Module 2

Introduction to Information System

Jitendra B Patil
Contains
 Chapter-I
Information System: Need, Purpose and Objectives, Trend

 Chapter-II
Information System as a Strategic Resource

 Chapter-III
Using Information Systems for Gaining Competitive
Advantage

 Chapter-IV
Using Information Systems for Competitive Advantage
 Chapter-I
Information System: Need, Purpose
and Objectives, Trend
Information System: Need
 A management information system (MIS) is
an information system used for decision-making, and
for the coordination, control, analysis, and
visualization of information in an organization. The
study of the management information systems involves
people, processes and technology in an organizational
context.
 In a corporate setting, the ultimate goal of the use of a
management information system is to increase the
value and profits of the business
Five Eras of IS
The modern history of MIS can be divided into
five eras originally identified by Kenneth C.
Laudon and Jane Laudon in their seminal
textbook Management Information Systems.

 First Era – Mainframe and minicomputer computing

 Second Era – Personal computers
 Third Era – Client/server networks
 Fourth Era – Enterprise computing
 Fifth Era – Cloud computing
First Era:
Mainframe and minicomputer computing
 A mainframe computer,
informally called
a mainframe or big
iron, is a computer used
primarily by large
organizations for critical
applications like bulk data
processing for tasks such
as censuses, industry and
consumer statistics, enterp
rise resource planning, and
large-scale transaction
processing.
Second Era:
Personal computers
 A personal
computer (PC) is a multi-
purpose microcomputer w
hose size, capabilities, and
price make it feasible for
individual use. Personal
computers are intended to
be operated directly by
an end user, rather than by
a computer expert
or technician.
Third Era:
Client/server networks
 Client-server model is
a distributed
application structure that
partitions tasks or
workloads between the
providers of a resource
or service,
called servers, and
service requesters,
called clients.
Fourth Era:
Enterprise software/computing
 Enterprise software, also
known as enterprise
application
software (EAS),
is computer software used
to satisfy the needs of
an organization rather than
individual users. Such
organizations include
businesses, schools,
interest-based user groups,
clubs, charities, and
governments.
Fifth Era:
Cloud computing
 Cloud computing is the
on-demand availability
of computer system
resources, especially
data storage (cloud
storage) and computing
power, without direct
active management by
the user
Types of IS
1. Transaction Processing Systems (TPS) – These
information processing systems collect data at the point of a
transaction and generate outputs based on the data collected
to anticipate demand and allocate resources more
efficiently.
Examples: sales order entry, hotel reservation systems,
payroll, employee record keeping, and shipping.

2. Customer Relation Management Systems (CRMS) –

These systems synchronize sales and marketing efforts,
customer service, as well as feedback and problem
resolution to help people collaborate on product, idea
development and improve sales and marketing efforts.
Example: HubSpot, Microsoft Dynamics
 CRMS Activities
1. Automating Consistent Responses
A critical component of excellent relationship management
is ensuring every customer who reaches out with a question
or issue receives a response.
Example: when a customer emails you about a missed
shipping deadline or receiving the wrong product, you can
set your CRM platform up to automate an immediate
“We’re on it” response. That way, you keep the
conversation going while your human reps take the time to
research the issue and respond with a more personalized
contact.
Cont.
2. Enabling Business Analytics
Data is a hot commodity, and so are tools capable of
breaking the information down into valuable insights. The
Microsoft Dynamics CRM helps businesses spot trends that
can represent opportunities or problems that could escalate.
One of the best examples of CRM usage is leveraging the
Dynamics 365 platform to analyze customer segments
having issues with a specific product. Your CRM makes it
possible for you to come up with a fix before the situation
escalates into a company-wide problem.
Cont.
3. Managing Customer Feedback
Customers like having options for reaching out to a
company.
Example: many Wells Fargo customers like to reach out
via the company’s social media accounts. The way Wells
Fargo uses its solution to track and respond to client
inquiries left on all their social media accounts is a great
CRM example.
Instead of leaving customers hanging, Wells Fargo agents
can quickly detect the interaction and improvise a quick
response. The enterprise utilizes CRM software through the
cloud to provide the most effective customer service and
streamlined efficiencies across the enterprise.
Cont.
4. Tracking Customer Activity
Marketers can using CRM to track customer activity
throughout their lifecycle—from prospect to existing
client upsell. Tracking key behaviors from social
media posts to content click rates on an email
campaign will help your company understand what’s
important to customers and what isn’t.
CRM Marketing Automation
 Marketing is made up of dozens upon dozens of
tedious tasks. Automating these tasks is a smart way to
improve the efficiency of everyone that connects with
customers and leads.
 Sending out a thank you when a customer makes a
purchase.
 Upsell or cross-sell a client if they purchase a particular
product.
 Offering a birthday greeting with a promo code.
 Sending a discount to a customer that hasn’t made a
purchase recently.
 Tying a content download to a specific product pitch.
Cont.
 Notifying current customers when a new product has been
launched.
 Sending an email to people that abandon purchases in their
shopping cart without buying.
 Offering “just in time” ordering.
 Notifying customers when an item on their wish list goes
on sale.
 Providing after-the-sale support in the form of a helpful
how-to or tips on how to upgrade.
 Sending customers information on new products they might
be interested in, based on prior purchases.
 Conducting customer satisfaction surveys
Cont.
3. Business Intelligence Systems (BIS) – These systems
analyze operational data to maintain and improve logistical
networks, minimize risk and help people make effective
real-time decisions.
Example: Lotte.com: BI Increases Company Revenue
Lotte.com is the leading internet shopping mall in Korea
with 13 million customers.
 Challenge: With more than 1 million site visitors daily,
company executives wanted to understand why
customers abandon shopping carts.
Cont.
 Solution: The assistant general manager of the marketing
planning team implemented customer experience
analytics, the first online behavioral analysis system
applied in Korea. The manager used the information to
understand customer behavior and implement targeted
marketing and transform the website.
 Results: With the insights from the new BI analytics
program, there was an increase in customer loyalty after
one year and an increase of $10 million in sales. The
changes came from identifying the causes of shopping
cart abandonment, such as a long checkout process and
unexpected delivery times and remedying the situation.
Cont.
4. Management Information Systems (MIS) – These
systems help organizational leadership by organizing
data and managing information that can be used to get
maximum value from personnel, equipment and
business processes.

