Information Systems in Global Business Today

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5 Νοε 2013 (πριν από 3 χρόνια και 7 μήνες)

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1


Chapter 1


In
formation Systems in Global
Business Today







OPENING CASE: SMART SYSTEMS AND SMART WAYS OF

WORKING HELP TOYOTA BECOME NUMBER ONE


Toyota has flourished in a highly competitive environment because it has created a set of finely
-
tuned busi
ness processes and information systems that simultaneously
promote

agility,
efficiency, and quality. It can respond instantly to customers and changes in the marketplace as
events unfold, while working closely with suppliers and retailers. The experience o
f Toyota and
other companies described in this text will help you learn how to make your own business more
competitive, efficient, and profitable.


As part of its ongoing effort to monitor quality, efficiency and costs, Toyota management saw
there was an o
pportunity to use information systems to improve business performance.
Technology alone would not have provided a solution. Toyota had to carefully revise its business
processes to support a build
-
to
-
order production model that based vehicle production on
actual
customer orders rather than “best guesses” of customer demand.

Once that was accomplished,
Oracle e
-
business software was useful for coordinating the flow of information among disparate
internal production, ordering, and invoicing systems within the

company and with systems of
retailers and suppliers.


By helping Toyota build only the cars customers have ordered, its vehicle order management
system reduces inventory costs, because the company and its dealers do not have to pay for
making and storing
vehicles customers did not want. The system also increases customer
satisfaction by making it easier for customers to buy exactly the model, make and option they
desire.

Information provided by the system helps management monitor trends and forecast
demand

and production requirements more accurately.

The system creates value for Toyota by
making its ordering and production processes more efficient and effective.

Electronically
integrating key business processes in vehicle ordering and inventory management h
as made this
company much more agile and adaptive to customer demands and changes in its supplier and
dealer network.



2


1.1

T
HE
R
OLE OF
I
NFORMATION
S
YSTEMS IN

B
USINESS
T
ODAY


Computers are changing every aspect of our lives from entertainment to shoppi
ng, from the work
we do and where we do it, to how we communicate with friends and relatives.

Even though we
are still hearing negative news about the dot
-
com bubble from the late 1990s through 2001, the
death of the Internet has been greatly exaggerated.

Not only is it alive and well, but thriving.

The
difference between then and now is that many of the companies went bust primarily because of
poor business planning or simply because their product wasn

t viable to begin with.

As you can
see from the openin
g case in the text, many companies are remodeling their businesses and
information systems with the Internet in mind.


Ask managers to describe their most important resources and they

ll list money, equipment,
materials, and people


not necessarily in tha
t order.

It

s very unusual for managers to consider
information an important resource, and yet it is.

As electronic business and electronic commerce
grow in popularity and more firms digitize their operations, having useful information is
becoming even mor
e important to the global business community.



This chapter gives you an overview of many of the subjects we

ll touch on in this course.

It will
help you understand how all firms today, large and small, local and global, use information
systems to achieve

important business objectives, such as operational efficiency, customer and
supplier intimacy, better decision making, and new products and services.



HOW INFORMATION SYSTEMS ARE TRANSFORMING

BU
SI
NESS


You can

t help but know about all the job cuts occu
rring in our country.

It seems like every week
we hear about thousands and thousands of people losing their jobs.

Back in the 1980s most of the
job losses were in the blue
-
collar sector.

In the 1990s it seems many of the cuts were made in the
white
-
collar,

management jobs.

Why?

Think about it.

Technology, to a large extent, has driven
organizations to change the way they operate and that includes the way they manage.

We

re
going to take an in
-
depth look at how organizations work and how they

ve been transfo
rmed by
technology
on the world stage.



Information systems are
the
foundation for conducting business today.

In many industries,
survival and even existence is difficult without extensive use of information technology.

No
longer can we imagine going to w
ork and conducting business without
them.

As a society we
have come to rely
extensively on the use of
information appliances such as
cell phones,
BlackBerrys, handhelds,

and other hardware.

Communicating and conducting business is
increasingly being carrie
d out through
the use of
e
-
mail, online conferencing, and international
teleconferencing over the Internet

have all become essential tools of business.





3

GLOBALIZATION OPPORTUNITIES


Next time you purchase a product, any product, look at the fine print and

see where it

s made.

It
could be China, or the Philippines, or a South American company, or even in the United States.

You can disagree with the fact that many manufacturing jobs are being moved from the U
nited
S
tates
to foreign countries.

But look at the

vast number of jobs that are being created in this
country.

Maybe they aren

t the traditional factory jobs we

re used to.

In fact, many of our new
jobs are in the information industry.

Many of them service whole new markets that didn

t exist
just a few ye
ars ago.

There was no position called

Webmaster


in 1991. That

s because the Web
didn

t exist.

But now, that particular job category is one of the fastest growing in the U
nited
S
tates
and overseas.

The global economy Laudon & Laudon talk about is being ma
de possible by
technology, and that

s why it

s so important that you understand how to use information systems
technology instead of just computer technology.

There

s a big difference between the two, and
we

ll talk about it more.




THE EMERGING DIGITAL F
IRM


A
digital firm

is one in which nearly all of the organization’s significant business relationships
with customers, suppliers, and employees are digitally enabled, and key corporate assets are
managed through digital means.


