Chapter 1 Transforming Business and Management

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The Information Systems The Information Systems Revolution: Revolution:

Transforming Business Transforming Business and Managementand Management

Chapter

• What is the role of information systems in What is the role of information systems in today’s competitive business environment?today’s competitive business environment?

• What exactly is an information system? What exactly is an information system? What do managers need to know about What do managers need to know about information systems?information systems?

• How are information systems transforming How are information systems transforming organizations and management?organizations and management?

Chapter 1Chapter 1

OBJECTIVES

• How has the Internet and Internet technology How has the Internet and Internet technology transformed business?transformed business?

• What are the major management challenges What are the major management challenges to building and using information systems?to building and using information systems?

OBJECTIVES

Chapter 1Chapter 1

1. Design competitive and effective systems1. Design competitive and effective systems

2. Understand system requirements of 2. Understand system requirements of global business environment global business environment

3. Create information architecture that 3. Create information architecture that supports organization’s goalsupports organization’s goal

MANAGEMENT CHALLENGES

Chapter 1Chapter 1

4. Determine business value of information 4. Determine business value of information systemssystems

5. Design systems people can control, 5. Design systems people can control, understand and use in a socially, ethically understand and use in a socially, ethically responsible mannerresponsible manner

MANAGEMENT CHALLENGES

Chapter 1Chapter 1

The Competitive Business Environment and the Emerging Digital Firm

WHY INFORMATION SYSTEMS?

Four powerful worldwide changes that Four powerful worldwide changes that

have altered the business environment:have altered the business environment:

1.1. Emergence of the Global EconomyEmergence of the Global Economy

2.2. Transformation of Industrial EconomiesTransformation of Industrial Economies

3.3. Transformation of the Business EnterpriseTransformation of the Business Enterprise

4.4. The Emerging Digital FirmThe Emerging Digital Firm

Chapter 1Chapter 1


Emergence of the Global Economy (1)Emergence of the Global Economy (1)• Many countries in Asia and Europe are depends Many countries in Asia and Europe are depends

on imports and exportson imports and exports• Success of a firm is depends on their ability to Success of a firm is depends on their ability to

operate globallyoperate globally• Globalization of the world’s industrial economies Globalization of the world’s industrial economies

enhances the value of information to firm, enhances the value of information to firm, therefore they required a powerful IS like Internettherefore they required a powerful IS like Internet– Values of communications: to control trade

with distributors and suppliers, control global corporation, operate 24 hours a day worldwide


Chapter 1Chapter 1


Emergence of the Global Economy (2)Emergence of the Global Economy (2)• Globalization has cause a stiff competition Globalization has cause a stiff competition

for local business.for local business.– Customer has more choices and ways to buy

products, can shop 24 hours a day, information is more available at anytime


Chapter 1Chapter 1


Transformation of Industrial EconomiesTransformation of Industrial Economies• Transform to knowledge- and information-Transform to knowledge- and information-

based economies based economies lead to knowledge- and lead to knowledge- and information-intense productsinformation-intense products– Products that requires a great deals of learning and

knowledge to produce, i.e. computer games• Information technology has contribute to increase Information technology has contribute to increase

productivity (computerised factory machines), new productivity (computerised factory machines), new products and services (credit card, faster delivery, products and services (credit card, faster delivery, worldwide reservation system)worldwide reservation system)

• IS is needed to smoothen the flow of information to IS is needed to smoothen the flow of information to maximize the used of company resources maximize the used of company resources


Chapter 1Chapter 1

Figure 1-1

Labor Force Composition 1900-1997


Chapter 1Chapter 1


Transformation of the Business EnterpriseTransformation of the Business Enterprise

• FlatteningFlattening• DecentralizationDecentralization• FlexibilityFlexibility• Location independenceLocation independence• Low transaction and coordination costsLow transaction and coordination costs• EmpowermentEmpowerment• Collaborative work and teamworkCollaborative work and teamwork


Chapter 1Chapter 1


Emergence of the Digital FirmEmergence of the Digital Firm• Digitally-enabled relationships with customers, Digitally-enabled relationships with customers,

suppliers, and employeessuppliers, and employees• Core business processes accomplished via digital Core business processes accomplished via digital

networksnetworks• Digital management of key corporate assetsDigital management of key corporate assets• Rapid sensing and responding to environmental Rapid sensing and responding to environmental

changeschanges• For example, Amazon-E-commerce company, For example, Amazon-E-commerce company,

banks - E-banking, AirAsia – E-ticking system, E-banks - E-banking, AirAsia – E-ticking system, E-genting for room booking, etc.genting for room booking, etc.


