Summary

How are information systems transforming business?

Smartphones, texting, e-mail and online conferencing have all

become essential tools of business, and by June 2012, more than
104 businesses worldwide had dot-com internet sites registered.
More specifically, businesses have sought to:
i) Sense and respond to rapidly changing customer demand.
ii) Reduce inventories to the lowest possible levels.
iii) Achieve higher levels of operating efficiency.
In response, Supply chains have become more fast-paced, with companies
of all sizes depending on Just-In-Time (JIT) Inventory to reduce their
overhead costs and get to market faster.
Increasingly, people have resorted to technology for daily activities, such
as less reading the newspaper and more reading news online, and many
also write their own blogs on the internet, which impacts business since it
has led to new writers and new forms of customer feedback which
previously did not exist. In response to this, businesses are starting to use
social networking tools such as Facebook and Twitter to connect their
employees, customers and managers worldwide. Furthermore, the
increasing strength of the influence of IT on business is evident in its
performance in the recent economic climate, where despite numerous
economic slowdowns, e-commerce and internet advertising have
continued to expand, with Googles online advertisement revenue growing
around 10% annually. The annual growth of digital information data has
also been spurred to an estimated rate of 5 Exabytes annually. This has
been due to, for example, federal security and accounting laws requiring
businesses to keep email messages for extended periods of time.
Challenges and opportunities of globalisation

A flattened world is a term used in the argument that internet and global
communications have greatly reduced the economic and cultural
advantages of developed countries, implying that globalisation presents
both challenges and opportunities for business firms.
A growing portion of the economy of advanced industrial countries depend
on exports and imports, as European and Asian economies consisted of
over 50% in 2012 (33% for US). Whilst goods move across borders, so do
jobs, including high-level jobs which require qualifications. For example, in
recent years, the US lost millions of manufacturing jobs to offshore, low-
wage producers. On the contrary however, the US creates over 3.5 million
jobs per normal year.
Employment in information systems and the other service occupations is
expanding, and wages are stable, as outsourcing has actually accelerated
the development of new systems worldwide. Furthermore, in relation to
outsourcing, the ultimate aim for an employee is to develop high-level
skills that cannot be outsourced, and the aim for a business is to avoid
markets for goods and services that can be produced offshore much less
expensively.
The major impact of globalisation on management information systems
has involved the emergence of the internet into an international
communications system, which has reduced the costs of operating and
transacting on a global scale. Communication has too greatly developed,
as communication between a factory floor in China and a distribution
centre in America for example is now instant and virtually free.
Customers can also now shop on a global market, providing a larger range
of goods and services to be purchased, whilst also allowing price and
quality information to be obtained 24 hours a day. Firms producing goods
and services on a global scale achieve extraordinary cost reductions by
finding low-cost suppliers and managing production facilities in other
countries.
Information systems also enable globalisation, as internet service firms,
such as Google and eBay, are able to replicate their business models and
services in multiple countries, without having to redesign their expensive
fixed-cost information systems infrastructure.
Strategic business objectives of Information systems

Information systems are essential for conducting day-to-day business in

the majority of advanced countries, as well as achieving strategic
business objectives. E-commerce, service firms, retail firms and
manufacturing firms all require information systems to operate, survive
and prosper, suggesting that information technology is a foundation for
business in the 21st century.
There is a growing interdependence between a firms ability to use
information technology and its ability to implement corporate strategies
and achieve corporate goals. In other words, what a business would like to
do in the future often depends on what its systems will be able to do.
The nature and quality of information systems in an organisation will
influence:
i) Increasing market share.
ii) Becoming the high-quality or low-cost producer.
iii) Developing new products.
iv) Increasing employee productivity.

Business firms invest heavily in information systems to achieve 6 strategic

business objectives:
1) Operational Excellence

Businesses continuously seek to improve the efficiency of their

operations in order to achieve higher profitability. Information
systems and technologies are some of the most important tools
available to managers for achieving higher levels of efficiency and
productivity in business operations, particularly when coupled with
changes in business practices and management behaviour.

There is also a growing interdependence between a firms

information systems and its business capabilities, as changes in
strategy, rules and business processes increasingly require changes
in hardware, software, databases and telecommunications; often
what the organisation would like to do depends on what its
information systems are capable of doing.

2) New Products, Services and Business 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.
Examples include Apple prospering through their continuing stream
of iPod innovations, as this is an example of transforming an old
business model, where vinyl records were the norm, into a new,
digital dependent model.

3) Customer and Supplier Intimacy

When a business is very familiar with its customers, and serves

them well, the customers generally respond by returning and
purchasing more, raising revenue and profits. Likewise, with
suppliers, the more a business engages its suppliers, the better the
suppliers can provide vital inputs, which lowers cost

4) Improved decision making

Many business managers operate in an information fog bank,

which refers to the issue of never having the right information at the
right time to make an informed decision. Instead, managers rely on
forecasts, best guesses and luck, and the result is an overproduction
or underproduction of goods and services, misallocation of resource
and poor response times. These outcomes raise costs and result in
lost customers, and so increasingly, information systems and
technologies have made it possible for managers to use real-time
data from the marketplace when making decisions, allowing better
response time, allocation of resources and appropriate production of
 goods and services.

