Management Information Systems

MANAGING THE DIGITAL FIRM, 12

TH
EDITION
INFORMATION SYSTEMS IN
BUSINESS TODAY
Chapter 1
Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Understanding the effects of information systems
on business and their relationship to globalization.
Explain why information systems are so essential in
business today.
Define an information system and describe its
management, organization, and technology
components.
Learning Objectives
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Define complementary assets and explain how they
ensure that information systems provide genuine
value to an organization.

Learning Objectives (cont.)
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Where is the emphasis?
Where should it be?
Information Technology
Information Technology
The stress should be on the I rather than the T in IT (Davenport, 2000).

Peter Drucker stressed the importance of information to organisational competitiveness in
1993 when he wrote:

The industries that have moved into the center of the economy in the last
forty years, have as their business, the production and distribution of
knowledge and information rather than the production and distribution of
things.
What is data?
Data are raw facts or observations that are considered to
have little or no value until they have been processed and
transformed into information.

Example definitions:
(a) a series of non-random symbols, numbers, values or
words;
(b) a series of facts obtained by observation or research
and recorded;
(c) a collection of non-random facts;
(d) the record of an event or fact.
What is information?
Information: Data that have been processed so that
they are meaningful.
Example definitions:
(a) data that have been processed so that they are
meaningful;
(b) data that have been processed for a purpose;
(c) data that have been interpreted and understood
by the recipient.
Transforming data into information using a data process
Information summary
Information:
Involves transforming data using a defined process;
involves placing data in some form of meaningful
context;
Is produced in response to an information need and
therefore serves a specific purpose;
Helps reduce uncertainty, thereby improving decision
behavior.
Types of information processing
Classification: This involves placing data into categories, for example, categorizing an
expense as either a fixed or a variable cost.
Rearranging/sorting: This involves organizing data so that items are grouped together
or placed into a particular order. Employee data, for example, might be sorted
according to last name or payroll number.
Aggregating: This involves summarizing data, for example, by calculating averages,
totals or subtotals.
Performing calculations: An example might be calculating an employees gross pay by
multiplying the number of hours worked by the hourly rate of pay.
Selection: This involves choosing or discarding items of data on the basis of a set of
selection criteria. A sales organization, for example, might create a list of potential
customers by selecting those with incomes above a certain level.
Activity 1.1 data versus information
Which of the following might be examples of
information? Which might be examples of data?
(a) the date
(b) a bank statement
(c) the number 1355.76
(d) a National Insurance number
(e) a balance sheet
(f) a bus timetable
(g) a car registration plate
(h) your grade in a course
(i) employees who were late this month (list)
(j) number of sold items of certain products by region

Development and use of information systems
that help businesses achieve their goals and
objectives.

Computer-based information system

What is MIS?





Hardwaredesktops, laptops, PDAs
Softwareoperating systems, application programs
Datafacts and figures entered into computers
Procedureshow the other four components are used
Peopleusers, technologists, IS support





What is MIS?
Five Components of an Information System
Information systeman assembly of hardware, software,
data, procedures, and people that interact to produce
information.
Development
Information systems are built for business professionals (you) to
use.
You need to take an active role in specifying system requirements
and in managing development projects to ensure that the system
meets your needs and the organizations needs.
Use
You need to learn how to use to accomplish your goals.
You have responsibilities for protecting security of system and
data.
You have responsibilities for backing up data.
You will help in recover systems and data.



Development and Use
of Information Systems

Businesses themselves do not do anything.

People within a business sell, buy, design, produce, finance,
market, account, and manage.

Information systems exist to help people in business achieve
the goals and objectives of that business.

== IS goal is to leverage human being capabilities.

Achieving Business Goals
and Objectives
Video of salesforce.com
Five components interact with each other to
create a complete system.

Actorshardware and people take actions
Instructionssoftware and procedures provide
instructions for actors
Bridgesdata bridges hardware/software and
people/procedures

How Can You Use the
Five-Component Framework?
How Can You Use the
Five-Component Framework?
Low-tech IS
Consists only of a file of email addresses and an
email program.
Only small amount of work moved from the
human side to computer side.
Considerable human work is required to
determine when to send which emails to which
customers.

High-Tech vs. Low-Tech
Information Systems
High-tech IS
Customer support system keeps track of
equipment customers have, maintenance
schedules for equipment, and automatically
generates email reminders to customers.
More work has been moved from human side to
computer side.
Computer is providing more services on behalf of
humans.
High-Tech vs. Low-Tech
Information Systems
Low-techusing an email program and its addresses is low-
tech because just a small amount of work is being
accomplished by a computer system.

High-techimplementing a customer support system is high-
tech because a large amount of work is being accomplished
by the computer system rather than humans.

Determining factor is amount of work that is moved from
human side to computer side.
High-Tech vs. Low-Tech Information Systems
Ask questions
What new hardware will you need?
What programs will you need to license?
What databases and other data must you create?
What procedures will need to be developed for both use and
administration of the information system?
What will be the impact of the new technology on people?
Which jobs will change?
Who will need training?
How will the new technology affect morale?
Will you need to hire new people?
Will you need to reorganize?
Understanding the Scope of
New Information Systems
Five IS components evaluated based on order of ease of change
and amount of organizational disruption.

