Information Systems: Concepts and Management CHAPTER 2 Information Systems: Concepts and Management

Chapter Outline 2.1 Types of Information Systems 2.2 Competitive Advantage and Strategic Information Systems 2.3 Why Are Information Systems Important to Organizations and Society? 2.4 Managing Information Resources

LEARNING OBJECTIVES Describe the components of computer-based information systems. BUSINESS OPPORTUNITIES: Effective and well designed hardware and software could enable faster, better customer service. BUSINESS RISKS: Inadequate or slow hardware or software could result in an inability to process information.

LEARNING OBJECTIVES (continued) Describe the various types of information systems by breadth of support. BUSINESS OPPORTUNITIES: Well integrated systems can improve data analysis capabilities. BUSINESS RISKS: The wrong type of information system could result in excess costs and inadequate data collection.

LEARNING OBJECTIVES (continued) Describe strategic information systems (SISs), and explain their advantages. BUSINESS OPPORTUNITIES: A well designed SIS can reduce costs or help to attract new customers. BUSINESS RISKS: Ineffective implementaton of a strategic information system increases costs.

LEARNING OBJECTIVES (continued) Describe Porter’s competitive forces model and his value chain model, and explain how IT helps companies improve their competitive positions. BUSINESS OPPORTUNITIES: Well designed systems can lock in customers, increasing profits. BUSINESS RISKS: Providing too much information to suppliers can result in high supplier power, increasing costs.

LEARNING OBJECTIVES (continued) Describe five strategies that companies can use to achieve competitive advantages in their industries. BUSINESS OPPORTUNITIES: Well designed systems enable the rapid creation of new products attracting new customers. BUSINESS RISKS: New methods and products can be easily copied, reducing competitive advantage.

LEARNING OBJECTIVES (continued) Identify the major information systems that support each organizational level. BUSINESS OPPORTUNITIES: Software matched to the needs of workers helps them to do their work more efficiently. BUSINESS RISKS: The wrong kinds of systems slow down decision making, or make it impossible to gather the appropriate data.

LEARNING OBJECTIVES (continued) Describe how information resources are managed, and discuss the roles of the information systems department and the end users. BUSINESS OPPORTUNITIES: Well designed equipment and software improves the ability of employees to get their work done quickly, without pain or injury. BUSINESS RISKS: Poorly designed work stations and equipment can result in work-related strains or injury.

Basic Components of Information Systems Hardware Software A Database A Network Procedures People

Major Capabilities of Information Systems High-speed numerical computations Quick access to high-volume data Fast communication and collaboration Automate business processes (See Table 2-1 for more items)

Breadth of Support of Information Systems Functional area information systems Enterprise resource planning systems (ERP) Transaction processing systems Inter-organizational information systems

Information Systems Support for Organization Employees Office automation systems Functional area information systems Business intelligence systems Expert Systems Dashboards

Porter’s Competitive Forces Model The best-known framework for analyzing competitiveness is Michael Porter’s competitive forces model (Porter, 1985).

Porter’s Competitive Forces Model The Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist A barrier to entry is a product or service feature that customers expect from organizations in a certain industry For most organizations, the Internet increases the threat that new competitors will enter a market

Porter’s Competitive Forces Model The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices Internet impact is mixed. Buyers can find alternative suppliers and compare prices more easily, reducing power of suppliers On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in customers

Porter’s Competitive Forces Model The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices Internet increases buyers’ access to information, increasing buyer power Internet reduces switching costs, which are the costs, in money and time, to buy elsewhere. This also increases buyer power

Porter’s Competitive Forces Model The threat of substitute products or services is high when there are many substitutes for an organization’s products or services and low where there are few substitutes Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The Internet can convey digital information quickly and efficiently

Porter’s Competitive Forces Model The rivalry among firms in an industry is high when there is fierce competition and low when there is not

Porter’s Value Chain Model This model identifies specific activities where organizations can use competitive strategies for greatest impact. Primary activities Inbound logistics, operations, outbound logistics, marketing and sales, and customer service Support activities Accounting, finance, management, human resources management, product and technology development (R&D), and procurement

Why are Information Systems Important to Organizations & Society IT will reduce the number of middle managers. IT will change the manager’s job. IT impacts employees at work. IT provides quality-of-life improvements.

Managing Information Resources Which IT Resources are Managed and By Whom? The Role of the IS Department

Traditional Major IS Functions Managing systems development and systems project management Managing computer operations Staffing, training, developing IS skills Providing technical services Infrastructure planning, development, control

New (Consultative) IS Functions Initiating and designing strategic information systems Incorporating the Internet and e-commerce into the business Managing system integration Educating non-IS managers about IT Educating IS staff about the business Supporting end-user computing Partnering with executives Managing outsourcing Innovate Ally with vendors and IS departments in other organizations

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