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Mis9 Ch01 Ppt

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    1.1 2006 by Prentice Hall

    1Chapter

    Managing the DigitalManaging the Digital

    FirmFirmManaging the DigitalManaging the Digital

    FirmFirm

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    OBJECTIVES

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Explain why information systems are soimportant today for business and management

    Evaluate the role of information systems intodays competitive business environment

    Assess the impact of the Internet and Internettechnology on business and government

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    Define an information system from both atechnical and business perspective anddistinguish between computer literacy andinformation systems literacy

    Identify the major management challenges tobuilding and using information systems

    OBJECTIVES (Continued)

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    DaimlerChrysler Case

    Challenge: 104 plants, 37 countries, 14,000 suppliers

    Solutions: Integrated Volume Planning System connects demand side of business with

    suppliers, reducing inventories.

    Powerway helps 3,400 suppliers track parts and quality, reducing errors.

    Demonstrates ITs role in operational excellence, better quality products, and agilitytime tomarket

    Illustrates the emerging digital firm landscape where information can flow seamlessly

    among business partners to create a superior customer experience

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    1.5 2006 by Prentice Hall

    WHY INFORMATION SYSTEMS?

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Capital managementCapital management

    Foundation of doing businessFoundation of doing business

    ProductivityProductivity

    Strategic opportunity and advantageStrategic opportunity and advantage

    Why Information Systems MatterWhy Information Systems Matter

    There are four reasons why IT makes a difference to theThere are four reasons why IT makes a difference to the

    success of a business:success of a business:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    IT is the largest single component of capitalinvestment in the United States.

    About $1.8 trillion is spent each year by Americanbusinesses.

    Managers and business students need to know howto invest this capital wisely.

    The success of your business in the future maywell depend on how you make IT investment

    decisions.

    Capital Management:Capital Management:

    WHY INFORMATION SYSTEMS?

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Information Technology Capital InvestmentInformation Technology Capital Investment

    Figure 1-1

    WHY INFORMATION SYSTEMS?

    Source: Based on the data in U.S. Department ofCommerce, Bureau of Economic Analysis, National

    Income and Product Accounts, Tables 5.2 and 5.8,2004.

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Most businesses today could not operate withoutMost businesses today could not operate without

    extensive use of information systems andextensive use of information systems and

    technologies.technologies.

    IT can increase market share.IT can increase market share.

    IT can help a business become a high-quality,IT can help a business become a high-quality,

    low-cost producer.low-cost producer.

    IT is vital to the development of new products.IT is vital to the development of new products.

    Foundation of doing business:Foundation of doing business:

    WHY INFORMATION SYSTEMS?

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    The Interdependence between Organizations andThe Interdependence between Organizations and

    Information SystemsInformation Systems

    Figure 1-2

    WHY INFORMATION SYSTEMS?

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    IT is one of the most important tools managershave to increase productivity and efficiency ofbusinesses.

    According to the Federal Reserve Bank, IT hasreduced the rate of inflation by 0.5 to 1% in thelast decade. For firms this means IT is a majorfactor in reducing costs.

    It is estimated that IT has increased productivityin the economy by about 1% in the last decade.For firms this means IT is a major source of labor

    and capital efficiency.

    WHY INFORMATION SYSTEMS?

    Productivity:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Create competitive advantage: IT makes itpossible to develop competitive advantages.

    New Business Models: Dell Computer has builtits competitive advantage on an IT enabled build-to-order business model that other firms have not

    been able to imitate.

    WHY INFORMATION SYSTEMS?

    Strategic Opportunity and Advantage:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Create new services: eBay has developed thelargest auction trading platform for millions of

    individuals and businesses. Competitors havenot been able to imitate its success.

    Differentiate yourself from your competitors:

    Amazon has become the largest book retailer inthe United States on the strength of its hugeonline inventory and recommender system. It hasno rivals in size and scope.

    WHY INFORMATION SYSTEMS?

    Strategic Opportunity and Advantage:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Carr has written that whatever advantages firmsbuild using IT can be easily copied by

    competitors.

    This view is not supported by the evidence:Amazon, eBay, Dell, Wal-Mart and Apple's

    iTunes are just a few firms that have built andmaintained technology-based advantages.

    How Much Does IT Matter?

    WHY INFORMATION SYSTEMS?

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Commoditization of technology is typically aspur to innovation and new business models,

    products and services.

    Competitive advantage derives not from thetechnology, but on how businesses use the

    technology.

    Innovations in business processes,management and organization are not easily

    copied from one firm to another.

    How Much Does IT Matter?

    WHY INFORMATION SYSTEMS?