Chapter 1Chapter 1

System ConceptsSystem Concepts

• SystemSystem– Set of elements or components that

interact to accomplish goals

• Components of a systemComponents of a system– Inputs – Processing mechanisms– Outputs– Feedback

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System Concepts (continued)

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What is a System? (continued)

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What is an Information System?

Input, Processing, Output, FeedbackInput, Processing, Output, Feedback

• InputInput– Activity of gathering and capturing raw data

• ProcessingProcessing– Converting data into useful outputs

• OutputOutput– Production of useful information, usually in the

form of documents and reports• FeedbackFeedback

– Information from the system that is used to make changes to input or processing activities

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Why Learn About Information Systems?Why Learn About Information Systems?

• Information systems used in most professionsInformation systems used in most professions– Sales representatives– Managers– Financial planners

• Information technology can help business in Information technology can help business in improving business processes, managerial improving business processes, managerial decision making and workgroup decision making and workgroup collaborations.collaborations.

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A set of interrelated components that collectA set of interrelated components that collect

(or retrieve), process, store, and distribute (or retrieve), process, store, and distribute

information to support decision making and information to support decision making and

control in an organization control in an organization

What Is an Information System?

Information ConceptsInformation Concepts

• Information Information – One of an organization’s most valuable

resources – Often confused with the term data

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• Data:Data: Streams of raw facts representing Streams of raw facts representing events such as business transactionsevents such as business transactions

• Information:Information: Clusters of facts that are Clusters of facts that are meaningful and useful to human beings in meaningful and useful to human beings in the processes such as making decisionsthe processes such as making decisions


Figure 1-2

Data and Information


INPUT OUTPUTPROCESS

FEEDBACK

Activities in an Information System

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Activities in Information SystemActivities in Information System

• Input: collect and introduce data to systemInput: collect and introduce data to system– Transaction: a business event, usually

entered as input– Transaction processing system (TPS): a

system that records transactions– Input devices include keyboards, bar code

readers, voice recognition systems, touch screens

• Data processing: perform calculations on inputData processing: perform calculations on input

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Activities in Information SystemActivities in Information System

• Output: what is produced by the Output: what is produced by the information systeminformation system– Output devices include printers and

speakers

• Storage: maintaining vast amounts Storage: maintaining vast amounts of dataof data– Storage devices include optical discs

Information Systems in OrganizationsInformation Systems in Organizations

• Trends that have made information systems important Trends that have made information systems important in business:in business:– Growing power and decreasing cost of computers– Growing capacity and decreasing costs of data

storage devices– Increasing variety and ingenuity of computer

programs– Available, reliable, affordable, and fast

communications links to the Internet– Growth of the Internet– Increasing computer literacy of the workforce

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Management Information Systems, Sixth Edition 27

Information Systems in Organizations Information Systems in Organizations (continued)(continued)

• Single set of hardware, software, databases, Single set of hardware, software, databases, telecommunications, people, and procedures telecommunications, people, and procedures – That are configured to collect, manipulate, store,

and process data into information• Technology infrastructure Technology infrastructure

– Includes all hardware, software, databases, telecommunications, people, and procedures • Configured to collect, manipulate, store, and Configured to collect, manipulate, store, and

process data into informationprocess data into information

Computer-Based Information System (CBIS)

• Information systems literacy:Information systems literacy: Broad- Broad-based understanding of information systems based understanding of information systems that includes behavioral knowledge about that includes behavioral knowledge about organizations and individuals using organizations and individuals using information systems as well as technical information systems as well as technical knowledge about computers.knowledge about computers.

• Computer literacy:Computer literacy: Knowledge about Knowledge about information technology, focusing on under-information technology, focusing on under-standing how computer-based technologies standing how computer-based technologies workwork

A Business Perspective on Information Systems

ORGANIZATIONSORGANIZATIONS TECHNOLOGYTECHNOLOGY

MANAGEMENTMANAGEMENT

INFORMATIONINFORMATION

SYSTEMSSYSTEMS

Figure 1-4

Using information systems

Effectively requires an

Understanding of the

Organization, management

And information technology

Shaping the system.