When a firm goes digita
l, it

s not about just adding a computer system to the mix.

Throwing a
computer system at outdated
business processes

is exactly the wrong thing to do.

A truly digital
firm has several characteristics that distinguish it from most of the firms claiming to
be digitized:




Significant business relationships with customers, suppliers, and employees are digitally
enabled and mediated
.



Core business processes are accomplished through digital networks and span the entire
organization

or link multiple organizations
.



Key corporate assets


intellectual property, core competencies, and financial and human
assets


are managed
through digital means.



Internal and external environments are quickly recognized and dealt with
.


And the number one reason digital firms exper
ience greater opportunities for success and profits
is because they view information technology as the “core of the business and the primary
management tool.”





Bottom Line:

Information systems do matter because of the increased need for capital
manageme
nt, the increased productivity that arises from their use, the strategic
opportunities and advantages they offer, and because they are becoming the foundation of
doing business around the world.


4


STRATEGIC BUSINESS OBJECTIVES OF INFORMATION

SYSTEMS


Alt
hough

many managers are familiar with the reasons why managing their typical resources
such as equipment and people are important, it is worthwhile to take a moment
t
o examine the
growing interdependence between a firm

s ability to use information technolo
gy and its ability to
implement corporate strategies
and achieve corporate goals.

Specifically, business firms invest
heavily in information to achieve
six strategic business objectives
:




Operational excellence



New products, services
, and b
usiness models



C
ustomer and supplier intimacy



Improved decision making



Competitive advantage



Survival



Operational Excellence


Businesses continuously seek to improve the efficiency of their operations in order to achieve
higher profitability.

Information systems and tec
hnologies are some of the most important tools
available to managers for achieving higher levels of efficiency and productivity in business
operations, especially when coupled with changes in business practices and management
behavior.
























5

INTERACTIVE SESSION: ORGANIZATIONS

VIRTUAL MANAGEMENT AT ACCENTURE


Accenture is a global consulting services and outsourcing firm with over 129,000 employees
serving clients in 48 different countries.

It has no operational headquarters and no formal
bran
ches, encouraging its employees to
move from location to location to work on projects at
client sites.

Accenture is a networked organization in which groups of professionals come
together


face to face or electronically


for short periods of time to acco
mplish a specific
task; once the task is accomplished, the individuals join other task forces.

Managers use e
-
mail,
phones, the Web, and other information technologies to manage virtually, often while they are
traveling themselves.


CASE STUDY QUESTIONS



1.

What are the advantages of working in a virtual environment like the one created by
Accenture?

What are the disadvantages?


Advantages:



Consultants can work from virtually any location.



No operational headquarters and no formal branches



No
overhead costs r
equired to maintain physical infrastructure
s
.



Corporate data on the
company

s
internal Web site can be accessed from anywhere in
the world.



Increased
communication
capabilities



Build and maintain closer client relationships while conducting work in the fie
ld.




Increased employee
productivity



Elimination of unwanted “
pop

ins” from
co
-
workers



Project work greatly enhanced and continues around the clock



Projects
teams can be
quickly formed and dissolved.



Realization of t
ime and space shifting



Outsourcing enab
les e
mployees
to
c
oncentrate on what they do best
.



Ability to
determine the physical location of e
very
traveling employee



Time spent in the
field enables managers to
obtain pertinent information from lower
-
level employees that they would not obtain otherwi
se.



Managers build closer relationship with lower
-
level employees

by visiting them at
their work site.



Manager

visits to
client

site
s helps to
cement better client relationships.



Flatter and leaner organizational levels.

Especially

lean management.


Disadv
antages:

6



Staff in constant motion
.

Productivity can be affected as e
mployees s
uffer from the
effects of jet leg.



Is
olates
employees from their co
-
workers and managers



Lack of informal meetings can have negative effects.



Disruptions on the

personal lives of

project team members located through the
different time zones



V
ulnerable

and
dependent o
n the abilities of
outside firm
s

to keep the systems
running
smoothly



Virtual executives are traveling around the clock
, which c
ould result in “burn out”.



Lack of feel
ing like there is a “home
-
base”



Disruptive to personal lives



Staff may feel that because of their lack of physical presence in the workplace
environment that

they do not know where their careers are heading


2.

Would you like to work in a company like Accent
ure?

Why or why not?

Explain your
answer.


------


3.

What kinds of companies could benefit from being run virtually like Accenture?

Could all
companies be run virtually like Accenture?


Any company that does not require a physical infrastructure could benefi
t from being run
virtually like Accenture.

Most likely, Accenture would be classified as a digital company.

They are using technology to forge close digital integration with their suppliers, customers,
and employees.

S
ome quick suggestions
to this answer m
ay
include firms such as large legal
firms, architectural
,
exploration or drilling companies.

Clearly, not all companies can be run
like Accenture
.

Many firms still require a
physical presence in most business operations.




N
ew Products, Services, and Bus
iness Models


Information systems and technologies are a major enabling tool for firms to create new products
and services, as well as entirely new business models.

A
business model

describes how a
company produces, delivers, and sells a product or service

to create wealth.

As successful as
Apple Inc,
NetFlix,
and Wal
-
Mart were in their traditional brick
-
and
-
mortar existence, they have
all introduced new products, services, and business models

that
have made them both
competitive and profitable.



