Copyright © 2014 Pearson Education, Inc. 1 MIS2101: INFORMATION SYSTEMS IN ORGANIZATIONS Brad Greenwood (class 1)

Copyright © 2014 Pearson Education, Inc. 2 Responsibilities Me – Make sure you understand – Keep you amused and interested in coming to class – Make this class useful to you for: Getting a job Getting promoted Develop critical thinking ability You – Do the readings and come to class ready to participate – Tell me if I am going too fast/slow

Copyright © 2014 Pearson Education, Inc. 3 Before We Dive In Quizzes are based on the readings and are due each Tuesday night – The quizzes and readings are administered through Pearson – Keeping up with the quizzes is the easiest way to improve your grade – Do the quizzes early… really really. The first quiz is not graded Missing Class Laptops in class and the Note Taker

Copyright © 2014 Pearson Education, Inc. 4 Societal Level Changes Facilitated By IT How This Influences Firm Positioning Executing Firm Strategy How do we know where we should be? Aligning the firm around the strategic objective Management of Internal Firm Processes (ERP) Supply Chain Management (Upstream) Customer Relationship Management (Downstream)

Copyright © 2014 Pearson Education, Inc. 5 Brad N Greenwood MIS2101 Chapter 1 - Managing in the Digital World

Copyright © 2014 Pearson Education, Inc. 6 Agenda The rise of the information age How this has changed business – Globalization and Firm Management Type of information Systems – How they can be used – People and Information Systems Does IT Matter? Ethicality in Information Systems This first lecture is more or less about the make vs buy decision within Porter’s puzzle.

Copyright © 2014 Pearson Education, Inc. 7 Chapter 1 Learning Objectives Information Systems Today Describe the characteristics of the digital world and the advent of the Information Age. Evolution of Globalization Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Information Systems Defined Explain what an information system is, contrasting its data, technology, people, and organizational components. The Dual Nature of Information Systems Describe the dual nature of information systems in the success and failure of modern organizations. IS Ethics Describe how computer ethics impact the use of information systems and discuss the ethical concerns associated with information privacy and intellectual property.

Copyright © 2014 Pearson Education, Inc. 8 Information Systems Today Learning Objective: Describe the characteristics of the digital world and the advent of the Information Age. Evolution of Globalization Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Information Systems Defined Explain what an information system is, contrasting its data, technology, people, and organizational components. The Dual Nature of Information Systems Describe the dual nature of information systems in the success and failure of modern organizations. IS Ethics Describe how computer ethics impact the use of information systems and discuss the ethical concerns associated with information privacy and intellectual property.

Copyright © 2014 Pearson Education, Inc. 9 The Rise of the Information Age In 1959 Peter Drucker proposes the notion of the knowledge worker – An individual who is relatively well educated and who creates, modifies and/or synthesizes knowledge as a fundamental part of a job This proposition asserts the rise of the knowledge society – i.e. the service economy – cornerstone is transferrable human capital and knowledge specific assets Data Supports the existence of the economy – Meritocracy Argument - HS Diploma (30k/year) / MBA (HBS/Wharton) (150k/year) in financial services

Copyright © 2014 Pearson Education, Inc. 10 Three Social Waves Toffler’s proposition is three waves within society Formalization of agricultural work – Establishment of dependable food sources Industrial revolution – Formalization of the economy and trade Double entry accounting hmm? Information age – The pooling and seamless dissemination of information

Copyright © 2014 Pearson Education, Inc. 11 Why are these waves important? Could the conventional wisdom of the day during the age of agriculture and handwork every prepare a young person to be successful during the industrial age? How would your parents and teachers tell you to prepare?

Copyright © 2014 Pearson Education, Inc. 12 Information is a Valuable Resource

Copyright © 2014 Pearson Education, Inc. 13 What Facilitated the Rise of the Information Age? Arguably the five mega trends

Copyright © 2014 Pearson Education, Inc. 14 Five IT Megatrends in the Information Age: Mobile Computing Many believe that we’re living in a post-PC era. In the developing world mobile devices often leapfrog traditional PCs. Implications of untethered access: – Increased collaboration – The ability to manage business in real time – New ways to reach customers

Copyright © 2014 Pearson Education, Inc. 15 Five IT Megatrends in the Information Age: Social Media and Web 2.0 Over 1.23 Billion Facebook users share status updates or pictures with friends and family Organizations use social media to encourage employee collaboration or to connect with their customers These sites facilitate: – Resolution of offline social failure – Production of non static content

