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10/9/2013

Learning Objectives Understand the concept of a system and how it relates to information systems. Explain why knowledge of information systems is important for business professionals and identify five areas of information systems knowledge they need.

Chapter 1
Foundations of Information Systems in Business

1-2 McGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Give examples to illustrate how business applications of information systems can support a firms business processes, managerial decision making, and strategies for competitive advantage. Provide examples of several major types of information systems from your experiences with business organizations in the real world.

Learning Objectives Identify several challenges that a business manager might face in managing the successful and ethical development and use of information technology in a business. Provide examples of the components of real world information systems Demonstrate familiarity with the myriad of career opportunities in information systems.

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What is a System? Interrelated components Defined boundary Working together Common objectives Accepting inputs and producing outputs Organized transformation process

A Business as a System

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What is Information?
We know what an information system is an assembly of hardware, software, data, procedures, and people that interact to produce information. But what is information? Definitions vary. Information is:
Knowledge derived from data. Data presented in a meaningful context. Data processed by summing, ordering, averaging, grouping, comparing, or other similar operations.

What is Information?
Information is subjective Information in one persons context may be just a data point in another persons context, since what may be important to you may not hold the same level of importance to someone else. Context changes occur in information systems when the output (information produced) of one system feeds (is data to) a second system.
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Any of these definitions will do; the important point is to discriminate between data and information.

What is Information?

What are the Characteristics of Good Information?


Good information must be:

Accurate entering incorrect sales data creates false


information; e.g., GIGO (garbage in, garbage out).

Timely knowing that production doesnt have enough raw


materials for next weeks schedule wont be useful information three weeks from now.

Relevant if your boss needs to know how many


shipments were late last month, you shouldnt give him/her a list of all items that shipped.

Worth its cost is it cost worthy to map out the entire


U.S. if you only need one state?
Figure 1-4 One Users Information is Another Users Data
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What is MIS?
Management Information Systems (MIS) is the development and use of information systems to help businesses achieve their goals and objectives An information system (IS) is a group of components that interact which each other to produce information

What is MIS?
Information systems exist to help people achieve the goals and objectives of their business.
You should take an active role in specifying system requirements and helping manage development projects since you are the one wholl be using the system to do your job.

You need to learn how to use an IS


You have responsibilities for protecting the security of the system and its data You have responsibilities for backing up data
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What is the Difference Between Information Technology and Information Systems?


Information technology and information systems are two closely related terms.
Information technology refers to the products, methods, inventions, and standards that are used for the purpose of producing information. Information Systems (IS) refers to the assembly of hardware, software, data, procedures, and people that produces information.

Types of Information Systems

Information technology drives the development of new information systems.


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Information systems combine: Operations Support Systems


Transaction Processing systems Process Control Systems Enterprise Collaboration Systems

Two Ways to Process Transactions Transaction Processing (batch)


Accumulate transactions over time Process periodically Example: a bank receives checks during the day and processes in a batch at night

Management Support Systems


Management Information Systems Decision Support Systems Executive Information Systems

Online Processing (real-time)


Process transactions immediately Example: a bank processes an ATM withdrawal immediately

Other Systems
Expert Systems Knowledge Management Systems Strategic Information Systems
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Types of Management Support Systems Management Information Systems (MIS)


Reports and displays Example: daily sales analysis reports

Other Information Systems Expert Systems


Example: credit application advisor

Knowledge Management Systems


Support creation, organization, and dissemination of business knowledge Example: intranet access to best business practices

Decision Support Systems (DSS)


Interactive and ad hoc support Example: a what-if analysis to determine where to spend advertising dollars

Strategic Information Systems


Help get a strategic advantage over customer Examples: shipment tracking, e-commerce Web systems

Executive Information Systems (EIS)


Critical information for executives and managers Example: easy access to actions of competitors
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Functional Business Systems


Focus on operational and managerial applications Examples: accounting, finance, or marketing
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IT Challenges and Opportunities

Responsibility and Accountability IT plays an integral role in every facet of a business Failure is often pinned on IT Cultivate a culture that embraces change Break projects into pieces Set realistic expectations There will always be problems
Thats life in IT

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Challenges and Ethics of IT What are the ethical responsibilities? What are the risks? How can you protect yourself and your company from computer crime?

