Chapter 1: INFORMATION SYSTEMS IN - Information systems,

technology an important tool in

BUSINESS TODAY
achieving greater efficiency and
Globalization opportunities productivity

- Internet has drastically reduced

costs of operating on global Business model
scale
- describes how company
- Presents both challenges and
produces, delivers, and sells
opportunities
product or service to create
Fully digital firm wealth

- Significant business Customer and supplier intimacy

relationships are digitally
- Serving customers well leads to
enabled and mediated
customers returning, which
- Core business processes are
raises revenues and profits
accomplished through digital
- Intimacy with suppliers allows
networks
them to provide vital inputs,
- Key corporate assets are
which lowers costs
managed digitally
Operational excellence
Digital firms offer greater flexibility
in organization and management - Improvement of efficiency to
attain higher profitability
- Time shifting, space shifting
New products, services, and business
Business firms invest heavily in
models
information systems to achieve six
strategic business objectives: - Enabled by technology

1. Operational excellence Customer and supplier intimacy

2. New products, services, and business - Serving customers raises

models revenues and profits
- Better communication with
3. Customer and supplier intimacy
suppliers lowers costs
4. Improved decision making
Improved decision making
5. Competitive advantage
- More accurate data leads to
6. Survival better decisions

Operational excellence Competitive advantage

- Improvement of efficiency to - Delivering better performance

attain higher profitability - Charging less for superior
products
- Responding to customers and
suppliers in real-time
Survival Organizational dimension of
information systems
- Information technologies as
necessity of business - Hierarchy of authority,
responsibility
Information system
• Senior management
- Set of interrelated components • Middle management
- Collect, process, store, and
• Operational management
distribute information
- Support decision making, • Knowledge workers
coordination, and control
• Data workers
Information vs. data • Production or service workers

- Data are streams of raw facts Organizational dimension of

- Information is data shaped into information systems (cont.)
meaningful form
- Separation of business
Three activities of information functions
systems produce information
• Sales and marketing
organizations need:
• Human resources
1. Input: Captures raw data from
organization or external environment • Finance and accounting
2. Processing: Converts raw data into • Manufacturing and production
meaningful form
- Unique business processes
3. Output: Transfers processed - Unique business culture
information to people or activities that - Organizational politics
use it
Management dimension of
Feedback information systems
- Output returned to appropriate - Managers set organizational
members of organization to strategy for responding to
help evaluate or correct input business challenges
stage
Technology dimension of
Computer/Computer program vs. information systems
information system
- Computer hardware and
- Computers and software are software
technical foundation and tools, - Data management technology
similar to the material and tools Networking and
used to build a house telecommunications technology
• Networks, the Internet,
intranets and extranets, World
Wide Web
 - IT infrastructure: provides Business perspective
platform that system is built on
- Calls attention to organizational
Dimensions of UPS tracking system: and managerial nature of
information systems
- Organizational:
• Procedures for tracking Complementary assets
packages and managing
- Assets required to derive value
inventory and provide
from a primary investment
information
- Firms supporting technology
- Management:
investments with investment in
• Monitor service levels and costs
complementary assets receive
- Technology:
superior returns
• Handheld computers, bar-code
scanners, networks, desktop Complementary assets include:
computers, etc.
- Organizational assets, e.g.
Business perspective on information • Appropriate business model
Systems
• Efficient business processes
- Information system is
instrument for creating value - Managerial assets, e.g.
- Investments in information • Incentives for management
technology will result in superior innovation
returns:
• Teamwork and collaborative
• Productivity increases work environments
• Revenue increases - Social assets, e.g.

• Superior long-term strategic • The Internet and

positioning telecommunications
infrastructure
Business information value chain
• Technology standards
- Raw data acquired and
transformed through stages Technical approach
that add value to that - Emphasizes mathematically
information based models
- Value of information system - Computer science,
determined in part by extent to management science,
which it leads to better operations research
decisions, greater efficiency, and
higher profits
Behavioral approach Serve operational levels
- Serve predefined, structured
- Behavioral issues (strategic
goals and decision making
business integration,
implementation, etc.) Information technology enhances
- Psychology, economics, business processes in two main
sociology ways:

Management Information Systems 1. Increasing efficiency of existing

processes
- Combines computer science,
management science, • Automating steps that were
operations research and manual
practical orientation with
2. Enabling entirely new processes that
behavioral issues
are capable of transforming the
Four main actors businesses