Copyright © 2014 Pearson Education, Inc. 16 Five IT Megatrends in the Information Age: Big Data IDC estimated that in 2011, 1.8 zettabytes of data were generated and consumed – Global mobile data traffic reached 1.5 exabytes per month at the end of 2013 – 2013 Mobile data traffic was 18x the size of the Internet in 2000 How much is 1.8 zettabytes? 1.8 trillion gigabytes, or the equivalent of 57 billion 32GB iPads (IDC, 2011) This number is forecast to grow by 50 times by 2020 Why does this matter? – Raw data can be transformed into knowledge – Raw data can be mined for business value

Copyright © 2014 Pearson Education, Inc. 17 Five IT Megatrends in the Information Age: Cloud Computing Web technologies enable using the Internet as the platform for applications and data Many regard cloud computing as the beginning of the “fourth wave” – the applications and data reside in the cloud Why does this matter? – Hardware is now a service

Copyright © 2014 Pearson Education, Inc. 18 Five IT Megatrends in the Information Age: Consumerization of IT Consumerization may be the most significant trend affecting organizational IT personnel – Today’s employees bring their own devices to work – Initially used for s / social networking Now used for other important tasks such as enterprise resource planning – Opens up new opportunities – Mitigates access to computing This is the lynch pin. Instead of pedantic connectivity options, the individual can engage in front and back office tasks to advance the firm’s position

Copyright © 2014 Pearson Education, Inc. 19 You’ve built a bridge to nowhere, Greenwood Why does this matter for the firm? – Recall the purpose of the firm… – How does it accomplish this objective? Two Options If I am a clever CEO, and I wish to remain competitive, how can I exploit these trends?

Copyright © 2014 Pearson Education, Inc. 20 Evolution of Globalization The Rise of the Information Age Describe the characteristics of the digital world and the advent of the Information Age. Evolution of Globalization Learning Objective: Be able to define globalization, describe how it evolved over time, and describe key globalization drivers. Information Systems Defined Explain what an information system is, contrasting its data, technology, people, and organizational components. The Dual Nature of Information Systems Describe the dual nature of information systems in the success and failure of modern organizations. IS Ethics Describe how computer ethics impact the use of information systems and discuss the ethical concerns associated with information privacy and intellectual property.

Copyright © 2014 Pearson Education, Inc. 21 What is globalization? Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture Like any other economic force, it isn’t good or bad, it is a response to incentives and market forces made by economic agents – i.e. it is the response of firms to demand

Copyright © 2014 Pearson Education, Inc. 22 Globalization – Facilitated by Changes in Three Things

Copyright © 2014 Pearson Education, Inc. 23 Three factors of import Economic changes – Global labor and financial systems Cultural changes – Multiculturalism and economic homogeneity – The spread of the capitalist ideal Technology changes – Communication across distance not cost prohibitive (i.e. monitoring costs)

Copyright © 2014 Pearson Education, Inc. 24 Thomas Friedman would argue there is globalization 1.0, 2.0, and 3.0 The World is Flat

Copyright © 2014 Pearson Education, Inc Key Factors/Events For Enabling Globalization 3.0 Fall of the Berlin Wall – This led to the breakup of the eastern bloc, undermining of the socialist state, and spurred (along with Nixon) China to enter the global market MS Windows – Fi and foo I say to you Steve Jobs – Windows becomes the de facto operating system in the world. No more my computer can’t talk to yours The Internet – and Netscape. Allowed, seemingly, costless access to the WWW. No travel costs to communicate Falling Telecom Costs – Creation of the telecom infrastructure – Valacich calls this overinvestment, I disagree – Was the dot com bubble bad? Outsourcing – The previous four started a change in the decision to in v outsource aspects of the firm. As technology continued to advance, the distance grew.

Copyright © 2014 Pearson Education, Inc. 26 The Rise of Information Systems Outsourcing What is outsourcing? Outsourcing: moving of business processes or tasks to another company – Facilitated by declining telecommunication costs – Driven by cost reduction Reduced labor costs for low-skilled labor: Apple outsourcing manufacturing to China Reduced labor costs for relatively high-skilled labor: Boeing outsourcing 787 Aeronautical Engineering to Russia

Copyright © 2014 Pearson Education, Inc. 27 The Rise of Information Systems Outsourcing: Key Reasons for Outsourcing To reduce or control costs To free up internal resources To gain access to world-class capabilities To increase revenue potential of the organization To reduce time to market To increase process efficiencies To be able to focus on core activities To source specific capabilities or skills

Copyright © 2014 Pearson Education, Inc. 28 Opportunities of Operating in the Digital World (Traditional Firms) Falling Transportation Costs – Shipping a bottle of wine from Australia to Europe merely costs a few cents Falling Telecommunication Costs – These have helped create shared perspectives of behavior, desirable goods, and even forms of government Reaching Global Markets Accessing a Global Labor Pool – Highly skilled or low cost labor pools exist in many countries which are now economically accessible

