The IS Revolution: Transforming Business and Management Yong Choi School of Business CSU, Bakersfield

Study Objectives IS vs. IT Data vs. Information Driving forces of IS Understand background of IS Understand functions of IS Understand basic initiatives for gaining a competitive advantage by utilizing IS. Recognize risks of IS Success Identify managers responsibilities

What is an Information System? An Information System (IS) is interrelated components to collect, process, store and distribute information to support mainly decision makings in an organization Information technology (IT) describes the combination of computer technology (hardware and software) with telecommunications technology (data, image, and voice networks). CBIS vs. Manual IS

Data vs. Information Data –refers to raw facts –Example: inventory part number or sales orders Information –refers to data that have been processed and presented in a form suitable for human interpretation –Example: total number of registered students based on each major or geographical purchasing pattern of SUV

Example of data

Example of information

Three Driving Forces of IS 1.Change of Paradigm (Information Age) –Bill Gates (used to be the richest) –EC: Moving to CA (next slide) –Information age phenomena Average American relies on more than 250 computers per day According to Time magazine, 14% of cell phone users stopped having sex to take a phone call 50 of the 2006 Fortune 500 companies were IT companies Your credit card number and PIN worth $490. Your driver’s license number worth $147.

Moving to California Change address: moversguide.usps.commoversguide.usps.com Moving company and new APT: New car: Airfare: If I move today –Buy a house: (10402 Loughton Ave, 93311) Better to have a job that complies with rules of information Age…. –See type of jobs based on type of decisions-makings

Three Driving Forces of IS (con’t) 2.Globalization (Nike Corporation) –Global Marketing thru the Internet –Dramatic increase of global management 3.Organizational Change –Less traditional middle management : collect, process, store and distribute information for various decision makings –Cross functional (project based – virtual team or organization)

Type of Jobs based on Type of Decisions-Makings Structured –Routine & Repetitive: order entry or payroll –Problems are predictable –Problems can be solved by applying standard solutions –Example: small independent travel agencies and real estate agencies

Type of Jobs based on Type of Decisions-Makings Unstructured –Non-routine, Unpredictable, and Fuzzy: emergency management or negotiation –Standard solutions are not applicable. –Example: emergency management consultant, negotiator, and lobbyist

Type of Jobs based on Type of Decisions-Makings Semi-structured –Combination of non-routine and predictable: production Scheduling or design lay-out of factory –Require a combination of standard solution procedures and individual judgment –Example: oil production manager

Background of MIS SOCIOLOGY POLITICAL SCIENCE PSYCHOLOGY COMPUTERSCIENCE OPERATIONSRESEARCH MANAGEMENTSCIENCE MIS TECHNICAL BEHAVIORAL

Functions of an information system

Competitive Advantage Thru IS Definition of competitive advantage –Competitive advantage is a significant benefit (ideally long term) to a business over its competitors because of the quality or superiority of products or services which will persuade customers to buy from them rather than from competitors. Initiative # 1: Cost leadership –Achieve competitive advantage by providing lower cost than competitors –Wal-Mart: Always Low Price (read this article!): lower price using computerized purchasing and inventory systemWal-Mart: Always Low Price

Competitive Advantage Thru IS Initiative # 2: Differentiation –Achieve competitive advantage by providing more unique and value added products/services than competitors –First ATM system by Citibank Initiative # 3: Focus (Cost leadership + Differentiation) –Achieve competitive advantage by providing lower cost + unique and value added products/services –Amazon.com (others: SW, DVD, games and extra value added information for each product) –Try to buy our textbook: management information systems for the information ageTry to buy our textbook

Competitive Advantage Thru IS Initiative #4: Enhance products and services –First Online Order Tracking system by FedEx Initiative #5: Create new products and services –E*Trade.com More initiatives and five competitive forces model analysis from the textbook…

Risks of IS success IS can be easily copied by competitors. IS can bring on litigation or regulation –SABRE by AA: first computer-based online reservation system. –Monopolization of the entire market by monopolizing information Bad timing –on-line home banking in the early 1980s by chemical bank

What is Electronic Commerce? Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information using the Internet or private computer networks. Total Value of EC: –1998: $73.9 billion –Today: trillions $$$$$$

Manager’s job in information age Monitor competitors IS usage Monitor change of government regulations Review competitor’s web sites –Information about new products and projects –Trend in budgeting (e.g., annual report) –Advertising strategies Analyze competitor’s newsgroup on the Internet –Newsgroup participants discuss what they like or dislike about competitor’s products or services