A Business Perspective on Information Systems

• Information systems are a part of organizations.

• key elements of an organizations are its– People– Structure– Operating procedures,– Policies– Culture

• An organization coordinates work through a structured hierarchyand formal, standard procedures

A Business Perspective on Information Systems - Organization

Managerial roles and decisions are Managerial roles and decisions are different at different levels:different at different levels:

• Senior managers:Senior managers: make long-range strategic make long-range strategic decisions about products and services decisions about products and services

• Middle managers:Middle managers: Carry out the programs Carry out the programs and plans of senior managementand plans of senior management

• Operational managers:Operational managers: monitor the firm’s monitor the firm’s daily activities daily activities

A Business Perspective on Information Systems - Management

Tools managers use to cope with changeTools managers use to cope with change

• Hardware:Hardware: Physical equipment Physical equipment

• Software:Software: Detailed preprogrammed instructions Detailed preprogrammed instructions Storage: Storage: Physical media for Physical media for

storing data and the softwarestoring data and the software

A Business Perspective on Information Systems - Technology

• Communications Technology:Communications Technology: transfers data from one physical location transfers data from one physical location to anotherto another

• Networks:Networks: link computers to share data link computers to share data or resourcesor resources

A Business Perspective on Information Systems - Technology

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Business Information Systems

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Business Information Systems (continued)

• 1950s:1950s: Technical changes Technical changes

• 60s-70s:60s-70s: Managerial controls Managerial controls

• 80s-90s:80s-90s: Institutional core activities Institutional core activities

Growing ImportanceGrowing Importance

THE NETWORK REVOLUTION AND THE INTERNET

The Widening Scope of Information Systems

Chapter 1Chapter 1

Figure 1-8



Chapter 1Chapter 1



Chapter 1Chapter 1

• Over time, IS have play a major role in Over time, IS have play a major role in an organization.an organization.

• From it affect the changes in technical From it affect the changes in technical to managerial control and behavior, and to managerial control and behavior, and then now towards influenced ‘core’ then now towards influenced ‘core’ activities in products, markets, activities in products, markets, suppliers and customers.suppliers and customers.

• Flattening organizations Flattening organizations – - to remove the layer of management and work as peer and

team.• Separating work from location Separating work from location

– thru email, Internet and video conferencing• Reorganizing work-flowsReorganizing work-flows

– Computerized information system has slowly replacing manual system where it able the staff to complete the work more efficient and effectively.

• Increasing flexibilityIncreasing flexibility– Companies can use communications technology to organize

in more flexible ways• Redefining organizational boundaries Redefining organizational boundaries – to have a – to have a

networked information systems networked information systems • The changing management process - The changing management process - from manual from manual

system to computerized processsystem to computerized process

New Options for Organizational Design

Figure 1-9

TOWARD THE DIGITAL FIRM

Flattening Organizations Information Systems

Chapter 1Chapter 1


How Information Technology Increases organizational Flexibility

Chapter 1Chapter 1

Small companiesSmall companies

• Desktop machines, inexpensive computer-aided design (CAD) Desktop machines, inexpensive computer-aided design (CAD) software, and computer-controlled machine tools provide the software, and computer-controlled machine tools provide the precision, speed and quality of giant manufacturers.precision, speed and quality of giant manufacturers.• Information immediately accessed by the telephone and Information immediately accessed by the telephone and communications links eliminate the need for research staff and communications links eliminate the need for research staff and business libraries.business libraries.

Large companiesLarge companies

• Custom manufacturing system offer customized productsCustom manufacturing system offer customized products• Massive databases of customer records to analyze the customer Massive databases of customer records to analyze the customer preferencespreferences• Information can help lower level employees to solve problem Information can help lower level employees to solve problem more easilymore easily

Figure 1-10

Redesigned Work Flow For Insurance Underwriting


Chapter 1Chapter 1

An application requiring 33 days in a paper system would only take 5 days using

computers, networks and a streamlined work flow.

• Electronic commerce: Electronic commerce: The buying and selling, marketing and servicing and delivery and payment of products/services and information over the Internet.

• Electronic business Electronic business : The use of Internet : The use of Internet technologies to internetwork and empower technologies to internetwork and empower business processes, electronic commerce and business processes, electronic commerce and enterprise communication and collaboration within enterprise communication and collaboration within a company.a company.

