Chapter 1 Presentation Handouts

Management Information Systems
Chapter 1: Information Systems in Global Business Today

Chapter 1
Learning Objectives
• Understand the effects of information

Information Systems in systems on business and their relationship to
globalization.
Business Today
• Explain why information systems are so
essential in business today.
• Define an information system and describe
its management, organization, and
technology components.
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Management Information Systems Management Information Systems

Chapter 1: Information Systems in Global Business Today Chapter 1: Information Systems in Global Business Today
Learning Objectives (cont.) Shortening Lines at Disney World: Technology to the Rescue
• Define complementary assets and explain • Problem: Long lines limit how many rides, shops, and restaurants a
customer can visit during a stay.
how they ensure that information systems
provide genuine value to an organization. • Solutions: Enhance customer satisfaction and spending by using
information systems to spot gridlock and improve crowd flow.
• Describe the different academic disciplines • Operational Command Center uses video cameras, digital maps,
used to study information systems and computer programs, and mobile apps to monitor attendance,
explain how each contributes to our registers, and spot and prevent gridlock
understanding of them. • Demonstrates IT’s role in increasing value and revenue in any
business.
• Explain what is meant by a sociotechnical
• Illustrates the potential for technology to improve customer
systems perspective. experience.
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The Role of Information Systems in Business Today Information Technology Capital Investment
• How information systems are transforming

business
– Emerging mobile digital platform
– Growing business use of “big data”
– Growth in cloud computing
• Globalization opportunities
– Internet has drastically reduced costs of operating
on global scale
– Increases in foreign trade, outsourcing
– Presents both challenges and opportunities
FIGURE 1-1 Information technology capital investment, defined as hardware, software, and communications equipment,
grew from 21 to 37 percent of all invested capital between 1999 and 2015.

The Role of Information Systems in Business Today The Role of Information Systems in Business Today
• In the emerging, fully digital firm: • Growing interdependence between ability to use
information technology and ability to implement
– Significant business relationships are digitally
enabled and mediated. corporate strategies and achieve corporate goals
– Core business processes are accomplished through • Business firms invest heavily in information systems
digital networks. to achieve six strategic business objectives:
– Key corporate assets are managed digitally. 1. Operational excellence
2. New products, services, and business models
• Digital firms offer greater flexibility in 3. Customer and supplier intimacy
organization and management. 4. Improved decision making
5. Competitive advantage
– Time shifting, space shifting
6. Survival
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The Interdependence Between Organizations and Information Technology 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
– Walmart’s Retail Link system links suppliers to
stores for superior replenishment system
Figure 1.2 In contemporary systems 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.

• New products, services, and business models: • Customer and supplier intimacy:
– Business model: describes how company – Serving customers well leads to customers returning,
produces, delivers, and sells product or service to which raises revenues and profits.
create wealth • Example: High-end hotels that use computers to track
customer preferences and used to monitor and
– Information systems and technology a major customize environment
enabling tool for new products, services,
– Intimacy with suppliers allows them to provide vital
business models
inputs, which lowers costs.
• Examples: Apple’s iPad, Google’s Android OS, • Example: JCPenney’s information system which links
and Netflix sales records to contract manufacturer
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• Improved decision making

• Competitive advantage
– Without accurate information:
• Managers must use forecasts, best guesses, luck – Delivering better performance
• Results in: – Charging less for superior products
– Overproduction, underproduction
– Misallocation of resources
– Responding to customers and suppliers in
– Poor response times real time
• Poor outcomes raise costs, lose customers – Examples: Apple, Walmart, UPS
– Example: Verizon’s Web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, and
so on

The Role of Information Systems in Business Today Perspectives on Information Systems
• Survival • Information system:

– Information technologies as necessity of business – Set of interrelated components
– Industry-level changes – Collect, process, store, and distribute
information
• Example: Citibank’s introduction of ATMs
– Support decision making, coordination, and
– Governmental regulations requiring record-
control
keeping
• Examples: Toxic Substances Control Act, • Information vs. data
Sarbanes-Oxley Act – Data are streams of raw facts.
– Information is data shaped into meaningful form.
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Data and Information Perspectives on Information Systems
• Three activities of information systems

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
Figure 1.3 Raw data from a supermarket checkout counter can be processed and organized to produce meaningful
information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a
specific store or sales territory.

Perspectives on Information Systems Functions of an Information System
• Feedback:
An information system
contains information about an
organization and its
surrounding environment.
– Output is returned to appropriate members of Three basic activities—input,
processing, and output—
organization to help evaluate or correct input stage. produce the information
organizations need. Feedback
is output returned to
• Computer/Computer program vs. appropriate people or activities
in the organization to evaluate
information system and refine the input.

