CHAPTER 1 "Information Systems in Global Business Today"
1.1 The Role of Information System in Business Today
As managers, most of you will work for firms that are intensively using information system and making large investments in information technology. If you make wise choices, your firm can outperform competitors. If you make poor choices, you will be wasting valuable capital.How Information Systems are Transforming Business
You can see the result of this massive spending around you everyday by observing how people conduct business, such as:- More wireless cell phone accounts were opened in 2009 than telephone land lines installed.
- In 2010, people start to access the Internet using mobile devices.
- Today, millions of people shop online and have purchased online, going online to research a product or service.
Business sought to sense and respond to rapidly changing customer demand, reduce inventories to the lowest possible levels, and achieve higher levels of operational efficiency. Businesses are starting to use social networking tools to connect their employees customers, and managers worldwide.
What's New in Management Information Systems?
What makes management information systems the most exciting topic in business is the continual change in technology, management use of the technology, and the impact on business success. In the technology area there are three interrelated changes:
- the emerging mobile digital platform,
- the growth of online software as a service, and
- the growth in "cloud computing" where more and more business software runs over the Internet.
Globalization Challenges and Opportunities: A Flattened World
The challenge for you as a business student is to develop high-level skills through education and on-the-job experience that cannot be outsourced. The challenge for your business is to avoid markets for goods and services that can be produced offshore much less expensively. The opportunities are equally immense. What does globalization have to do with management information systems? That's simple; Everything. Briefly, information systems enable globalization.
The Emerging Digital Firm
A digital firm is one in which nearly all of the organization's significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. Business processes refer to the set of logically related tasks and behaviours that organizations develop over time to produce specific business results and the unique manner in which these activities are organized and coordinated.
Most other companies are not fully digital, but they are moving toward close digital integration with suppliers, customers, and employees.
Strategic Business Objectives of Information System
Specifically, business firms invest heavily in information systems to achieve six strategic business objectives:- operational excellence
- new products, services, and business models
- customer and supplier intimacy
- improved decision making
- competitive advantage
- survival
1.2 Perspectives on Information Systems
Information technology (IT) consists of all the hardware and software that a firm needs to use in order to achieve its business objectives. "Information systems" are more complex and can be best be understood by looking at them from both a technology and a business perspective.
What is an Information System?
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. Information systems contain information about significant people, places, and things within the organization or in the environment surrounding it. By information we mean data that have been shaped into a form that is meaningful and useful to human being.
Three activities in an information system produce the information that organizations need to make decisions, control operations, analyze problems, and create new products or services. these activities are input, processing, and output.
Dimensions of Information Systems
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.
- organizations; information systems are an integral part of organizations. the key elements of an organization are its people, structure, business processes, politics, and culture.
- management; management's job is to make sense out of the many situations faced by organizations, make decisions, and formulate action plans to solve organizational problems.
- information technology; information technology is one of many tools managers use to cope with change.
It Isn't Just Technology: A Business Perspective on Information Systems
Managers and business firms invest in information technology and systems because they provide real economic value to the business. We can see that from a business perspective, an information system is an important instrument for creating value for the firm. Information systems enable the firm to increase its revenue or decrease its costs by providing information that helps managers make better decisions or that improves the execution of business processes.
Complementary Assets: Organizational Capital and The Right Business Model
Awareness of the organizational and managerial dimensions of information systems can help us understand why some firms achieve better results from their information systems than others. Information technology investments alone cannot make organizations and managers more effective unless they are accompanied by supportive values, structures, and behaviour patterns in the organization and the other complementary assets.
Business firms need to change how they do business before they can really reap the advantages of new information technologies. Some firms fail to adopt the right business model that suits the new technology, or seek to preserve an old business model that is doomed by new technology.
1.3 Contemporary Approaches to Information Systems
The study of information systems is a multidisciplinary field. No single theory or perspective dominates. In general, the field can be divided into technical and behavioral approaches.
Technical Approach
The technical approach to information systems emphasizes mathematically based models to study information systems, as well as the physical technology and formal capabilities of these systems. The disciplines that contribute to the technical approach are computer science, management science, and operations research.
Behavioral Approach
An important part of the information systems field is concerned with behavioral issues that arise in the development and long-term maintenance of information systems. Issues such as strategic business integration, design, implementation, utilization, and management cannot be explored usefully with the models used in the technical approach. Other behavioral disciplines contribute important concepts and methods.
The behavioral approach does not ignore technology. Indeed, information systems technology is often the stimulus for a behavioral problem or issue. But the focus of this approach is generally not on technical solutions. Instead, it concentrates on changes in attitudes, management and organizational policy, and behavior.
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source: "Management Information System" e-book, 12th edition, written by Kenneth C. Laudon and Jane P. Laudon.