Copyright © 2002 by The McGraw-Hill Companies, Inc. Information Technology & Management 2 nd Edition, Thompson Cats-Baril Chapter 6 Organizational Use of Information Systems

Copyright © 2002 by The McGraw-Hill Companies, Inc. 2 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Chapter Objectives To understand the major components of an information system. To understand how information systems may be used to help organizations compete more effectively. To understand how using information systems also can lead to some unintended consequences.

Copyright © 2002 by The McGraw-Hill Companies, Inc. 3 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Components of an I/S Information Systems Components –Purpose –Roles –Procedures –Content –Information Technology

Copyright © 2002 by The McGraw-Hill Companies, Inc. 4 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Purpose of an I/S The purpose is a measurable objective of the information system. Objectives: –Survival –Better Customer Service

Copyright © 2002 by The McGraw-Hill Companies, Inc. 5 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Roles of an I/S The “people component” or roles of an information system are very important. –User –Developer –Operator –I/T Administrator

Copyright © 2002 by The McGraw-Hill Companies, Inc. 6 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Procedures of an I/S Procedures are the activities required to interact with the information system. Procedures should be tested. –Formal –Informal

Copyright © 2002 by The McGraw-Hill Companies, Inc. 7 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Content of an I/S Anything digital can be used by an information system. –Textual data –Images –Sounds –Video Cost of Information –Time and Resources needed to collect and analyze data. Value of Information –The increase in value associated with the decision based on information.

Copyright © 2002 by The McGraw-Hill Companies, Inc. 8 Information Technology & Management 2 nd Edition, Thompson Cats-Baril I/T in an I/S Hardware and software used to store, retrieve, process, and transmit data. –Personal computer –Mainframes –Operating systems –Application programs –Network cards –Routers

Copyright © 2002 by The McGraw-Hill Companies, Inc. 9 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Desirable Characteristics of Information CharacteristicDescription RelevanceHow pertinent is the information. TimelinessHow quickly is the information captured and transmitted. AccuracyA measure of correctness. ReliabilityDependability of the source. CompletenessA measure of the degree of reduction of uncertainty. GranularityThe level of detail.

Copyright © 2002 by The McGraw-Hill Companies, Inc. 10 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Competition and Strategy Competitive Analysis –Formal analysis to identify threats and opportunities. Generic Competitive Strategies –Cost Leadership –Differentiation –Market Niche Mass Customization

Copyright © 2002 by The McGraw-Hill Companies, Inc. 11 Information Technology & Management 2 nd Edition, Thompson Cats-Baril SWOT Analysis SWOT analysis provides a simple high level framework for describing the competitive position of the organization. SWOT –Strengths –Weaknesses –Opportunities –Threats

Copyright © 2002 by The McGraw-Hill Companies, Inc. 12 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Value Chain A value chain is the series of activities performed to create the value for which customers pay. Initially looked at only internal operations of firm. Analysis now includes whole industry, industry value chain.

Copyright © 2002 by The McGraw-Hill Companies, Inc. 13 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Value Chain Supply Chain Management (SCM) addresses the linkages along the firms value chain. –Ensure accurate and timely information. –Reduces time needed to process orders. –Reduces inventory carry costs.

Copyright © 2002 by The McGraw-Hill Companies, Inc. 14 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Porter’s Five-Forces Model 1.Suppliers bargaining Power 2.Buyers bargaining power 3.Threat of new entrants 4.Threat of substitute products 5.Positioning of traditional intra-industry rivals

Copyright © 2002 by The McGraw-Hill Companies, Inc. 15 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Questions for Assessing Potential Impact of I/T on Strategy Can I/T build barriers to entry? Can I/T build in switching costs? Can I/T change the basis of competition? Can I/T change the balance of power in supplier relationship? Can I/T generate new products?

Copyright © 2002 by The McGraw-Hill Companies, Inc. 16 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Management Objectives for I/S Infrastructure Systems provide services that are shared across the firm. –Telecommunications infrastructure –Centralized databases Transactional Systems are basic and repetitive, they are often used to automate existing processes. Informational Information Systems are designed to provide informational and decision-support functionality. Strategic (Competitive) Systems –Consistent with the firms competitive strategy –Change the industry structure

Copyright © 2002 by The McGraw-Hill Companies, Inc. 17 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Competitive Vulnerabilities I/T can create competitive vulnerabilities that are difficult to address. –Travel agents and the Internet Two strategies for addressing competitive vulnerabilities. 1.Positioning the I/T organization 2.Managing emerging technologies

Copyright © 2002 by The McGraw-Hill Companies, Inc. 18 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Positioning the I/T organization The position of I/T in the organization varies among industries. Positioning of I/T –What level should I/T be in the organization? The more strategic the I/T function the higher they should be in the organization. –What functional area should I/T be assigned to in the organization? If I/T is a CSF for a business function they should report to that business function.

Copyright © 2002 by The McGraw-Hill Companies, Inc. 19 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Managing Emerging Technologies I/T creates risks through the threat of emerging technologies. –Competitors may gain an advantage due to advances in I/T. Example of how I/T impacts an industry. –I/T in higher education Programming was taught on mainframes (1970s). Then dumb terminals gave students access to computing resources (1980s). Then labs of networked computers gave students access to computing resources (1990s). Students are now familiar with DVDs, PDAs, & the Internet (2000s)

Copyright © 2002 by The McGraw-Hill Companies, Inc. 20 Information Technology & Management 2 nd Edition, Thompson Cats-Baril Responsibilities for Emerging Technology Monitor the environment for technologies that have some potential to help or hurt the organization. Evaluate selected new technologies to determine how they might best be employed. Assist in the adoption and assimilation of new technologies into the organization.