Information Systems in Global Business Today: Sixteenth Edition

Management Information Systems:
Managing the Digital Firm Learning Objectives

Sixteenth Edition
1.1 How are information systems transforming business, and
why are they so essential for running and managing a
business today?
1.2 What is an information system? How does it work? What
Chapter 1 are its management, organization, and technology
Information Systems in components? Why are complementary assets essential
Global Business Today for ensuring that information systems provide genuine
value for organizations?
1.3 What academic disciplines are used to study information
systems, and how does each contribute to an
understanding of information systems?
Copyright © 2020, 2018, 2016 Pearson Education, Inc. All Rights Reserved Copyright © 2020, 2018, 2016 Pearson Education, Inc. All Rights Reserved
WHY ?
Figure 1.4 Functions of an

-
Information System
How are information systems

transforming business, and
DISCUSSION why are they essential for
running and managing a
business today?
How Information Systems Are Figure 1.1 Information Technology
Transforming Business Capital Investment
• Social networking tools being used by businesses to
connect employees, customers, and managers
• Internet advertising continues to grow at more than 20
percent per year
• New laws require businesses to store more data for
longer periods
• Changes in business result in changes in jobs and
careers
What’s New in Management What’s New in Management

Information Systems (1 of 2) Information Systems (2 of 2)
• IT Innovations data from many sources
• Management Changes
organization's solution (structured & unstructured)
– Cloud computing, big data, Internet of Things – Managers use social networks, collaboration tools
– Mobile digital platform – Business intelligence applications accelerate
– AI and machine learning – Virtual meetings proliferate
• New Business Models • Firms and Organizations Change
– Online streaming music and video – More collaborative, less emphasis on hierarchy and
– On-demand e-commerce services structure
– Higher-speed/more accurate decision making based on
data and analysis
– More willingness to interact with consumers (social
media)
The Emerging Digital Firm Strategic Business Objectives of
• In a fully digital firm: Information Systems (1 of 2)
– Significant business relationships are digitally enabled • Growing interdependence between:
and mediated
– Ability to use information technology
– Core business processes are accomplished through
– Ability to implement corporate strategies and achieve
digital networks
corporate goals
– Key corporate assets are managed digitally
• Digital firms offer greater flexibility in organization and
management
– Time shifting, space shifting
Strategic Business Objectives of Figure 1.2 The Interdependence

Information Systems (2 of 2) Between Organizations and
• Firms invest heavily in information systems to achieve six Information Systems
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
Operational Excellence New Products, Services, and
• Improved efficiency results in higher profits Business Models
• Information systems and technologies help improve • Information systems and technologies enable firms to
efficiency and productivity create new products, services, and business models
• Example: Walmart • Business model: how a company produces, delivers, and
– Most efficient retail store in world as result of digital sells its products and services
links between suppliers and stores • Example: Apple
– Transformed old model of music distribution with
iTunes
– Constant innovations—iPod, iPhone, iPad, etc.
Customer and Supplier Intimacy Improved Decision Making (1 of 2)

• Customers who are served well become repeat customers • Without accurate information:
who purchase more – Managers must use forecasts, best guesses, luck
– Uses IT to foster an intimate relationship with its – Results in:
customers, keeping track of preferences, etc.  Overproduction, underproduction
• Close relationships with suppliers result in lower costs  Misallocation of resources
 Poor response times
Improved Decision Making (2 of 2) Competitive Advantage
• Poor outcomes raise costs, lose customers • Often results from achieving previous business objectives
• Real-time data improves ability of managers to make • Advantages over competitors
decisions.
• Charging less for superior products, better performance,
• Example: Verizon’s web-based digital dashboard to and better response to suppliers and customers
provide managers with real-time data on customer
• Examples: Apple, Walmart, UPS are industry leaders
complaints, network performance, etc.
because they know how to use information systems for this
purpose
Survival What Is an Information System?

(1 of 3)
• Businesses may need to invest in information systems out
of necessity; simply the cost of doing business
• Information technology: the hardware and software a
• Keeping up with competitors business uses to achieve objectives
– Citibank’s introduction of ATMs • Information system: interrelated components that manage
• Federal and state regulations and reporting requirements information to:
– Support decision making and control
– Help with analysis, visualization, and product creation
• Data: streams of raw facts
• Information: data shaped into meaningful, useful form
Figure 1.3 Data and Information What Is an Information System?
(2 of 3)
• Activities in an information system that produce

information:
– Input
– Processing
– Output
– Feedback
• Sharp distinction between computer or computer program
versus information system
What is an Information System?

