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English summary of "Management Information Systems", chapters 1-3 and 8-14.
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Summary Management Information System ch 1 - BUAN 132
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MANAGEMENT INFORMATION SYSTEMSChapter 1: Information Systems in Global Business Today 3
1.1 How are information systems transforming global business and why are they so essential
for running and managing a business today?
1.2 What’s an information system? How does it work? What are its management, organization,
and technology components? Why are complementary assets essential for ensuring that
information systems provide genuine value for organizations?
1.3 What academic disciplines are used to study information systems, and how does each
contribute to an understanding of information systems?
Chapter 2: Global E-business and Collaboration 10
2.1 What are business processes? How are they related to information systems?
2.2 How do systems serve the different management groups in a business, and how do
systems that link the enterprise improve organizational performance?
2.3 Why are systems for collaboration and social business so important, and what
technologies do they use?
2.4 What is the role of the information systems function in a business?
Chapter 3: Information Systems, organizations and strategy 17
3.1 Which features of organizations do managers need to know about to build and use
information systems successfully?
3.2 What is the impact of information systems on organizations?
3.3 How do Porter’s competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies using
information systems?
3.4 What are the challenges posed by strategic information systems, and how should they be
addressed?
Chapter 8: Securing Information Systems 25
8.1 Why are information systems vulnerable to destruction, error, and abuse?
8.2 What is the business value of security and control?
8.3 What are the components of an organizational framework for security and control?
8.4 What are the most important tools and technologies for safeguarding information
resources?
Chapter 9: Achieving operational excellence and customer intimacy 37
9.1 How do enterprise systems help businesses achieve operational excellence?
9.2 How do supply chain management systems coordinate planning, production, and logistics
with suppliers?
9.3 How do CRM systems help firms achieve customer intimacy?
9.4 What are the challenges that enterprise applications pose, and how are enterprise
applications taking advantage of new technologies?
1
,Chapter 10: E-commerce: Digital Markets, Digital goods 44
10.1 What are the features of e-commerce, digital markets, and digital goods?
10.2 What are the principal e-commerce business and revenue models?
10.3 How has e-commerce transformed marketing?
10.4 How has e-commerce affected business-to-business transactions?
10.5 What is the role of m-commerce in business, and what are the most important m-
commerce applications?
10.6 What issues must be addressed when building an e-commerce presence?
Chapter 11: Managing knowledge 53
11.1 What is the role of knowledge management systems in business?
11.2 What types of systems are used for enterprise-wide knowledge management? How do
they provide value for businesses?
11.3 What are the major types of knowledge work systems? How do they provide value for
firms?
11.4 What are the business benefits of using intelligent techniques for knowledge
management?
Chapter 12: Enhancing Decision making 61
12.1 What are the different types of decisions, and how does the decision-making process
work?
12.2 How do information systems support the activities of managers and management
decision making?
12.3 How does business intelligence and business analytics support decision making?
12.4 How do different decision-making constituencies in an organization use business
intelligence, and what is the role of information systems in helping people working in a group
make decisions more efficiently?
Chapter 13: Building information systems 69
13.1 How does building new systems produce organizational change?
13.2 What are the core activities in the systems development process?
13.3 What are the principal methodologies for modeling and designing systems?
13.4 What are alternative methods for building information systems?
13.5 What are the new approaches for system building in the digital firm era?
Chapter 14: Managing projects 75
14.1 What are the objectives of project management, and why is it so essential in developing
information systems?
14.2 What methods can be used for selecting and evaluating information systems projects
and aligning them with the firm’s business goals?
14.3 How can firms assess the business value of information systems?
14.4 What are the principal risk factors in information systems projects, and how can they be
managed?
2
, CHAPTER 1: INFORMATION SYSTEMS IN GLOBAL BUSINESS TODAY
Opening Case: Rugby Football Union tries Big Data
- Objective of the Union: Promote Rugby
- Problem: Improving fan engagement, satisfaction and experience through Big Data
- Solutions:
• Provide data visualization and real-time statistics to draw in fans.
• Provide tactical insights to players and coaches that will improve match play.
Rugby Football Union uses TryTracker to capture and analyze Big Data that will be useful to
both fans and players. This case demonstrates IT’s role in increasing value and revenue in
any business and illustrates the potential for technology to improve customer experience.