5. Decision Support Systems (DSS) – A more advanced

type of management information system, a DSS is an
interactive information system that analyzes large
amounts of data to help business leaders make
informed decisions.
Think like a Manager…!!
 If you were setting up web sites for IPL teams, what
management, organization and technology issues might you
encounter?

 What is the difference between e-business, e-commerce and

e-government ?
 Distinguish between e-business and e-commerce.
 Define and describe e-government
Enhancing Decision Making
Senior managers:
• Make many unstructured decisions

• E.g. Should we enter a new market?

Middle managers:
• Make more structured decisions but these may include
unstructured components
• E.g. Why is order fulfillment report showing decline in Morena?

Operational managers, rank and file employees

• Make more structured decisions

• E.g. Does customer meet criteria for credit?

 Information Requirements of Key
Decision-Making Groups in a Firm

Senior managers, middle managers, operational managers, and employees have

different types of decisions and information requirements.
Four stages of decision making
1. Intelligence
Discovering, identifying, and understanding the
problems occurring in the organization
2. Design
Identifying and exploring solutions to the problem
3. Choice
Choosing among solution alternatives
4. Implementation
Making chosen alternative work and continuing to
monitor how well solution is working
Stages in Decision Making
E-commerce, E-business & E-
government
 E-Commerce : E-Commerce refers to the performing
online commercial activities, transactions over
internet. It includes activities like buying and selling
product, making monetary transactions etc over
internet. Internet is used for E-commerce. Websites
and applications (apps) are required for e-commerce. it
is mainly connected with the end process of flow
means connected with the end customer.
Cont.
 E-Business : E-Business refers to performing all type
of business activities through internet. It includes
activities like procurement of raw materials/goods,
customer education, supply activities buying and
selling product, making monetary transactions etc over
internet. Internet, intranet, extranet are used in e-
business. Websites, apps, ERP, CRM etc are required
for e-business.
Difference b/w E-commerce & E-
business
 E-Commerce refers to  E-Business refers to
the performing online performing all type of
commercial activities, business activities
transactions over through internet.
internet.  E-Business is a broad
 E-Commerce is a concept and it is
narrow concept and it is considered as a superset
considered as a subset of of E-Commerce.
E-Business.  Business transactions
 Commercial transactions are carried out in e-
are carried out in e- business.
commerce.
Cont.
 In e-commerce
transactions are limited.
 It includes activities like
buying and selling
product, making monetary
transactions etc over
internet.
 It usually requires the use
of only a website.
 In e-business transactions are
not limited.
 It includes activities like
procurement of raw
materials/goods, customer
education, supply activities
buying and selling product,
making monetary
transactions etc over internet.
 It requires the use of
multiple websites, CRMs,
ERPs that connect different
business processes.
Cont.
 It involves mandatory  It involves the use of
use of internet. internet, intranet or
 E-commerce is more extranet.
appropriate in Business  E-business is more
to Customer (B2C) appropriate in Business
context. to Business (B2B)
 E-Commerce covers context.
outward/external  E-Business covers
business process. internal as well as
external business
process/activities.
Seven unique features of e-commerce
1. Ubiquity
Internet technology available anytime and everywhere: work,
home, mobile devices
Business significance:
Marketplace is extended beyond traditional boundaries and is
removed from temporal and geographic location
Creates market space: Marketplace extended beyond
traditional temporal, geographical boundaries
Shopping can take place anywhere - customer convenience is
enhanced, shopping costs are reduced
Cont.
2. Global reach
Technology reaches across national boundaries, around Earth
Business significance:
Commerce enabled across cultural and national boundaries
seamlessly, without modification
Market space includes potentially billions of consumers and
millions of businesses worldwide
Cont.
3. Universal standards
There is one set of Internet technology standards
Business significance
Disparate computer systems can easily communicate
Brings lower market entry costs (costs merchants pay to bring
goods to market)
Lowers search costs for consumers
Cont.
4. Richness
Video, audio, text messages are possible
Business significance: Video, audio, text integrated into
single marketing message and experience

