Chapter 1 Managing the Digital Firm

Chapter Objective: Explain why information systems are so important today for business and management
Evaluate

the role of information systems in todays competitive business environment. the impact of the Internet and Internet technology on business and government. an information system from both a technical and business perspective. the major management challenges to building and using information systems.

Assess

Define

Identify

Why Information Systems?

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An entirely new Internet business culture new ways of conducting business. Businesspeople working with high-speed Internet connections, wireless networks, cellular phones, hybrid handheld devices. Online services for purchasing goods and services are more and more expected on the western world. Business communication with vendors, customers & employees any time of day or night over the Internet.

Information Technology (IT): refers to all of the computer-based information systems used by organizations and their underlying technologies.

Why Information System Matter

4

Capital Management

Foundation of Doing

Business

Productivity

Strategic Opportunity &

Advantage

Capital Management
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Information technology has become the largest component of capital investment for firms in the United States. More money is invested on IT, telecommunications equipment and software. Managers work for firms that are intensively using information systems and making large investments in IT. Managers certainly wants to know how to invest this money wisely. If they make wise choices, firm can outperform competitors. Poor choices will be wasting valuable resources / capital.

Foundation of Doing Business

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In US, millions of managers & workers in the labor force rely on information systems every day to conduct business. In many industries, survival and even existence without extensive use of Information systems is impossible. E-commerce and firms like Amazon, eBay, Google, University of Phoenix would not simply exist without IT. Service Industries (finance, insurance, real state) & personal services (travel, medicine, education) could not operate without IT.

Strategic Opportunity & Advantage

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To take advantage of

new opportunities in markets, develop new products, and create new services big investment in IT might be required by the firm. help to achieve a strategic advantage over competitors.

Information systems also

Productivity

How Much Does IT Matter?

8

IT Matters
not all

investments in IT work out or have strategic value.

Some are just

needed to stay in business, to comply with government reporting requirements and to satisfy the needs of customers and vendors.

Digital Convergence and the Changing Business Environment

Five factors to consider when assessing the growing impact of IT in business firms:
Internet growth &

technology convergence Transformation of the business enterprise Growth of a globally connected economy Growth of knowledge and information based economies Emergence of the digital firm

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The Internet & Technology Convergence

New business models based on Cellular phones are becoming

Internet.

Internet access devices.

New market for online

streaming media, music, video

download.
Suppliers of big

chains like Wal-Mart, Sears can not do business unless adopted internet based digital technology.

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E-business: Includes activities for the internal management of the firm and for coordination with suppliers and other business partners. E-commerce: Part of e-business that deals with the buying and selling of goods and services electronically with computerized business transaction using the internet. E-government: Application of the Internet and related technologies to digitally enable government and public sector agencies relationships with citizens, businesses and other arms of government.

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Transformation of the Business Enterprise

Firms are no longer limited

by traditional organizational boundaries or physical locations in how they design, develop, and produce goods and services.

There are also

changes in the management of the enterprise. New business Enterprise is flattened (less hierarchical), decentralized, flexible, location independent and there is more empowerment.

Globalization
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Information Systems facilitate

imports and exports, foreign

trades.
Information Systems provide the

communication and analytic power that firms need to conduct trade and manage businesses on a global scale. has great role on management and control in a global marketplace, forming global workgroups, managing global delivery systems.

IS

Rise of the Information Economy

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Western and advanced world are being transformed from industrial economies to knowledge and information based service economies. Manufacturing has been moving to lower-wage countries. Today most people on the western world no longer work on farms on in factories. Instead they on sales, education, health care, banks, insurance firms, law firms and so on. In a knowledge and information based economy, knowledge and information are the sources for creating wealth.

Emergence of the Digital Firm

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Digital Firm: Internal tasks and most business relationships with customers, suppliers and employees are digitally enabled. Digital firms are hoped to be more productive, effective and efficient.

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Perspectives on Information Systems

Information System: Set of interrelated components collect (or retrieve), process, store & distribute information to support decision making and control in an organization.

Input Output Processing Storage Feedback

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Perspectives on Information Systems

Data vs.

Information

Informal Information System

Formal Information System

Computer based Information System

(CBIS)

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Business Perspective on Information Systems

Information systems provide economic value

to the business. Thats why money is spent on IS / IT is: more profit, more market share, more return on investment, increases in revenue, etc. IT just to stay on business (small banks investing on ATM)

the result

Sometimes firms are forced to spend on

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Computer Literacy: focuses primarily on knowledge of information

technology. Information Systems Literacy: IT knowledge, plus understanding about organization & management.

Knowledge Workers: design products or services and create new knowledge (engineers, architects, scientists) Data Workers: process the organizations paperwork (secretaries, bookkeepers, clerks) Production / Service Workers: actually produce the organizations products or services.

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Operational Managers: responsible for monitoring the firms daily

activities.

Middle Managers: carry out the programs and plans of senior management. Senior Managers: make long-range strategic decisions about what products and services to produce.

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Computer Hardware

Computer Software Storage Technology Communication Technology Internet & World Wide Web (WWW) IT Infrastructure: provides the foundation, or platform, on which the firm can build its specific information systems.

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The Challenge of Information Systems

The Information Systems investment challenge

The Strategic Business challenge The Globalization challenge The Information Technology Infrastructure challenge Ethics and Security challenge

Some Idea On:

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Business Process Function Systems

Business

Sociotechnical