1.1 How are information systems transforming global business and why are they so
essential for running and managing a business today?
How information Systems Are Transforming business
Information systems are transforming our economy. Increasing investments in IT:
- Mobile digital platform
- Systems used to improve customer experience, to respond to customer demand and to
reduce inventories
- Growing online newspaper readership
- Expanding e-commerce and Internet advertising
- New federal security and accounting laws
As a manager, you want to make sure you make the right investments (=key challenge). Why
would firms increase IT investments faster than machinery and buildings? The answer is
capital substitution: the price of IT capital has been falling exponentially, whereas the price of
machines and buildings has been growing at slightly more than the rate of inflation. Wherever
possible, firms would much rather invest in more IT than machinery or buildings because the
returns on investment are greater. The amount of investments increased over the years,
because businesses believe in potential value creation.
What’s new in Management Information Systems
Plenty new things make this area very exciting. Some important ones:
- New Technology Innovations
• Cloud computing: store your data in the cloud. Advantage: cost reduction.
- e.g. Salesforce is a company that offers business software in the field of Customer
Relationship Management, in the form of Software as a Service.
Advantage: very scaled. Risk: the network could be down, privacy breach.
• Big data and the Internet of Things (IoT)
• Mobile digital platform
- New business models (e.g. Uber, Netflix, Apple iTunes)
- Expanding e-commerce: selling goods & services online
3
,- Management changes
• Online collaboration and social networking software
• Business intelligence
• Virtual meetings
- Changes in firms & organizations: businesses put less emphasis on hierarchy and structure
and more emphasis on employees taking on multiple roles and tasks and collaborating with
others on a team. They put greater emphasis on competency and skills.
Globalization Challenges and Opportunities: A Flattened World
Internet has drastically reduced costs of operating on global scale. This presents both
challenges and opportunities. Foreign trade increased (our market has extended) but a lot of
industries are leaving Europe and build production facilities in Asia (=outsourcing, job loss).
The Emerging Digital Firm
In a fully digital firm (definition):
- Core business processes are accomplished through digital systems
= set of logically related tasks and behaviors that organizations develop over time to
produce specific business results and the unique manner in which these activities are
organized and coordinated such as developing a new product, creating a marketing plan
- Key corporate assets are managed digitally (e.g. HR, finance)
= intellectual property, core competencies, and financial human assets
- Significant business relationships are digitally enabled and mediated
Digital firms offer greater flexibility in organization and management
- Time shifting = business being conducted 24/7, rather than in time bands of 9 to 5
- Space shifting = work takes place in a global workshop, as well as within national
boundaries
Why is a digital firm more likely to benefit from globalization than a traditional firm?
By allowing business to be conducted at any time (time shifting) and any place (space
shifting), digital firms are ideally suited for global operations which take place in remote
locations and very different time zones.
Strategic Business Objectives of Information Systems
Growing interdependence between:
- Ability to use information technology and
- Ability to implement corporate strategies and achieve corporate goals
4
,Firms invest heavily in information systems to achieve six strategic business objectives:
1. Operational excellence
= understanding how your business process is operated, and make this as cost efficient as
possible e.g. delivery of products, the fulfillment time. Another example: in a retail sector
like Walmart/Colruyt, when you take a package of milk, the shop automatically knows
how much milk packages are left, and if they already need to order more.
2. New products, services, and business models
=> iTunes: the whole classic industry was turned upside down, and now we can stream
music in a legal way. Airbnb also impacted the whole travel/tourism industry.
3. (increase) Customer and supplier intimacy
=> Hotel chains try to capture your preferences to make the room as comfortable as
possible. Also, when you have complaint about an airline (wrong destination, delayed),
you can send in a complaint and they will assure a solution for you within an hour.
4. Improved decision making
=> Chain of bakers: to educate the bakers with all the safety rules. In the past new bakers
always had to take a special class. But it wasn’t effective because they always forgot
stuff. Solution was an app with games on security regulations, ingredients of the bread
etc. They had to play the game every week. The whole education was inverted into the
app. Through that system HR knows at any time which baker has which complexes.