C
ustomer
and Supplier Intimacy



7


When a business really knows its customers, and serves them well, the way they want to be
served, the customers generally respond by returning and purchasing more.

This raises revenues
and profits.

Likewise with suppliers: the more a

business engages it
s

suppliers, the better the
suppliers can provide vital inputs.

This lower costs.

Wal
-
Mart is an excellent example of how the
use

of
information systems and technologies
are extensively used to better serve their suppliers
and retail cu
stomers.

The RealLink system that they
use

digitally links their suppliers to
everyone of Wal
-
Mart

s 5,289 stores worldwide.

Suppliers are able to ensure the continuous
flow of products to the stores in order to satisfy customer demands.



Improved Decisi
on Making


Information systems and technologies have made it possible for managers to use real
-
time data
from the marketplace when making decisions.

Previously, managers did not have access to
accurate and current data and as such relied on forecasts, best

guesses, and luck.

The inability to
make informed decision resulted in raising costs and lost customers.



Competitive Advantage


Doing things better than your competitors, charging less for superior products, and responding to
customers and suppliers in
real time all add up to higher sales and higher profits that your
competitors cannot match.

Dell Computers and Wal
-
Mart are prime examples of
how these
companies used information systems and technologies to separate themselves from
their
competition.

Dell
remains the most efficient producer of PCs in the world.

Wal
-
Mart is the most
efficient retail store in the industry.



Survival



Firms also invest in information systems and technologies because they are necessities of doing
business. Information systems

is

not a luxury.

In most businesses, information systems and
technology is the core to survival.

In the text, the Laudon

s discuss how Citibank
was
the first
banking firm to introduce ATMs.

In doing so, they had a major competitive advantage over their
co
mpetitors.

In order to remain and survive in the retail banking industry, other banks had no
choice but to provide ATM services to banking customers.


New
federal and state
statu
t
es and regulations have resulted in giving
firms no choice but to turn
to in
formation systems and technologies

in order to comply with the new requirements.



1.2

P
ERSPECTIVES ON
I
NFORMATION
S
YSTEMS


Information technology

(IT) consists of all the hardware and software that a firm needs to use
in order to achieve its business ob
jectives.


8



WHAT IS AN INFORMATION SYSTEM?


Too often you hear someone say,

Oh yeah, I know how to use a computer.

I can surf the Web
with the best of them and I can play Solitaire for hours.

I

m really good at computers.


Okay.

So
that person can pound
a keyboard, use a mouse at lightning speed, and has a list of favorite Web
sites a mile long.

But the real question is:

Is that person information literate?


Just because you
can pound the keyboard doesn

t necessarily mean you can leverage the technology
to your
advantage or to the advantage of your organization. An organization can gather and keep all the
data on its customers that a hard drive can hold.

You can get all the output reports that one desk
can physically hold.

You can have the fastest Interne
t connection created to date.

But if the
organization doesn

t take advantage of customer
data

to create new opportunities, then all it has
is useless information.

If the output report doesn

t tell management that it has a serious problem
on the factory flo
or, then all that

s been accomplished is to kill a few more trees.

If you don

t
know how to analyze the
information

from a Web site to take advantage of new sales leads, then
what have you really done for yourself today?



Most of us think only of hardware

and software when we think of an
information system
.

There
is another component of the triangle that should be considered, and that

s the people side or

persware

.

Think of it this way:



In this section of the text, Laudon & Laudon discuss the componen
ts of an information system.

They talk about the
input
,
processing
,
output,

and
feedback

processes.

Most important is the
feedback process; unfortunately, it

s the one most often overlooked.

The hardware (input and
output) and the software (processing) rec
eive the most attention.

With those two alone, you have
computer literacy.

But if you don

t use the

persware


side of the triangle to complete the
feedback loop, you don

t accomplish much.

Add the

persware


angle with good feedback and
you have the begin
nings of information literacy.



Using feedback completes the information processing loop.

To be a good information systems
manager, however, you must bring into that loop far more than just computer data.

For instance,
your information system reports that

you produced 100,000 widgets last week with a

throwback


rate of 10 percent.

The feedback loop tells you that the throwback rate has fallen 2
percent in the last month.

Wow, you say, that

s a pretty good improvement.

So far, so good.

But
if you put that
information into the broader context of the organization, you

re still costing the


9

organization a huge sum of money because each percentage point on the throwback rate averages
$10,000.

And when you bring in available external environmental information, yo
ur company is
5 percent above the industry norm.

Now that

s information you can use


to your advantage or
disadvantage!



DIMENSIONS OF INFORMATION SYSTEMS


There is a distinct difference between possessing
information systems literacy

and simple
computer

literacy
.

If you, as a manager, can combine information from internal sources and
external environments, if you can be part of the solution and not part of the problem, you can
consider yourself

information literate.



Management information systems

(MIS
) deals with behavioral issues as well as technical
issues surrounding the development, use, and impact of information systems used by managers
and employees in the firm. As such, MIS is defined as the study of information systems focusing
on their use in

business and management.





10

Organizations


Organizations are funny things.

Each one tends to have its own individual personality and yet
share many things in common with other organizations.

Look at some of the organizations you
may be associated with



softball team, fraternity/sorority, health club, or a child

s soccer team.

See, organizations exist everywhere, and each has its own structure, just as workplace
organizations have structures and personalities to fit their needs, or in some cases, their

old
habits.