5. Interactivity
Technology works through interaction with user
Business significance: Consumers engaged in dialog that
adjusts to individual; consumer is co-participant in
delivering goods to market
Cont.
6. Information density
Technology reduces information costs and raises
quality
Business significance:
• Information becomes plentiful, cheap, and more
accurate
• Increases price transparency and cost
transparency
• Enables price discrimination
Cont.
7. Personalization/customization
Technology allows personalized messages to be
delivered to individuals as well as groups
Permits customization—changing delivered product
or service based on user’s preferences or prior
behavior
Business significance
• Personalization of marketing messages and
customization of products and services are
based on individual characteristics
The Benefits of Disintermediation to the
Consumer

The typical distribution channel has several intermediary layers, each of

which adds to the final cost of a product, such as a sweater. Removing layers
lowers the final cost to the consumer.
E-governance
 Electronic governance or e-governance is the application
of information technology for delivering government
services, exchange of information, communication
transactions, integration of various stand-alone systems
between government to citizen (G2C), government-to-
business (G2B), government-to-government (G2G),
government-to-employees (G2E) as well as back-
office processes and interactions within the entire
governance framework.
 Through e-governance, government services are made
available to citizens through IT. The three main target
groups that can be distinguished in governance concepts are
government, citizens, and businesses/interest groups. In e-
governance, there are no distinct boundaries, finance and
support.
Cont.
 Electronic governance or e-governance implies
government functioning with the application of ICT
(Information and Communications Technology).
Hence e-Governance is basically a move towards
SMART governance implying: simple, moral,
accountable, responsive and transparent governance.
SMART Governance?
 Simple — implies simplification of rules and regulations of the
government and avoiding complex processes with the application of
ICTs and therefore, providing a user-friendly government.
 Moral — meaning the emergence of a new system in the administrative
and political machinery with technology interventions to improve the
efficiency of various government agencies.
 Accountable — develop effective information management systems
and other performance measurement mechanisms to ensure the
accountability of public service functionaries.
 Responsive — Speed up processes by streamlining them, hence
making the system more responsive.
 Transparent — providing information in the public domain like
websites or various portals hence making functions and processes of the
government transparent.
Interactions in e-Governance
G2C (Government to Citizens) — Interaction between the
government and the citizens.
 This enables citizens to benefit from the efficient delivery of a large
range of public services.
 Expands the accessibility and availability of government services
and also improves the quality of services
 The primary aim is to make the government citizen-friendly.

G2B (Government to Business):

 It enables the business community to interact with the government
by using e-governance tools.
 The objective is to cut red-tapism which will save time and reduce
operational costs. This will also create a more transparent business
environment when dealing with the government.
 The G2B initiatives help in services such as licensing, procurement,
permits and revenue collection.
Cont.
G2G (Government to Government)
 Enables seamless interaction between various government
entities.
 This kind of interaction can be between various departments
and agencies within government or between two governments
like the union and state governments or between state
governments.
 The primary aim is to increase efficiency, performance and
output.

