MIS 301 - Information Systems in Organizations Dave Salisbury [email protected] UDMIS.info.

MIS 301 - Information Systems in Organizations

Dave Salisbury

[email protected]

http://www.davesalisbury.com/

UDMIS.info

mailto:[email protected]

http://www.davesalisbury.com/

Copyright 2007 John Wiley & Sons, Inc.

Information Systems: Creating Business Value

John Wiley & Sons, Inc.

Mark Huber, Craig Piercy, and Patrick McKeown


Chapter 4:Business Fundamentals and IT Strategy


What We Will Cover:

• Businesses as Open Systems

• How Businesses Organize to Create Value

• The Value Chain

• Applying IT to Create Business Value

• Strategically Fitting IT to the Organization: A Business Example


Student ROI (Return on Investment)

Your investment of time and effort in this course will result in your being able to answer these questions:

1. Why can organizations be thought of and modeled as open systems?

2. How are organizations structured to optimize business value?

3. How do value chains related to business organizations?

4. In what ways can organizations apply IT to build business value?

5. How can businesses strategically fit IT to the organization?


Businesses as Open Systems• How does a business operate as a system?


Stakeholders and Boundaries

• A stakeholder is a person or entity that has an ________ and an ________ on how a business will function in order to succeed.

• A stakeholder can be ________ or ________ relative to the business.

• All open systems have an ________ ________ which separates them from their environment but still allows them to interact with their environment.


Organizational Stakeholders

What are some specific examples of the organizational stakeholders shown in the figure?


The Business Process

• How do we define a business process?

• Why are “business” processes important to all organizations?

• Two important outputs of business processes are ________ and ________.


Inputs to Open Systems Organizations

Input Type Description

Data, information, and knowledge

Labor

Raw Materials

Capital

Technology


Feedback• Feedback is …

• How is feedback related to a business’ inputs, processes, and outputs?

• Why do businesses use feedback to monitor the efficiency and effectiveness of a given process?

• How and why is feedback related to a business’ business environment?

What is a System?

ManufacturingProcess

Input ofRaw Materials

Output ofFinished Products

Environment

Other Systems

Control byManagement

ControlSignals

ControlSignals

FeedbackSignals

FeedbackSignals

System Boundary

UDMIS.info

What is an Information System?

Input ofData

Resources(Forms)

Data Processing(Updates,Queries)

Output ofInformation(Reports)

System to Support a Business Process

Data Storage

Feedback/Control

UDMIS.info

IS Components/Resources

Input ofData

Resources(Forms)

Data Processing(Updates,Queries)

Output ofInformation(Reports)

System to Support a Business Process

Data Storage

People

Data

Hardware

Software

Network

Other Systems

UDMIS.info

Systems Interact w/ Other Systems

UDMIS.info

Manufacturingand

Production

Engineering &Research

Accounting,Finance, andManagement

Suppliers and Other Business Partners

Procurement, Distribution, and Logistics

Advertising Sales Customer Service

Consumer and Business Customers

Company Boundary

Intranets

The Internet

Extranets

Ex

tra

ne

tsThe Inter-Networked Business

UDMIS.info

Technology versus Systems

• Technology– Computers– Telephones– Tools

• Systems– Intelligent application of technology along with

people and procedures to do something useful

UDMIS.info


Organizing to Create Value

• All business organizations possess structures that organize ________, ________, and ________.

• Types of organizational structures include ________, ____________, and ________ structures.

• In ________ and ____________ structures lines of authority are vertically oriented.

• A ________ organization is a blend of functional and decentralized organizations that uses teams.


Organizational Structures


Advantages of Organizational FormsOrganizational Form Advantages

Functional 1.

2.

3.

Decentralized 1.

2.

3.

Matrix 1.

2.

3.


Disadvantages of Organizational Forms

Organizational Form

Disadvantages

Functional 1.

2.

3.

Decentralized 1.

2.

3.

Matrix 1.

2.

3.


The Value Chain• The value chain is a __________ ________ of

__________, each of which adds value or supports the addition of value to the firm’s goods and services1.

• • Every action an organization takes, from securing the

necessary raw materials (input), to making the goods or service (process), to completing a transaction with a customer (output), is either a __________ activity or __________ activity.

• What is a transaction?

1Porter, M. E., “How competitive forces shape strategy.” Harvard Business Review, 1979, pp. 137-145


An Organizational Value Chain (adapted from Porter)


Primary Activities

• Primary activities are … .

• Example primary activities include inbound logistics (obtaining raw materials), operations (creating the product), outbound logistics (shipping the product), and marketing, sales, and service (selling the product).

• For businesses that you interact with, what are some examples of each of the primary activities?


• How would you define each of the support activities shown above?

• Examples of support activities include… ?.

Support Activities – are value chain activities that an organization conducts to support the creation of business value.


Value Chain Summary

• An organization’s value chain is the sum of its primary and support activities working together to create business value.

• The value chain is another way to view the organization as a system (inputs processes outputs).