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Internet growth and technology convergence

    Transformation of the business enterprise

    Why IT Now? Digital Convergence and theChanging Business Environment

    Growing impact of IT in business firms can be

    assessed from the following five factors:

    WHY INFORMATION SYSTEMS?

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Growth of a globally connected economy

    Growth of knowledge and information-basedeconomies

    Emergence of the digital firm

    WHY INFORMATION SYSTEMS?

    Why IT Now? Digital Convergence and theChanging Business Environment (Continued)

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Growth of the Internet: 120 million online in theUnited States, 500 million global users

    The Internet is bringing about a convergence oftelecommunications and computing: VoIPtelephones.

    WHY INFORMATION SYSTEMS?

    The Internet and Technology Convergence:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Growth in e-business, e-commerce, and e-government

    Internet is bringing about rapid changes inmarkets and market structure: financial servicesand banking such as eTrade.com.

    The Internet is making many traditionalbusiness models obsolete: the corner musicstore and video store.

    WHY INFORMATION SYSTEMS?

    The Internet and Technology Convergence:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Flattening

    Decentralization

    Flexibility

    WHY INFORMATION SYSTEMS?

    Transformation of the Business Enterprise:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Location independence

    Low transaction and coordination costs

    Empowerment

    Collaborative work and teamwork

    WHY INFORMATION SYSTEMS?

    Transformation of the Business Enterprise (Continued):

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    1.21 2006 by Prentice Hall

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Management and control in a global marketplace

    Competition in world markets

    Global workgroups

    Global delivery systems

    WHY INFORMATION SYSTEMS?

    Globalization:

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    1.22 2006 by Prentice Hall

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Knowledge and information-based economies

    New products and services

    Knowledge as a central productive and strategicasset

    WHY INFORMATION SYSTEMS?

    Rise of the Information Economy:

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    1.23 2006 by Prentice Hall

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Time-based competition

    Shorter product life

    Turbulent environment

    Limited employee knowledge base

    WHY INFORMATION SYSTEMS?

    Rise of the Information Economy (Continued):

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    1.24 2006 by Prentice Hall

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    The Growth of the Information Economy

    Figure 1-3

    WHY INFORMATION SYSTEMS?

    Source: U.S. Department of Commerce, Bureau of theCensus, Statistical Abstract of the United States, 2003,

    Table 615; and Historical Statistics of the United States,Colonial Times to 1970, Vol. 1, Series D, pp. 182-232.

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    1.25 2006 by Prentice Hall

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Digitally enabled relationships with customers,suppliers, and employees

    Core business processes accomplished usingdigital networks

    Digital management of key corporate assets

    WHY INFORMATION SYSTEMS?

    Emergence of the Digital Firm:

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Agile sensing and responding to environmentalchanges

    Seamless flow of information within the firm, andwith strategic partners

    WHY INFORMATION SYSTEMS?

    Emergence of the Digital Firm (Continued):

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    The Emerging Digital FirmThe Emerging Digital Firm

    Figure 1-4

    WHY INFORMATION SYSTEMS?

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    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    What Is an Information System?

    Technology perspective:Technology perspective:A set of interrelated

    components that collect (or retrieve), process, store,

    and distribute information to support decision

    making and control in an organization

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    1.29 2006 by Prentice Hall

    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    What is an Information System? (Continued)

    Data: Streams of raw facts representing events

    such as business transactions

    Information: Clusters of facts meaningful anduseful to human beings in the processes such as

    making decisions

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    1.30 2006 by Prentice Hall

    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Data and Information

    Figure 1-5

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    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Functions of an Information System

    Figure 1-6

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Rely on computer hardware and softwareRely on computer hardware and software

    Processing and disseminating informationProcessing and disseminating information

    Fixed definitions of data and proceduresFixed definitions of data and procedures

    Collecting, storing, and using informationCollecting, storing, and using information

    PERSPECTIVES ON INFORMATION SYSTEMS

    Computer-Based Information System (CBIS)

    M I f i S

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Information systems are an organizational andInformation systems are an organizational and

    management solution to business challenges thatmanagement solution to business challenges that

    arise from the business environment.arise from the business environment.

    PERSPECTIVES ON INFORMATION SYSTEMS

    Information systems are more than just technology.Businesses invest in IS in order to create value and

    increase profitability.

    A Business Perspective on Information Systems

    f SM t I f ti S t

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Based on information technology but also requireBased on information technology but also require

    significant investment in organizational andsignificant investment in organizational andmanagement changes and innovationsmanagement changes and innovations

    IS create value primarily by changing businessIS create value primarily by changing business

    processes and management decision making.processes and management decision making.

