Applying Information Systems to BusinessApplying Information Systems to Business

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APPLYING INFORMATION

SYSTEMS TO BUSINESS

Submitted by:

Ankit Luthra 06502922

Ankush Sharma 09609077

Namrata Mittal 09609145

18/16/2010 APPLYING INFORMATION SYSTEMS IN BUSINESS


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Key elements which shape the

environment of anorganization :

1. Economic Environment

2. Social Environment

3. Physical Environment

4. Political Environment



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Economic Systems And Actors

Major processes relevant to Economic Systems :

Production - Activities concerned with creation of goods/Services

Distribution -Processes of collection, storage and movementof goods

Consumption - Processes by which consumers receive/usegoods and services.



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Regulators: Organizations thatset policies for appropriateeconomic activities

Competitors: Otherorganizations in the samefundamental area of business Partners: Organizations that co-operate in provision ofgoods/services Suppliers: Organizationsproviding resources to theorganization Customers:Individuals/Organizationspurchasing products/servicesfrom the organization



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Competitive StructureOf The Industry

Relative Power of

Buyers and Sellers

Basis Of Competition

State OfRegulation in

Economic Environment

State of TechnologicalDeployment in theEnvironment

Industry Growth

Relationships between the Key Economic Players



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Goods : Product produced byan organization or distributedto the customer

FURTHERCLASSIFICATION

Tangible Goods : PhysicalGoods. Eg. Washingmachines, TVs.

Intangible Goods : Non-Physical Goods. Eg. Movies,Music

Services : Activity performed byan organization for thecustomer

FURTHERCLASSIFICATION

Tangible Services : Thosewhich can be deliveredelectronically. Eg. News

Reports, Monetary Transfers

Intangible Services: Serviceswhich cannot be deliveredelectronically. Eg. HealthTreatments, Beauty Treatments



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Goods and Services are notmutually exclusive

Associated with the flow

of any goods and servicesthrough production,distribution andconsumption is also a flowof transactions

A transaction is a datastructure that records acoherent unit of activity

The 5 main transactions in a Trading relationship



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Primary Activities :The core competencies ofan organisation.

Inbound LogisticsOperationsOutbound LogisticsMarketing SalesAfter-Sales Services

Secondary Activities :Activities important tosuccessful operation of the

primary activities.Infrastructure ActivitiesHuman ResourceManagementTechnology Development

Procurement



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HUMAN RESOURCE MANAGEMENT

CORPORATE INFRASTRUCTURE

TECHNOLOGY DEVELOPMENT

PROCUREMENT

INBOUN

D

LOGISTI

CS

OPERAT

IONS

OUTBOU

ND

LOGISTI

CS

MARKETI

NG and

SALES

AFTER

SALES

SERVIC

E

PRODUCT

SERVICE

CUSTOME

R

The Value Chain



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Supply chain, customer chain and community chain

An economic system consists of a complex network of chains which areknown as the wider value network

SUPPLIER

SUPPLIER

CHANNEL ORGANIZATION

INTERMEDIARY

VALUE

VALUE

DIRECT SUPPLIER

INTERMEDIARY

VALUE

COMPAN

Y

VALUE

VALUE

VALUE

The Supply Chain



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The Customer Chain

COMPANY

INTERMEDIARYINTERMEDIARY

INTERMEDIARY

LOCAL

CUSTOM

ER

GLOBAL

CUSTOM

ER

VALUE VALUEVALUE

VALUEVALUE

Customer chain is the demand chain of the business

It distinguishes local customers and export customers in a global marketplace



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Commerce

Economic process which deals with the exchange of goods and services fromproducer to final consumer.Activities involved:Pre-sale activities: occur before a sale is made

Sale execution: consists of the activities involved in the actual saleSale settlement: involves those activities that complete the saleAfter sale: activities take place after the buyer has received the product orservice

Each of these activities generates a range of transactions, one of the most

prominent types of which is payment.



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Value networks

uto o ile anufacturing

Internal Supplier

Component Supplier

Vehicle Assembly Dealer Network

Custom

er

Componen

ts

Components

Cars forsafe

Sold

cars

Insurance

Insurance Company

Internal Supplier

Internal Supplier

Custom

erInsurance

Products

Customer Insurance

Customer Insurance



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An important feature of a product or service is its price. Items are distinguishedbetween:Low-priced items,Low to medium priced items,Medium to high priced items, andHigh priced itemsThe price of an item is often related to product complexity and asset specificity.