(3 of 3)
• Feedback What are its management,

– Output is returned to appropriate members of organization, and technology
organization to help evaluate or correct input stage components and why are
• Computer/computer program vs. information system DISCUSSION
complementary assets
– Computers and software are technical foundation and
essential for ensuring that
tools, similar to the material and tools used to build a information
house systems provide genuine
value for organizations?
Dimensions of Information Systems Figure 1.5 Information Systems Are
• Organizations More Than Computers
• Management
• Technology
Dimensions of Information Systems: Figure 1.6 Levels in a Firm

Organizations (1 of 2)
• Hierarchy of authority, responsibility
– Senior management
– Middle management
– Operational management
– Knowledge workers
– Data workers
– Production or service workers
Dimensions of Information Systems: Dimensions of Information Systems:
Organizations (2 of 2) Management
• Separation of business functions • Managers set organizational strategy for responding to
– Sales and marketing business challenges
– Human resources • In addition, managers must act creatively
– Finance and accounting – Creation of new products and services
– Manufacturing and production – Occasionally re-creating the organization
• Unique business processes
• Unique business culture
• Organizational politics
Dimensions of Information Systems: It Isn’t Just Technology: A Business

Technology Perspective on Information Systems
(1 of 3)
• Computer hardware and software
• Data management technology • Information system is instrument for creating value
• Networking and telecommunications technology • Investments in information technology will result in superior
– Networks, the Internet, intranets and extranets, World returns
Wide Web – Productivity increases
• IT infrastructure: provides platform that system is built on – Revenue increases
– Superior long-term strategic positioning
It Isn’t Just Technology: A Business It Isn’t Just Technology: A Business
Perspective on Information Systems Perspective on Information Systems
(2 of 3) (3 of 3)
• Business information value chain • Investing in information technology does not guarantee
– Raw data acquired and transformed through stages good returns
that add value to that information • There is considerable variation in the returns firms receive
– Value of information system determined in part by from systems investments
extent to which it leads to better decisions, greater
efficiency, and higher profits • Factors
– Adopting the right business model
• Business perspective
– Investing in complementary assets (organizational and
– Calls attention to organizational and managerial nature management capital)
of information systems
Figure 1.7 The Business Information Figure 1.8 Variation in Returns on

Value Chain Information Technology
Complementary Assets: Complementary Assets:
Organizational Capital and the Right Organizational Capital and the Right
Business Model (1 of 2) Business Model (2 of 2)
• Assets required to derive value from a primary investment • Complementary assets
– Examples of organizational assets
• Firms supporting technology investments with investment
in complementary assets receive superior returns  Appropriate business model
 Efficient business processes
• Example: Invest in technology and the people to make it – Examples of managerial assets
work properly
 Incentives for management innovation
 Teamwork and collaborative work environments
– Examples of social assets
 The Internet and telecommunications infrastructure
 Technology standards
Figure 1.9 Contemporary Approaches

to Information Systems
WHAT ACADEMIC DISCIPLINES ARE

USED TO STUDY INFORMATION
DISCUSSION SYSTEMS AND HOW DOES EACH
CONTRIBUTE TO AN UNDERSTANDING
OF INFORMATION SYSTEMS?
Figure 1.9 Contemporary Approaches to Information 41
Systems Technical Approach

• Computer science -> theories of computability, methods
of computation, and efficient data storage. • Emphasizes mathematically based models
• Management science -> the development of models for • Computer science, management science, operations
decision-making and management practices. research
• Operations research -> mathematical techniques for
optimizing selected parameters of organizations,
• Sociologists -> how information systems affect
individuals, groups, and organizations.
• Psychologists -> how human decision makers perceive
and use formal information from IS.
• Economists -> how new information systems change the
control and cost structures within the firm.
Behavioral Approach Approach of This Text:

• Behavioral issues (strategic business integration, Sociotechnical Systems (1 of 2)
implementation, etc.)
• Management information systems
• Psychology, economics, sociology – Combine computer science, management science,
operations research, and practical orientation with
behavioral issues
• Four main actors
– Suppliers of hardware and software
– Business firms
– Managers and employees
– Firm’s environment (legal, social, cultural context)
Approach of This Text: Figure 1.10 A Sociotechnical
Sociotechnical Systems (2 of 2) Perspective on Information Systems
• Sociotechnical view
– Optimal organizational performance achieved by jointly
optimizing both social and technical systems used in
production
– Helps avoid purely technological approach
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Management Information Systems:

Managing the Digital Firm Learning Objectives

Figure 1.4 Functions of an

How are information systems

What’s New in Management What’s New in Management

Strategic Business Objectives of Figure 1.2 The Interdependence

Customer and Supplier Intimacy Improved Decision Making (1 of 2)

Survival What Is an Information System?

• Activities in an information system that produce

What is an Information System?

• Feedback What are its management,

Dimensions of Information Systems: Figure 1.6 Levels in a Firm

Dimensions of Information Systems: It Isn’t Just Technology: A Business

Figure 1.7 The Business Information Figure 1.8 Variation in Returns on

Figure 1.9 Contemporary Approaches

WHAT ACADEMIC DISCIPLINES ARE

Systems Technical Approach

Behavioral Approach Approach of This Text:

This work is protected by United States copyright laws and is

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