5) Competitive Advantage

If the firm has achieved any of the above objectives, it is likely they
have already achieved a competitive advantage. A competitive
advantage involves doing things better than your competitors,
charging less for superior products and responding to customers
and suppliers in real time all increase sales and profits that
competitors cannot match.

6) Survival

Business firms also invest in Information Systems and Technologies

because they are necessities of doing business, as these necessities
may be driven by industry changes, such as when Citibank
introduced the ATM in New York 1977, its competitors rushed to
keep up with Citibank by developing their own ATMs.
Furthermore, many pieces of federal and state legislation in health
care, financial services, education and privacy protection impose
significant information retention and reporting requirements on
businesses. Firms turn to Information systems and technologies to
provide the capability to respond to these challenges.

What is an information system?

An Information System may be defined as a set of interrelated

components that collect (retrieve), process, store and distribute
information to support decision making and control in an organisation.
Information systems, in addition to supporting decision making,
coordination and control, may also assist managers and workers analyse
problems, visualise complex subjects, an even create new products.
Information systems contain information about significant people, places
and things within the organisation or in the environment surrounding it,
however, information is not data:
Information: data that have been shaped into a form that is
meaningful and useful to human beings.
Data: Streams of raw facts representing events occurring in
organisations or the physical environment before they have been
organised and arranged into a form that people can understand
and use.
3 activities in an information system produce the information that
organisations need to make decisions, control operations, analyse
problems and create new products or services, as they include:
 i) Input activities Captures or collects raw data from within the
organisation or from its external environment.
ii) Processing activities Converts this raw input into a
meaningful form.
iii) Output activities Transfers the processed information to the
people who will use it or to the activities for which it will be
used.

Information systems also require feedback, which is output that is

returned to appropriate members of the organisation to help them
evaluate or correct the input stage. There is a sharp distinction, however,
between a computer, computer program and an information system. More
specifically, computers provide the equipment for storing and processing
information. Computer programs, or software, however, are sets of
operating instructions that direct and control computer processing.
Dimensions of information systems

To fully understand information systems, one must understand the

broader organisation, management, and information technology
dimensions of the systems, and their power to provide solutions to
challenges and problems in the business environment. This broader
understanding of information systems is referred to as information
systems literacy. Computer literacy, however, refers to primarily
the knowledge of information technology. The field of Management
Information Systems (MIS) attempts to achieve this broader
information systems literacy.
MIS deals with behavioural issues, as well as technical issues
surrounding the development, use and impact of information
systems used by managers and employees in the firm. Thus, an
examination of each of the dimensions of information systems
would include an examination of organisations, management and
information technology.
SUMMARY OF VIDEO CLIPS
VIDEO 1 SMART BUS
Advantages
- Provides people with greater information regarding the standards of the
bus before it arrives (ie. How full it is, and how far away it is).
- Camera will monitor your bus stop and other bus stops, promoting
communication and a safer feeling, particularly in late hours.
- Location-based communication allows people to connect with each other
from the bus stop.
Disadvantages
- Will be costly to establish and maintain these bus stops.
- Will also take a significant amount of time to replace old bus stops with
smart stops.
- May place greater pressure on the public transport system, as it is likely
more people would be inclined to catch a bus in response to this
development.
Benefits for organisation
Employees are less likely to be late to work since the time estimation provides
the employee with a guide as to how far away the bus is, and if it is so far away
that it would result in being late to work, the employee can search for alternative
transport modes to assure they are on time.
Benefits for consumers
- Reduces uncertainty of bus arrival time, which may make catching the bus
more appealing for consumers.
- Location based communication allows consumers to connect with each
other regarding events and other social matters.
Strategic Business objectives

Improved decision making: Reduces the fog bank complication, as the

smart bus stop utilises real time and live information in a public
transport environment.
New Product/Service/business model.
Operational excellence: A more reliable estimation of bus arrival times
means employees have a better idea of when they are required to be
at the bus stop to catch the bus. They are thus more likely to be at
work on time, which improves operating efficiency in business
processes.

