CHAPTER 2

Information Systems: Concepts and

Management
CHAPTER OUTLINE
2.1 Types of Information Systems
2.2 Competitive Advantage and Strategic
Information Systems
2.3 Why Are Information Systems Important
to Organizations and Society?
2.4 Managing Information Resources
LEARNING OBJECTIVES
 Describe the components of computer-based
information systems.
 Describe the various types of information
systems by breadth of support.
 Identify the major information systems that
support each organizational level.
 Describe strategic information systems
(SISs), and explain their advantages.
Learning Objectives (continued)
 Describe porter’s competitive forces model
and his value chain model, and explain how
IT helps companies improve their competitive
positions.
 Describe five strategies that companies can
use to achieve competitive advantage in their
industries.
 Describe how information resources are
managed, and discuss the roles of the
information systems department and the end
users.
 Chapter Opening Case
Upstream activities: exploration
and production

Downstream activities: refining,

marketing, transportation, sales
2.1 Types of Information Systems
Computer-based information systems (CBIS)
use computer technology to perform some or
all of their tasks and are composed of:
 Hardware
 Software
 A Database
 A Network
 Procedures
 People
Information Systems Inside Your
Organization
Information Technology Outside Your
Organization
Application Programs

An application program is a computer

program designed to support a specific task,
a business process or another application
program.
Breadth of Support of Information
Systems
 Functional area information systems
 Enterprise resource planning systems
 Transaction processing systems
 Interorganizational information systems
Information Systems Support for
Organization Employees

 Office automation systems

 Functional area information systems
 Business intelligence systems
 Expert Systems
 Dashboards
2.2 Competitive Advantage and
Strategic Information Systems

 Competitive Advantage
 Strategic Information Systems (SIS)
Porter’s Competitive Forces Model

The best-known framework for analyzing

competitiveness is Michael Porter’s
competitive forces model (Porter, 1985).
Porter’s Competitive Forces Model
Porter’s Competitive Forces Model
 Threat of entry of new competitors is high
when it is easy to enter a market and low
when significant barriers to entry exist.
 A barrier to entry is a product or service
feature that customers expect from
organizations in a certain industry.
 For most organizations, the Internet
increases the threat that new competitors will
enter a market.
Porter’s Competitive Forces Model
 The bargaining power of suppliers is high
when buyers have few choices and low when
buyers have many choices.
 Internet impact is mixed. Buyers can find
alternative suppliers and compare prices
more easily, reducing power of suppliers.
 On the other hand, as companies use the
Internet to integrate their supply chains,
suppliers can lock in customers.
Porter’s Competitive Forces Model
 The bargaining power of buyers is high
when buyers have many choices and low
when buyers have few choices.
 Internet increases buyers’ access to
information, increasing buyer power.
 Internet reduces switching costs, which are
the costs, in money and time, to buy
elsewhere. This also increases buyer power.
Porter’s Competitive Forces Model
 The threat of substitute products or
services is high when there are many
substitutes for an organization’s products or
services and low where there are few
substitutes.
 Information-based industries are in the
greatest danger from this threat (e.g., music,
books, software). The Internet can convey
digital information quickly and efficiently.
Porter’s Competitive Forces Model
 The rivalry among firms in an industry is
high when there is fierce competition and low
when there is not.
Porter’s Value Chain Model

This model identifies specific activities where

organizations can use competitive strategies
for greatest impact.
 Primary activities
 Support activities
Porter’s Value Chain Model
Strategies for Competitive Advantage
 Cost Leadership

 Differentiation

 Innovation

 Operational Effectiveness

 Customer-orientation
2.3 Why are Information Systems
Important to Organizations & Society
 IT will reduce the number of middle
managers.
 IT will change the manager’s job.
 IT impacts employees at work.
 IT provides quality-of-life improvements.
Ergonomic Products
When ergonomics doesn’t work

When all else fails…….

Enabling People with Disabilities
to Work with Computers
 The Robot Revolution

See Invasion of the Humanoid Robots

The Robot Revolution

See video of
Big Dog robot
in action
The Robot Revolution (continued)

See ASIMO commercial

See video of ASIMO in action

Honda’s ASIMO robot

DeLaval Voluntary Milking System
Improvements in Health Care
Improvements in Health Care
(continued)

The Pill Cam: Wireless endoscopy

The daVinci Surgical Robot

The robot
The surgeon’s console
The daVinci Surgical Robot (continued)

The daVinci robot in use

Medical Simulation

Two physicians
perform a
procedure on a
simulated human
(mannequin)
Managing Information Resources

 Which IT Resources are Managed and By

Whom?
 The Role of the IS Department
Traditional Major IS Functions
 Managing systems development and systems project
management
 Managing computer operations
 Staffing, training, developing IS skills
 Providing technical services
 Infrastructure planning, development, control
New (Consultative) IS Functions
 Initiating and designing strategic information systems
 Incorporating the Internet and e-commerce into the business
 Managing system integration
 Educating non-IS managers about IT
 Educating IS staff about the business
 Supporting end-user computing
 Partnering with executives
 Managing outsourcing
 Innovate
 Ally with vendors and IS departments in other organizations
 Supporting End Users

One form of end-user support is the help desk, where

IS staffers help users troubleshoot problems with
their systems.

This video shows the first help desk.

Chapter Closing Case

Todd Pacific
Shipyards

Wireless PDA