L1. Information Systems in Global Business Today

Business Information Systems
Chapter 1
Information Systems in Global Business Today
Based on the book “Management Information Systems: Managing the Digital Company”
by Laudon, K.C. and Laudon J.P., 16th Edition copyrighted © 2020 by Pearson Education Ltd.
Dr. Elena Gorbacheva | Business Informatics 1 (OWIN)
Chapter 1 Information Systems in Global Business Today
Course Structure
Part One: Organisations, Management, and the Networked Enterprise
 Chapter 1 Information Systems in Global Business Today
 Chapter 2 Global E-Business and Collaboration
 Chapter 3 Information Systems, Organisations, and Strategy
 Chapter 4 Ethical and Social Issues in Information Systems
Part Two: Information Technology Infrastructure

 Chapter 5 IT Infrastructure and Emerging Technologies
 Chapter 6 Foundations of Business Intelligence: Databases and Information Management
 Chapter 7 Telecommunications, the Internet, and Wireless Technology
 Chapter 8 Securing Information Systems
Part Three: Key System Applications for the Digital Age

 Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications
 Chapter 10 E-Commerce: Digital Markets, Digital Goods
 Chapter 11 Managing Knowledge and Artificial Intelligence
 Chapter 12 Enhancing Decision-Making
Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 2

Part One — Organisations, Management, and
the Networked Enterprise
 The major concepts in the Information Systems (IS) field are introduced
 The following questions are addressed:

 What is an IS, and what are its management, organisation, and technology
dimensions?
 Why are IS so essential in businesses today?
 Why are IS for collaboration and social business so important?
 How can IS help businesses become more competitive?
 What ethical and social issues are raised by widespread use of IS?

Agenda
 What is an Information System?
 The Role of Information Systems in Business Today
 Support of Business Processes by Information Systems

Definition: Information Systems
 A boundary-spanning field connecting business and Information Technology (IT)
 Information Technology (IT) - All the hardware and software technologies a company needs in order to
achieve its business objectives
 Hardware - A physical part of an electronic device (e.g., computer, laptop, smartphone, tablet etc.)
 Software - A collection of instructions that tell the electronic device how to work and perform a task
(e.g., applications running on your electronic device)
 Hardware and software are technical foundation and tools for IS, similar to the material and tools
used to build a house

Definition: Information Systems
 Information – Data (streams of raw facts) that have been shaped into a form
that is meaningful and useful to people
 System - A set of interrelated components that (hopefully) work together

Data vs. Information
Example: Sales at convenience stores
 Data - Streams of raw facts

 Information - Data that have been shaped into a form that is meaningful and useful to people

Basic Activities of an Information System
 Three basic activities of IS
 Input: Captures raw data from a

company or external
environment
 Processing: Converts raw data

into meaningful information
 Output: Transfers processed

information to people or
activities that use it

Business Perspective on Information Systems
Management, organisation, and technology dimensions of IS
 A combination of management,
organisation, and technology
dimensions shape IS
 Main components of IS:

 Tasks that need to be performed to
address business challenges
(management)
 People who perform these tasks
(organisation)
 IT that supports people in
performing the tasks (technology)

Management Dimension of IS
 IS support managers in their work and decision-making
 Examples:
 Setting the organisational strategy for responding to business challenges
 Allocation of the human and financial resources to coordinate the work
 Development of new products and services
 Redirecting and redesigning the organisation

Organisational Dimension of IS
 IS serve each level in the organisational

hierarchy

Organisational Dimension of IS
 Various organisational factors shape IS
 Separation of functional areas (e.g., sales and marketing, human resources,

finance and accounting, manufacturing and production)
 Business processes
 Organisational culture
 Organisational politics

Technology Dimension of IS
 Hardware and software
 Information Technology (IT) infrastructure ( Chapter 5)
 Data management technology ( Chapter 6)
 Networking and telecommunications technology ( Chapter 7)

Information Systems as an Academic Discipline
 IS is interdisciplinary and deals

with issues and insights from a
number of other disciplines
 Technical approach
 Focus on mathematically based
models to study IS
 Behavioural approach
 Focus on changes in behaviour
triggered by IS

Information Systems as an Academic Discipline
Historical term: “Management Information Systems”
 BUT: in this course under “Management Information Systems” a specific type

of Business Intelligence delivery platforms serving middle management is
understood ( Chapter 2)

Lessons Learned
What is an IS? How does it work?
 IS support solving a problem or a challenge facing a company and represent a

combination of management, organisation, and technology dimensions
 IS collect, store, and disseminate information from an organisation’s

environment and internal operations to support organisational functions, as
well as decision-making, communication, coordination, control, and analysis
 IS transform raw data into useful information through three basic activities:
input, processing, and output