• Electronic marketElectronic market: Information systems links, : Information systems links, buyers and sellers to exchange information, buyers and sellers to exchange information, products, services, paymentsproducts, services, payments


Figure 1-11


• Internet links buyers, sellersInternet links buyers, sellers

• Lower transaction costsLower transaction costs

• Goods and services advertised, bought, Goods and services advertised, bought, exchanged worldwideexchanged worldwide

• Business-to-business transactions Business-to-business transactions increasingincreasing

Electronic Commerce

• Internet:Internet: Business builds private, secure Business builds private, secure networknetwork

• E-mail, Web documents, group E-mail, Web documents, group software:software: Extends effective Extends effective communication and controlcommunication and control

• Extranet: Extranet: Extension of intranet to Extension of intranet to authorized external usersauthorized external users

Electronic Business

5 key IS 5 key IS challenges confronting managerschallenges confronting managers::

1.1. The Strategic Business Challenge The Strategic Business Challenge How can business use IT to design org that are competitive How can business use IT to design org that are competitive

and effective?and effective? The power of computer hardware and software has grown The power of computer hardware and software has grown

much more rapidly than the ability of org to apply and use this much more rapidly than the ability of org to apply and use this technologytechnology

To stay competitive, many org needs to redesigned by To stay competitive, many org needs to redesigned by making fundamental changes in organizational behavior, making fundamental changes in organizational behavior, develop new business models, design, produce, deliver and develop new business models, design, produce, deliver and maintain goods and servicesmaintain goods and services

Such as using Internet to have e-commerce, e-business, Such as using Internet to have e-commerce, e-business, Intranet or ExtranetIntranet or Extranet

2.2. The Globalization ChallengeThe Globalization Challenge How can firms understand the business and How can firms understand the business and

system requirements of a global economic system requirements of a global economic environment?environment?

To develop integrated, multinational IS, To develop integrated, multinational IS, businesses must develop global hardware, businesses must develop global hardware, software and communication standards and software and communication standards and create cross-cultural accounting and reporting create cross-cultural accounting and reporting structuresstructures

It is to cater selling goods in different countries.It is to cater selling goods in different countries.

5 key IS5 key ISchallenges confronting managerschallenges confronting managers::

3. The Information Architecture and Infrastructure 3. The Information Architecture and Infrastructure ChallengeChallenge

How can org develop an info architecture and IT How can org develop an info architecture and IT infrastructure that supports their business goals ? infrastructure that supports their business goals ?

Creation of a new system involve installation of new Creation of a new system involve installation of new machine which requires redesigning the org and machine which requires redesigning the org and building a new information architecture and building a new information architecture and information technology (IT) infrastructureinformation technology (IT) infrastructure

5 key IS challenges confronting 5 key IS challenges confronting managersmanagers::

INFORMATION ARCHITECTURE OF THE ORGANIZATION

Today’s managers must know how to arrange and coordinate the various computer

technologies and business system applications to meet the information needs of each level of their

organization, and the needs of the organization as a whole.

4.4. The Information System Investment Challenge The Information System Investment Challenge How can organizations determine the business value How can organizations determine the business value

of information systems? of information systems? Tangible benefits : sales increaseTangible benefits : sales increase Intangible benefits: customer satisfaction or even Intangible benefits: customer satisfaction or even

staff is more motivated in doing the worksstaff is more motivated in doing the works


5. 5. The Responsibility and Control Challenge The Responsibility and Control Challenge How can org ensure that their information systems How can org ensure that their information systems

are used in an ethically and socially responsible are used in an ethically and socially responsible manner?manner?

IS must be designed so that they functions as IS must be designed so that they functions as intended produce accurate and reliable information intended produce accurate and reliable information and human can control the processand human can control the process

New problems and challenges of which managers New problems and challenges of which managers are award such as privacy, eliminate jobs performed are award such as privacy, eliminate jobs performed by employees, injuries such as repetitive stress by employees, injuries such as repetitive stress injuryinjury


THE END.THE END.

ANY QUESTIONS???ANY QUESTIONS???

Chapter 1 Transforming Business and Management

Documents

role of information

information systems

information architecture

flow of information

emerging digital firm

management chapter

local business

effective systems