information technology foundations-bit 112 chapter 2 information systems: concepts and management

Information Technology Foundations-BIT 112

CHAPTER 2

Information Systems: Concepts and Management


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Chapter Outline

• 2.1 Types of Information Systems

• 2.2 Competitive Advantage and Strategic Information Systems

• 2.3 Why Are Information Systems Important to Organizations and Society?

• 2.4 Managing Information Resources


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Learning Objectives

• Describe the components of computer-based information systems.

• Describe the various types of information systems by breadth of support.

• Identify the major information systems that support each organizational level.

• Describe strategic information systems (SISs), and explain their advantages.


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Learning Objectives (continued)

• Learn about Porter’s competitive forces model and value chain model, and explain how IT helps companies improve their competitive positions.

• Describe five strategies that companies can use to achieve competitive advantage in their industries.

• Describe how information resources are managed, and discuss the roles of the information systems department and the end users.


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Application Programs

• An application program is a computer program designed to support a specific task, a business process or another application program.

• A collection of Application Programs is often called an Information System. – Example: Collection of application programs in the Finance

Department = Finance Information System.

• Note: The term “Application” is synonymous with “Application Program”.


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Classroom Table Discussion

• In the course of your life and career, you will work with companies that utilize a variety of information systems at various levels of the organization.

• At your table group spend the next few minutes identifying and discussing the universal use of information systems in your everyday life.

• Capture a list of 5 or 6 information technologies you have interacted with in the last week.

• Some examples are:– ATM machines.– Grocery store checkout line cash registers with bar code

scanners – Use of a bank card / credit cards for purchases.

Companies Have Failed When They Do Not Keep State Of The

Art Information Systems.


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Major Types of Information System

• Functional area information systems – Support particular functional areas in an organization.

• Enterprise resource planning systems (ERP)– An integrated information system that serves all departments within an

enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer.

– An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources.

• Transaction processing systems (TPS)– Support the monitoring, collection, storage, and processing of data from the

organization’s basic business transactions.– Many support an entire organization.

• Interorganizational information systems – Connect two or more organizations. – Examples are supply chain management systems and electronic commerce

systems.


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Information Systems Inside An Organization / Company See Pgs 34-35


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Information Systems that Support an Organization’s / Company’s Employees

• Office automation systems (OAS)– Typically support the staff, managers, and knowledge workers. – OASs are used to development documents, schedule resources, and

communicate.

• Functional area information systems (FAIS)– Summarize data and prepare reports, primarily for middle managers.

• Business Intelligence systems (BI)– Provide computer-based support for complex, non-routine systems,

primarily for middle managers and knowledge workers.

• Expert Systems (ES)– Attempt to duplicate the work of human experts by applying reasoning

capabilities, knowledge, and expertise within a specific domain.

• Dashboards – Support all managers by providing rapid access to timely information

and direct access to structured information in the form of reports.


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Components of an Information System

• Computer-based information systems (CBIS) use computer technology to perform some or all of their tasks and are composed of:– Hardware: a device such as a processor, monitor, keyboard or

printer– Software: a program or collection of programs that enable

hardware to process data.– Database: a collection of related files or tables containing data.– Network: a connecting system (wireline or wireless) that

permits different computers to share resources.– Procedures: the set of instructions about how to combine the

above components in order to process information and generate the desired output.

– People: those individuals who use the hardware and software, interface with it, or uses its output.


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Information Technology Outside An Organization / Company


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2.2 Competitive Advantage and Strategic Information Systems

• Competitive Advantage– An advantage over competitors in some measure such as

cost, quality, or speed, leads to control of a market and to larger- than average profits.

• Strategic Information Systems (SIS)– Provide a competitive advantage by helping an organization

to implement its strategic goals and to increase its performance and productivity.


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Porter’s Competitive Forces Model

• The best-known framework for analyzing competitiveness is Michael Porter’s (Porter, 1985) Competitive Forces Model.

–


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Porter’s Five Forces

• Competitive Forces Model is used to develop strategies to increase a company’s competitive edge.– Demonstrates how IT can make a company more

competitive.

• Five Forces– Entry Barrier– Bargaining Power of Suppliers– Bargaining Power of Buyers– Threat of Substitute Products or Services– Rivalry Among Existing Firms in the Industry


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Entry Barrier

• Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. – An entry barrier is a product or service feature that

customers expect from organizations in a certain industry.– The product or feature must be offered by the competing

organization for it to survive in the marketplace.– For most organizations, the Internet increases the threat that

new competitors will enter a market.


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Bargaining Power of Suppliers

• The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices.

• Internet impact is mixed. – Buyers can find alternative suppliers and compare prices

more easily, reducing power of suppliers.– On the other hand, as companies use the Internet to

integrate their supply chains, suppliers can lock in customers.


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Bargaining Power of Buyers

• The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices.

• Internet increases buyers’ power.– Internet provides access to information, increasing buyer

power.– Internet reduces switching costs, which are the costs, in

money and time, to buy elsewhere. This also increases buyer power.


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Threat of Substitute Products or Services

• The threat of substitute products or services is high when there are many substitutes for an organization’s products or services and low where there are few substitutes.

• Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The Internet can convey digital information quickly and efficiently.


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Rivalry Among Existing Firms in the Industry

• Finally, the rivalry among firms in an industry is high when there is fierce competition and low when there is not.