Lessons Learned
What are the management, organisation, and technology components of IS?
 The management dimension of IS involves such aspects as leadership, strategy,

and management behaviour
 The organisation dimension of IS involves such aspects as the organisation’s

hierarchy, functional areas, business processes, culture, and politics
 The technology dimension of IS consists of hardware, software, IT

infrastructure, data management technology, as well as networking and
telecommunications technology (including the internet)

Lessons Learned
What academic disciplines are used to study IS and how does each contribute to
an understanding of IS?
 The study of IS deals with issues and insights from the disciplines following
both technical and behavioural approaches
 The technical disciplines focus on mathematically based models to study IS and

include computer science, management science, and operations research
 The behavioural disciplines focus on changes in behaviour triggered by IS and

include psychology, sociology, and economics

Agenda

Information Technology Investment
 Consists of investments
into hardware, software,
and communications
equipment
 Grew between 1999 and

2017 from 21% to 33% of
all investments in the US
companies

Variation in Returns on
Information Technology Investment

Information Systems Complementary Assets
 The additional investments required to derive value from the investments in IT
 Complementary assets include organisational and managerial assets
 IS bring value when companies invest in complementary assets in addition to

investments in IT

Information Systems Complementary Assets
Examples
 Organisational assets
 Appropriate business model
 Efficient business processes
 Managerial assets
 Incentives for management to innovate
 Teamwork and collaborative work environments

The Value of Information Systems to Business
Examples
 Increased productivity
 Increased sales, revenue, and profitability
 Increased quality
 Cut costs
 Improved customer service and experience
 Improved long-term strategic positioning
 Innovations
 Compliance with governmental regulations
etc.

The Value of Information Systems to Business
Technological trends triggering business transformation
 Mobile digital platforms

 Examples: smartphones, tablets, netbooks, digital e-book readers (e.g., as Amazon’s Kindle)
 Big Data
 Massive sets of unstructured/semi-structured data from web traffic (e.g., customer
transactions), social media, sensors etc.
 Cloud computing
 Model of computing in which computer processing, storage, software, and other services are
provided as a shared pool of virtualized resources over a network, primarily the internet
 Note: Computing - Any activity that uses computers to manage, process, and communicate
information; includes development of both hardware and software

Lessons Learned
How do IS transform business, and why are they so essential for running and
managing a business today?
 IS are a foundation for conducting business today
 In many industries, survival and the ability to achieve strategic business objectives are
difficult without extensive use of IS
 IS trends, which trigger business transformation, include mobile digital platforms, big data,
and cloud computing

Lessons Learned
Why are complementary assets essential for ensuring that IS provide genuine value
for organisations?
 In order to obtain meaningful value from IS, organisations must complement

their technology investments with appropriate organisational and managerial
investments
 These complementary assets include new business models and business

processes, supportive organisational culture and management behaviour, and
appropriate technology standards, regulations, and laws
 New IT investments are unlikely to produce high returns unless companies

make the appropriate managerial and organisational changes to support the
technology

Premier League: The Power of IT Analytics
Case Study
Read the case and attend to the following question:
 What role did technology play in Leicester City’s success as a football team?
Assess the contributions of technology described in this case study.

Premier League: The Power of IT Analytics
Case Study

Agenda

Definition: Business Process
 A collection of activities that takes one or more inputs and creates an output that is of
value to the customer (Hammer & Champy, 1993)
 Represents flows of material, information, and knowledge
 Organisations can be seen as a collection of business processes
 Can be tied to a functional area (functional business processes) or be cross-functional

Examples of Functional Business Processes
 Manufacturing and production

 Assemble a product, check the product for quality
 Sales and marketing

 Identify customers, sell the product
 Finance and accounting

 Create financial statements, pay creditors
 Human resources
 Hire employees, evaluate job performance

Business Processes and Information Systems (IS)
IS can enhance business processes by…
 Increasing efficiency of existing processes

 Automating steps that were manual
 Enabling entirely new processes

 Change flow of information
 Replace sequential steps with parallel steps
 Eliminate delays in decision-making
 Support new business models

Example: The Order Fulfilment Process
 Each rectangle represents an activity, which is one part of the larger business process
 Each circle represents a functional area of the business involved in the business process
Value of the Process Paradigm
 Process paradigm
 Process-centred approach to management
 Focus on processes, instead of functions
 Is at the core of the Business Process Management (BPM) discipline
 Productivity gains (reduced cost, increased speed, improved quality etc.)
 New opportunities to innovate and continuously transform businesses

