Alter – Information Systems 4th e d. © 2002 Prentice Hall 1 Moving Towards E-Business As Usual.

1 Alter – Information Systems 4th ed.

© 2002 Prentice Hall

Moving Towards E-Business As Usual

Alter – Information Systems 4th ed. © 2002 Prentice Hall2

Opening Case - Dell Computer

Business insight: Sell directly to customers

Decide how much to produce based on demand estimates & contracts produce on demand

What makes this approach possible? Outsourcing

Negative holding costs! Mass customization

Powerful order fulfillment system

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Work Systems, Information Systems, and E-Business

E-business = the practice of performing & coordinating business processes through the extensive use of information technology (IT) IT = computer and communication

technologies E-business does NOT equal the Internet,

though the growth of the Internet acted as a very powerful catalyst

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Work System = a system in which people and/or machines perform a business process using resources (e.g., information, technology) to create products/services for internal or external customers

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Information System = a work system that processes information, thereby supporting other work systems Capture Transmit Store Retrieve Manipulate Display

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Four Main Themes:

Businesses operate through systems Business professionals are part of all

phases of building & maintaining information systems

Technological advances drive business innovation

The success of IT-based systems is NOT guaranteed

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1. Businesses Operate Through Systems

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Systems & Subsystems

System = a set of interacting components that operate together to accomplish a purpose

Subsystem = a system component Has all the features of a system, but it is part

of a larger system

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Figure 1.2

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System Terminology:

Purpose The reason for the system’s existence The reference for measuring the system’s success

Boundary Separates the system from its environment

Environment Everything pertinent to the system that is outside the

boundary

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Inputs Objects & information that enter the system

from the environment Outputs

Objects & information that enter the environment from the system

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Figure 1.1

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Business Processes & the Value Chain

Business process A related group of steps (subprocesses)

and/or activities that use resources (including information) to create value for internal or external customers

Subprocess = a well-defined part of a process Activity = less well-defined process component Often an important role of IT is to transform an

activity into a better-defined subprocess

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A process must add value for its customers

Always analyze whether a process or subprocess adds value or not An obvious but surprisingly often overlooked

point

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Business Processes & Functional Areas

Traditional organizational structure is centered around functional areas May reinforce an inward-looking orientation

Functional silos

Current trend: reorganize around customer-oriented processes

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Three Types of Processes

Processes that cross functional areas

Processes related to a specific functional area

Activities & subprocesses occurring in every functional area

Possible problems when functional areas are overemphasized

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The Value Chain

The set of processes used by a firm to create value for its customers. Includes: Primary processes – directly create the

value as perceived by the customers Support processes – indirectly create value

by supporting the primary processes

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Figure 1.4

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The Supply Chain & the Customer Experience (Fig. 1.5)

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Supply chain – the transactions, coordination, and movement of goods between the firm and its suppliers

Each layer provides an opportunity to increase value to the customer and/or improve efficiency Basic approach:

Standardized electronic links Long-term agreements

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The Trend Toward E-Business

Much more than a cool Web site! E-commerce – the part of e-business that

the customer experiences directly B2B (business-to-business) vs. B2C

(business-to-consumer)

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2. Phases in Building & Maintaining Systems

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Figure 1.7 – Business Professionals Play an Important Role in All 4 Phases

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1. Initiation

Defining the need for a new work system or for the change of an existing one

May occur as result of a known problem, or as part of a planning process

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2. Development

Acquiring & configuring hardware, software, and other resources Decide how the different parts of the system

will operate Acquire the resources Create the documentation Testing

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3. Implementation

Making the new process operational Planning User training Conversion to the new system Follow-up

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4. Operation & Maintenance

Supporting the ongoing operation of the system + efforts to enhance it and correct possible problems

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Table 1.4

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3. IT As a Driving Force for Innovation

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Main Trends

Greater miniaturization, speed, and portability

Greater connectivity + continuing convergence of computing and communications

Greater use of digitized information & multimedia

Better software and user interfaces

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4. Obstacles When Applying IT in the Real World

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Unrealistic Expectations & Techno-hype

Technology is almost never a solution by itself Often vendors claim to “sell solutions”

Be skeptical about the Internet hype

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Difficulty Building & Modifying IT Systems

Factors most often associated with success: User involvement Executive support Clear statement of requirements Proper planning Realistic expectations

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Difficulty Integrating IT Systems

One of the most difficult issues – examples: Medicare’s insurance claims (aborted) system

A unified system would have had to integrate 72 72 existing systems, built & operated by different insurance companies

Y2K problem Integrated supply chains

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Organizational Inertia

Often a change that has a positive impact in some areas, may also have a negative impact in other areas

Natural tendency of both organizations & individuals to resist change

Overcoming inertia may require a consistent effort across all phases of the system life cycle

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Genuine Difficulty Anticipating What Will Happen

No one really knows how a particular innovation will develop in time

Eye-opening examples in table 1.7