The key elements of an organization are its:



People



Structure



Business processes



Politics



Culture



In every organization you

ll find
senior managers

making long
-
range decisions,
middle
managers

carrying out the plans and goals set by senior

managers, and

operational managers

handling the day
-
to
-
day operations of the company. As we

ll see, information systems output
must be geared to each of these levels of management.


Just as every baseball team needs good players at different positions, a
business organization
requires different employees to help it succeed.

Knowledge workers

help create new knowledge
for the organization and
data workers

help process the paperwork necessary to keep an
organization functioning.

Without
production or service

workers
, how would the company get
its products and services to the customer?


A baseball team needs talented, well
-
trained players at different positions. Sometimes, the
success of the team depends on a good, well
-
informed coach or manager.

So
,

too
,

with

the
workplace organization. Business organizations have their major
business functions,
which need
many kinds of players with various talents, who are well
-
trained and well
-
informed, in order to
succeed.


The larger the organization, the more formal the
management structure, including the need for
standard operating procedures (SOPs).

SOPs can help streamline standard business processes so
that managers and employees can properly complete their tasks in a more efficient manner.

Many companies now integrat
e these business processes into their information systems to ensure
uniformity, consistency, and compliance.

As we

ll see in upcoming chapters, many companies
are even incorporating the informal work processes into their information systems in an effort to

capture as much corporate knowledge as possible.


Each organization has a unique
culture
, or fundamental set of assumptions, values, and ways of
doing things, that has been accepted by most of its members.




11


Management


Every good organization needs goo
d managers.

Pretty simple, pretty reasonable.

Take
professional baseball managers.

They don

t actually play the
game;

they don

t hit the home run,
catch the fly ball for the last out, or hang every decoration for the celebration party.

They stay on
the sid
elines during the game.

Their real role is to develop the game plan by analyzing their
team

s strengths and weaknesses.

But that

s not all; they also determine the competition

s
strengths and weaknesses.

Every good manager has a game plan before the team e
ven comes out
of the locker room.

That plan may change as the game progresses, but managers pretty much
know what they

re going to do if they are losing or if they are winning.




Technology


Do you own a high
-
definition television?

Probably not, since it

s only been on the market for a
short time.

How old is your car or truck?

Manufacturers are constantly offering us new vehicles,
yet we tend to upgrade only every few years. Your personal computer may be a year old or three
years old.

Do you have the late
st gadgets?

Chances are you don

t. Face it, you just can

t keep up
with all the new
hardware
.

No one can.



Think about how hard, not to mention expensive, it is for an individual to acquire each new
software

program introduced to the marketplace.

Think ho
w difficult it is sometimes to learn
how to use every feature of all those new products.



No matter how big your storage technology

device seems to be, you

re constantly running out of
room to store all the new software programs and all the data you creat
e.

In order to keep track of
all of the information
you have stored, you will need
data management

software that is
designed to organize the information so that you can readily retrieve what you are looking for.


As the products and services on the
Interne
t

expand everyday, your need for new
networking

and
telecommunications te
chnology

links just seems to grow and grow.


The fastest and biggest change in modern computing is the
Internet
.

To say that the Internet is
transforming the way we live, work, and pl
ay is probably the greatest understatement in years.

Businesses can create new opportunities, but they can also lose opportunities just as quickly.

Now an organization has to design new systems, or transform old ones, with not just the
company in mind, but

100 million other users of the Internet,
extranets
, and
intranets
.

They
have to decide how much or how little information to provide, in what way, with what level of
access, and how best to present it.

It

s a huge job!


The
World Wide Web

allows big compa
nies to act

small,


and small companies to act

big.


It
has leveled the playing field so entrepreneurs can break into new markets previously closed to
them.

A Web site, consisting of a few pages or hundreds of pages, enables businesses to get close
and s
tay close to their customers in new ways.

It is truly a revolution in our global economy.


12

Now put those thoughts into a much larger context of an organization

s
information technology
(IT) infrastructure
.

Yes, it would be nice if your company could purcha
se new computers every
three months so you could have the fastest, best technology on the market.

But it can

t.

Not only
is it expensive to buy the hardware and the software, but the costs of installing, maintaining,
updating, integrating, and training mus
t all be taken into account.

We

ll look at the hardware and
software sides of the information systems triangle in upcoming chapters, but it

s important that
you understand now how difficult it is for an organization, large or small, to take advantage of al
l
the newest technology.



INTERACTIVE SESSION: TECHNOLOGY

UPS COMPETES GLOBALLY WITH INFORMATION TECHNOLOGY


The Interactive Session on Technology describes some of the typical
technologies
used in
computer
-
based information systems today.

United Parcel
Services (UPS) invests heavily in
information systems technology to make its business more efficient and customer oriented. It
uses an array of information technologies.



CASE STUDY QUESTIONS


1.

What are the inputs, processing, and outputs of UPS

s package
tracking system?


Inputs
: The inputs include package information, customer signature,
pickup
, delivery, time
-
card data, current location (while en route), and billing and customer clearance
documentation.


Processing
: The data are transmitted to a central
computer and stored for retrieval. Data are
also reorganized so that they can be tracked by customer account, d
ate, driver, and other
criteria such as the consolidation of orders for efficient final delivery of packages.