Copyright © 2014 Pearson Education, Inc. 29 Opportunities of Operating in the Digital World Reaching Global Markets – I can now access any market, any time, conditional on connectivity Accessing a Global Labor Pool – Highly skilled or low cost labor pools exist in many countries which are now economically accessible

Copyright © 2014 Pearson Education, Inc. 30 Challenges of Operating in the Digital World Government – Political instability – Regulatory: privacy, control, standards, censorship Geopolitical – Time zones, infrastructure – Workforce: welfare, demographics, expertise Cultural – Working with – Providing services

Copyright © 2014 Pearson Education, Inc. 31 I think it is time for a break… quick recap We have discussed – The rise of the information age – Megatrends in IT – Information Systems role in globalization – The role of the decision maker in IT strategy – How firms are leveraging IT

Copyright © 2014 Pearson Education, Inc. 32 Before the Break We discussed – The rise of the information age – Megatrends in IT – Three Factors that lead to globalization Information Systems role in globalization Now – The role of the decision maker in IT strategy – How firms are leveraging IT – IT Ethics

Copyright © 2014 Pearson Education, Inc. 33 Information Systems Defined The Rise of the Information Age Describe the characteristics of the digital world and the advent of the Information Age. Evolution of Globalization Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Information Systems Defined Learning Objective: Explain what an information system is, contrasting its data, technology, people, and organizational components. The Dual Nature of Information Systems Describe the dual nature of information systems in the success and failure of modern organizations. IS Ethics Describe how computer ethics impact the use of information systems and discuss the ethical concerns associated with information privacy and intellectual property.

Copyright © 2014 Pearson Education, Inc. 34 What is an information system? Thoughts? – Combination of hardware, software, and telecom leveraged by human capital to transform data into information and then knowledge Why do we want to transform data?

Copyright © 2014 Pearson Education, Inc. 35 Data: The Root and Purpose of Information Systems Data is analyzed and processed into information When there is an ability to understand the information and make decisions using it, it becomes knowledge What is the benefit of transforming data this way?

Copyright © 2014 Pearson Education, Inc. 36 The Components of Information Systems Five Components of Information Systems: – People – Telecommunications – Hardware – Data – Software

Copyright © 2014 Pearson Education, Inc. 37 Three Types of Systems To Transform Data Automated office systems – Communication tools within the firm Benefit? Transaction processing systems – Used to facilitate the interaction between the firm and itself, and upstream or downstream partners Benefit? Management information systems – sorted TPS information which facilitates managerial decision making Benefit?

Copyright © 2014 Pearson Education, Inc. 38 Managerial decision making? What is the role of the knowledge worker here? These data and software fit into a system, they do not exist in a vacuum – What is their value? – The information contained in an IS can be leveraged by a firm or individual – Why? To press market advantage To create maintainable sustainable competitive advantage What IS professionals do is find this leverage point (same is true of the IS competent)

Copyright © 2014 Pearson Education, Inc. 39 Three Methods of Exploiting This Information Technical competency – Knowledge and skill about hardware, software, networking, and security the nuts and bolts approach Business competency – Understanding market forces and how the firm presses strategic advantage Porter’s puzzle Systems competency – The integration of technical and business competency – How does the information system allow the firm to exploit its advantage

Copyright © 2014 Pearson Education, Inc. 40 People: The Builders, Managers, and Users of Information Systems An ecosystem of Users, Builders, Managers, and those who study information systems As the use of information systems grows, so does the need for dedicated IS professionals Growing demand focused on those with advanced and/or unique skills

Copyright © 2014 Pearson Education, Inc. 41 The Dual Nature of Information Systems The Rise of the Information Age Describe the characteristics of the digital world and the advent of the Information Age. Evolution of Globalization Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Information Systems Defined Explain what an information system is, contrasting its data, technology, people, and organizational components. The Dual Nature of Information Systems Learning Objective: by able to describe the dual nature of information systems in the success and failure of modern organizations. IS Ethics Describe how computer ethics impact the use of information systems and discuss the ethical concerns associated with information privacy and intellectual property.

Copyright © 2014 Pearson Education, Inc. 42 Question Does a great payroll or order entry system give your organization a competitive advantage? What if the order entry system is connected to a CRM system which helps you cross sell or up sell additional goods and services? Do either of these systems grant competitive advantage?

