1. Information Technology Foundations-BIT 112 CHAPTER 2 Information Systems: Concepts and Management

2. Information Technology Foundations-BIT 112 2 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

3. Information Technology Foundations-BIT 112 3 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.

4. Information Technology Foundations-BIT 112 4 Learning Objectives (continued) Learn about Porter’s competitive forces model and 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.

5. Information Technology Foundations-BIT 112 5 Chapter Opening Case Upstream activities: exploration and production Downstream activities: refining, marketing, transportation, sales

6. Information Technology Foundations-BIT 112 6 Application Programs An application program is a computer program designed to support a specific task, a business process or another application program. A collection of Application Programs is often called an Information System. –Example: Collection of application programs in the Finance Department = Finance Information System. Note: The term “Application” is synonymous with “Application Program”.

7. Information Technology Foundations-BIT 112 7 Classroom Table Discussion In the course of your life and career, you will work with companies that utilize a variety of information systems at various levels of the organization. At your table group spend the next few minutes identifying and discussing the universal use of information systems in your everyday life. Capture a list of 5 or 6 information technologies you have interacted with in the last week. Some examples are: –ATM machines. –Grocery store checkout line cash registers with bar code scanners –Use of a bank card / credit cards for purchases. Companies Have Failed When They Do Not Keep State Of The Art Information Systems.

8. Information Technology Foundations-BIT 112 8 Major Types of Information System Functional area information systems –Support particular functional areas in an organization. Enterprise resource planning systems (ERP) –An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. –An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources. Transaction processing systems (TPS) –Support the monitoring, collection, storage, and processing of data from the organization’s basic business transactions. –Many support an entire organization. Interorganizational information systems –Connect two or more organizations. –Examples are supply chain management systems and electronic commerce systems.

9. Information Technology Foundations-BIT 112 9 Information Systems Inside An Organization / Company See Pgs 34-35

10. Information Technology Foundations-BIT 112 10 Information Systems that Support an Organization’s / Company’s Employees Office automation systems (OAS) –Typically support the staff, managers, and knowledge workers. –OASs are used to development documents, schedule resources, and communicate. Functional area information systems (FAIS) –Summarize data and prepare reports, primarily for middle managers. Business Intelligence systems (BI) –Provide computer-based support for complex, non-routine systems, primarily for middle managers and knowledge workers. Expert Systems (ES) –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.

11. Information Technology Foundations-BIT 112 11 Components of an Information System Computer-based information systems (CBIS) use computer technology to perform some or all of their tasks and are composed of: –Hardware: a device such as a processor, monitor, keyboard or printer –Software: a program or collection of programs that enable hardware to process data. –Database: a collection of related files or tables containing data. –Network: a connecting system (wireline or wireless) that permits different computers to share resources. –Procedures: the set of instructions about how to combine the above components in order to process information and generate the desired output. –People: those individuals who use the hardware and software, interface with it, or uses its output.

12. Information Technology Foundations-BIT 112 12 Information Technology Outside An Organization / Company

13. Information Technology Foundations-BIT 112 13 2.2 Competitive Advantage and Strategic Information Systems 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.

14. Information Technology Foundations-BIT 112 14 Porter’s Competitive Forces Model The best-known framework for analyzing competitiveness is Michael Porter’s (Porter, 1985) Competitive Forces Model. –

15. Information Technology Foundations-BIT 112 15 Porter’s Five Forces Competitive Forces Model is used to develop strategies to increase a company’s competitive edge. –Demonstrates how IT can make a company more competitive. Five Forces –Entry Barrier –Bargaining Power of Suppliers –Bargaining Power of Buyers –Threat of Substitute Products or Services –Rivalry Among Existing Firms in the Industry

16. Information Technology Foundations-BIT 112 16 Entry Barrier Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. –An entry barrier is a product or service feature that customers expect from organizations in a certain industry. –The product or feature must be offered by the competing organization for it to survive in the marketplace. –For most organizations, the Internet increases the threat that new competitors will enter a market.

17. Information Technology Foundations-BIT 112 17 Bargaining Power of Suppliers 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.

18. Information Technology Foundations-BIT 112 18 Bargaining Power of Buyers The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices. Internet increases buyers’ power. –Internet provides 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.

19. Information Technology Foundations-BIT 112 19 Threat of Substitute Products or Services 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.

20. Information Technology Foundations-BIT 112 20 Rivalry Among Existing Firms in the Industry Finally, the rivalry among firms in an industry is high when there is fierce competition and low when there is not.