G2E (Government to Employees)

 This kind of interaction is between the government and its
employees.
 ICT tools help in making these interactions fast and efficient
and thus increases the satisfaction levels of employees.
Advantages of e-Governance
 Improves delivery and efficiency of government services
 Improved government interactions with business and
industry
 Citizen empowerment through access to information
 More efficient government management
 Less corruption in the administration
 Increased transparency in administration
 Greater convenience to citizens and businesses
 Cost reductions and revenue growth
Cont.
 Increased legitimacy of government
 Flattens organizational structure (less hierarchic)
 Reduces paperwork and red-tapism in the administrative
process which results in better planning and coordination
between different levels of government
 Improved relations between the public authorities and civil
society
 Re-structuring of administrative processes
Need
“Once a new technology rolls over you, if you’re not
part of the steamroller, you’re part of the road.”

“Modern technology has become a total phenomenon

for civilization, the defining force of a new social
order in which efficiency is no longer an option but a
necessity imposed on all human activity.”
Cont.
 Increasing impact of information processing for
organizational decision making.
 Dependency of services sector including banking, financial
organization, health care, entertainment, tourism and travel,
education and numerous others on information.
 Changing employment scene world over, shifting base from
manual agricultural to machine-based manufacturing and
other industry related jobs.
 Information revolution and the overall development
scenario.
 Growth of IT industry and its strategic importance.
Cont.
 Strong growth of information services fuelled by increasing
competition and reduced product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought
in by use of information processing.
 Use of information processing in reduction of energy
consumption, reduction in pollution and a better ecological
balance in future.
 Use of information processing in land record managements,
legal delivery system, educational institutions, natural
resource planning, customer relation management and so
on.
Trends
 Advancement and application of information
technology are ever changing. Some of the trends in
the information technology are as follows:

 Artificial intelligence and machine learning

 Edge computing and quantum computing
 Cyber-security
 Block-chain
 Virtual reality and augmented reality
Cont.
1. Artificial Intelligence and Machine Learning
 Machine learning (ML) involves training machines to
perform tasks without being specifically programmed.
In contrast, artificial intelligence (AI) consists in
building intelligent machines capable of performing
tasks that usually require human wisdom. AI and ML
resources are being used by organizations in their
operations, gaining substantial benefits such as
improved performance, strengthening customer
service, better data analytics, alleviating production
issues, and higher revenues.
Cont.
 Artificial intelligence advances have allowed chatbots
to become highly sophisticated, simulating human
conversation. In addition to customer support and sales
assistance, organizations can use chatbots for lead
generation and marketing.

 Machine learning is becoming omnipresent across all

industries, including agriculture, medical research,
stock market, traffic monitoring, etc. For instance,
machine learning can be utilized in agriculture, such as
predicting weather patterns and crop rotation.
Cont.
2. Edge Computing and Quantum Computing
 Edge computing is a distributed computing framework
that brings computation and data storage closer to the
data source. Using edge computing can strengthen
businesses. It also brings significant benefits such as
faster insights, improved response times, and enhanced
bandwidth availability.
 Implementing edge computing ensures data security
Cont.
 Through quantum computing, calculations can be performed
using quantum information in the form of superposition,
interference, or entanglement. As a result, quantum computing
can carry out measures faster, solve complex problems, and run
complex computer simulations.

 This phenomenal technology trend is used for molecular

modeling, (transforming the medicine industry, revolutionizing
energy storage), database searching, cryptography, weather
forecasting, etc. Banking and finance also use quantum
computing to manage credit risk, high-frequency trading, and
fraud detection. In addition, there are many exciting new
healthcare applications enabled by quantum computing,
including rapid DNA sequencing, drug discovery, personalized
medicine, molecular simulations, diagnosis assistance, and
efficient radiotherapy.
Cont.
3. Cyber-security
 Cyber-security is now a growing trend in the
information technology industry. Critical infrastructure
cyber-security, network security, Cloud security, IoT
(internet of things), and Application security are the 5
types of security. Organizations can develop suitable
cyber-security strategies to protect their confidential
data from unauthorized threats, thereby avoiding
financial losses.
Cont.
4. Blockchain
 The Blockchain is a digital register for recording
information called blocks, they are securely linked to each
other using cryptography. Every block contains information
about the previous block, forming a chain, and each
subsequent block reinforces the previous one. The data
contained in a blockchain cannot be altered retroactively
without altering all subsequent blocks; therefore,
blockchains are resistant to tampering with their data.

