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

Why study MIS? Information Age –Bill Gates (how much rich?), List of GDPhow much richList of GDP –Major TANGIBLE product of Microsoft –Information age phenomena Population of “facebook.com” : 800 million active user US: 310 million Price of your driver license: $150 Better to have a job that complies with rules of information Age….

Type of Jobs based on Type of Decisions-Makings Structured –Small independent travel agencies and real estate agencies –Routine & Repetitive –Problems are predictable –Problems can be solved by applying standard solutions

Type of Jobs based on Type of Decisions-Makings Unstructured –Management Consultant and negotiator –Non-routine, Unpredictable, and Fuzzy –Standard solutions are not applicable –Solve problems by individual judgment

Type of Jobs based on Type of Decisions-Makings Semi-structured –Production manager –Combination of non-routine and predictable (production Scheduling) –Require a combination of standard solution procedures and individual judgment

Effect of Information Age 1) Globalization (Nike Corporation) –Global Marketing thru the Internet –Dramatic increase of global management 2) Organizational Change –Less traditional middle management : collect, process, store and distribute information for various decision makings –Cross functional (project based – virtual team or organization) 3) IBM WatsonWatson

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

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