Assignment 1
Assignment 1
Assignment 1
Information systems are a foundation for conducting business today. In many industries, survival and even
existence is difficult without extensive use of information technology. Information systems have become
essential for helping organizations operate in a global economy. Organizations are trying to become more
competitive and efficient by transforming themselves into digital firms where nearly all core business
processes and relationships with customers, suppliers, and employees are digitally enabled. Businesses
today use information systems to achieve six major objectives: operational excellence; new products,
services, and business models; customer/supplier intimacy; improved decision making; competitive
advantage; and day-to-day survival.
Business firms invest heavily in information systems to achieve six strategic business objectives
Operational excellence
Business model: describes how company produces, delivers, and sells product or service to create
wealth
Information systems and technology are a major enabling tool for new products, services, business
models
Serving customers well leads to customers returning, which raises revenues and profits
E.g. High-end hotels that use computers to track customer preferences (room temperature, TV
channels) and use IS to monitor and customize environment
Intimacy with suppliers allows them to provide vital inputs, which lowers costs
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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
Competitive advantage
Survival
Information systems are the foundation for conducting business today. In many industries, survival and even
existence without extensive use of IT is inconceivable, and IT plays a critical role in increasing productivity.
Although information technology has become more of a commodity, when coupled with complementary
changes in organization and management, it can provide the foundation for new products, services, and ways
of conducting business that provide firms with a strategic advantage.
From a technical perspective, an information system collects, stores, and disseminates information from an
organization’s environment and internal operations to support organizational functions and decision
making, communication, coordination, control, analysis, and visualization. Information systems transform
raw data into useful information through three basic activities: input, processing, and output. From a
business perspective, an information system provides a solution to a problem or challenge facing a firm and
provides real economic value to the business.
An information system can be defined technically as a set of interrelated components that collect (or
retrieve), process, store, and distribute information to support decision making and control in an
organization. In addition to supporting decision making, coordination, and control, information systems may
also help managers and workers analyze problems, visualize complex subjects, and create new products.
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Technical perspectives on Information Systems
Investing in information technology does not guarantee good returns (big failures by firms like HP,
Nike, Nestle)
Considerable variation in the returns firms receive from systems investments
Success requires a business perspective: attention to the organizational and managerial nature of
information systems
Success Factors:
Adopting the right business model
Investing in complementary assets (organizational and management capital)
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Hierarchy of authority, responsibility
Senior management
Middle management
Operational management
Knowledge workers
Data workers
Production or service workers
Organizational politics
Assess the complementary assets required for information technology to provide value to a business.
An information system is part of a series of value-adding activities for acquiring, transforming, and
distributing information to improve management decision making, enhance organizational performance,
and, ultimately, increase firm profitability. Information technology cannot provide this value unless it is
accompanied by supportive changes in organization and management called complementary assets. These
complementary assets include new business models, new business processes, a supportive organizational
culture, incentives for management support and innovation, training, and social assets such as standards,
laws and regulations, and telecommunications infrastructure. Firms that make appropriate investments in
these complementary assets, also known as organizational and management capital, receive superior returns
on their information technology investments.
Complementary assets
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Assets required to derive value from a primary investment
Firms supporting technology investments with investment in complementary assets receive superior
returns
Value must be added through complementary assets such as new business processes, management
behavior, organizational culture, and training.
E.g.: invest in technology and the people to make it work properly
Organizational assets
Managerial assets
Social assets
Identify the major management challenges to building and using information systems.
There are five key management challenges in building and using information systems: (1)
designing systems that are competitive and efficient; (2) understanding the system
requirements of a global business environment; (3) creating an information architecture that
supports the organization's goals; (4) determining the business value of information systems;
and (5) designing systems that people can control, understand, and use in a socially and
ethically responsible manner.
Design competitive and effective systems: rethinking of business processes, not simple automation
Understand system requirements of global business environment: language, cultural and regulatory
barriers
Create information architecture that supports organization’s goal
Determine the business value of information systems
Design systems people can control, understand and use in a socially, ethically responsible manner.
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