1. Information Systems in Global Business Today
Chapter 1
Information Systems in Global Business Today

2. Explain why information systems are so essential in business today.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
LEARNING OBJECTIVES
Explain why information systems are so essential in business today.
Define an information system from both a technical and a business perspective.
Identify and describe the three dimensions of information systems.

3. Management Information Systems
Chapter 1 Information Systems in Global Business Today
LEARNING OBJECTIVES (Continued)
Assess the complementary assets required for information technology to provide value to a business.
Identify the major management challenges to building and using information systems.

4. Problem: Tough competition and demanding customers.
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Smart Systems and Smart Ways of Working Help Toyota Become Number One
Problem: Tough competition and demanding customers.
Solutions: Redesigned order and production processes reduce costs, increase revenue, and improve customer service.
Oracle E-Business Suite makes it possible to build cars to order and forecast demand and production requirements more accurately.
Demonstrates IT’s role in analyzing market trends and monitoring quality, efficiency, and costs.
Illustrates the emerging digital firm landscape where businesses can use tools to analyze critical data.

5. How information systems are transforming business
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
How information systems are transforming business
Increased technology investments by firms (up-to 50% of total investments)
Increased responsiveness to customer demands: A “Fed-Ex” economy
Shifts in media and advertising (online newpapers, Internet adverts)
New security and accounting laws (e.g. storing employee s for 5 years) leading to growth of digital information

6. Globalization opportunities
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Globalization opportunities
Internet has drastically reduced costs of operating on a global scale
Customers shop in a worldwide marketplace
Firms reduce costs by finding low cost suppliers and managing facilities in other countries
Small firms can act big
Large firms can act small (mass customization)

7. The emerging digital firm
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
The emerging digital firm
Significant business relationships are digitally enabled and mediated (external)
Core business processes are accomplished through digital networks (internal)
Key corporate assets (like core competencies, financial and human assets) are managed digitally
Digital firms offer greater flexibility in organization and management
Time shifting: operating 24 hrs, 7 days
Space shifting: no geographic boundaries

8. Virtual Management at Accenture
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Virtual Management at Accenture
Consulting firm, employees, 48 countries, no headquarters, no branches
Read the Interactive Session and then discuss the following questions:
What are the advantages of working in a virtual environment like the one created by Accenture? What are the disadvantages?
Would you like to work at a company like Accenture? Why or why not? Explain your answer.
What kinds of companies could benefit from being run virtually like Accenture? Could all companies be run virtually like Accenture?

9. Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Business firms invest heavily in information systems to achieve six strategic business objectives:
Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival

10. Operational excellence:
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Operational excellence:
Improvement of efficiency to attain higher profitability
Information systems, technology an important tool in achieving greater efficiency and productivity
E.g. Wal-Mart’s RetailLink system links suppliers to its 5289 stores wordlwide for superior replenishment system

11. New products, services, and business models:
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
New products, services, and business models:
Business model: describes how company produces, delivers, and sells product or service to create wealth
Information systems and technology are a major enabling tool for new products, services, business models
E.g. Apple’s iPod, iTunes transformed the old business model of music distribution from CDs into online
Netflix’s Internet-based DVD rentals vs rental stores

12. Customer and supplier intimacy:
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Customer and supplier intimacy:
Serving customers well leads to customers returning, which raises revenues and profits
E.g. High-end hotels that use computers to track customer preferences (room temperature, TV channels) and use IS to monitor and customize environment
Intimacy with suppliers allows them to provide vital inputs, which lowers costs
E.g. J.C.Penney’s information system which links shirt sales records at each store to contract manufacturer in Hong Kong. Supplier produces (quantity, style, color, size) based on the sales records and delivers directly to stores; no inventory storage costs for J.C.Penney, lower price to customer

13. Improved decision-making
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Improved decision-making
Without accurate information:
Managers must use forecasts, best guesses, luck
Leads to:
Overproduction/underproduction of goods and services
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers
E.g. Verizon’s (phone company) Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc. Fast response through immediate allocation of repair resources

14. Competitive advantage
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and suppliers in real time
Often achieved through one of first four strategic business objectives
E.g. Dell: Consistent profitability over 25 years; Dell remains one of the most efficient producer of PCs in world (mass customization)
But Dell has lost some of its advantages to fast followers– HP (competitive advantage is not sustainable)

15. Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
Survival
Information systems and technologies as a necessity for businesses to survive
Driven by:
Industry-level changes, e.g. the introduction of ATMs by one bank forces other banks to follow
Governmental regulations requiring record-keeping
E.g. Toxic Substances Control Act (records of emloyee exposure for 30 years), Sarbannes-Oxley Act (after the Enron scandal, retain audit papers and records including s for 5 years)
Firms need IS capability to respond to these requirements

16. The Interdependence Between Organizations and Information Technology
Management Information Systems
Chapter 1 Information Systems in Global Business Today
The Role of Information Systems in Business Today
The Interdependence Between Organizations and Information Technology
There is a growing interdependence between a firm’s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.
Figure 1-2

17. Information system: Information vs. data Knowledge?
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Information system:
Set of interrelated components
Collect, process, store, and distribute information
Support decision making, coordination, and control
Information vs. data
Data are streams of raw facts
Information is data shaped into meaningful form
Knowledge?

18. Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Information system: Three activities produce information organizations need
Input: Captures raw data from organization or external environment
Processing: Converts raw data into meaningful form
Output: Transfers processed information to people or activities that use it

19. Computer/Computer program vs. information system
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Feedback:
Output returned to appropriate members of organization to help evaluate or correct input stage
Computer/Computer program vs. information system
Computers and software are technical foundation and tools, similar to the material and tools used to build a house

20. Functions of an Information System
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Functions of an Information System
Other environmental factors?
(t,p,e)
An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.
Figure 1-4

21. Information Systems Are More Than Computers
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Information Systems Are More Than Computers
Computers are like the tools and materials used to make a house (griders,cement, hammers, nails), but these by themselves do not make a house; you need the architectural design, setting and static knowledge to build the house.
Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment.
Figure 1-5

22. Organizational dimension of information systems
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Organizational dimension of information systems
Hierarchy of authority, responsibility
Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers

23. Levels in a Firm Management Information Systems Figure 1-6
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Levels in a Firm
Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.
Figure 1-6

24. Organizational dimension of information systems (cont.)
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Organizational dimension of information systems (cont.)
Separation of business functions
Sales and marketing
Human resources
Finance and accounting
Production and manufacturing
Unique business processes
Unique business culture
Organizational politics

25. Management dimension of information system
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Management dimension of information system
Managers set organizational strategy for responding to business challenges
Managers control and coordinate
In addition, managers must act creatively:
Creation of new products and services
Occasionally re-creating the organization

26. Technology dimension of information systems
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Technology dimension of information systems
Computer hardware and software
Data management technology
Networking and telecommunications technology
Networks, the Internet, intranets and extranets, World Wide Web
IT infrastructure: provides platform that system is built on

27. UPS Competes Globally with Information Technology
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
UPS Competes Globally with Information Technology
Read the Interactive Session: Technology, and then discuss the following questions:
What are the inputs, processing, and outputs of UPS’s package tracking system?
What technologies are used by UPS? How are these technologies related to UPS’s business strategy?
What problems do UPS’s information systems solve? What would happen if these systems were not available?

28. Dimensions of UPS tracking system
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Dimensions of UPS tracking system
Organizational:
Procedures for tracking packages and managing inventory and provide information
Management:
Monitor service levels and costs
Technology:
Handheld computers, bar-code scanners, networks, desktop computers, etc.

29. Business perspective on information systems:
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Business perspective on information systems:
Information systems are instruments for creating value
Investments in information systems and technology will result in superior returns:
Productivity increases
Revenue increases
Superior long-term strategic positioning
But not always!!

30. Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Investing in information technology does not guarantee good returns (big failures by firms like HP, Nike, Nestle)
Considerable variation in the returns firms receive from systems investments
Success requires a business perspective: attention to the organizational and managerial nature of information systems
Success Factors:
Adopting the right business model
Investing in COMPLEMENTARY ASSETS (organizational and management capital)

31. Complementary assets:
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Complementary assets:
Assets required to derive value from a primary investment
Firms supporting technology investments with investment in complementary assets receive superior returns
E.g.: invest in technology and the people to make it work properly

32. Complementary assets include:
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
Complementary assets include:
Organizational investments, e.g.
Appropriate business model
Efficient business processes
Managerial investments, e.g.
Incentives for management innovation
Teamwork and collaborative work environments
Social investments, e.g.
The Internet and telecommunications infrastructure
Technology standards

33. The Business Information Value Chain
Management Information Systems
Chapter 1 Information Systems in Global Business Today
Perspectives on Information Systems
The Business Information Value Chain
From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability.
Figure 1-7

34. Challenge of Information Systems: Key Management Issues
Management Information Systems Chapter 1 Information Systems in Global Business Today
Challenge of Information Systems: Key Management Issues
Major management challenges:
1. Design competitive and effective systems: rethinking of business processes, not simple automation
2. Understand system requirements of global business environment: language, cultural and regulatory barriers
3. Create information architecture that supports organization’s goal

35. Challenge of Information Systems: Key Management Issues
Management Information Systems Chapter 1 Information Systems in Global Business Today
Challenge of Information Systems: Key Management Issues
4. Determine the business value of information systems
5. Design systems people can control, understand and use in a socially, ethically responsible manner