Systems in Global
Why information systems (I.S) are
so essential in business today?
The technical & business
perspective of I.S.
Dimensions of I.S.
I.T & business value.
• Problem: Tough competition and demanding
• Solutions: Redesigned order and production
processes reduce costs, increase revenue, and
improve customer service.
• Oracle E-Business Suite makes it possible to build
cars to order and forecast demand and production
requirements more accurately.
• Demonstrates IT’s role in analyzing market trends
and monitoring quality, efficiency, and costs.
• Illustrates the emerging digital firm landscape where
businesses can use tools to analyze critical data.
Smart Systems and Smart Ways of
Working Help Toyota Become
How information systems are
•Increased technology investments
•Increased responsiveness to customer demands
•Shifts in media and advertising
•New federal security and accounting laws
•Internet has drastically reduced costs of operating
on global scale
Information Technology Capital Investment
Information technology investment, defined as hardware, software, and
communications equipment, grew from 32% to 51% between 1980 and 2008.
Source: Based on data in U.S. Department of Commerce, Bureau of Economic
Analysis, National Income and Product Accounts, 2008.
In the emerging,
fully digital firm
• Significant business
relationships are digitally
enabled and mediated
• Core business processes
through digital networks
• Key corporate assets are
Digital firms offer
greater flexibility in
• Time shifting, space
Read the Interactive
Session and then
discuss the following
•What are the advantages of working in a virtual
environment like the one created by Accenture?
What are the disadvantages?
•Would you like to work at a company like
Accenture? Why or why not? Explain your answer.
•What kinds of companies could benefit from being
run virtually like Accenture? Could all companies
be run virtually like Accenture?
Virtual Management at Accenture
20th century: large
offices and HQ’s,
cabinets, elevators etc
The Foundations of business
Q: Why firms invest heavily in I.T?
A: To achieve six strategic business objectives
efficiency to attain
important tool in
links suppliers to
stores for superior
describes how company
produces, delivers, and
sells product or service
to create wealth
and technology a major
enabling tool for new
• E.g. Apple’s iPod, iTunes and
Netflix’s Internet-based DVD
Serving customers well
leads to customers
returning, which raises
revenues and profits
• E.g. High-end hotels that use
computers to track customer
preferences and use to
monitor and customize
Intimacy with suppliers
allows them to provide
vital inputs, which
• E.g. J.C.Penney’s information
system which links sales
records to contract
Without accurate information:
• Managers must use forecasts, best
• Leads to:
• Overproduction, underproduction of
goods and services
• Misallocation of resources
• Poor response times
• Poor outcomes raise costs, loose
E.g. Verizon’s Web-based digital
dashboard to provide managers with
real-time data on customer complaints,
network performance, line outages,
Charging less for superior
Responding to customers
and suppliers in real time
E.g. Dell: Consistent
profitability over 25 years;
Dell remains one of the
most efficient producer of
PCs in world.However, Dell
has lost some of its
advantages to fast
• Industry-level changes,
introduction of ATMs
The Interdependence Between Organizations and
There is a growing interdependence between a firm’s information systems and its
business capabilities. Changes in strategy, rules, and business processes increasingly
require changes in hardware, software, databases, and telecommunications. Often,
what the organization would like to do depends on what its systems will permit it to do.
streams of raw
Raw data from a supermarket checkout counter can be processed and organized to
produce meaningful information, such as the total unit sales of dish detergent or the total
sales revenue from dish detergent for a specific store or sales territory.
Data and Information
Information system: Three
activities produce information
Input: Captures raw data
from organization or
Processing: Converts raw
data into meaningful form
Output: Transfers processed
information to people or
activities that use it
An information system creates value for
the firm & acts as an
organizational/management solution to
challenges posed by the environment.
Information Systems Are
More Than Computers
Business organizations are hierarchies consisting of three principal levels: senior management, middle
management, and operational management. Information systems serve each of these levels. Scientists
and knowledge workers often work with middle management.
Levels in a Firm
• Managers set organizational strategy
for responding to business challenges
• In addition, managers must act
• Creation of new products and
• Occasionally re-creating the
• Computer hardware and software
• Data management technology
• Networking and telecommunications
• Networks, the Internet, intranets
and extranets, World Wide Web
• IT infrastructure: provides platform
that system is built on
• Information system is instrument for
• Investments in information technology
will result in superior returns:
• Productivity increases
• Revenue increases
• Superior long-term strategic
From a business perspective, information systems are part of a series of
value-adding activities for acquiring, transforming, and distributing
information that managers can use to improve decision making, enhance
organizational performance, and, ultimately, increase firm profitability.
The Business Information Value Chain
In a socio-technical perspective, the performance of a
system is optimized when both the technology and the
organization mutually adjust to one another until a
satisfactory fit is obtained.
A Socio-technical Perspective on Information Systems
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