5. Competitive advantage
= To keep competitive position in the market
6. Survival
= Some organizations want to be the leaders, some are followers.
Video case FedEx: Which reasons do you see in this video? Operational excellence,
competitive advantage, customer intimacy (you can always see where the package is),
survival, improved decision making.
1.2 What’s an information system? How does it work? What are its management,
organization, and technology components? Why are complementary assets
essential for ensuring that information systems provide genuine value for
organizations?
A system refers to a set of components that work together (hopefully). The point of an
information system is to make sense out all the confusing data in the environment, and put
the data into some kind of order. Information is an ordered set of data that you can
understand and act on.
Information system
- Set of interrelated components
- Collect, process, store, and distribute information
- Support decision making, coordination, and control
Information vs. data
- Data are streams of raw facts
- Information is data shaped into meaningful form
5
,Example: 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.
Information Technology (IT) consists of all the hardware and software that a firm needs to
use in order to achieve its business objectives.
Three activities in an information system produce the information that organizations need to
make decisions, control operations, create new products. These
activities are input, processing and output. Input captures or
collects raw data from within the organization or from its
external environment. Processing converts this raw input into a
meaningful form. Output transfers the processed information to
the people who will use it, or to the activities for which it will be
used. Information systems also require feedback, which is
output that is returned to appropriate members of the
organization to help them evaluate or correct the input stage.
Dimensions of Information Systems
The field of management information systems (MIS) tries to achieve this broader
information systems literacy. It deals with behavioral issues as well as technical issues
surrounding the development, use, and impact of information systems used by managers
and employees in the firm. Let’s examine each of the dimensions of information systems -
organizations, management, and information technology.
Organizations
Hierarchy of authority, responsibility
- Senior management: makes long-range strategic decisions, ensures financial performance
- Middle management: carries out the programs and plans of senior management
- Operational management: responsible for monitoring the daily activities of the business
- Knowledge workers: engineers, scientists, architects create knowledge for the firm
- Data workers: secretaries, clerks
- Production or service workers: produce the product and deliver the service
There are many organizational factors that will shape information systems. A common
observation is that “Every business is different.” Does this mean every business will have
different information systems? Every business has its unique culture and politics. Systems
reflect these business cultures.
- Separation of business functions
• Sales and marketing
• Human resources
• Finance and accounting
• Manufacturing and production
- Unique business processes
- Unique business culture
- Organizational politics
6
,Management
- Managers set organizational strategy for responding to business challenges, they allocate
the human and financial resources to coordinate the work and achieve succes.
- In addition, managers must act creatively
• Creation of new products and services
• Occasionally re-creating the organization
How might information systems assist managers in the development of new products and
services? What is meant by re-creating the organization? Why do organizations need to be
continually re-created? The answer is that they quickly become obsolete unless they continue
to change.
Information technology
Information technology is at the heart of information systems. Although organization and
management are important too, it’s the technology that enables the systems and the
organizations and managers who use the technology.
- Computer hardware: is the typical equipment used off input, processing, and output
activities in an information system.
- Computer software: consists of the detailed, preprogrammed instructions that control and
coordinate the computer hardware components in an information system.
- Data management technology: consists of software governing the organization of data on
physical storage media.
- Networking and telecommunications technology: links the various pieces of hardware and
transfers data from one physical location to another
• Networks, the Internet, intranets and extranets, World Wide Web
‣ Network = links two or more computers to share data/resources
‣ Internet = a network that uses universal standards to connect networks
‣ Intranet = internal corporate networks based on Internet technology
‣ Extranet = private intranets extended to authorized users outside the organiz.
‣ WWW = service provided by the internet that uses universally accepted
standards for storing, formatting & displaying information in a page format
- IT infrastructure: provides platform that system is built on
The distinction between the Internet and intranets and extranets has to do with their scope.
Intranets are private networks used by corporations and extranets are similar except that they
are directed at external users (such as customers and suppliers). In contrast, the Internet
connects millions of different networks across the globe.
It Isn’t Just Technology: A Business Perspective on Information Systems
- Investing in information technology does not guarantee good returns
- There is considerable variation in the returns firms receive from systems investments
- Factors
• Adopting the right business model
• Investing in complementary assets (organizational and management capital)
IT Blackhole: we invest in IT but we don’t see the benefits. Investment in IT also means
investment in changing behavior, changing culture and changing business processes.
