Information Systems Defined © Gabriele Piccoli Chapter 2 Basic definitions and foundational Information Systems concepts.

Information Systems Defined

© Gabriele Piccoli

Chapter 2

Basic definitions and foundational Information Systems concepts

© Gabriele Piccoli

Course Roadmap

• Part I: Foundations– Chapter 1: Introduction– Chapter 2: Information Systems Defined– Chapter 3: Organizational Information Systems and

Their Impact

• Part II: Competing in the Internet Age• Part III: The Strategic use of Information Systems• Part IV: Getting IT Done

© Gabriele Piccoli

Learning Objectives

1. Be able to define information system (IS) and information technology (IT). Understand the difference between the two.

2. Be able to define information system success and information system failure.

3. Be able to explain why modern firms create and deploy information systems.

4. Be able to discuss the role that the firm’s context and the external environment play in shaping organizational information systems.

5. Be able to describe the four components that make up an information system. Understand how they interact through systemic effects.

6. Be able to discuss how to design successful information systems.

7. Be able to troubleshoot problematic information systems implementations.

Introduction

• Organizations around the world continue to spend significant amounts of money on IT

• These investments must pay off

• For investments to pay off you cannot have a narrow focus on IT

© Gabriele Piccoli

© Gabriele Piccoli

Information System: Definition

Formal, socio-technical, organizational systems designed to collect, process,

store, and distribute information

• Formal Ferrari’s supply chain system• Informal Facebook

IS ≠ IT

• Ricasoli Winery – 1141: Opened – Oldest winery in Italy

• Did they have an information system in 1141?

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Courtesy of Barone Ricasoli

© Gabriele Piccoli

IS ≠ IT

• Hilton Hotels– 1919: Opened – Did they have an

information system in 1919?

Photo by Jim Henderson (public domain)

© Gabriele Piccoli

IS ≠ IT

• Hilton Hotels– 1919: Opened – 1963: First

implementation of computers in hospitality (New York Hilton)

Photo by Jim Henderson (public domain)

© Gabriele Piccoli

Information System Components

• Technology

• Process

• People

• Structure

© Gabriele Piccoli

Why is this Important?

• You need a solid understanding of the characteristics of each of the four components

• You need an appreciation of how they relate and interact with one another

• In order to make appropriate business decisions as a general or functional manager

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#1: Information Technology

• Hardware Devices– Servers, smartphones, game consoles

• Software Tools– Microsoft Office, foursquare app

• Telecommunication Devices – Internet

• IT is a cornerstone of any modern IS• IT enables and constrains action through

rules of operation that stem from its design

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Don’t Forget!

The design of IT enables and constrains the behavior of the Information System

“Software, particularly a custom developed application,

is an opinion of how data should be represented,

organized, and manipulated”

© Gabriele Piccoli

#2: Process

• The series of steps necessary to complete a business activity

• Examples:– Check-in at a hotel – Credit approval at a bank– Paying bills online

• There are multiple ways to perform the same activity

• Processes are designed to be efficient & effective

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Don’t Forget!

Official business process

Informal process

Processes evolve and change over time, often away from the

original design

Comparison

Formal Business Process• Check the inventory and identify

the needed items• Call individual suppliers for

quotes and delivery dates• Compare the various quotes• Select one or more suppliers for

each of the needed items based on the terms of the agreement

• Call these suppliers and place the orders

• Receive the goods upon delivery, checking the accuracy and quality of the shipped items

• Pay the suppliers according to agreed upon terms.

Informal Process

Restock inventory when needed

© Gabriele Piccoli

© Gabriele Piccoli

#3: People

• Those individuals or groups directly involved in the information system– End-users– Managers

• Addressing their needs is a critical concern when designing and implementing a new Information System

• Failure to do so will result in the failure of your information systems

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#4: Structure

• The organizational structure component encompasses: – Organizational design

• Hierarchy, decentralized, loose coupling

– Reporting configuration• Functional, divisional, matrix

– Organizational relationships • Communication and reward mechanisms• Culture

Systemic Effects

• The four components of an Information System are Interdependent

• Changes in one component may affect all others

• You must ensure the proper interaction of IT with the other components

© Gabriele Piccoli

© Gabriele Piccoli

The Purpose of Information Systems

• Fulfilling organizational processing needs

• Improving efficiency and effectiveness while reducing cost

• Achieving a (specified) Information System goal.– Example: Movie theaters

– Goal: Offering customers the ability to purchase tickets online will improve the effectiveness of the theater by reducing the lines and inconvenience at the ticket counter

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Information Systems Success

• Has the system delivered expected results?

• What are some of the unintended results?– Positive– Negative

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IS Success can be Elusive

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Don’t Forget!

• Every organization is unique

• Even fierce competitors often have different:– Firm strategies: The manner in which the

organization intends to achieve its objectives.– Firm cultures: The collection of beliefs,

expectations, and values shared by the members of an organization.

– Infrastructures: The technological backbone of the firm.

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External Environment

• External environment: – The legal and regulatory context– The competitive landscape– The general business and social trends

surrounding the organization

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Information Systems in Context

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Information Systems and Organizational Change

First Order Change:

Automate

Second Order

Change: Informate

Third Order Change:

Transform

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First Order Change: Automate

• First order change only affects the technical subsystem

• Thus, it is:– Easiest to envision– Easiest to justify– Easiest to manage

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Second Order Change: Informate

• Second order change affects the people component

• It provides more of an implementation challenge

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Third Order Change: Transform

• Third order change affects organizational structures

• It seeks to transform how the organization operates

• It requires significant managerial and executive involvement

Organizational Culture

• Firms have a culture

• They assume an organizational culture that fits with an individualistic, egalitarian or uncertainty tolerant mindset

• There has to be a harmonious relationship between organizational culture and the IS design in order for the IS to be effective in the firm

© Gabriele Piccoli

© Gabriele Piccoli

Implications

• IT should NOT be the start of your Information System design process– Strategy may be inspired, not driven, by IT – IT selection is a point of arrival not departure

• Never forget Systemic Effects– components of an IS mutually influence one

another • Anticipate the “ripples”

– You must anticipate & manage systemic effects

Implications

• IS evolve over time. You must:– Evaluate individual IS components regularly– Assess how different organizational systems

work together to support the business

• Optimize the Information System as a whole, not the components individually

• Organizations are dynamic– They need to be re-evaluated often

© Gabriele Piccoli

The Recap

• Information systems are designed and built with the objective of improving the firm’s efficiency and effectiveness by fulfilling its information processing needs.

• Success can only occur when the systems that are used achieve their intended goals

• Information systems exist in an organizational context, characterized by the firm strategy, culture, and IT infrastructure.

• Every organization is subject to the influences of an ever-changing external environment, including regulatory requirements, social and business trends, and competitive pressures.

© Gabriele Piccoli

The Recap

• New IS components bring about organizational change.

• Information systems are subject to systemic effects

• You will need to manage these systemic effects in order to realize information system objectives and expected outcomes

© Gabriele Piccoli

© Gabriele Piccoli

What We Learned

1. The definition of information system (IS) and information technology (IT) and the difference between the two.

2. The definition of information system success and information system failure.

3. The principal reasons why modern firms create and deploy information systems.

4. To recognize and manage the influence of a firm’s context and of the external environment organizational information systems design and success.

5. The four components that make up an information system and the ways in which they interact.

6. How to design successful information systems and how to troubleshoot problematic information systems implementations.