1. Suppliers of hardware and • Change flow of information

software
• Replace sequential steps with
2. Business firms
parallel steps
3. Managers and employees
4. Firm’s environment (legal, • Eliminate delays in decision
social, cultural context) making
Chapter 2: GLOBAL E-BUSINESS AND Management information systems
COLLABORATION - Serve middle management
- Provide reports on firm’s current
Business processes
performance, based on data
- Sets of activities, steps, to from TPS
produce product or service - Provide answers to routine
- Workflows of material, questions with predefined
information, knowledge procedure for answering them
- May be tied to functional area - Typically have little analytic
or be cross-functional capability
- Business processes may be
Decision support systems
assets or liabilities
- Serve middle management
Transaction processing systems
- Support non-routine decision
- Perform and record daily routine making
transactions necessary to
Business intelligence
conduct business
- Allow managers to monitor - Class of software applications
status of operations and - Analyze current and historical
relations with external data to find patterns and trends
environment and aid decision-making
Executive support systems Supply chain management (SCM)
systems
- Support senior management
- Address non-routine decisions - Manage firm’s relationships
with suppliers
Systems from a constituency
- Share information about Orders,
perspective
production, inventory levels,
- Transaction processing systems: delivery of products and services
supporting operational level
Knowledge management systems
employees
(KMS)
- Management information
systems and decision-support - Support processes for acquiring,
systems: supporting managers creating, storing, distributing,
- Executive support systems: applying, integrating
supporting executives knowledge

TPS: Major source of data for other Intranets:

systems
- Internal company Web sites
ESS: Recipient of data from lower-level accessible only by employees

Systems Extranets:

Enterprise applications - Company Web sites accessible

externally only to vendors and
- Systems for linking the
suppliers
enterprise
- Often used to coordinate supply
- Span functional areas
chain
- Execute business processes
across firm E-business
- Include all levels of
- Use of digital technology and
management
Internet to drive major business
Four major applications: processes

1. Enterprise systems E-commerce

2. Supply chain management
- Subset of e-business
systems
- Buying and selling goods and
3. Customer relationship
services through Internet
management systems
4. Knowledge management systems E-government
Enterprise systems - Using Internet technology to
deliver information and services
- Collects data from different firm
to citizens, employees, and
functions and stores data in
businesses
single central data repository
Collaboration Systems Analyst

- Short-lived or long-term - principal liaisons between the

- Informal or formal (teams) IS groups and the rest of the
organization.
Business benefits of collaboration
- His job is to translate the
and teamwork
business problems and
- Investments in collaboration requirements into information
technology can produce requirements and systems.
organizational improvements
Information systems managers
returning high ROI
- leaders of teams of
“Command and control”
programmers and analyst,
organizations
project managers, physical
- No value placed on teamwork or facility managers,
lower-level participation in telecommunications managers,
decisions or database specialist.

Collaborative business culture IS Managers

- Senior managers rely on teams - the managers of computer

of employees operations and data entry staff.
- Policies, products, designs,
CIO – IS department head
processes, systems rely on
teams - Senior manager who oversees
- Managers purpose is to build the use of IT in the firm
teams
CSO – chief security officer
Two dimensions of collaboration
- In charge of IS security for the
technologies
firm and is responsible for
- – Space (or location) – remote or enforcing the firm’s information
collocated security policy
- – Time – synchronous or
CPO – chief privacy officer
asynchronous
- Responsible for ensuring that
Information systems department
the company complies with
- Formal organizational unit existing data privacy laws.
responsible for information
CKO – chief knowledge officer
technology services
- Responsible for the firm’s
Programmers
knowledge management
- write the software instruction program.
for computers.
End users - A formal legal entity with
internal rules and procedures, as
- Representatives of other
well as a social structure
departments for whom
applications are developed Behavioral Organization
- Increasing role in system design,
- A collection of rights, privileges,
development
obligations, and responsibilities
IT Governance: that is delicately balanced over a
period of time through conflict
- Strategies and policies for using
and conflict resolution
IT in the organization
- Decision rights Features of organizations
- Accountability (ensure that the
1. Use of hierarchical structure
user of IT supports the
2. Accountability, authority in
organization’s strategies and
system of impartial decision
objectives)
making
- Organization of information
3. Adherence to principle of
systems function
efficiency
• Centralized, decentralized, etc.
4. Routines and business
processes
5. Organizational politics, culture,
Chapter 3: INFORMATION SYSTEMS,
environments and structures
ORGANIZATIONS, AND STRATEGY
Routines (standard operating
procedures)

Information technology and - Precise rules, procedures, and

organizations influence one another practices developed to cope
with virtually all expected
- Complex relationship situations
influenced by organization’s
• Structure Organizational politics
• Business processes
- Divergent viewpoints lead to
• Politics
political struggle, competition,
• Culture
and conflict
• Environment, and
- Political resistance greatly
• Management decisions
hampers organizational change
Technical Organization
Organizational culture
- Stable, formal social structure
- Encompasses set of
that takes resources from
assumptions that define goal
environment and processes
and product
them to produce outputs
- May be powerful unifying force
as well as restraint on change
Disruptive technologies Internet