Asset SpecificityDegree to which an organization has inputs that are specific to it, and cannotreadily be used by another firm. This might involve its location, human knowledgeor physical attributes.

Product ComplexityAmount of information buyers need to make a selection between rival products.



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Types of CommerceBased on frequency and the point at which payment is made:

Repeat commerce: regular repeat transactions between trading partnersCredit commerce: irregular transactions and the process of settlement and executionare separatedCash commerce: irregular one-off transactions paid for at the time of purchase



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Social Networks

A network is a set of nodes connected by links of some form.



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Communities generate value just like organization. However, the value ofcommunity lies not in its physical or financial capital, but in it social capital.Social Capital is the productive value of people engaged in dense network ofsocial relations.The value of a social network does not directly correspond to its identity or

connectedness. Of equal importance is the quality of the links.It has been proposed that technology, particularly ICT, can be important insocial networks with both strong and weak linksBusinesses are interested in the community chain and social networksbecause they can take advantage of the social capital such as increased levels of

trust.Social networks spread information about goods and services, both good andbad, and this process can be used to try to grow sales.



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An economy can be seen as a system that controls the flowof goods and services along chains of value.

There are three possible approaches to control and govern

that flow:

Markets

Hierarchies

Networks.

Markets, hierarchies and networks are mechanisms for bothcoordination and governance.

Coordination concerns how elements are made to act

together.

Governance concerns the regulation of elements.



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` A transaction cost is a cost incurred in making aneconomic exchange.

` For example, a transaction cost of undertaking a

deal on the stock market (buying or selling afinancial security) is a commission paid to a broker.



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We can classify markets and hierarchies using the balance ofproduction costs to coordination (transaction) costs, and thebalance of asset specific city to the complexity of a product.

` Markets are generally characterized by low production costs and high

coordination costs also tend to be good for low product complexity and low asset

specific city

` Hierarchies typically have high production costs and low coordination

costs are good for high asset specific city and high product

complexity



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` A business model specifies the structure and dynamics of an

organisation in terms of, for example, its major products and/orservices, key stakeholders, costs and benefits of particular modes of

operation and key revenue flows.

` Linder and Cantrell (2000) define a business

model as the organisations core logic for creating

value, and from this angle it is useful in relating

business strategy to business processes to

information systems.

` Osterwalder and Pigneur (2002) describe a business model as theconceptual and architectural implementation of a business strategy thatrepresents the foundation for the implementation of business processesand information systems.



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` Value-chain

Value-chain model has been applied in many differentsettings, it has also received plenty of criticism. Forinstance, it is seen as more applicable to physicalproducts than to services; it under-emphasises the role ofinformatics infrastructure in the delivery of value

` Value-network The idea of the value network is that organisations

interrelate and interact in complex networks of value

production, distribution and consumption. A particularorganisation will take on roles in a number of differentchains of value.



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Value-Network analysis Value-network analysis is an extension of value-chain

analysis which focuses on the activities and relationships ofthe business with external stakeholders. It looks for ways ofdisaggregating or deconstructing the value network, as wellas ways of re aggregating or reconstructing it.

Value-stream analysis A combination of process modeling approaches and

information systems modeling constructs can be used toconduct both value-chain and value-network analyses.

Collectively this is called value-stream analysis, and itsobjective is to improve the efficiency of both internal andexternal processes, frequently through the application ofICT.



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` Identifying in close detail the nature of the value produced by theorganisation. Distinctions between tangible and intangible products andservices can help highlight potential areas for change.

` Drawing a map of the current value stream. Techniques such as activity

systems modelling, process modelling and information systemsmodelling come in here.

` Conducting an assessment of the existing value stream. This usescriteria such as thethree Es of performance (efficacy, efficiency andeffectiveness). It should consider ways of improving the performance of

activities and the flow of physical goods as well as the flow ofinformation. From modelling it may become possible to identifyproblems with the value stream such as wastage in activities or delaysin information handling.



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` Considering ways of redesigning elements of the value stream toeliminate problems. This may involve looking at the role ofintermediaries in supply and customer chains, and deciding whether todisaggregate or re aggregate. The role of ICT in improving the flow ofinformation and integrating activities needs to be part of this process.

` Defining the new value stream, using a model or a series of models.

` Implementing the new value stream. This needs to take into accountthe scale of change that is both required and feasible. It may involveconsiderable organisational and technological change, and so thedisciplines of project management and change management are likely tobe critical to success.



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