CHAPTER-1:

INFORMATION SYSTEMS IN BUSINESS TODAY

Instructor
Dr. Samim Al Azad (SAA2)
Post-doc (LU), PhD (SNU), MBA & BBA (DU)

Assistant Professor
School of Business, North South University
 Opening Case
“The Grocery Store of the Future: Look at Kroger”

Even some of the most successful

businesses must continually embrace
technology upgrades and improvements-

§ Infrared camera
§ QueVision (sensor and predictive analytics)
§ Data-driven customer experience
§ Visual AI technology
§ Retail IoT temperature monitoring systems
§ Self-scan and autonomous checkout
§ Self-driving grocery delivery robot
§ Drone grocery delivery
§ Many more……

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 Class Activity-1

Focus on any BD Supermarket and find out what new

technologies that the company is using to interact with
the customers or provide good customer experiences.

Ø List the technologies………….???

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 Chapter Agendas

§ Data, Information, and Information Systems

§ Role of information systems in business and their
relationship to globalization.
§ Why information systems are so essential in business
today?
§ Define complementary assets and why are they essential
for ensuring that information systems provide genuine
value to an organization.

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Data, Information, and Information Systems

§ Information vs. data

– Data are streams of raw facts
– Information is data shaped into meaningful form

§ Information system
– Set of interrelated components
– Collect, process, store, and distribute information
– Support decision making, coordination, and control

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Data and Information

Figure Raw data from a supermarket checkout counter

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Function of an Information Systems

§ Three activities of information systems produce information that

organizations need to make better decision, control operation,
analyze problems, and create new product and services.
1. Input: Captures raw data from organization or external
environment
2. Processing: Converts raw data into meaningful form
3. Output: Transfers processed information to people or activities
that use it

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Function of an Information Systems

§ Feedback
– Output returned to appropriate members of organization to
help evaluate or correct input stage

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Function of an Information Systems

An information system contains information

about an organization and its surrounding
environment. Three basic activities—input,
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.
Figure: Function of IS

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Business Case

PCL Construction: The New Digital Firm

§ Problem: Inefficiencies created by a far-flung, highly

paper-intensive business
§ Solution: PCL’s computerised systems
Electronic Touchscreen Kiosks and Electronic Plan Room
– a solution that takes advantage of opportunities
provided by new wireless digital technology and the
Internet.
– enabled its key business processes for planning,
designing, and monitoring its construction projects.

§ Improved PCL’s overall business performance

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The Role of Information Systems in Business Today

§ Transformation of business
– Increase in wireless technology use, Web sites
– Increased use of Web 2.0 technologies
– Cloud computing, mobile digital platform allow more distributed
work, decision-making, and collaboration

Can you run a business with your mobile/ iphone???

§ Globalization opportunities
– Internet has drastically reduced costs of operating on global scale
– Presents both challenges and opportunities

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Information Technology Capital Investment

FIGURE Information technology capital investment, defined as hardware, software,

and communications equipment, grew from 18 percent to 33 percent of all
invested capital between 1999 and 2017.

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The Role of Information Systems in Business Today

§ Digitalization
– In a fully digital firm
§ Core business processes are accomplished through digital
networks
§ Key corporate assets are managed digitally

– Digital firms offer greater flexibility in organization and

management
§ Time shifting, space shifting

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Class Discussion-1.1

§ You are starting a small bike messenger company. Given your type of
services (hand-delivering packages within a small geographical area),
could your firm be a digital firm? If so, what would make this a digital
firm?

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Class Activity-1.2

§ Snyders of Hanover, which sells about 80 million bags of pretzels, snack

chips, and organic snack items each year, had its financial department use
spreadsheets and manual processes for much of its data gathering and
reporting. Snyder’s financial analyst would spend the entire final week of
every month collecting spreadsheets from the heads of more than 50
departments worldwide. She would then consolidate and re-enter all the
data into another spreadsheet, which would serve as the company’s
monthly profit-and-loss statement. If a department needed to update its
data after submitting the spreadsheet to the main office, the analyst had
to return the original spreadsheet, then wait for the department to
resubmit its data before finally submitting the updated data in the
consolidated document.
§ Assess the impact of this situation on business performance and
management decision making.