- Technology that brings about - increases the accessibility,

sweeping change to businesses, storage, and distribution of
industries, markets information and knowledge for
organizations
First movers
- The Internet can greatly lower
- inventors of disruptive transaction and agency costs
technologies
Traditional competitors
Fast followers
- All firms share market space
- firms with the size and with competitors who are
resources to capitalize on that continuously devising new
technology products, services, efficiencies,
switching costs
5 basic kinds of organizational
structure New market entrants

1. Entrepreneurial: - Some industries have high

- Small start-up business barriers to entry, e.g. computer
2. Machine bureaucracy: chip business
- Midsize manufacturing firm - New companies have new
3. Divisionalized bureaucracy: equipment, younger workers,
- Fortune 500 firms but little brand recognition
4. Professional bureaucracy:
Substitute products and services
- Law firms, school systems,
hospitals - Substitutes customers might
5. Adhocracy: use if your prices become too
- Consulting firms high, e.g. iTunes substitutes for
CDs
Economic impacts
Customers
- IT changes relative costs of
capital and the costs of - Can customers easily switch to
information competitor’s products? Can
- Information systems they force businesses to
technology can be viewed as a compete on price alone in
factor of production that can be transparent marketplace?
substituted for traditional
Suppliers
capital and labor
- Market power of suppliers when
Transaction costs
firm cannot raise prices as fast
- the costs incurred when a firm as suppliers
buys on the marketplace what it
cannot make itself
Four generic strategies for dealing Value web
with competitive forces, enabled by
- Collection of independent firms
using IT
using highly synchronized IT to
1. Low-cost leadership coordinate value chains to
2. Product differentiation produce product or service
3. Focus on market niche collectively
4. Strengthen customer and
Core competencies
supplier intimacy
- Activity for which firm is world-
Low-cost leadership
class Leader
- Produce products and services - Relies on knowledge,
at a lower price than experience, and sharing this
competitors while enhancing across business units
quality and level of service
Network-based strategies
Product differentiation
- Take advantage of firm’s
- Enable new products or abilities to network with each
services, greatly change other
customer convenience and
Traditional economics: Law of
experience
diminishing returns
Focus on market niche
- The more any given resource is
- Use information systems to applied to production, the lower
enable a focused strategy on a the marginal gain in output,
single market niche; specialize until a point is reached where
the additional inputs produce
Strengthen customer and supplier
no additional outputs
intimacy
Network economics
- Use information systems to
develop strong ties and loyalty - Marginal cost of adding new
with customers and suppliers; participant almost zero, with
increase switching costs much greater marginal gain
- Value of community grows with
Business value chain model
size
- Views firm as series of activities - Value of software grows as
that add value to products or installed customer base grows
services
- Highlights activities where
competitive strategies can best
be applied
Virtual company strategy Chapter 4: ETHICAL AND SOCIAL
ISSUES IN INFORMATION SYSTEMS
- Virtual company uses networks
to ally with other companies to Ethics
create and distribute products
- Principles of right and wrong
without being limited by
that individuals, acting as free
traditional organizational
moral agents, use to make
boundaries or physical locations
choices to guide their behaviors
Keystone firms:
Five moral dimensions of the
- Dominate ecosystem and information age
create platform used by other
1. Information rights and
firms
obligations
Niche firms: 2. Property rights and obligations
3. Accountability and control
- Rely on platform developed by
4. System quality
keystone firm
5. Quality of life
Business ecosystems
Doubling of computer power
- Industry sets of firms providing
- More organizations depend on
related services and products
computer systems for critical
Sustaining competitive advantage operations

- Because competitors can Rapidly declining data storage costs

retaliate and copy strategic
- Organizations can easily
systems, competitive advantage
maintain detailed databases on
is not always sustainable;
individuals
systems may become tools for
survival Networking advances and the
Internet
Performing strategic systems
analysis - Copying data from one location
to another and accessing
- What is structure of industry?
personal data from remote
- What are value chains for this
locations is much easier
firm?
Advances in data analysis techniques
Managing strategic transitions
- Companies can analyze vast
- Adopting strategic systems
quantities of data gathered on
requires changes in business
individuals for Profiling and
goals, relationships with
Nonobvious relationship
customers and suppliers, and
awareness (NORA)
business processes
Profiling 4. Utilitarian Principle
- Take the action that achieves
- Combining data from multiple
the higher or greater value
sources to create dossiers of
detailed information on
5. Risk Aversion Principle
individuals
- Take the action that produces
Nonobvious relationship awareness the least harm or least potential
(NORA) cost

- Combining data from multiple 6. Ethical “no free lunch” Rule

sources to find obscure hidden - Assume that virtually all
connections that might help tangible and intangible objects
identify criminals or terrorists are owned by someone unless
Responsibility there is a specific declaration
otherwise
- Accepting the potential costs,
duties, and obligations for Professional codes of conduct
decisions - Promises by professions to
Accountability regulate themselves in the
general interest of society
- Mechanisms for identifying
responsible parties Real-world ethical dilemmas