Outputs
: The outputs include
picku
p

and delivery times, location while en route, and package
recipient. The outputs also include various reports, such as all packages for a specific account
or a specific driver or route, as well as summary reports for management.


2.

What technologies are use
d by UPS?

How are these technologies related to UPS

s business
strategy?


Technologies
consist of
handheld computers (DIADs), bar
-
code scanners,
wired and wireless
communications networks, desktop computers, UPS

s central computer, storage technology
for t
he package delivery data, UPS in
-
house package tracking software, and many different
pieces of software to access the Internet and many different pieces of software for tracking
packages, calculating fees, maintaining customer accounts, and managing logist
ics.


The Web serves as the foundation for new kinds of information systems such as their Web
-
based package tracking system.

Through the use of
DIAD
s
,

the
UPS drivers automatically


13

capture customers


signatures along with pickup, delivery, and time
-
card in
formation.

UPS

s

information systems use these data to track packages while they are being transported.

The
result is an information system solution to the business challenge of providing a high level of
service with low prices in the face of mounting comp
etition.



UPS has used the same strategy for over 90 years. Its strategy is to provide the “best service
and lowest rates.” One of the most visible aspects of technology is the customer

s ability to
track his/her package via the UPS Web site. However, tec
hnology also enables data to
seamlessly flow throughout UPS and helps streamline the workflow at UPS. Thus, the
technology described in the scenario enables UPS to be more competitive, efficient, and
profitable.

UPS

s culture has been centered on placing s
ervice to the customer first.

This
company philosophy can clearly be found in their package tracking systems.


3.

What problems do UPS

s information systems solve?

What would happen if these systems
were not available?


UPS
is
able to quickly access up
-
to
-
dat
e information on which to make better decisions.

Information systems help UPS managers to make better decisions.

Through the use of
information technology, UPS has made their business processes more efficient
,

which in turn
has resulted in higher revenues.



These technologies
also
provide value for the company because they are seen as an asset
from the customers


perspective. The technologies are seen as helping the customers


complete their tasks more efficiently, which in turn is seen as value
-
added serv
ices as
opposed to increasing the cost of sending packages.


Arguably, UPS might not be able to compete effectively without the technology. If the
technology were not available, then UPS would, as it has through most of its history, attempt
to provide that

information to its customers, but at higher prices.


















14

IT ISN

T JUST TECHNOLOGY:

A BUSINESS

PERSPECTIVE ON INFORMATION SYSTEMS


From a business perspective, an information system provides a solution to a problem or
challenge facing a firm a
nd provides real economic value to the business.

The decision to build
or maintain an information system assumes that the returns on this investment will be superior to
other investments in buildings, machines, or other assets.

These superior returns will
be
expressed as
:



I
ncreased productivity



Increased revenues



Enhance
d

organizational performance


From a business perspective, an information system is an important instrument for creating value
for the firm.

Information systems enable the firm to increase i
ts revenue or decrease its costs by
providing information that helps managers make better decisions or that improves the execution
of business processes.



COMPLEMENTARY ASSETS
:

ORGANIZATIONAL CAPITAL


AND THE RIGHT BUSINESS MODEL


At the end of the twenti
eth century there was widespread fear of the havoc the Y2K bug would
wreak on computer systems throughout the world.

Billions of dollars and millions of hours were
spent fixing the problem.

As a result of the preparation, very few problems arose.

One of th
e
biggest benefits was serving as a

wake
-
up


call to senior managers throughout corporate
America about the increasing role information systems play in the success of their organizations.

They discovered that managers can

t ignore technology any more and
pass it off to secretaries or
clerical workers or the information technology department.

Information systems
are
critical to
the success of an organization at all levels.


Once technology was considered “too technical” for the rest of us to understand.

Com
puters
were relegated to the back room with a few technicians running around in white coats.

No one
else understood what these people did or how they did it.

It was a whole different world and
actually seemed disconnected from the mainstream operations of
the company.


Technology and its associated information systems are now integrated throughout the
organization.

Everyone is concerned about its role and impact on their work activities.

End users
take on greater responsibility for the success of the infor
mation systems and are actually doing a
lot of the work that belonged to the techies.

Even the executive levels of an organization can no
longer ignore the technology as they realize the importance of managing their organizational and
management capital.


As a firm becomes more digital, its information system continues to extend beyond the
traditional role of serving the employees. Developing the
complementary assets

associated with
the information systems such as developing new business
models and
processe
s,
changing
management behavior and organizational culture,
emphasizing employee training in technology,


15

and creating new partnerships with suppliers, customers, and even competitors, is proving to be a
daunting task.

These investments in organization and
management are also known as
organizational and management capital
.


But the plain fact is that organizations, especially larger ones, just can

t change as fast as the
technology.

Companies make huge investments not just in hardware, but in software and
pe
rsware. Training people, building new operating procedures around technology, and changing
work processes take far longer than the technological pace will allow.



The introduction of new technology can severely disrupt organizations.

Productivity naturall
y
slips, at least in the beginning. Learning curves cost time and money.

Most system installations
or changes used to mainly affect data workers or production workers.

Now they affect every
level of the organization, even the management and strategic level
s. Every part of the
organization is involved in the introduction or change of technology, and everyone plays a part in
its success.



