Chapter 1

Information
Systems in Global
Business Today

Data VS. Information

Data vs. Information

Data consists of raw facts (i.e., a list of the numbers)
Information is a collection of facts organized (or processed) in such a
way that they have additional value (i.e., a list of the class grades based
on the exam score)

In a way, information is data that has been transformed into a

more useful and meaningful form
Turning data into information is a process performed to achieve a
defined outcome and requires knowledge

Characteristics of Valuable Information

Accessible

Reliable

Accurate

Secure

Complete

Simple

Economical

Timely

Relevant

Verifiable

Functions of an Information System

An information system contains information about an organization and its surrounding environment. Three basic activitiesinput, processing, and output
produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input.
Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information
systems.

IS: input, process, output, feedback

IS: activities produce required information
Input: Captures raw data from organization or external

environment
Processing: Converts data into meaningful form
Output: Transfers processed information to people or activities
that use it
Feedback: Output returned to appropriate members of
organization to help evaluate or correct input stage

Information System
Set of interrelated components
Collect, process, store, and distribute information by computers

and software as a tool

Support decision making, coordination, control, problem

analysis and create new product

Provide solutions to challenges in business environment

Computer/Computer program vs. IS

Computers and software are technical foundation and tools to store and

process information, of modern information systems

Computers provide equipment for storing and processing information

Computer programs, or software, are sets of operating instructions

that direct and control computer processing

Similar to the material and tools used to build a house
They alone cannot produce required information to a particular
organization

To understand IS, we must understand the problems they are designed

to solve, their architectural and design elements, and organizational

processes that lead to these solutions.

Dimensions (boarders) of IS
Understanding of IS dimensions is IS literacy
Where computer literacy is focus on primarily on knowledge of IT
MIS try to achieve this boarders, deals with behavioral and technical

issues surrounding development, use and impact of IS in the firm.

1. Organizational dimension of IS
ISs are an integral part of organizations
Components of organizations are structure, business process,

and culture
Structure: composed of different levels and specialties.
Structure reveals a clear-cut division of labor.
Authority and responsibility is organized as a hierarchy.
The upper level of the hierarchy consists of managerial, professional,

and technical employees

The lower levels consists of operation personnel
The role of Senior Management, Middle Management, and Data
Workers

Levels in a Firm

1. Organizational dimension of IS (contd.)

Business functions: tasks (sales and marketing, manufacturing

and production finance and accounting, and human resources)

Business process: logically related tasks and behaviors for
accomplishing work.
E.g., Developing a new product, fulfilling an order or hiring a new
employee
Organization coordinate its work through its hierarchy and business
process
IS automates many business processes (e.g., a customer receives a
credit or billing)

Culture : fundamental set of assumptions, values, and ways of doing

things, that has been accepted by most of its members, part is

embedded in IS (FedEx).

2. Management dimension
Managements job is to sense out of the many situations, make

decisions, formulate action plan and solve organizational

problem
Managers set organizational strategy for responding to business
challenges
And they allocate human and financial resources to coordinate
the work and achieve success
They must exercise leadership
In addition, managers must act creatively:
Creation of new products and services
Occasionally re-creating the organization

3. Technology dimension
IT is:
Hardware: physical component
Software: instruction control Hardware
Data management technology

Network and telecommunications technology

Network: Hardware + Software link computers
Internet: Network to provide services
WWW: service to store retrieve information
IT infrastructure: platform that the firm can built on its IS

Contemporary Approaches to IS
IS is a multidisciplinary field
No single theory or perspective dominates
ISs are socio-technical systems

Technical approach
The technical approach emphasizes mathematically based

models as well as the physical technology

Computer science theories of computation, data storage

Management science: models of decision-making and

practices

Operations research: optimizing selected parameters of org.

Behavioral approach
Behavioral issues arise in the development and long-term

maintenance of information systems.

Behavioral issues such strategic business integration,

implementation...cannot be explored usefully with the models

used in technical approach.

Psychology: how decision makers use formal information

Economics: how IS change the control and cost structures
Sociology: how system affect individuals and groups

Management Information Systems

MIS combines the work of computer science, management

science, and operations research with a practical orientation

toward developing system solutions to real-world problems and
managing IT resources

Also concerned with behavioral issues surrounding the

development, use, and impact of ISs

Use of computer-based information systems in business firms

Advice: understand the perspectives of many disciplines

Role of IS in business today

IS transform (improve) business today. How?
1. Creating globalization opportunities: Internet reduced

costs of operating, on global scale for customers and firms, using

foreign markets, easily replicate service such as Google and ebay

2. Helps the emerging digital firm:

A digital firm is one in which nearly all of the organizations

significant business relationships with customers, suppliers, and
employees are digitally enabled and mediated.

and its core business processes are accomplished through

digital networks.

(Time shifting, space shifting)

Why firms use IS?

Firms invest heavily in IS to achieve 6 strategic business

objectives

Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage

Survival

1. Operational excellence
IS Improvement of efficiency of operation to attain higher

profitability

IS and IT tool to achieve greater efficiency and productivity

Examble: Wal-Marts RetailLink system links suppliers to stores

for superior replenishment system

2. New products, services, and business models

IS and IT enables firms to create new products as well as new

business models

Business model: describes how company produces, delivers, and

sells product or service to create wealth

Information systems and technology a major enabling tool for

new products, services, business models

E.g. Apples iPod, iTunes and Netflixs Internet-based DVD

rentals

3. Customer and supplier intimacy

Serving customers well leads to customers returning, which

raises revenues and profits

E.g. High-end hotels that use computers to track customer

preferences and use to monitor and customize environment

Intimacy with suppliers allows them to provide vital inputs,

which lowers costs

E.g. J.C.Penneys information system which links sales records to

contract manufacturer

4. Improved decision-making
Without accurate information:
Managers must use forecasts, best guesses, luck

Leads to:
Overproduction, underproduction of goods and services
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers

IS provide real-time data for making decisions

E.g. Verizons Web-based digital dashboard to provide managers

with real-time data on customer complaints, network

performance, line outages, etc.

5. Competitive advantage
Achieve higher sales and profit through using IS by:
Doing things better
Charging less for superior products

real time responding

Using the internet is competitive advantage
E.g. Dell: Consistent profitability over 25 years; Dell remains one

of the most efficient producer of PCs in world.

But Dell has lost some of its advantages to fast followers-- HP

6. Survival
Information technologies are necessity of doing business
Industry-level changes, e.g. Citibanks introduction of ATMs

E.g. Governmental regulations requiring record-keeping