Liability - One set of interests pitted

against another
- Permits individuals (and firms)
to recover damages done to Privacy
them - Claim of individuals to be left
Six Candidate Ethical Principles alone, free from surveillance or
interference from other
1. Golden Rule individuals, organizations, or
- Do unto others as you would state. Claim to be able to control
have them do unto you information about yourself
2. Immanuel Kant’s Categorical
Imperative FTC FIP principles:
- If an action is not right for 1. Notice/awareness (core
everyone to take, it is not right principle)
for anyone 2. Choice/consent (core principle)
3. Descartes’ Rule of Change 3. Access/participation
- If an action cannot be taken 4. Security
repeatedly, it is not right to take 5. Enforcement
at all
Cookies Three principal sources of poor
system performance:
- Tiny files downloaded by Web
site to visitor’s hard drive to help 1. Software bugs, errors
identify visitor’s browser and 2. Hardware or facility failures
track visits to site 3. Poor input data quality (most
- Allow Web sites to develop common source of business
profiles on visitors system failure)

Web beacons/bugs Balancing power

- Tiny graphics embedded in e- - Although computing power

mail and Web pages to monitor decentralizing, key decision-
who is reading message making remains centralized

Spyware Rapidity of change

- Surreptitiously installed on - Businesses may not have

user’s computer enough time to respond to
- May transmit user’s keystrokes global competition
or display unwanted ads
Maintaining boundaries
Intellectual property
- Computing, Internet use
- Intangible property of any kind lengthens work-day, infringes
created by individuals or on family, personal time
corporations
Computer crime
Trade secret
- Commission of illegal acts
- Intellectual work or product through use of compute or
belonging to business, not in against a computer system –
the public domain computer may be object or
instrument of crime
Copyright
Computer abuse
- Statutory grant protecting
intellectual property from being - Unethical acts, not illegal
copied for the life of the author,
Employment
plus 70 years
- Reengineering work resulting in
Patents
lost jobs
- Grants creator of invention an
Equity and access – the digital divide
exclusive monopoly on ideas
behind invention for 20 years - Certain ethnic and income
groups in the United States less
Flawless software
likely to have computers or
- is economically unfeasible Internet
Chapter 5: IT INFRASTRUCTURE AND Mainframes

EMERGING TECHNOLOGIES - IBM mainframe equivalent to

thousands of blade servers
IT infrastructure:
Telecommunication services
- Set of physical devices and
software required to operate - Telecommunications, cable,
enterprise telephone company charges for
voice lines and Internet access
Moore’s law and micro processing
power Internet platforms

- Computing power doubles - Hardware, software,

every 18 months management services to
support company Web sites,
Nanotechnology
(including Web hosting services)
- Shrinks size of transistors to size intranets, extranets
comparable to size of a virus
Grid computing
Law of Mass Digital Storage
- Connects geographically
- The amount of data being remote computers into a single
stored each year doubles network to combine processing
power and create virtual
IT Infrastructure has 7 main supercomputer
components - Provides cost savings, speed,
1. Computer hardware platforms agility
2. Operating system platforms Virtualization
3. Enterprise software applications
4. Data management and storage - Allows single physical resource
5. Networking/telecommunications to act as multiple resources (i.e.,
platforms run multiple instances of OS)
6. Internet platforms - Reduces hardware and power
7. Consulting system integration expenditures
services - Facilitates hardware
centralization
Client machines
Cloud computing
- Desktop PCs, mobile devices –
PDAs, laptops - On-demand (utility) computing
services obtained over network
Servers
Green computing
- Blade servers: ultrathin
computers stored in racks - Practices and technologies for
manufacturing, using, disposing
of computing and networking
hardware
Autonomic computing Apps

- Industry-wide effort to develop - Small pieces of software that

systems that can configure, heal run on the Internet, on your
themselves when broken, and computer, or on your cell phone
protect themselves from
Scalability
outside intruders
- Ability to expand to serve larger
High performance, power-saving
numbers of users
processors
Mobile computing and cloud
- Multi-core processors
computing
Web Services
- New policies and procedures for
- Software components that managing these new platforms
exchange information using - Contractual agreements with
Web standards and languages firms running clouds and
distributing software required
Three external sources for software:

1. Software packages and enterprise

software
2. Software outsourcing (domestic or
offshore)

Domestic:

- Primarily for middleware,

integration services, software
support

Offshore:

- Primarily for lower-level

maintenance, data entry, call
centers, although outsourcing
for new-program development
is increasing
3. Cloud-based software services

Mashups

- Combinations of two or more

online applications, such as
combining mapping software
(Google Maps) with local
content