VIDEO 2 BLUESMART: CARRY ON SUIT CASE

Advantages
- Numerous features that any person with a smart phone may utilise, such
as a built in scale to weigh luggage amount and ability to lock the case
from a smart phone.
- Utilises a powerful program though with a simple and easy to use
interface.
- Can readily be tracked in the event it has been misplaced or lost in
transport.
Disadvantages
- It will likely be substantially more expensive than current suitcases.
- Prone to technological failure through instances such as water exposure.
- Requires external technology (a smart phone) to operate to its maximum
extent.
Benefits for organisations
- When managers or employees are needed to travel interstate or abroad,
the tracking system on the suitcase will prevent the impacts of a loss of
baggage, which is often costly and timely, impacting the organisation.
- It is also a safer way to transport sensitive items such as business related
documents due to the tracking system and mobile lock system.
Benefits for consumers
 - The suit case acts as a personal travel assistant to consumers, with the
ability to display the route of travel and estimated time to arrival.
- Also contains a battery which can charge a consumers smart phone
during travel, allowing extended periods of activities such as social
networking and online shopping.
Strategic business objectives

Operational Excellence: The carry on suitcase, with its secure locking

system and tracking device, is an efficient and safe way of transporting
sensitive items/documents, as it can be traced if the baggage is lost,
saving time and potentially cost to the organisation, improving
operational efficiency. Furthermore, with its mapping abilities, it assists
the manager/employee in arriving to their destination, reducing time
spent in travel and thus, increasing efficiency.
New product/service/business model
Competitive advantage: If all managers and employees of an
organisation utilised this system, it would likely result in much more
efficient travel and a lessened risk of time and money lost on missing
baggage, which may give the organisation a competitive advantage,
particularly if the industry is characterised by large amounts of travel.

VIDEO 3 POCKETFIRE: SMARTPHONE APP FIGHTS BUSHFIRES

Advantages
- Replaces paper mapping system, which was largely outdated, with a real
time data and mapping solution for mobile phones.
- Firefighters can use their own phones to share maps.
- May also be used to post a description regarding severity and damage
resulted from the fire at the current time period by allowing it to be posted
onto the internet and viewed/shared by the public.

Disadvantages
- Requires external device (mobile phone) to operate.
- Prone to issues such as loss of connection and loss of internet, which are
plausible events during a fire.

Benefits for organisations

Fires can often result in the blocking of major transport routes, so by
having a real time mapping system of the affected areas, an organisation
can effectively formulate alternative routes for delivery/transport.
Benefits for consumers
Consumers waiting on delivery of a good or service will likely be less
impacted in the event of fire with this system since the suppliers are able
to re-route delivery to assure it occurs in the timeliest manner possible.

Strategic business objectives

Improved decision making: The availability of real time data in this

system allows organisations to plan alternative measures to avoid
areas affected by the fire in their business operations, leading to
improved decision making.
New product/service/business model.
Customer and supplier intimacy: In the event of fire, by assuring that
delivery still occurs in a timely manner, through appropriate planning,
the business maintains a intimacy with their customers.

INNOVATION OF CHOICE Internet (1989)

WHAT DOES IT OFFER ORGANISATIONS?

The internet has significantly altered the ways in which organisations

operate. This includes a significant impact on communication, with e-mail,
social networking and online conferencing all becoming essential
mediums of communication in business. The influence of the internet on
organisations is further evident in the fact that by June 2012, more than
104 million businesses worldwide had dot-com internet sites registered.
The internet has allowed the creation of social networking to be used on a
wide scale, offering businesses the ability to connect their employees,
customers and managers worldwide. The internet has also promoted
globalisation in that it has created an international communications
system, which has reduced the costs of operating and transacting on a
global scale.
All of these changes have led to the creation of suitable conditions for a
fully digital firm, where nearly all of the organisations significant business
relationships with customers, suppliers and employees are digitally
enabled and mediated. The internet also closer links firms and external
entities, particularly the World Wide Web, as the internet increases the
accessibility, storage and distribution of information and knowledge for
organisations globally. Furthermore, a global sales force can receive nearly
instant product price information updates using the Web, as vendors of
some large retailers can access retailers internal Web sites directly to find
up-to-the-minute sales information and to initiate replenishment orders
instantly if required. The Internet also widens the geographic market,
increasing the number of competitors, and reducing differences among
competitors, which in fact makes it more difficult to sustain operational
advantages and puts pressure to compete on price. Internet sites can also
be used by firms to build communities of users (like-minded consumers),
who want to share their experiences, which builds customer loyalty and
relations for organisations.

WHAT DOES IT OFFER CONSUMERS?

Increasingly, people have resorted to technology for daily activities, such
as a reduced amount of people reading the newspaper and more reading
news online. This increase in online activities is a largely a result of the
development of the internet in 1989, which has spurred a world of
digitalisation and globalisation.
In terms of the consumer, the internet has allowed many to write their
own blogs, which has led to new writers and the ability to leave their own
customer feedback regarding products they have purchased from
organisations, which previously did not exist. Furthermore, consumers can
now shop on a global market, as the internet has been a means of
promoting globalisation by reducing the costs of operating and transacting
on a global scale through its traits of near instant communication and in
turn, by increasing the mobility of labour. This has provided a larger range
of goods and services to be purchased by the consumer due to access to
foreign markets which previously were unavailable, whilst also allowing
price and quality information to be obtained 24 hours a day. This
availability of global price and product information also shifts bargaining
power to consumers, as the internet, with its large, competitive market,
has offered a greater availability of substitute goods, meaning consumers
may search for cheaper alternatives to the product they initially desired if,
for example, they feel the price is too high.