CHAPTER 1 INTRODUCTION : BUSINESS AND INFORMATION TECHNOLOGY

Learning Objectives Discuss business pressures and responses in today’s Information Age Differentiate between data and information, and describe the characteristics of high-quality data. Name and describe the components of an information system. Describe the capabilities expected of information systems in modern organizations. Describe opportunities for strategic use of information systems.

Case : Blades Board & Skate rapid growth The Business Problem retailer of ice and inline skates and snowboards the business needed a computer system that could instantly track sales and inventory at all of its stores The Solution point-of-sales (POS) systems computerized cash registers that use specialized software to record transaction data such as the stock numbers of items sold, cost , time of sale, and information on the customer, such as name help retailers cut costs, increase profits, and serve customers better by making the most of sales information

Case (continued…) The Results Quicker, more accurate, and more detailed picture of sales and inventory Tied into the firm’s accounting software Order products from vendors only when needed, decreasing the amount of warehouse space

Case (continued…) What have we learned from this case?? Information Technologies are woven into complex systems interrelating with other systems permeating every business process enabling tremendous gains in knowledge, productivity, and profitability A great variety of information can now be gathered at each part of each business process, and information can be distributed throughout the organization, giving knowledge and insight for competitive decision making and strategic advantage.

Business in the Information Age: Pressures Global Competition for Market and for Labor Need for Real-time Operations Changing Work Force Customer-Oriented Operations Technological Innovation and Obsolescence Information Overload Social Responsibility of Organizations Government Regulation and Deregulation Ethical Issues Organizational Responses to Business Pressures in the Information Age

Business in the Information Age: Responses Strategic Systems Customer Focus and Customer Service mass customization Continuous Improvement Efforts just-in-time (JIT)  total quality management (TQM) Business Process Reengineering Empowering Employees and Fostering Collaborative Work Team-based Structure Business Alliances supply chain management and enterprise resource planning (ERP) Electronic Commerce

Business Pressures & Organizational Responses : Summary Global Competition for Market and Labor Need for Real-time Operations Changing Work Force Customer Orientation Technological Innovation and Obsolescence Information Overload Social Responsibility Government Regulation and Deregulation Ethical Issues Organizational Responses Strategic Systems Customer Focus and Customer Service Continuous Improvement Efforts (Just-in-Time, Total Quality Management) Business Process Reengineering (BPR) Team-based Structure Business Alliances Electronic Commerce

Why You Need to Learn About Information Technology IT is Generally Interesting IT Facilitates Work in Organizations IT Offers Career Opportunities IT is Used by All Departments Locating real estate at nations bank Using IT to strategic advantage at McDonald’s Canada Using IT to manage human resources at the City of Winnipeg in Manitoba, Canada

Why You Need to Learn About Information Technology (continued…) Web-based One-to-One Marketing at Liberty Financial Companies one-to-one Web Marketing aims to personalize a user’s online experience by offering services and advertisements that are likely to appeal to that person Web-site operator can use the information it collects on individuals to provide customized content used Web-based marketing software to build its database of customer profiles investors able to find exactly the information they need, quickly and easily from Web sites

What is a Computer-Based Information System? A computer-based information system (CBIS) is an information system that uses computer and often telecommunications technology to perform some or all of its intended tasks. An information technology is a particular component of a system, like a personal computer, a printer, or a network. But few information technologies are used alone. Rather, they are most effective combined into information systems. The basic components of information systems are the following: Hardware  Software Database  Network Procedures  People

Components of Computer-based Information System HARDWARE SOFTWARE DATABASE NETWORK PROCEDURES PEOPLE

Capabilities of Information Systems Provide Fast and Accurate Transaction Provide Large Capacity, Fast Access Storage Provide Fast Communications (machine to machine, human to human) Reduce Information Overload Span Boundaries Provide Support for Decision Making Provide a Competitive Weapon General Technological Trends for IT

Strategic Questions and Information Technology Answer Information Technology and organizational strategy are inseparable Porter’s strategic analysis model (5 forces models) the relative power of buyers and suppliers, threats from substitute products and services, and the ease or difficulty with which new competitors can enter the industry Value chain the discrete steps involved in the manufacturing of a product or the provision of a service