Copyright © 2014 Pearson Education, Inc. 43 IT Doesn’t Matter In his 2003 article Nicholas Carr argues that IT does not matter What is Carr’s argument? Do you believe him? What if I told you no academic research has ever found a relationship between IT investment and firm productivity? – Would you believe me? PSST – I am telling the truth

Copyright © 2014 Pearson Education, Inc. 44 So why is the advantage fleeting? Two Reasons 1) Because technology happens in phases 2) Because strategy is a multi-period game

Copyright © 2014 Pearson Education, Inc. 45 Suggestions By Carr Spend Less – Returns are higher for those who invest sparingly Follow, Don’t Lead – Let others take the risk of the bleeding edge. Pickup IT once it is cheap and proven Focus on Vulnerabilities, Not Opportunities – Shore up the weak spots of the business. Let the strategy do the rest

Copyright © 2014 Pearson Education, Inc. 46 Carr’s Argument IT has become ubiquitous How can it provide an advantage if everyone has it? IT has become the cost of doing business There are four things missing from his argument.

Copyright © 2014 Pearson Education, Inc. 47 What We Want! Carr asserts that IT provides temporal advantage – Well that’s no good – IT is commoditized – IT can be imitated – IT is risky when unproven – IT is valuable when the advantage goes to a few – IT is standardized – IT is replicable

Copyright © 2014 Pearson Education, Inc. 48 What does Carr Miss? Use – Nowhere does Carr discuss how people use IT, he only looks at investment. Branding and Differentiation in Service Imitation Cannot be Stopped – Preposterous to the point of utter absurdity Strategic Positioning and Fit

Copyright © 2014 Pearson Education, Inc. 49 IS Ethics The Rise of the Information Age Describe the characteristics of the digital world and the advent of the Information Age. Evolution of Globalization Define globalization, describe how it evolved over time, and describe the key drivers of globalization. Information Systems Defined Explain what an information system is, contrasting its data, technology, people, and organizational components. The Dual Nature of Information Systems Describe the dual nature of information systems in the success and failure of modern organizations. IS Ethics Learning Objective: Describe how computer ethics impact the use of information systems and discuss the ethical concerns associated with information privacy and intellectual property.

Copyright © 2014 Pearson Education, Inc. 50 A Brief Statement on Ethics Remember: Unethical and illegal are not synonymous... don't confuse them, you need to draw your own line

Copyright © 2014 Pearson Education, Inc. 51 Computer Ethics What are computer ethics? – Issues and standards of conduct pertaining to the use of information systems

Copyright © 2014 Pearson Education, Inc. 52 Information Privacy What information you might want to keep private? What is identity theft

Copyright © 2014 Pearson Education, Inc. 53 Information Privacy (cont’d) Companies seem to know about our every move—how much information do we need to reveal? Amazon.com is famous for personalization What are the costs?

Copyright © 2014 Pearson Education, Inc. 54 Information Accuracy Who is responsible for ensuring of the authenticity and fidelity of information?

Copyright © 2014 Pearson Education, Inc. 55 Information Property Who owns information about individuals? How can this information be sold and exchanged?

Copyright © 2014 Pearson Education, Inc. 56 Data Privacy Statements Company maintaining the database with customer information legally owns it – Is free to sell it? – Must it ensure proper data handling practices? Social networking complicates matters – Complexity of privacy settings – Friends can tag you without your knowledge.

Copyright © 2014 Pearson Education, Inc. 57 Information Accessibility Who has the right to monitor the information?

Copyright © 2014 Pearson Education, Inc. 58 The Need for a Code of Ethical Conduct: Computer Ethics Institute Guidelines The guidelines prohibit: – Using a computer to harm others – Interfering with other people’s computer work – Snooping in other people’s files – Using a computer to steal – Using a computer to bear false witness – Copying or using proprietary software without paying for it – Using other’s resources without authorization or compensation – Appropriating other people’s intellectual output The guidelines recommend: – Review social consequences of programs and systems you design – Use computers in ways that show consideration and respect for others

Copyright © 2014 Pearson Education, Inc. 59 Charlie Hebdo is a French weekly satire paper known for risqué and controversial cartoons. Last week, two members of Al-Qaeda, Yemen broke into the headquarters and murdered 12 members of the staff over cartooned representations of the Prophet Muhammad. Consider today’s discussion, how has the advent of the digital age shaped both the lead up and aftermath of these events? Take five minutes and discuss this with the people sitting around you. A thought exercise… Charlie Hebdo

Copyright © 2014 Pearson Education, Inc. 60 Recap Part Deux Types of IT Systems IT Doesn’t Matter – Validity of Carr’s Arguments – Weaknesses of his argument IT and Ethics – Components – Need for a code of ethical conduct – Implications of the digital divide