Chapter 1 Information Systems in Global Business Today
• 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.
Interdependence between organization and Information Technology:
The basic point of this graphic is that in order to achieve its business objectives, a firm will
need a significant investment in IT. Going the other direction (from right to left), having a
significant IT platform can lead to changes in business objectives and strategies. Emphasize
the two-way nature of this relationship. Businesses rely on information systems to help
them achieve their goals; a business without adequate information systems will inevitably
fall short. But information systems are also products of the businesses that use them.
Businesses shape their information systems and information systems shape businesses.
• Growing interdependence between:
– Ability to use information technology and
– Ability to implement corporate strategies and achieve corporate goals
• In the emerging, fully digital firm:
– Significant business relationships are digitally enabled and mediated.
– Core business processes are accomplished through digital networks.
– Key corporate assets are managed digitally.
• Digital firms offer greater flexibility in organization and management.
– Time shifting, space shifting
,• Three activities of information systems produce information organizations need
– Input: Captures raw data from organization or external environment
– Processing: Converts raw data into meaningful form
– Output: Transfers processed information to people or activities that use it
1. How are information systems transforming business, and why are they so essential for
running and managing a business today?
- organizations trying to be more competitive and efficient by digitally enabling their
core business processes
- Internet has stimulated globalization by reducing costs of producing, buying and
selling good on global scale
- New information system trends: emerging mobile data platform, big data, remote
management, democratization of decision making, machine learning systems,
growing use of social media in business
- IS foundation for conducting business today
- Major objectives are:
operational excellence: Improvement of efficiency to attain higher
profitabilityInformation systems, technology an important tool in achieving
greater efficiency and productivity
new products, services, business models: Business model: describes how
company produces, delivers, and sells product or service to create wealth
Information systems and technology a major enabling tool for new products,
services, business models
customer/supplier intimacy: Serving customers well leads to customers
returning, which raises revenues and profitsExample: High-end hotels that
use computers to track customer preferences and used to monitor and
customize environment, Intimacy with suppliers allows them to provide
vital inputs, which lowers costs.
improved decision making: Without accurate information: Managers must
use forecasts, best guesses, luck; Results in:Overproduction, underproduction
Misallocation of resources, Poor response times, Poor outcomes raise costs,
lose customers
competitive advantage: Delivering better performance, Charging less for
superior products, Responding to customers and suppliers in real time
day-to-day survival: Information technologies as necessity of business
Industry-level changes, Governmental regulations requiring record-keeping
2. What is 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?
- Technical perspective: collects, stores, disseminates information from an
organization’s environment and internal operations to support organizational
function, decision making, communication, coordination, control analysis,
visualization
Transform raw data into useful information through three activities:
1. Input Captures raw data from organization or external environment
, 2. processing, Converts raw data into meaningful form
3. Output Transfers processed information to people or activities that use
it
- Business perspective: provides a solution to problem or challenge facing a firm and
represents combination of management, organization, technology elements,
- Management dimension involves issues such as leadership, strategy and
management behavior
- Technology dimension consists of hardware, software, data management
technology, networking/telecommunications technology
- Organization dimension involves issues such as organizations hierarchy, functional
specialties, business processes, culture, political interest groups
- In order to obtain value from IS organizations must support technology investments
with appropriate complementary investments such as new business models,
business processes, supportive organizational culture and management behavior,
appropriate technology standards, regulations and laws
3. What academic disciplines are used to study information systems and how does each
contribute to an understanding of information systems?
- Deals with issues and insights contributed from technical and behavioral disciplines
- Technical approach: computer science, management science, operations research
- Behavioral Approach: design, implementation, management and business impact of
systems are psychology, sociology, economics
, KEY TERMS
BUSINESS FUNCTION Performed by business organizations consist of sales and
marketing, manufacturing and production, finance and
accounting, human resources
BUSINESS MODEL Describes how a company produces, delivers, sells a
product/service to create wealth
BUSINESS PROCESSES Refer to the set of logically related tasks and behaviors that
organizations develop over time to produce specific business
results and the unique manner in which these are activities are
organized and coordinated.
COMPLEMENTARY Are those assets required to derive value from primary
ASSETS investment
COMPUTER Physical equipment used for input, processing and output
HARDWARE activities
COMPUTER LITERACY Focuses primarily on knowledge of information technology
COMPUTER SOFTWARE Consists of detailed, preprogrammed instructions that control
and coordinate the computer hardware components
CULTURE Unique set of assumptions, values and ways of doing things that
has been accepted by most members of an organization
DATA Streams of raw facts representing events occurring in
organizations or the physical environment before they have
been organized and arranged into a form that people can
understand and use
DATA MANAGEMENT Consists of software governing the organization of data on
TECHNOLOGY physical storage media
DATA WORKERS Secretaries or clerks, assist with scheduling and
communications at all levels of a firm
DIGITAL FIRM Nearly all of organization’s significant business relationships
with customers, suppliers, and employees are digitally enabled
and mediated
EXTRANETS Authorized users outside the organization
FEEDBACK Output that is returned to appropriate members of the
organization to help them evaluate or correct the input stage
INFORMATION Data which have been shaped into a form that is meaningful
and useful to human beings
INFORMATION SYSTEM Set of interrelated components that collect/retrieve, process,
store, and distribute information to support decision making
and control in an organization
INFORMATION SYTEM knowing how information systems work
LITERACY
INFORMATION Consists of all the hardware and software a firm needs to use in
TECHNOLOGY order to achieve its business objectives