15 © Prentice Hall 2011

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Why Information Systems is essential in Business?

§ Business firms invest heavily in information systems

to achieve six strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival

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Why Information Systems is essential in Business?

1. Operational excellence:
– Improvement of efficiency to attain higher profitability
– Example: Walmart’s retailLink systems/SCM

2. New products, services, and business models:

– Enabled by technology
– Example: Music Industries/ itunes

3. Customer and supplier intimacy:

– Serving customers raises revenues and profits
– Better communication with suppliers lowers costs
– Example: Hilton Hotels’ customer tracking systems

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Why Information Systems is essential in Business?

4. Improved decision making

– More accurate data leads to better decisions
– Example: Verizon’s web-based digital dashboard

5. Competitive advantage
– Delivering better performance
– Charging less for superior products
– Responding to customers and suppliers in real time
– Example: Walmart, UPS, and Apple

6. Survival
– Information technologies as necessity of doing business
– Industry level changes
– Example: Citibank’s introduction of ATMs
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Real Business Case

UPS Competes Globally with Information Technology

§ Started in 1907 in a closet-sized basement office

§ Slogan (best service and lowest rates)
§ UPS delivers 5.1 billion packages and documents in more
than 220 countries and territories.
§ Maintain leadership by investing heavily in advanced
information technology-
– Scannable bar-coded label
– Routing software called ORION
– Delivery Information Acquisition Device (DIAD)
– Automated package tracking systems
– Cisco Systems (tracking and cost calculations)
– UPS Supply Chain Solutions
– UPS Quantum View Manage® technology

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Organizations and Information Technology

The Interdependence Between Organizations and Information Technology

Figure In contemporary systems, there is a growing interdependence

between a firm ’ s information systems and its business
capabilities.
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How IS adds value to Business?

§ Business perspective on information systems:

– Information system is an instrument for creating value for
the firm
– Investments in information technology will result in
superior returns:
§ Productivity increases
§ Revenue increases
§ Superior long-term strategic positioning

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How IS adds value to Business?

Figure The Business Information Value Chain

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Complementary Assets

§ Investing in IT (information technology) does not

guarantee good returns
§ Factors
– Adopting the right business model
– Investing in complementary assets (organizational and
management capital)

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Complementary Assets

§ Complementary assets:
– Additional assets required to derive value from a primary
investment
– Firms supporting technology investments with investment
in complementary assets receive superior returns
– E.g.: invest in technology and the people to make it work
properly

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Complementary Assets

§ Complementary assets include:

– Organizational assets, e.g.
§ Appropriate business model
§ Efficient business processes

– Managerial assets, e.g.

§ Incentives for management innovation
§ Teamwork and collaborative work environments

– Social assets, e.g.

§ The Internet and telecommunications infrastructure
§ Technology standards

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Class Discussion-3

Dollar General Corporation operates deep-discount stores offering

housewares, cleaning supplies, clothing, health and beauty aids, and
packaged food, with most items selling for $1. Its business model calls for
keeping costs as low as possible. The company has no automated method
for keeping track of inventory at each store. Managers know
approximately how many cases of a particular product the store is
supposed to receive when a delivery truck arrives, but the stores lack
technology for scanning the cases or verifying the item count inside the
cases. Merchandise losses from theft or other mishaps have been rising
and now represent more than 3 percent of total sales.
Ø What decisions have to be made before investing in an information
system solution?

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Class Review (True/False)

§ Data is information that has been shaped into a form that is

meaningful to human beings.
§ Feedback is output returned to appropriate members of the
organization to help them evaluate or correct the input stage.
§ In order to be considered a digital firm, all of the firm’s
significant business relationships and core business processes
must be digitally enabled.
§ A firm that invests in a strong IS development team is making
an investment in organizational complementary assets.
§ Middle managers make long-range strategic decisions about the
firm's products and services.

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Video Case

Business in the Cloud: Facebook data center

§ https://www.youtube.com/watch?v=_r97qd
yQtIk

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THANK YOU
&
GOOD DAY!!!

29 © Prentice Hall 2011