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. Describe the various types of information systems by breadth of support. Identify the major information systems that support each organizational level. Describe strategic information systems (SISs), and explain their advantages.

Learning Objectives (continued) Describe porter’s competitive forces model and his value chain model, and explain how IT helps companies improve their competitive positions. Describe five strategies that companies can use to achieve competitive advantage in their industries. Describe how information resources are managed, and discuss the roles of the information systems department and the end users.

Chapter Opening Case Upstream activities: exploration and production Downstream activities: refining, marketing, transportation, sales

2.1 Types of Information Systems Computer-based information systems (CBIS) use computer technology to perform some or all of their tasks and are composed of: Hardware Software A Database A Network Procedures People Hardware is a device such as a processor, monitor, keyboard or printer Software is a program or collection of programs that enable hardware to process data. Database is a collection of related files or tables containing data. Network is a connecting system (wireline or wireless) that permits different computers to share resources. Procedures are the set of instructions about how to combine the above components in order to process information and generate the desired output. People are those individuals who use the hardware and software, interface with it, or uses its output.

Information Systems Inside Your Organization

Information Technology Outside Your Organization

Application Programs An application program is a computer program designed to support a specific task, a business process or another application program.

Breadth of Support of Information Systems Functional area information systems Enterprise resource planning systems Transaction processing systems Interorganizational information systems Functional area information systems support particular functional areas in an organization. Enterprise resource planning systems tightly integrate the functional area information systems via a common database. Transaction processing systems support the monitoring, collection, storage, and processing of data from the organization’s basic business transactions. Interorganizational information systems connect two or more organizations. Examples are supply chain management systems and electronic commerce systems.

Information Systems Support for Organization Employees Office automation systems Functional area information systems Business intelligence systems Expert Systems Dashboards Office automation systems typically support the clerical staff, lower and middle managers, and knowledge workers. These people use OASs to development documents, schedule resources, and communicate. Functional area information systems summarize data and prepare reports, primarily for middle managers. Business intelligence systems provide computer-based support for complex, non-routine systems, primarily for middle managers and knowledge workers. Expert systems attempt to duplicate the work of human experts by applying reasoning capabilities, knowledge, and expertise within a specific domain. Dashboards support all managers by providing rapid access to timely information and direct access to structured information in the form of reports.

2.2 Competitive Advantage and Strategic Information Systems Strategic Information Systems (SIS) Competitive Advantage: An advantage over competitors in some measure such as cost, quality, or speed, leads to control of a market and to larger- than average profits. Strategic Information Systems (SIS) provide a competitive advantage by helping an organization to implement its strategic goals and to increase its performance and productivity.

Porter’s Competitive Forces Model The best-known framework for analyzing competitiveness is Michael Porter’s competitive forces model (Porter, 1985). * Model is used to develop strategies to increase their competitive edge. * Demonstrates how IT can make a company more competitive.

Porter’s Competitive Forces Model 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 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 Support activities Primary activities are those business activities that relate to the production and distribution of the firm’s products and services, thus creating value for which customers are willing to pay. Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and customer service. Support activities do not add value directly to a firm’s products and services, but support the primary activities. Support activities include accounting, finance, management, human resources management, product and technology development (R&D), and procurement.

Porter’s Value Chain Model

Strategies for Competitive Advantage Cost Leadership Differentiation Innovation Operational Effectiveness Customer-orientation Cost Leadership. Produce products and/or services at the lowest cost in the industry. Differentiation. Offer different products, services or product features. Innovation. Introduce new products and services, add new features to existing products and services or develop new ways to produce them. Operational Effectiveness. Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals. Customer-orientation. Concentrate on making customers happy.

2.3 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.

Ergonomic Products Wrist support Back support Eye-protection filter Adjustable foot rest

When ergonomics doesn’t work When all else fails…….

Enabling People with Disabilities to Work with Computers Computer for visually-impaired user Computer for hearing-impaired user Computer for motor-impaired user

The Robot Revolution See Invasion of the Humanoid Robots

The Robot Revolution See video of Big Dog robot in action

The Robot Revolution (continued) See ASIMO commercial See video of ASIMO in action Honda’s ASIMO robot

DeLaval Voluntary Milking System A look at “milking robot” in the example “Robots on the Dairy Farm” (p. 47)

Improvements in Health Care A roving robot camera that can be steered remotely and wirelessly. Can move through the throat, esophagus, stomach, and small and large intestines.

Improvements in Health Care (continued) The patient swallows the Pill Cam (camera). The camera takes an image of the digestive tract at intervals, and sends the images to a device that patients wear on their belts. The patients take their devices to their doctors who download the images and view them on a screen. May do away with endoscopy and the need for general anesthetic for the procedure. The Pill Cam: Wireless endoscopy

The daVinci Surgical Robot The robot The surgeon’s console

The daVinci Surgical Robot (continued) The daVinci robot in use

Medical Simulation Two physicians perform a procedure on a simulated human (mannequin)

Managing Information Resources Which IT Resources are Managed and By Whom? The Role of the IS Department Which IT Resources are Managed and By Whom? During the early 1950s, Information Systems Department (ISD) managed ALL of the only computing resource, the mainframe. Today, computing resources are located through the organization and almost all employees use computers in their work. This system is known as end user computing. The Role of the IS Department The ISD is responsible for corporate-level and shared resources and for using IT to solve end users’ business problems. End users are responsible for their own computing resources and departmental resources. ISD and end users work together as partners to manage the IT resources.

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

Supporting End Users One form of end-user support is the help desk, where IS staffers help users troubleshoot problems with their systems. This video shows the first help desk. There is an interesting point in this video (besides a humorous look at the “first help desk.”) Notice that the book (a new innovation) is causing the obsolescence of the scroll (an old technology). Also notice the user’s comment that “it was easier to use a scroll, rather than turning the pages of a book.” Have students think back to the innovation/obsolescence slides in Chapter 1.

Chapter Closing Case Todd Pacific Shipyards Wireless PDA