Definition: Business Process Management (BPM)
 “A discipline involving any combination of

 modelling,
 automation,
 execution,
 control,
 measurement, and
 optimisation
 of business activity flows,
 in support of
 enterprise goals,
 spanning systems,
 employees,
 customers, and
 partners
 within and beyond the enterprise boundaries”
(definition by the Workflow Management Coalition, www.wfmc.org)

BPM Antecedents
 The work simplification and quality control tradition

 Focus on quality improvement of business processes
 Approaches used: Total Quality Management (TQM), Six Sigma etc.
 The management tradition

 Focus on the alignment of business processes with organisational objectives
 The Information Technology (IT) tradition

 Resulted in the Business Process Reengineering (BPR) movement
 BPR main idea: A radical rethink and redesign of business processes with the help of IT

Modern Understanding of BPM
“Six Core Elements of BPM” by Rosemann & Vom Brocke (2015)

Steps in Business Process Management
1. Identify processes for change
2. Analyse each of the identified processes (‘as-is’)
3. Design the new process (‘to-be’)
4. Implement the new process
5. Continuously measure and improve the new process

‘As-is’ Business Process for Purchasing a Book
from a Physical Bookstore
Example
 Purchasing a book from a physical bookstore requires many steps to be performed by both
theGorbacheva
Dr. Elena seller and theInformatics
| Business customer 1 (OWIN) 40
Redesigned (‘To-Be’) Process for Purchasing a
Book Online
Example
 Use of the internet technology makes it possible to redesign the process for
purchasing a book, so that it requires fewer steps and consumes fewer resources

Lessons Learned
What are business processes?
 Business process is a collection of activities that takes one or more inputs and
creates an output that is of value to the customer
 Activities forming a business process define how specific business tasks are
performed
 Business process represents a unique way in which an organisation coordinates

work, information, and knowledge
 Managers need to pay attention to business processes, because they determine

how well the organisation can execute its business, and they may be a source of
strategic advantage
 There are business processes specific to each of the major business functions, but
many business processes are cross-functional
Lessons Learned
How are business processes related to IS?
 IS can automate parts of business processes
 IS can help organisations redesign and streamline business processes

Dr. Elena Gorbacheva
el.gorbacheva@gmail.com
Dr. Elena Gorbacheva | Business Informatics 1 (OWIN)


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Business Information Systems

Part Two: Information Technology Infrastructure

Part Three: Key System Applications for the Digital Age

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 2

 The following questions are addressed:

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 3

 What is an Information System?

 The Role of Information Systems in Business Today

 Support of Business Processes by Information Systems

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 4

 A boundary-spanning field connecting business and Information Technology (IT)

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 5

 System - A set of interrelated components that (hopefully) work together

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 6

 Data - Streams of raw facts

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 7

 Three basic activities of IS

 Input: Captures raw data from a

 Processing: Converts raw data

 Output: Transfers processed

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 8

 Main components of IS:

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 9

 IS support managers in their work and decision-making

 Setting the organisational strategy for responding to business challenges

 Allocation of the human and financial resources to coordinate the work

 Development of new products and services

 Redirecting and redesigning the organisation

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 10

 IS serve each level in the organisational

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 11

 Various organisational factors shape IS

 Separation of functional areas (e.g., sales and marketing, human resources,

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 12

 Hardware and software

 Information Technology (IT) infrastructure ( Chapter 5)

 Data management technology ( Chapter 6)

 Networking and telecommunications technology ( Chapter 7)

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 13

 IS is interdisciplinary and deals

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 14

 BUT: in this course under “Management Information Systems” a specific type

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 15

 IS support solving a problem or a challenge facing a company and represent a

 IS collect, store, and disseminate information from an organisation’s

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 16

 The management dimension of IS involves such aspects as leadership, strategy,

 The organisation dimension of IS involves such aspects as the organisation’s

 The technology dimension of IS consists of hardware, software, IT

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 17

 The technical disciplines focus on mathematically based models to study IS and

 The behavioural disciplines focus on changes in behaviour triggered by IS and

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 18

 What is an Information System?

 The Role of Information Systems in Business Today

 Support of Business Processes by Information Systems

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 19

 Grew between 1999 and

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 20

Dr. Elena Gorbacheva | Business Informatics 1 (OWIN) 21

 The additional investments required to derive value from the investments in IT

 Complementary assets include organisational and managerial assets

 IS bring value when companies invest in complementary assets in addition to