21. Information Technology Foundations-BIT 112 21 Porter’s Value Chain Model The Value Chain Model (1985) identifies specific activities where organizations can use competitive strategies for greatest impact. –Primary activities 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 Activities that 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.

22. Information Technology Foundations-BIT 112 22 Porter’s Value Chain Model

23. Information Technology Foundations-BIT 112 23 What Strategies Might Companies Use To Gain Competitive Advantage? Cost leadership Differentiation Innovation Operational effectiveness Customer-orientation

24. Information Technology Foundations-BIT 112 24 Strategies for Competitive Advantage Cost Leadership strategy –Produce products and/or services at the lowest cost in the industry. Differentiation strategy –Offer different products, services or product features. Innovation strategy –Introduce new products and services, add new features to existing products & services or develop new ways to produce them. Operational Effectiveness strategy –Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals. Customer-orientation strategy –Concentrate on making customers happy.

25. Information Technology Foundations-BIT 112 25 2.3 Why are Information Systems Important to Us, Organizations, & Society IT will reduce the management overhead – increases the number of employees who can report to a single manager. IT will change the Manager’s job – more informed decisions. IT impacts employees at work. IT provides quality-of-life improvements!!!

26. Information Technology Foundations-BIT 112 26 Impacts Employees at Work-Ergonomic Products (a) Wrist support (b) Back support (c) Eye-protection filter (d) Adjustable foot rest

27. Information Technology Foundations-BIT 112 27 Enabling People with Disabilities to Work with Computers (a) Computer for visually-impaired user (b) Computer for hearing-impaired user (c) Computer for motor-impaired user

28. Information Technology Foundations-BIT 112 28 The Robot Revolution See Invasion of the Humanoid RobotsInvasion of the Humanoid Robots

29. Information Technology Foundations-BIT 112 29 The Robot Revolution See video of Big Dog robot in actionvideo http://www.youtube.com/ watch?v=W1czBcnX1W w

30. Information Technology Foundations-BIT 112 30 The Robot Revolution (continued) Honda’s ASIMO robot See video of ASIMO in actionvideo See ASIMO commercialcommercial

31. Information Technology Foundations-BIT 112 31 DeLaval Voluntary Milking System See P 47 – Voluntary cause cows return to the system on their own.

32. Information Technology Foundations-BIT 112 32 Improvements in Health Care A roving robot camera that can be steered remotely and wirelessly. Can move through the throat, esophagus, stomach, and small & large intestines.

33. Information Technology Foundations-BIT 112 33 Improvements in Health Care (continued) The Pill Cam: Wireless endoscopy. –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. –May do away with endoscopy and the need for general anesthetic for the procedure.

34. Information Technology Foundations-BIT 112 34 The daVinci Surgical Robot The robot The surgeon’s console

35. Information Technology Foundations-BIT 112 35 The daVinci Surgical Robot (continued) The daVinci robot in use

36. Information Technology Foundations-BIT 112 36 Medical Simulation Two physicians perform a procedure on a simulated human (mannequin)

37. Information Technology Foundations-BIT 112 37 Classroom Table Discussion Besides our inability to predict the future, what are other reasons why IT Information Systems projects might fail? At your table group spend the next few minutes identifying and discussing possible reasons why an information system might fail when it is launched. Capture a list of 4 or 5 reasons. Lack of understanding of the business problem Lack of user involvement A schedule which is too aggressive Inadequate testing Trying to make too many changes at one time

38. Information Technology Foundations-BIT 112 38 2.4 Managing Information Resources Which IT Resources are Managed and By Whom? –During the early 1950s, the Information Systems Department (IS Dept) managed ALL of the computing resources, namely the mainframe. –Today, computing resources are located through the organization and almost all employees use computers in their work. This is known as end user computing. The Role of the IS Department –The IS Dept is responsible for corporate-level and shared resources and for using IT to solve end users’ business problems. –In most companies, the end users are responsible for managing their own computing resources. –IS Dept and end users work together as partners to manage the IT resources.

39. Information Technology Foundations-BIT 112 39 Traditional Major IS Department Functions Managing systems development and systems project management. Managing computer operations. Staffing, training, developing IS skills. Providing technical services. Infrastructure planning, development, and control.

40. Information Technology Foundations-BIT 112 40 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.

41. Information Technology Foundations-BIT 112 41 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.first help desk

42. Information Technology Foundations-BIT 112 42 Chapter Closing Case P55 Todd Pacific Shipyards Wireless PDA