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Porter’s Value Chain Model

• The Value Chain Model (1985) identifies specific activities where organizations can use competitive strategies for greatest impact.– Primary activities

• Business activities that relate to the production and distribution of the firm’s products and services, thus creating value for which customers are willing to pay. Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and customer service.

– Support activities • Activities that do not add value directly to a firm’s products

and services, but support the primary activities. Support activities include accounting, finance, management, human resources management, product and technology development (R&D), and procurement.


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Porter’s Value Chain Model


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What Strategies Might Companies Use To Gain Competitive Advantage?

• Cost leadership

• Differentiation

• Innovation

• Operational effectiveness

• Customer-orientation


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Strategies for Competitive Advantage

• Cost Leadership strategy– Produce products and/or services at the

lowest cost in the industry.

• Differentiation strategy– Offer different products, services or product features.

• Innovation strategy– Introduce new products and services, add new features to existing

products & services or develop new ways to produce them.

• Operational Effectiveness strategy– Improve the manner in which internal business processes are

executed so that a firm performs similar activities better than its rivals.

• Customer-orientation strategy– Concentrate on making customers happy.

http://www.walmart.com/

http://www.southwest.com/

http://www.citi.com/

http://www.nscorp.com/

http://www.amazon.com/

http://www.dell.com/


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2.3 Why are Information Systems Important to Us, Organizations, & Society

• IT will reduce the management overhead – increases the number of employees who can report to a single manager.

• IT will change the Manager’s job – more informed decisions.

• IT impacts employees at work.

• IT provides quality-of-life improvements!!!


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Enabling People with Disabilities to Work with Computers

(a) Computer for visually-impaired user(b) Computer for hearing-impaired user(c) Computer for motor-impaired user


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The Robot Revolution

See Invasion of the Humanoid Robots

http://images.businessweek.com/ss/05/06/robots/source/1.htm

http://images.businessweek.com/ss/05/06/robots/source/1.htm


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The Robot Revolution

See video of Big Dog robot in action

http://www.youtube.com/watch?v=W1czBcnX1Ww

http://video.google.com/videoplay?docid=-7669630734504222442&q=Bigdog+robot&total=71&start=0&num=10&so=0&type=search&plindex=0





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The Robot Revolution (continued)

Honda’s ASIMO robot

See video of ASIMO in action

See ASIMO commercial

http://video.google.com/videoplay?docid=1210345008392050115&q=ASIMO&total=1196&start=0&num=10&so=0&type=search&plindex=0

http://video.google.com/videoplay?docid=-8045655366932059216


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DeLaval Voluntary Milking System

• See P 47 – Voluntary cause cows return to the system on their own.


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Improvements in Health Care

• A roving robot camera that can be steered remotely and wirelessly. Can move through the throat, esophagus, stomach, and small & large intestines.


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Improvements in Health Care (continued)

• The Pill Cam: Wireless endoscopy.– Patient swallows the Pill

Cam (camera). The camera takes an image of the digestive tract at intervals, and sends the images to a device that patients wear on their belts.

– May do away with endoscopy and the need for general anesthetic for the procedure.


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The daVinci Surgical Robot

The robot

The surgeon’s console


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The daVinci Surgical Robot (continued)

The daVinci robot in use


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Medical Simulation

Two physicians perform a procedure on a simulated human (mannequin)


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Classroom Table Discussion

• Besides our inability to predict the future, what are other reasons why IT Information Systems projects might fail?

• At your table group spend the next few minutes identifying and discussing possible reasons why an information system might fail when it is launched.

• Capture a list of 4 or 5 reasons.

• Lack of understanding of the business problem• Lack of user involvement• A schedule which is too aggressive • Inadequate testing• Trying to make too many changes at one time


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2.4 Managing Information Resources

• Which IT Resources are Managed and By Whom?– During the early 1950s, the Information Systems Department (IS

Dept) managed ALL of the computing resources, namely the mainframe.

– Today, computing resources are located through the organization and almost all employees use computers in their work.• This is known as end user computing.

• The Role of the IS Department– The IS Dept is responsible for corporate-level and shared

resources and for using IT to solve end users’ business problems.– In most companies, the end users are responsible for managing

their own computing resources.– IS Dept and end users work together as partners to manage the IT

resources.


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Traditional Major IS Department Functions

• Managing systems development and systems project management.

• Managing computer operations.

• Staffing, training, developing IS skills.

• Providing technical services.

• Infrastructure planning, development, and control.


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New (Consultative) IS Functions

• Initiating and designing strategic information systems.

• Incorporating the Internet and e-commerce into the business.

• Managing system integration.

• Educating non-IS managers about IT.

• Educating IS staff about the business.

• Supporting end-user computing.

• Partnering with executives.

• Managing outsourcing.

• Innovate.

• Ally with vendors and IS departments in other organizations.


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Supporting End Users

• One form of end-user support is the help desk, where IS staffers help users troubleshoot problems with their systems.

• This video shows the first help desk.

http://video.google.com/videoplay?docid=-6733312842222025710&q=%22IT+pro%22&total=119&start=0&num=10&so=0&type=search&plindex=2


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Chapter Closing Case P55

Todd Pacific Shipyards

Wireless PDA

http://www.toddpacific.com/

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