Bottom Line: Information literacy is more than just clicking a mouse, pounding the
computer keyboard, or surfing the Web.

It

s about integrating the various elements of an
organization, technical and nontechnical, into a successful enterprise.

As a successful
manager you must concentrate on all three parts of the information systems triangle
(hardware, software, and persware
) and integrate them into a single, cohesive system that
serves the needs of the organization, the wants of the customer, and the desires of the
employees.

The more complex the system, the harder to manage, but the greater the payoff.




1.3

C
ONTEMPORARY
A
PPROACHES TO
I
NFORMATION

S
YSTEMS


The study of information systems deals with issues and insights contributed from technical and
behavioral disciplines.

The disciplines that contribute to the technical approach are computer
science, management science, a
nd operations research.

The disciplines contributing to the
behavioral approach are psychology, sociology, and economics.



TECHNICAL APPROACH


Think of this analogy:

A

techie


looks at most things associated with computing as a series of
zeroes or ones.

After all, everything in a computer is ultimately reduced to a zero or a one.

So
using the technical approach, you could say that 2 + 2 = 4.




16

BEHAVIORAL APPROACH


The behavioral approach, on the other hand, takes into account the very nature of human be
ings.

Nothing is totally black and white.

Therefore the behavioral approach to the same equation
would be

2 + 2 = maybe 4 or perhaps 3.5 to 5.5, but we

ll have to put it before the committee
and see what the last quarter

s figures say.


Neither approach i
s better than the other, depending
on the situation.

Neither approach is more right than the other, depending on the situation.



APPROACH OF THIS TEXT:

S
OC
IOTECHNICAL SYSTEMS



An organization can

t afford to view its information resources as belonging to

either the techies
(technical approach) or the non
-
techies (behavioral approach).

Responsibility for information
belongs to everyone in the organization.

This is the
sociotechnical

approach


a combination of
the two approaches.

Everyone has to work toget
her to ensure that information systems serve the
entire organization.


To help you understand the importance of viewing management information systems using the
sociotechnical approach, look at what the current trade journals are saying.

David Haskin,
writ
ing in the April 1999 issue of
Windows

Magazine, quotes Steve Roberts, vice president of
information technology for Mind Spring Enterprises, an Atlanta
-
based Internet service provider:

The gap in understanding between technical and nontechnical people is
the biggest challenge
I

ve seen.


Haskin goes on to say,

Because technology is the bedrock on which successful
businesses are built, the stakes in making this relationship work are high. Failing to use the
correct technology can put you at a competitive d
isadvantage, and glitches in existing
technologies can bring a business to a grinding halt.






Bottom Line:

Information systems and the use of technology belong to
everyone

in an
organization.

This concept is best carried out through a sociotechnical app
roach to viewing
information systems, which allows both the technical and behavioral approaches to be
combined for the good of the organization.

















17

Summary


1.

Explain why information systems are so essential in business today
.


Information syst
ems are a foundation for conducting business today. In many industries,
survival and even existence is difficult without extensive use of information technology.
Information systems has become essential for helping organizations operate in a global
economy
. Organizations are trying to become more competitive and efficient by transforming
themselves into digital firms where nearly all core business processes and relationships with
customers, suppliers, and employees are digitally enabled. Businesses today us
e information
systems to achieve six major objectives: operational excellence; new products, services, and
business models; customer/supplier intimacy; improved decision making; competitive
advantage; and day
-
to
-
day survival.


2.

Define an information sys
tems from both a technical and a business perspective.


From a technical perspective, an information system collects, stores, and disseminates
information from an organization’s environment and internal operations to support
organizational functions and de
cision making, communication, coordination, control,
analysis, and visualization. Information systems transform raw data into useful information
through three basic activities: input, processing, and output. From a business perspective, an
information syst
em provides a solution to a problem or challenge facing a firm and provides
real economic value to the business.


3.

Identify and describe the three dimensions of information syste
ms.


An information system represents a combination of management, organiza
tion, and
technology elements. The management dimension of information systems involves
leadership, strategy, and management behavior. The technology dimensions consist of
computer hardware, software, data management technology, and
networking/telecommunic
ations technology (including the Internet). The organization
dimension of information systems involves the organization’s hierarchy, functional
specialties, business processes, culture, and political interest groups.


4.

Assess the complementary assets req
uired for information technology to provide value to a
business.


An information system is part of a series of value
-
adding activities for acquiring,
transforming, and distributing information to improve management decision making,
enhance organizational p
erformance, and, ultimately, increase firm profitability. Information
technology cannot provide this value unless it is accompanied by supportive changes in
organization and management called complementary assets. These complementary assets
include new bus
iness models, new business processes, a supportive organizational culture,
incentives for management support and innovation, training, and social assets such as
standards, laws and regulations, and telecommunications infrastructure. Firms that make
18

appropr
iate investments in these complementary assets, also known as organizational and
management capital, receive superior returns on their information technology investments.


5.

Identify and describe contemporary approaches to the study of information systems

and
distinguish between computer literacy and information systems literacy.


The study of information systems deals with issues and insights contributed from technical
and behavioral disciplines. The disciplines that contribute to the technical approach a
re
computer science, management science, and operations research. The disciplines contributing
to the behavioral approach are psychology, sociology, and economics.