Strategic Questions (continued…) Can we use IT to gain leverage over our suppliers? To improve our bargaining power? To reduce their bargaining power? Can we use IT to reduce purchasing costs? To reduce our order processing costs? To reduce suppliers’ billing costs? Can we use IT to identify alternative supply sources? To locate substitute products? To identify lower-price suppliers? Can we use IT to improve the quality of products and services we receive from suppliers? To reduce order lead times? To monitor quality? To leverage supplier service data for better service to our customers? Can we use IT to give us access to vital information about our suppliers that will help us reduce our costs? To select the most appropriate products? To negotiate price breaks? To monitor work progress and readjust our schedules? To assess quality control? Can we use IT to give our suppliers information important to them that will in turn yield a cost, quality, or service reliability advantage to us? To conduct electronic exchange of data to reduce their costs? To provide master production schedule changes?

Strategic Questions (continued…) Can we use IT to reduce our customer’s cost of doing business with us? To reduce paperwork for ordering or paying? To provide status information more rapidly? To reduce our costs and prices? Can we provide some unique information to our customers that will make them buy our products/service? Can we provide better billing or account status data? Can we provide options to switch to higher-value substitutes? Can we be first with an easy-to-duplicate feature that will provide value simply by being first? Can we use IT to increase our customers’ costs of switching to a new supplier? Can we provide proprietary hardware or software? Can we make customers dependent upon us for their data? Can we make our customer service more personalized? Can we use external database sources to learn more about our customers and discover possible market niches? To relate buying from us to buying other products? To analyze customers interactions with us and questions to us to develop customized products/services or methods of responding to customer needs?

Strategic Questions (continued…) Can we use IT to help our customers increase their revenues? To provide proprietary market data to them? To support their access to their markets through our channels? Can we use IT to raise the entry barriers of new competitors into our markets? To redefine product features around IT components? To provide customer services through IT? Can we use IT to differentiate our products/services? To highlight existing differentiations? To create new differentiations? Can we use IT to make a preemptive move over our competition? To offer something new because we have proprietary data? Can we use IT to provide substitutes? To simulate other products? To enhance our existing products? Can we use IT to match an existing competitor’s offerings? Are competitor products/services based on unique IT capabilities or technologies and capabilities generally available?

Information Technology Answer (continued…) Information Technology Answers Consolidated Stores invested $80 million in KBToys.com, a site it will jointly own with startup BrainPlay.com PetSmart plans to invest $16 million in 1999 in PetSmart.com, a site it will jointly own with startup PetJungle.com Toys “R” Us invested $80 million to relaunch Toysrus.com, which will be run as a standalone business CVS spent $30 million to buy online pharmacy Soma.com

The Plan of This Book Part 1 INFORMATION TECHNOLOGY IN THE BUSINESS ENVIRONMENT 1. Introduction : Business and Information Technology 2. Organizational Structure and Information Technology Part 2 INFORMATION TECHNOLGY INFRASTRUCTURE 3. Computer Hardware 4. Computer Software 5. Managing Organizational Data and Information 6. Telecommunications and Networks 7. The Internet and Intranets Part 3 APPLYING INFORMATION TECHNOLOGY FOR COMPETITIVE ADVANTAGE 8. Interorganizational and Global Information Systems 9. Functional and Enterprise Systems 10. Data, knowledge, and Decision Support 11. Intelligent Systems in Business 12. Electronic Commerce 13. Strategic Information Systems and Reorganization Part 4 DEVELOPING AND MANAGING INFORMATION SYSTEMS 14. Information Systems Development 15. Implementing IT:Ethics, Impacts, and Security

What’s in IT for Me? For Accounting For Finance Information systems capture, organize, analyze, and disseminate data and information throughout modern organizations For Finance Information systems turn financial world on speed, volume, and accuracy of information flow

What’s in IT for Me? (continued …) For Marketing The Internet and the World Wide Web have opened an entirely new channel for marketing and provided much closer contact between the consumer and the supplier For Production/Operations Management Every process in a product or service’s value chain can be enhanced by the proper use of computer-based information systems

What’s in IT for Me? (continued …) For Human Resource Management Employees can handle much of their personal business themselves, and the Internet makes a tremendous amount of information available to the job seeker For Management Information Systems (MIS) The opportunities for those planning a career in MIS grows as fast as the adoption of information technologies into organizations everywhere