• The value chain is also a useful tool for defining an organization’s core competencies and the activities it can pursue to gain a sustained competitive advantage.


IS and IT Support for the Value Chain

Through the intelligent use of IS and IT, a business can increase its competitive advantage.


IS and IT Support for the Value Chain

• Some IS and IT are specific to particular parts of the value chain or departments.

• Other systems, known as __________ __________, support and are used by the entire enterprise through a centralized database and coordinated software modules.

• IT can support almost every activity in the organization as well as helping to transform and integrate differing aspects of the value chain.


Applying IT to Create Business Value

• Automating, informating, and transforming are three ways that IT can be applied to value chain activities to create business value?

• Automating is … .

• Informating is … .

• Transforming is … .


Using IT Automation to Create Business Value

Industry Automation Benefits

Banking ATM machines, online banking

Grocery/ Retail

Barcode inventory systems

Travel Reservation and scheduling systems


Applying Automation

When applying automation within an organization to a single process, management considers answers to questions such as:

1.What is the main goal, and what are the steps of the process?

2.What data and information are required to carry out the process? How does data flow between the steps?

3.How is the process affected by other processes? When should it occur? What starts it? How does the output effect other processes?

Q: As CEO of a hypothetical organization, how would you automate a business process found in your organization?


Automating Cash Withdrawal Process


Informating to Do Things Better

• What is informating?

• How does informating help organizations?

• What is a major advantage of informating versus atuomating?

• Relative to informating, why is it important that an organization know what data is captured and stored as well as where the data is located?


Added Benefits of InformatingIndustry IT Application Benefits from Informating

Banking ATM machines, online banking

Grocery/ Retail

Barcode inventory systems

Travel Reservation and scheduling systems


Transforming to Gain Competitive Advantage

• Since one of the primary goals of a business’s strategy is achieve a sustainable competitive advantage, most businesses have a transforming view of IT.

• What are two ways to obtain a competitive advantage?

• What is a cost advantage?

• What is a differentiation advantage?


A Resource-Based View

• With a resource-based view, a company gains competitive advantage through the development of distinctive competencies.

• Q. - How does a company gain its distinctive competencies? What are some examples?


Using Distinctive Competencies and IT

• Distinctive competencies enable organizations to innovation, product quality, process efficiency, and customer responsiveness.

• IT can assist in all of these areas.• Through automation with IT, a business can

achieve a lower cost structure.• Through informating with IT, a business can

learn new ways to increase or transform its capabilities in order to differentiate its products.


Can Companies Gain a Unique Competitive Advantage with IT?

• A widely held view during the late 1990s and early 2000s was that companies can gain a unique competitive advantage with IT?

• Dr. Nicolas Carr argued that since the core functions of IT are available and affordable to all companies, it isn’t possible to gain competitive advantages with IT alone.

• If a company can automate a particular process, so can its competitors.

• Competitive advantage only comes from doing things other companies can’t do.

• A widely held view is that competitive advantage comes from the intelligent application of IT to support business strategies and to leverage distinctive competencies.

IT as advantage vs. necessity

• Strategic Advantage– If you’re first, a novel technology creates an

advantage

• Strategic Necessity– Eventually, technology-based gains are lost

because they are easily replicable

UDMIS.info

Information TechnologySupports Strategic Management• Innovative applications

Create innovative applications that provide direct strategic advantage to organizations.

• Competitive weaponsInformation systems themselves are recognized as a competitive weapon

• Changes in processesIT supports changes in business processes that translate to strategic advantage

• Links with business partnersIT links a company with its business partners effectively and efficiently.

UDMIS.info

Porter’s Competitive Forces Model

Bargaining Power

Bargaining Power

Threat

Threat

UDMIS.info

Sample Competitive Strategies• Operational

effectiveness• Customer-orientation• Entry-barriers• Lock in customers or

suppliers• Increase switching

costs

• Cost Leadership• Differentiation• Niche• Growth• Innovation• Alliance

UDMIS.info


Strategically Fitting IT to the Organization

• Four views of a how a business can derive benefit by applying IT to the organization:1. 2. 3. 4.

• When applying IT, organizations must consider:1. 2. 3. 4.

• Q. - What can happen if organizational leaders do not ensure that IS and IT strategically fit an organization?


IT Application Newspaper Example

View Scope Benefits ExampleSupport of value chain

Organization-wide System view

Focus on value-adding activities

Fits IT to organization

Use subscription data to forecast demand

Use demographic data for target marketing and improved customer service

Automating Process/Transaction Cost reduction, efficiency, quality, and consistency

Online subscription reduces printing and handling costs

Informating Process/Transaction Knowledge and learning of core competencies

Use transaction data to understand subscription process and customers

Transforming/ Competitive advantage

Organization-wide Connects automating and informating of processes to strategy

Develop a unique competency for delivering targeted content to customer segments

MIS 301 - Information Systems in Organizations Dave Salisbury [email protected] UDMIS.info.

Documents

business valuejohn wiley

business business environment

business inputs

business fundamentals

business examplecopyright

business processhow

business processes important

information systems