    PERSPECTIVES ON INFORMATION SYSTEMS

    A Business Perspective on Information Systems(Continued)

    M t I f ti S tM t I f ti S t

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    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    The Business Information Value Chain

    Figure 1-7

    M t I f ti S tM t I f ti S t

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    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Information Systems Are More than Computers

    Figure 1-8

    M t I f ti S tM t I f ti S t

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Information systems literacy:Information systems literacy: Broad-basedBroad-based

    understanding of information systems that includesunderstanding of information systems that includes

    behavioral knowledge about organizations,behavioral knowledge about organizations,

    management and individuals using informationmanagement and individuals using informationsystems as well as technical knowledge aboutsystems as well as technical knowledge about

    computerscomputers

    Computer literacy:Computer literacy: Knowledge about informationKnowledge about informationtechnology, focusing on understanding howtechnology, focusing on understanding how

    computer technologies workcomputer technologies work

    PERSPECTIVES ON INFORMATION SYSTEMS

    M t I f ti S tM t I f ti S t

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Sales and marketingSales and marketing

    ManufacturingManufacturing

    FinanceFinance

    AccountingAccounting

    Human resourcesHuman resources

    PERSPECTIVES ON INFORMATION SYSTEMS

    Major Business Functions Rely on Information Systems

    M t I f ti S tManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Three Important Dimensions of Information Systems

    Organizations

    Managers

    Technology

    PERSPECTIVES ON INFORMATION SYSTEMS

    You will need to understand and balance thesedimensions of information systems in order to createbusiness value.

    Dimensions of Information Systems

    Management Information SystemsManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    People

    Structure

    Business processes

    Culture

    Politics

    PERSPECTIVES ON INFORMATION SYSTEMS

    The Organizational Dimension of Information Systems

    Management Information SystemsManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Managers are:

    Sense makersSense makers

    Decision makersDecision makers

    PlannersPlanners

    Innovators of new processesInnovators of new processes

    Leaders: set agendasLeaders: set agendas

    PERSPECTIVES ON INFORMATION SYSTEMS

    The Management Dimension of Information Systems

    Management Information SystemsManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    PERSPECTIVES ON INFORMATION SYSTEMS

    The Management Dimension of Information Systems(Continued)

    Managers who can understand the role ofManagers who can understand the role of

    information systems in creating business value areinformation systems in creating business value arethe key ingredient to success with systems, andthe key ingredient to success with systems, and

    cannot easily be replicated by your competitors.cannot easily be replicated by your competitors.

    Management Information SystemsManagement Information Systems

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    1.43 2006 by Prentice Hall

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Hardware:Hardware: Physical equipmentPhysical equipment

    Software:Software: Detailed preprogrammed instructionsDetailed preprogrammed instructions

    Storage:Storage: Physical media for storing data and thePhysical media for storing data and thesoftwaresoftware

    PERSPECTIVES ON INFORMATION SYSTEMS

    Information technology is one of the tools managersInformation technology is one of the tools managersuse to cope with change:use to cope with change:

    The Technology Dimension of Information Systems

    Management Information SystemsManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Communications technology:Communications technology: Transfers dataTransfers data

    from one physical location to anotherfrom one physical location to another

    Networks:Networks: Links computers to share data orLinks computers to share data orresourcesresources

    PERSPECTIVES ON INFORMATION SYSTEMS

    The Technology Dimension of Information Systems(Continued)

    Managers need to know enough about informationManagers need to know enough about informationtechnology to make intelligent decisions about how totechnology to make intelligent decisions about how touse it for creating business value.use it for creating business value.

    Management Information SystemsManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Complementary assets:

    New business processes

    Management behavior

    Organizational culture

    Training

    PERSPECTIVES ON INFORMATION SYSTEMS

    Complementary Assets and Organizational Capital

    Management Information SystemsManagement Information Systems

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    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Supportive business culture that values efficiencyand effectiveness

    Efficient business processes, decentralization ofauthority

    Highly distributed decision rights

    A strong information system (IS) developmentteam

    PERSPECTIVES ON INFORMATION SYSTEMS

    Organizational capital:

    Management Information SystemsManagement Information Systems

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    PERSPECTIVES ON INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Variation in Returns on Information Technology Investment

    Figure 1-9

    Source: Based on Erik Brynjolfsson and Lorin M.Hitt, Beyond Computation: Information

    Technology, Organizational Transformation and

    Business Performance. Journal of Economic

    Perspectives 14, no. 4 (Fall 2000). Used withpermission of the American Economic Association.

    Management Information SystemsManagement Information Systems

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    CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    Sociotechnical Systems

    Optimize systems performance:

    Technology and organization

    Organizations mutually adjust to one another

    until fit is satisfactory

    Management Information SystemsManagement Information Systems

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    CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

    Management Information SystemsManagement Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

    A Sociotechnical Perspective on Information Systems