IT Careers

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The IS Function Major functional area of business Important contributor to


Efficiency, productivity, morale, customer service and satisfaction

Major source of information for decisions Vital ingredient in developing competitive products and services Dynamic and challenging career opportunity Key component of networked business

Chapter 2
Competing with Information Technology

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McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

10/9/2013

Learning Objectives Identify several basic competitive strategies and explain how they use information technologies to confront the competitive forces faced by a business Identify several strategic uses of Internet technologies and give examples of how they help a business to gain competitive advantages Give examples of how business process reengineering frequently involves the strategic use of IT
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Learning Objectives Identify the business value of using Internet technologies to become an agile competitor or form a virtual company Explain how knowledge management systems can help a business gain strategic advantages

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Strategic IT Technology is no longer an afterthought in business strategy, but the cause and driver IT can change the way businesses compete
Vital competitive networks Organizational renewal Necessary investment

Competitive Strategy Concepts A strategic information system uses IT to help an organization


Gain a competitive advantage Reduce a competitive disadvantage Meet other strategic enterprise objectives

What is Competitive Advantage?


Capability for advantage over competitive forces Leading the industry in some identifiable way Sustains profits above the industry average Hard to maintain over a long period of time
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Integral to success

Porters Five Forces of Competition Rivalry of Competitors


Positive, natural, healthy

Threat of new entrants


Apple, TRS 80, Commodore, IBM, HP, Compaq, Gateway, Dell, Acer

Threat of substitutes
Salon shampoo vs Wal-Mart brand VCR vs DVD vs BluRay

Customer bargaining power


Buy from competitors or dont buy

Suppliers bargaining power


Your competitor pays in days not weeks
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Competitive Forces and Strategies

Five Competitive Strategies Cost Leadership


Become low-cost producers Help suppliers or customers reduce costs Increase cost to competitors
Example: Priceline

Differentiation Strategy
Set a firms products apart from competitors Focus on a particular segment or niche market
Example: Dell

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Competitive Strategies (continued) Innovation Strategy


Unique products, services, or markets Radical changes to business processes
Example: Dell

Competitive Strategies (continued) Alliance Strategy


Includes mergers, acquisitions, joint ventures, virtual companies Customers, suppliers, competitors, consultants, and other companies
Example: Wal-Mart uses automatic inventory replenishment by supplier

Growth Strategy
Expand companys capacity to produce Expand into global markets Diversify into new products or services
Example: Wal-Mart

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Using Competitive Strategies Not mutually exclusive


One alone wont usually fix the problem Generally need a combination

Using IT to Implement Basic Strategies

Innovation not necessarily differentiated


Kindle v. iPad MP3 players vs iPod Gateway made in US, relaxed office

Differentiation not necessarily innovative


Shipping more efficient but not different Telecom companies compete

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Implementing Competitive Strategies

Other IT strategies

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Other Competitive Strategies Lock in Customers and Suppliers


Deter them from switching to competitors

Other Competitive Strategies Build a strong IT department Use IT to:


Take advantage of strategic opportunities Improve efficiency of business practices Develop products and services that would not be possible without a strong IT capability

Create Switching Costs


Time, money, effort or inconvenience needed to switch to a competitor

Raise Barriers to Entry


Discourage or delay other companies from entering the market Increase the technology or investment needed to enter

Use IT to do more than automate a system, be creative

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Customer-Focused Business Keep customers loyal


Anticipate their future needs Respond to customer concerns Provide top-quality customer service

Providing Customer Value Companies that consistently offer the best value from the customers perspective
Track individual preferences Keep up with market trends Supply products, services, and information anytime, anywhere Tailor customer services to the individual Use Customer Relationship Management (CRM) systems to focus on the customer

Focus on customer value


Quality, not price, has become the primary determinant of value

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Building Customer Value via the Internet

Value Chain and Strategic IS Activities that add value


Primary processes direct Support processes indirect

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Strategic Uses of IT Gain a competitive differentiation


Products Services Capabilities

Business Process Reengineering Called BRP or simply Reengineering


Radical Seeks improvements

Somehow do things better


Just-in-time

High potential High risk Important enabler of reengineering


IT Process teams Case managers

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Role of Information Technology Major role


Increase process efficiencies Improves communication Facilitates collaboration

BPR Versus Business Improvement

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Building a Knowledge-Creating Company A knowledge-creating company or learning organization


Consistently creates new business knowledge Disseminates it throughout the company Builds it into its products and services

Knowledge Management Explicit Knowledge


Data, documents, and things written down or stored in computers
Employee handbook

Tacit Knowledge
The how-to knowledge in workers minds Most important information

Successful knowledge management


Rewards sharing Makes better use of knowledge

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Knowledge Management Techniques

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