7
,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 information value chain is one way to visualize the relationship among
information activities, business processes, and management activities. Reason to create an
information system besides profitability or strategic positioning: to meet the information
reporting requirements of government and other authorities.
Complementary Assets: Organizational Capital and the Right Business Model
Some firms invest a great deal and receive a great
deal (quadrant 2); others invest an equal amount
and receive few returns (quadrant 4). Still other
firms invest a little and receive much (quadrant 1).-,
whereas others invest a little and receive a little
(quadrant 3). This suggests that investing in IT does
not by itself guarantee good returns. What
accounts for this variation among firms?
The answer lies in the concept of complementary
assets. IT investments alone cannot make
organizations and managers more effective unless
they are accompanied by supportive values,
structures, and behavior patter ns in the
organization and other complementary assets. Complementary assets are those assets
required to derive value from a primary investment. Firms that support their IT investments
with investments in complementary assets, such as new business models, new business
processes or training receive superior returns. The investments in organization and
management are also known as organizational and management capital. Managers must
consider dimensions such as complementary assets in order to derive benefit from
information systems and be successful.
Example: Invest in technology and the people to make it work properly.
8
,Complementary assets
- Examples of organizational assets
• Appropriate business model
• Efficient business processes
- Examples of managerial assets
• Incentives for management innovation
• Teamwork and collaborative work environments
- Examples of social assets
• The Internet and telecommunications infrastructure
• Technology standards
1.3 What academic disciplines are used to study information systems, and how
does each contribute to an understanding of information systems?
The study of information systems deals with issues and insights contributed from technical
and behavioral disciplines. Which of the two major types of approaches, behavioral and
technical, tend to be most appropriate or accurate? Well, the technical approach does not
ignore behavior and the behavioral approach does not ignore technology, but they are indeed
two distinct approaches.
Technical approach
This approach to information systems emphasizes mathematically based models to study
information systems as well as the physical technology and formal capabilities of these
systems. The disciplines that contribute to the technical approach are computer science,
management science, and operations research.
Behavioral Approach
This approach concentrates on changes in attitudes, management and organizational policy
and behavior. the disciplines that contribute to the behavioral approach are sociology,
psychology and economics.
Approach of this text: Sociotechnical systems
In a sociotechnical 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.
This graphic illustrates the interplay between technology and the organization. The two
continue to grow closer together until an approach satisfying both perspectives is reached.
The two sides do not always need to form an equal compromise. Sometimes highly
advanced technology may be more acceptable than at other times.
9
, CHAPTER 2: GLOBAL E-BUSINESS AND COLLABORATION
Opening case: Enterprise Social Networking helps ABB innovate and grow
ABB is a global supplier of power grids, industrial motors and generators for industrial and
commercial operations. They had a corporate intranet, but the problem was that the
technology was to outdated & static. The intranet had poor capabilities for searching for
information and lacked tools to help staff have dialogues and work with other members of the
company. Solutions were:
• Develop knowledge sharing strategy and goals
• Change knowledge and collaboration processes
• Change organizational culture
• Deploy Inside+, with Yammer, Office 365, and Sharepoint
ABB management decided to use Inside+ to provide new channels for knowledge
acquisition, innovation, and collaboration. This case demonstrates IT’s role in helping
organizations improve performance and remain competitive and illustrates the ability of IT
systems to support collaboration and teamwork.
2.1 What are business processes? How are they related to information systems?
Business Processes
Business processes are the collection of activities required to produce a product or service.
These activities are supported by flows of material, information and knowledge among the
participants in business processes.
A company’s business processes can be seen as assets (a source of competitive strength),
or they could be seen as liabilities (it hinders you to become more effective).
Every business can be seen as a collection of business processes. Many business processes
are tied to a specific functional area (marketing is responsible for identifying customers,
human resources is responsible for hiring employees, finance is responsible for creating
financial statements, …). Other business processies cross many different functional areas and
require coordination across departments. For example: fulfilling a customer order involves a
complex set of steps that requires the close coordination of the sales, accounting, and
manufacturing functions.
10
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