that leads to new services

Information Systems as a Strategic Resource

Hayes and Wheelwright (1985) - operations effectiveness, applies equally well to ISD effectiveness

Stage 1: Internally Neutral

not seen as a source of process improvement technology Minimize negative impact of functional area on organization Top management in control; tells dept. what to do not seen as a source of external competitive advantage source of internally focused competitive advantages viewed as competitive force in the business function drives issues of top-management strategy making

Stage 2: Externally Neutral

Stage 3: Internally Supportive

Stage 4: Externally Supportive

Information Systems as a Strategic Resource

Competitive Marketplace

Externally Strategic

Company A

Internally Strategic

Company B

Inter-Firm Strategic Focus Alliance

MANAGING FOR STRATEGIC ADVANTAGE

Elements of Strategic Management

Innovation Response-Management Long-Range Planning

Competitive

Intelligence

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CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

APPROACHES TO INFO SYSTEMS

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TECHNICAL APPROACHES

COMPUTER
SCIENCE MANAGEMENT SCIENCE OPERATIONS RESEARCH

MIS
SOCIOLOGY ECONOMICS

PSYCHOLOGY
BEHAVIORAL APPROACHES

TECHNICAL APPROACH
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Emphasizes mathematically based, normative models to study information systems, as well as the physical technology and formal capabilities of these systems. Computer science: computability, computation, data storage and access. Management science: development of models for decision making and management practices. Operations research: techniques for optimizing selected parameters of organizations.

BEHAVIORAL APPROACH
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Behavioral issues arise in the development and long-term maintenance of IS. Sociologists study IS with an eye toward how groups and organizations shape the development of systems and also how systems affect individuals, groups, and organizations. Psychologists study IS with an interest in how formal information is perceived and used by human decision makers. Economists study IS with an interest in what impact systems have on control and cost structures within the firm and within markets.

SOCIOTECHNICAL PERSPECTIVE
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The challenge and excitement of the information system field is that it requires an appreciation and tolerance of many different approaches. We stress the need to optimize the performance of the system as a whole. Both the technical and behavioral components need attention.

SOCIOTECHNICAL PERSPECTIVE
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OPTIMIZE SYSTEM PERFORMANCE: Technology & organization mutually adjust to One another Until fit is satisfactory