1. INTRODUCTORY COMMENTS MANAGEMENT OF INFORMATION TECHNOLOGY

2. ELEMENTS FOR STUDY OF INFORMATION SYSTEMS Text’s Three Themes 1.Enterprise Systems 2.E-Business 3.Information Technology Three Roles 1.Systems User 2.Systems Evaluator 3.Systems Designer

3. INPUT-PROCESS-OUTPUT MODEL FOR INFO SYSTEMS AND BUSINESS PROCESSES

4. SYSTEMS, COMPONENTS, AND HIDING COMPLEXITY Note that the diagram omits that System 1.2 consumes inputs A & E and produces outputs C & B. Data flow diagram leveling (Ch 2) makes these relationships clearer.

5. A HIERARCHY OF INFORMATION QUALITIES

6. © Pearson Prentice Hall 20093-6 Q1 – How does organizational strategy determine information systems structure? An organization’s goals and objectives are determined by its competitive strategy. In turn, an organization’s competitive strategy determines every information system’s  Structures  Features  Functions Fig 3-1 Organizational Strategy Determines Information Systems

7. © Pearson Prentice Hall 20093-7 Fig 3-2 Porter’s Five Forces Model of Industry Structure Q2 – What Five Forces Determine Industry Structure?

8. © Pearson Prentice Hall 20093-8 Fig 3-3 Examples of Five Forces Q2 – What Five Forces Determine Industry Structure?

9. © Pearson Prentice Hall 20093-9 Fig 3-4 Porter’s Four Competitive Strategies Q3 – What is Competitive Strategy

10. © Pearson Prentice Hall 20093-10 Q4 – What is a Value Chain? Each competitive strategy requires a system whose benefits outweigh the risks and provide value to the customer.  Value is defined as the amount of money a customer is willing to spend on a product, service, or resource.  The difference between the value that an activity generates and the cost of the activity is the margin.  A value chain is a network of value-creating activities and is divided into primary activities and support activities.

11. © Pearson Prentice Hall 20093-11 Fig 3-5 Porter’s Value Chain Model Q4 – What is a Value Chain?

12. © Pearson Prentice Hall 20093-12 Primary Activities in the value chain include:  Inbound logistics activities involve receiving and managing raw materials.  Operations activities transform raw materials into final products or create services.  Outbound logistic activities deliver finished products to customers.  Marketing and Sales activities create marketing strategies and sell products or services to customers.  Services activities provide after-sale customer support for products or services. Q4 – What is a Value Chain?

13. © Pearson Prentice Hall 20093-13 Support Activities in the value chain indirectly enhance production of products and services.  Firm infrastructure includes general management, finance, accounting, legal, and government affairs (if necessary).  Human Resources recruits, compensates, evaluates and trains employees.  Technology Development includes research and development for new processes or techniques.  Procurement finds suppliers and vendors for raw materials, creates contracts, and negotiates prices of raw materials. Q4 – What is a Value Chain?

14. © Pearson Prentice Hall 20093-14 Fig 3-7 Three Examples of Business Processes Q5 – How Do Business Processes Generate Value?

15. © Pearson Prentice Hall 20093-15 Fig 3-8 Improved Materials Ordering Process Q5 – How Do Business Processes Generate Value?

16. © Pearson Prentice Hall 20093-16 Fig 3-10 Business Process & Information System for Bike Rental Q6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems?

17. © Pearson Prentice Hall 20093-17 Each business must first analyze its industry and choose a competitive strategy. Will it be a low-cost provider or differentiate its products from competitors? Then it must design its business processes to span value-generating activities. Once those decisions have been made, a business can structure an information system that supports its business processes. Q6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems?

18. © Pearson Prentice Hall 20093-18 Q7 – How Do Information Systems Provide Competitive Advantages? There are two ways businesses can respond to the five competitive forces.  They can gain a competitive advantage via their products and services.  They can gain a competitive advantage by developing superior business processes.

19. © Pearson Prentice Hall 20093-19 A business can gain a competitive advantage via its products by  Creating new products and services, or  Enhancing its existing products or services, or  Differentiating its products and services from its competitors Information systems can help create a competitive advantage by being part of the product or by providing support to the product. Q7 – How Do Information Systems Provide Competitive Advantages?

20. © Pearson Prentice Hall 20093-20 A company can gain a competitive advantage by using business processes to  Lock in customers via high switching costs, making it too expensive for the customer to switch to a competitor.  Lock in suppliers via easy-to-use connections, discouraging them from changing to another business.  Create entry barriers for new competitors, thereby raising the costs to enter the market.  Establish alliances with other organizations and set standards, reducing purchase costs and providing benefits for everyone.  Reduce costs which in turn reduces prices and increases profitability. Q7 – How Do Information Systems Provide Competitive Advantages?

21. Information Systems are the means for executing business processes, activating the value chain, and achieving the business’s strategy Summary: Why information systems are developed