Information systems literacy requires an understanding of the organizational and management

dimensions of information systems as well as the technical dimensions addressed by computer
literacy. Information systems literacy draws on both technical and behavioral approaches to
studying information systems. The field of management information syste
ms (MIS) promotes
information systems literacy by combining all of these disciplines with a practical orientation
toward developing system solutions to real
-
world problems and managing information
technology resources.



Key Terms


The following alphabetic
al list identifies the key terms discussed in this chapter.


Business functions



specialized tasks performed in a business organization, including
manufacturing and production, sales and marketing, finance and accounting, and human
resources.


Business m
odel



an abstraction of what an enterprise is and how the enterprise delivers a
product or service, showing how the enterprise creates wealth.


Business processes



the unique ways in which organizations coordinate and organize work
activities, informatio
n, and knowledge to produce a product or service.


Complementary assets



additional assets required to derive value from a primary investment.


Computer hardware


physical equipment used for input, processing, and output activities in
an information syst
em.


Computer literacy



knowledge about information technology, focusing on understanding how
computer
-
based technologies work.


Computer software



detailed, preprogrammed instructions that control and coordinate the
work of computer hardware components
in an information system.




19

Culture



fundamental set of assumptions, values, and ways of doing things that has been accepted by
most members of an organization.


Da
ta



streams of raw facts representing events occurring in organizations or the physical env
ironment
before they have been organized and arranged into a form that people can understand and use.


D
ata management technology



the software that governs the organization of data on physical storage
media.


D
ata workers



people such as secretaries or
bookkeepers who process the organization’s paperwork.


D
igital firm



organization in which nearly all significant business processes and relationships with
customers, suppliers, and employees are digitally enabled and key corporate assets are managed thro
ugh
digital means.


E
xtranets



private intranet that is accessible to authorized outsiders.


F
eedback



output that is returned to the appropriate members of the organization to help them
evaluate or correct input.


I
nformation



data that have been shape
d into a form that is meaningful and useful to human beings.


I
nformation system



interrelated working together to collect, process, store, and disseminate
information to support decision making, coordinate, control, analysis, and visualization in an
orga
nization.


I
nformation systems literacy



broad
-
based understanding of information systems that includes
behavioral knowledge about organizations and individuals using information systems as well as
technical knowledge about computers.


I
nformation technol
ogy (
IT
)



all the hardware and software technologies that a firm needs to use in
order to achieve its business objectives.


I
nformation technology (IT) infrastructure



computer hardware, software, data, storage technology,
and networks providing a portfo
lio of shared IT resources for the organization.


I
nput



the capture or collection of raw data from within the organization or from its external
environment for processing in an information system.


I
nternet



international network of networks that is a c
ollection of hundreds of thousands of private
and public networks.


I
ntranets



an internal network based on Internet and World Wide Web technology and standards.


K
nowledge workers



people, such as engineers or architects, who design products or services

and
create knowledge for the organization.

20

Management information systems (MIS)



the study of information systems focusing on their
use in business and management.


Middle management



people in the middle of the organizational hierarchy who are responsi
ble
for carrying out the plans and goals of senior management.


Network



the linking of two or more computers to share data or resources, such as a printer.


Networking and telecommunications technology



physical devices and software that link
various pi
eces of hardware and transfer data from one physical location to another.


Operational management



people who monitor the day
-
to
-
day activities of the organization.


Organizational and management capital



investments in organization and management such
a
s new business processes, management behavior, organizational culture, or training.


Output



the distribution of processed information to the people who will use it or to the
activities for which it will be used.


Processing



the conversion, manipulation
, and analysis of raw input into a form that is more
meaningful to humans.


Production or service workers



people who actually produce the products or services of the
organization.


Senior management



people occupying the top most hierarchy in an organiz
ation who are
responsible for making long
-
range decisions.


Sociotechnical view



design to produce information systems that blend technical efficiency
with sensitivity to organizational and human needs.


World Wide Web (WWW)



a system with universally ac
cepted standards for storing,
retrieving, formatting, and displaying information in a networked environment.
















21

Review Questions


1.

Describe three ways in which information system are transforming business.




Communication


cell phones, BlackBerry
, handhelds, e
-
mail, online conferencing, and
international teleconferencing over the Internet have all become essential tools of
business.



Media markets


access to news online, reading and writing blogs, and increases in e
-
commerce and Internet advertisi
ng.



New federal security and accounting laws


spurring the growth of digital information.


2.

Describe the qualities of a digital firm. Why are digital firms so powerful?


A digital firm is one in which nearly all of the organization’s significant business
relationships with customers, suppliers, and employees are digitally enabled and mediated.
Qualities of a digital firm include:



Core business processes are accomplished through digital networks spanning the entire
organization or linking multiple organizat
ions.



Key corporate assets


intellectual property, core competencies, and financial and human
assets


are managed through digital means.



Digital firms sense and respond to their environments far more rapidly than traditional
firms, giving them more flexi
bility to survive in turbulent times.



Digital firms offer extraordinary opportunities for more flexible and global organization
and management.



In digital firms, both time shifting and space shifting are the norm.


Digital firms are powerful because they
extensively use Internet technology for electronic
commerce and electronic business to manage their internal processes and relationships with
customers, suppliers, and other external entities. Because a digital firm relies heavily on
information technology

to enable, mediate, and streamline its internal and external
operations, the firm is more flexible, profitable, competitive, and efficient than a traditional
firm.