 The Blockchain allows digital information to be cataloged

and circulated but not edited or altered, which is the
primary advantage of using Blockchain.
Cont.
5. Virtual Reality (VR) And Augmented Reality (AR)
 Virtual reality (VR) is an experience that replaces a
real-life environment with a simulated environment.
 Augmented reality (AR) adds digital elements to an
existing live view by often using the camera on a
Smartphone.
 VR and AR technologies are used marketing, gaming,
education, e-commerce, and several other fields.
 Chapter-II
Information System as a Strategic
Resource
Information system as a Strategic
Resource
 It has been a momentous change. Information technology
and information is no longer a business resource; it is the
business environment.
 Increasingly, the right question to ask about information
technology is not:

"What can the machines do?

but
"What do we want them to do?"
Cont.
Computers are going to work alongside humans -
typically in three roles.
 As assistants, computers will do routine work, like
preparing dossiers of information from databases.
 As advisers, the machines store and search huge
quantities of information to provide facts and advice on
everything from new products and services to the latest
trade regulations.
 As communicators, they spread information across
companies and countries.
Cont.
 Information technology can be used to achieve
strategic managerial objectives in three different ways:
 first, it can be used to obtain greater efficiencies in
existing operations,
 secondly it can be used to improve the strategic
planning process
 thirdly it can be used to open new markets.
Cont.
 Business environment is prone to changes and certain
factors make business planning very complex. Factors
like market forces, technological changes, complex
diversity of business and competition have a
significant impact on business prospect.

 IS is designed to access and monitor this factors.

 The continues assessment of business progress in

terms of sales, market, quality, profit and its direction
becomes the major roles of IS.
Case of ZARA
• Zara aligns its information system strategy with its business
strategy.

• The system links demand to manufacturing and distribution.

• Customers visit up to 17 times per year to check on new items
that may have arrived.

• Limited products lead customers to immediately purchase

products they like.

• Zara’s business strategy leads to a loyal and satisfied customer

base.
Cont.
• The POS system sends daily updates to Zara's
headquarters.
• Managers report to designers what sold and what
customers wanted but couldn't find.
• The information is used to determine inventory
management.
• New designs can be ordered twice a week.
• The entire process is automated so that new designs
and products can be created quickly.
• Zara uses its information resources to sustain its
advantages over competitors
Evolution of Information Resources
• IS strategy from the 1960s to the 1990s was driven by internal
organizational needs
o Lower existing transaction costs
o Provide support for managers by collecting and distributing
information

o Redesign business processes

• In the 2020 era IS strategy was driven by social IT platforms and new
capabilities

o A new evolution of applications, processes, and strategic

opportunities
Mission statements of computer
companies
Cont.
The Strategic Role for IS – Value
Creation
• IS help firms address their internal and external
circumstances
• Enable managers to identify and use information
resources strategically
• IS enable firms to gain advantage over the competition.
• Firms draw on modern and innovative applications
 Chapter-III & IV
Using Information Systems for
Competitive Advantage
Information Systems for Competitive
Advantage
 Information systems aid companies in competing with
other competitors by maintaining low costs,
differentiating products or services, focusing on
market niche, strengthening ties with customers and
suppliers, and increasing market entry high
competition.
 Using Information Systems to achieve competitive
advantage can be described by Porter's competitive
forces model.
 The competitive forces, which assist in competitive
advantage, include traditional competitors, new market
entrant, substitute products, customers, and suppliers.
Cont.
 The methods that businesses utilize in order to fight against
these competitive forces are vital and important. The
internet also influences competitive advantage greatly. With
this help and the help of information's systems, businesses
compete on a global scale, with different business models.

 A business can compete on quality, design and business

process.

 Having information systems in today's society helps

businesses stay more connected with the world, and most
importantly its customers.
Cont.
 The Porters five force model explains how the competitiveness
of a firm is affected by new market entrants, substitute products
and services, customers, and suppliers.

 Porter's competitive forces model helps companies determine

what they should do to be more productive by comparing what
their competitors are doing.

 It also brings the companies costs down and makes them more
efficient as a business by using Information Systems.

 The value chain model helps firms decide what information

systems adds are of value to the firm. These decisions are
applied to two activities called primary activities and support
activities.
The Internet and Globalization
 Until the 1990s, companies like: General Electric, General
Motors, Toyota, and IBM; dominated the global
competition.
 Today, the global internet and internal information systems,
put manufacturing firms in nearly instant contact with their
suppliers.
 With the Internet it is possible to move very large computer
files with hundreds of graphics and designs across the
globe in seconds.
 Because of the Internet and IT systems, it is possible for
medium-sized, "micro-multinational" firms to also enter the
global competition.
 Information technology and the Internet provide efficiency
and almost instant communication.