Environmental actors, such as
customers, suppliers,
– Computers and software are technical foundation competitors, stockholders, and

regulatory agencies, interact
and tools, similar to the material and tools used to with the organization and its
information systems.
build a house. Figure 1.4
5
Information Systems Are More Than Computers Perspectives on Information Systems
• Organizational dimension of information

Using information systems
effectively requires an
understanding of the
organization, management, and
information technology systems
shaping the systems. An
information system creates
value for the firm as an
organizational and
– Hierarchy of authority, responsibility
management solution to
challenges posed by the • Senior management
environment.
• Middle management
• Operational management
• Knowledge workers
Figure 1.5
• Data workers
• Production or service workers

Levels in a Firm Perspectives on Information Systems
• Organizational dimension of information

Business organizations are
hierarchies consisting of three
principal levels: senior
management, middle
management, and operational systems (cont.)
management. Information
systems serve each of these
levels. Scientists and – Separation of business functions
knowledge workers often work
with middle management. • Sales and marketing
• Human resources
• Finance and accounting
• Manufacturing and production
– Unique business processes
Figure 1.6
– Unique business culture

– Organizational politics
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Perspectives on Information Systems Perspectives on Information Systems
• Management dimension of information • Technology dimension of information

systems systems
– Managers set organizational strategy for – Computer hardware and software
responding to business challenges – Data management technology
– In addition, managers must act creatively: – Networking and telecommunications technology
• Creation of new products and services • Networks, the Internet, intranets and
• Occasionally re-creating the organization extranets, World Wide Web
– IT infrastructure: provides platform that system
is built on

• Dimensions of UPS tracking system • Business perspective on information

– Organizational: systems:
• Procedures for tracking packages and managing – Information system is instrument for creating
inventory and provide information
value
– Management:
– Investments in information technology will result
• Monitor service levels and costs
in superior returns:
– Technology:
• Productivity increases
• Handheld computers, bar-code scanners, networks,
desktop computers, and so on • Revenue increases
• Superior long-term strategic positioning
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Perspectives on Information Systems The Business Information Value Chain
• Business information value chain

– Raw data acquired and transformed through stages
that add value to that information
– Value of information system determined in part by
extent to which it leads to better decisions, greater
efficiency, and higher profits
• Business perspective:
– Calls attention to organizational and managerial
nature of information systems Figure 1-7 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.

Perspectives on Information Systems Variation in Returns on Information Technology Investment
• Investing in information technology does not

Although, on average,
investments in information
technology produce returns far
guarantee good returns. above those returned by other

investments, there is
considerable variation across
• There is considerable variation in the returns

firms.
firms receive from systems investments.

• Factors:
– Adopting the right business model
– Investing in complementary assets (organizational Figure 1.8
and management capital)
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• Complementary assets: • Complementary assets include:

– Assets required to derive value from a primary – Organizational assets, for example:
investment • Appropriate business model
– Firms supporting technology investments with • Efficient business processes
investment in complementary assets receive – Managerial assets, for example:
superior returns • Incentives for management innovation
– Example: Invest in technology and the people to • Teamwork and collaborative work environments
make it work properly – Social assets, for example:
• The Internet and telecommunications infrastructure
• Technology standards

Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems
• Technical approach
The study of information
systems deals with issues and
insights contributed from
technical and behavioral
disciplines. – Emphasizes mathematically based models
– Computer science, management science, operations
research
• Behavioral approach
– Behavioral issues (strategic business integration,
implementation, etc.)
Figure 1.9
– Psychology, economics, sociology
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Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems
• Management Information Systems • Approach of this book: Sociotechnical view

– Combines computer science, management science, – Optimal organizational performance achieved by
operations research and practical orientation with jointly optimizing both social and technical systems
behavioral issues used in production
• Four main actors – Helps avoid purely technological approach
– Suppliers of hardware and software
– Business firms
– Managers and employees
– Firm’s environment (legal, social, cultural context)

A Sociotechnical Perspective on Information Systems
Figure 1-10 In a sociotechnical perspective, the performance of a system is optimized when both the technology and the
organization mutually adjust to each other until a satisfactory fit is obtained.
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Management Information Systems

Chapter 1: Information Systems in Global Business Today

• Understand the effects of information

1.2 Copyright © 2014 Pearson Education, Inc.

Management Information Systems Management Information Systems

• How information systems are transforming

Management Information Systems Management Information Systems

Management Information Systems Management Information Systems

1.11 Copyright © 2014 Pearson Education, Inc. 1.12

• Improved decision making

Management Information Systems Management Information Systems

The Role of Information Systems in Business Today Perspectives on Information Systems

• Survival • Information system:

Data and Information Perspectives on Information Systems

• Three activities of information systems

Management Information Systems Management Information Systems

Perspectives on Information Systems Functions of an Information System

information system and refine the input.

– Computers and software are technical foundation competitors, stockholders, and

Information Systems Are More Than Computers Perspectives on Information Systems

• Organizational dimension of information

Management Information Systems Management Information Systems

Levels in a Firm Perspectives on Information Systems

• Organizational dimension of information

– Unique business culture

Perspectives on Information Systems Perspectives on Information Systems

• Management dimension of information • Technology dimension of information

Management Information Systems Management Information Systems

Perspectives on Information Systems Perspectives on Information Systems

• Dimensions of UPS tracking system • Business perspective on information

Perspectives on Information Systems The Business Information Value Chain

• Business information value chain

Management Information Systems Management Information Systems

Perspectives on Information Systems Variation in Returns on Information Technology Investment

• Investing in information technology does not

guarantee good returns. above those returned by other

• There is considerable variation in the returns

firms receive from systems investments.

Perspectives on Information Systems Perspectives on Information Systems

• Complementary assets: • Complementary assets include:

Management Information Systems Management Information Systems

Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems

Contemporary Approaches to Information Systems Contemporary Approaches to Information Systems

• Management Information Systems • Approach of this book: Sociotechnical view

Management Information Systems Management Information Systems

A Sociotechnical Perspective on Information Systems

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