Supply chain management systems, customer relationship management systems, enterprise
syst
ems, and knowledge management systems are the four principal systems driving the
movement toward digital firms. As the textbook suggests, these four systems are where
corporations are digitally integrating information flows and making significant informati
on
systems investments.


3.

List and describe six reasons why information systems are so important for business
today.


Six reasons why information systems are so important for business today include:



Operational excellence



New products, services, and busine
ss models



Customer and supplier intimacy

22



Improved decision making



Competitive advantage



Survival


Information systems are the foundation for conducting business today. In many industries,
survival and even existence without extensive use of IT is inconceiv
able, and IT plays a
critical role in increasing productivity. Although information technology has become more of
a commodity, when coupled with complementary changes in organization and management,
it can provide the foundation for new products, services,

and ways of conducting business
that provide firms with a strategic advantage.


4.

What is an information system? What activities does it perform?


The textbook defines an information system as a set of interrelated components that work
together to collect,

process, store, and disseminate information to support decision making,
coordination, control, analysis, and visualization in an organization. In addition to supporting
decision making, coordination, and control, information systems may also help managers

and
workers analyze problems, visualize complex subjects, and create new products.


5.

What is the difference between data and information?


Data
are streams of raw facts representing events occurring in organizations or the physical
environment before they
have been organized and arranged into a form that people can
understand and use.


Information
is data that have been shaped into a form that is meaningful and useful to human
beings.


6.

What is information systems literacy? How does it differ from computer

literacy?


Information literacy is more concerned with creating information useful to an organization
and its employees, whereas computer literacy addresses the simple use of computers. As
technology uses spread beyond traditional computers, information l
iteracy enables employees
and organizations to gain an edge over their competition


7.

List and describe the organizational, management, and technology dimensions of
information systems.


Organization
: The organization dimension of information systems involve
s issues such as the
organization’s hierarchy, functional specialties, business processes, culture, and political
interest groups.


Management
: The management dimension of information systems involves issues such as
training, job attitudes, and management
behavior.




23

Technology
: The technology dimension consists of computer hardware, software, data
management technology, and networking/telecommunications technology.


8.

What are the Internet and the World Wide Web? How have they changed the role
played by infor
mation systems in organizations?


The

Internet

is the world’s largest and most widely used network. It is a global “network of
networks” that uses universal standards to connect millions of different networks with more
than 350 million host computers (pub
lic and private networks) in over 200 countries around
the world. Over 500 million people working in science, education, government, and business
connect to the Internet ever day. Individuals and organizations use the Internet to exchange
information and p
erform business transactions with other individuals and organizations
around the globe. It should be noted that the digital firm uses the Internet as its primary
technology platform. The Internet has created a new “universal” technology platform on
which t
o build new products, services, strategies, and business models. For most business
firms today, using Internet technology is both a business necessity and a competitive
advantage.


The
World Wide Web

is a system with universally accepted standards for stor
ing, retrieving,
formatting, and displaying information in a networked environment. The Web is a part of the
Internet that provides a graphically
-
based system of pages for storing information on the
Internet. Web pages contain text, graphics, animations, s
ound and video and are linked to
other Web pages. By clicking on highlighted words or buttons on a Web page, you can link
to related pages to find additional information and links to other locations on the Web.


The Internet and World Wide Web have had a
tremendous
impact

on the role information
systems play in organizations. The Internet and World Wide Web are responsible for the
increased connectivity and collaboration within and outside the organization. The Internet,
World Wide Web, and other technolog
ies have led to the redesign and reshaping of
organizations. The Internet and World Wide Web have helped transform the organization’s
structure, scope of operations, reporting and control mechanisms, work practices, work
flows, and products and services.


9.

What is the purpose of an information system from a business perspective? What role
does it play in the business information value chain?


Information systems facilitate the acquisition, transformation, and distribution of
information. Information systems
can improve decision making, enhance organizational
performance, and help increase firm profitability, thus contributing to corporate value.


10.

Why do some firms obtain greater value from their information systems than others?
What role do complementary asse
ts and organizational and management capital play?


Firms must rely on supportive values, structures, and behavior patterns to obtain a greater
value from their IT investments. Value must be added through complementary assets such as
new business processes
,
management

behavior, organizational culture, and training. The
24

complementary assets and organizational and management capital provide the necessary
business culture that values efficiency and effectiveness, decentralized authority, highly
-
distributed dec
ision rights, and a strong IS development team.


11.

Distinguish between a behavioral and a technical approach to information systems in
terms of the questions asked and the answers provided. What major disciplines
contribute to an understanding of information

systems?


A behavioral approach to information systems focuses on questions such as strategic business
integration, behavioral problems of systems utilization, system design and implementation,
social and organizational impacts of information systems, pol
itical impacts of information
systems, and individual responses to information systems. Solutions to problems created by
information technology are primarily changes in attitudes, management, organizational
policy, and behavior.


A technical approach to in
formation systems emphasizes mathematically
-
based models to
study information systems and the physical technology and formal capabilities of information
systems. Students should know the differences between computer science (theories of
computability, comp
utation methods, and data storage and access methods), management
science (development of models for decision making and managerial practice), and
operations research (mathematical techniques for optimizing organizational parameters such
as transportation,

inventory control and transaction costs).