1. Hardware is simple to order and install.
2. Obtaining or developing new programs is more difficult.
3. Creating new databases or changing structure of existing databases is
more difficult.
4. Changing procedures, requiring people to work in new ways, is even
more difficult.
5. Changing personnel responsibilities and reporting relationships and
hiring and terminating employees are both very difficult and very
disruptive.
Components Ordered by
Difficulty and Disruption
Information technology (IT) pertains to things you buy:
Hardware
Software
Data components
Things you can buy or lease:
Products
Methods
Inventions
Standards (obtain predesigned procedures)

Information technology drives the development of new
information systems.

Difference Between Information
Technology and Information Systems?
Information Systems (IS) include five components:
Hardware
Software
Data
Procedures
People

New systemsalways have training tasks (and costs), employees
resistance to change to overcome, and need to manage employees as
they utilize the new system.

You can buy IT, you cannot buy IS.




Difference Between Information Technology
and Information Systems?
Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
How information systems are transforming business
Increase in wireless technology use, Web sites
Increased business use of Web 2.0 technologies
Cloud computing, mobile digital platform allow more
distributed work, decision-making, and collaboration
Globalization opportunities
Internet has drastically reduced costs of operating on
global scale
Presents both challenges and opportunities

The Role of Information Systems in Business Today
Prentice Hall 2011
Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
In the emerging, fully digital firm
Significant business relationships are digitally
enabled and mediated
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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Management Information Systems
Read the Interactive Session and discuss the following questions

CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
What are the advantages of using mobile handheld
devices? What are the disadvantages?
What features are needed in a mobile to make it a
business solution?
What business functions can be performed by using
handhelds alone? How have other companies
utilized handhelds?
The Role of Information Systems in Business Today

MIS IN YOUR POCKET
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Growing interdependence between ability to use
information technology and ability to implement
corporate strategies and achieve corporate goals
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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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Operational excellence:
Improvement of efficiency to attain higher
profitability
Information systems, technology an
important tool in achieving greater
efficiency and productivity
Walmarts RetailLink system links suppliers
to stores for superior replenishment
system

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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
New products, services, and business
models:
Business model: describes how company
produces, delivers, and sells product or service to
create wealth
Information systems and technology a major
enabling tool for new products, services,
business models
Examples: Apples iPod, iTunes, iPhone, iPad,
Googles Android OS.

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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Customer and supplier intimacy:
Serving customers well leads to customers
returning, which raises revenues and profits
Example: High-end hotels that use computers
to track customer preferences and use to
monitor and customize environment
Intimacy with suppliers allows them to provide
vital inputs, which lowers costs
Example: J.C.Penneys information system
which links sales records to contract
manufacturer

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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Improved decision making
Without accurate information:
Managers must use forecasts, best guesses, luck
Leads to:
Overproduction, underproduction of goods and services
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers
Example: Verizons Web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, etc.
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Operational excellence:
Improvement of efficiency to attain higher profitability
New products, services, and business models:
Enabled by technology
Customer and supplier intimacy:
Serving customers raises revenues and profits
Better communication with suppliers lowers costs
Improved decision making
More accurate data leads to better decisions
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and suppliers in real
time
Examples: Apple, Walmart, UPS
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Survival
Information technologies as necessity of business
May be:
Industry-level changes, e.g. Citibanks
introduction of ATMs
Governmental regulations requiring record-
keeping
Examples: Toxic Substances Control Act, Sarbanes-
Oxley Act
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Information system:
Set of interrelated components
Collect, process, store, and distribute information
Support decision making, coordination, and control
Perspectives on Information Systems
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Perspectives on Information Systems
Management Information Systems
Chapter 1 Information Systems in Global Business Today
An information system contains information about an organization and its surrounding
environment. Three basic activitiesinput, processing, and outputproduce 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.
Functions of an Information System
Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Perspectives on Information Systems

Information Systems
Are More Than
Computers
Using information systems
effectively requires an
understanding of the
organization,
management, and
information technology
shaping the systems. An
information system creates
value for the firm as an
organizational and
management solution to
challenges posed by the
environment.

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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Organizational dimension of information
systems
Hierarchy of authority, responsibility
Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Organizational dimension of information
systems (cont.)
Separation of business functions
Sales and marketing
Human resources
Finance and accounting
Manufacturing and production
Unique business processes
Unique business culture
Organizational politics
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Management dimension of information
systems
Managers set organizational strategy for
responding to business challenges
In addition, managers must act creatively:
Creation of new products and services
Occasionally re-creating the organization
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Technology dimension of information
systems
Computer hardware and software
Data management technology
Networking and telecommunications technology
Networks, the Internet, intranets and extranets,
World Wide Web
IT infrastructure: provides platform that system
is built on
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Investing in information technology does not
guarantee good returns
Considerable variation in the returns firms
receive from systems investments
Factors:
Adopting the right business model
Investing in complementary assets
(organizational and management capital)
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Management Information Systems
CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY
Complementary assets:
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
Perspectives on Information Systems
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The main aim of the science of MIS is to leverage human being
capabilities, on the other hand, some see that depending a lot
on IS will result in replacing human beings inside the
organization with systems that dont mistake and dont get
tired!!
Which of the views do you support? Explain your answer?! How
important are employees in relation to IS?!
Individual homework