Chapter 1
The Information Systems
Revolution: Transforming
Business and Management
1
Objectives
• Define an information system.
• Distinguish between computer literacy and
information systems literacy.
• Explain why information systems are so
important today and how they are
transforming organizations and
management.
2
Objectives
• Compare electronic commerce and
electronic business and analyze their
relationship to the Internet and digital
technology.
• Identify the major management challenges
to building and using information systems
in organizations.
3
part 1
WHY INFORMATION
SYSTEMS?
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THE CHANGING BUSINESS
ENVIRONMENT
• Globalization
• Industrial economies
• Transformation of the
enterprise
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GLOBALIZATION
• Management & control in a global
marketplace
• Competition in world markets
• Global work groups
• Global delivery systems
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INDUSTRIAL ECONOMIES
• Knowledge- and information-based economies
• Productivity
• New products & services
• Knowledge as an asset
• Time-based competition
• Shorter product life
• Turbulent environment
• Limited employee knowledge base
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LABOR FORCE COMPOSITION 1900-1997
70%
60%
% SERVICE
50%
% WHITE COLLAR
40% % BLUE COLLAR
30% % FARMING
20%
10%
0%
00
20
30
40
50
97
10
60
70
80
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19
19
19
19
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YEAR
TRANSFORMATION OF
ENTERPRISE
• Flattening
• Decentralization
• Flexibility
• Location independence
• Low transaction and coordination costs
• Empowerment
• Collaborative work and team work
9
WHAT IS AN
INFORMATION SYSTEM
• An information system can be defined
technically as a set of interrelated
INPUT PROCESS OUTPUT
components that collect (or retrieve),
process, store, and distribute information to
support decision making, coordination,
FEEDBACK
control, analysis, and visualization in an
organization.
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FUNCTIONS OF INFO SYSTEM
ENVIRONMENT
Customers Suppliers
ORGANIZATION
INFORMATION SYSTEM
INPUT PROCESS OUTPUT
FEEDBACK
Regulatory Stockholders Competitors
Agencies 11
DATA & INFORMATION
• Data: streams of raw facts representing
events such as business transactions
• Information: clusters of facts meaningful &
useful to human beings in processes such as
making decisions
12
COMPUTER-BASED INFORMATION
SYSTEMS (CBIS)CBIS)
• CBISs are information systems that rely on
computer hardware and software for
processing and disseminating info.
• Formal systems are systems resting on
accepted and fixed definitions of data and
procedures, operating with predefined rules.
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A BUSINESS PERSPECTIVE
ON INFORMATION SYSTEMS
• From a business perspective, an information
system is an organizational and
management solution, based on information
technology, to a challenge posed by the
environment.
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INFORMATION SYSTEMS
ORGANIZATIONS TECHNOLOGY
INFORMATIO
N
SYSTEMS
MANAGEMENT
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ORGANIZATIONS
• PEOPLE: Managers, knowledge workers,
data workers, production or service workers
• STRUCTURE: Organization chart, groups
of specialists, products, geography
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ORGANIZATIONS
• OPERATING PROCEDURES: Standard
Operating Procedures (SOP), rules for
action
• POLITICS: Power to persuade, get things
done
• CULTURE: Customs of behavior
17
MANAGEMENT
• Managers set the organizational strategy for
responding; and they allocate the human and
financial resources to achieve the strategy and
coordinate the work. Throughout, they must
exercise responsible leadership.
• Levels of management:
– Senior managers
– Middle managers
– Operational managers
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COMPUTER TECHNOLOGY
• HARDWARE
• SOFTWARE
• STORAGE
• COMMUNICATIONS
• NETWORKS
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part 2
CONTEMPORARY
APPROACHES TO
INFORMATION SYSTEMS
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APPROACHES TO INFO SYSTEMS
TECHNICAL APPROACHES
COMPUTER
OPERATIONS
SCIENCE
RESEARCH
MANAGEMENT
SCIENCE
MIS
SOCIOLOGY
PSYCHOLOGY ECONOMICS
BEHAVIORAL APPROACHES
21
TECHNICAL APPROACH
• Emphasizes mathematically based, normative
models to study information systems, as well as
the physical technology and formal capabilities of
these systems.
• Computer science: computability, computation,
data storage and access.
• Management science: development of models for
decision making and management practices.
• Operations research: techniques for optimizing
selected parameters of organizations.
22
BEHAVIORAL APPROACH
• Behavioral issues arise in the development and long-term
maintenance of IS.
• Sociologists study IS with an eye toward how groups and
organizations shape the development of systems and also
how systems affect individuals, groups, and organizations.
• Psychologists study IS with an interest in how formal
information is perceived and used by human decision
makers.
• Economists study IS with an interest in what impact
systems have on control and cost structures within the firm
and within markets.
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SOCIOTECHNICAL PERSPECTIVE
• The challenge and excitement of the
information system field is that it requires
an appreciation and tolerance of many
different approaches.
• We stress the need to optimize the
performance of the system as a whole. Both
the technical and behavioral components
need attention.
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SOCIOTECHNICAL PERSPECTIVE
OPTIMIZE SYSTEM PERFORMANCE:
Technology & organization mutually adjust to
One another
Until fit is satisfactory
Page14 figure 1-5
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part 3
THE NEW ROLE OF INFO
SYSTEMS IN
ORGANIZATIONS
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SYSTEM INTERDEPENDENCE
INTERDEPENDENCE
HARDWARE
BUSINESS SOFTWARE DATABASE
Strategy
Rules TELE-
Procedures COMMUNICATIONS
ORGANIZATION INFORMATION SYSTEM
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SCOPE OF INFO SYSTEMS
• 1950s: TECHNICAL CHANGES
• 60s-70s: MANAGERIAL CONTROL
• 80s-90s: INSTITUTIONAL CORE
ACTIVITIES
GROWING IMPORTANCE
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WHAT YOU CAN DO ON THE
INTERNET
• COMMUNICATE & COLLABORATE
• ACCESS INFORMATION
• DISCUSS
• SUPPLY INFORMATION
• ENTERTAIN
• TRANSACT BUSINESS
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NEW OPTIONS FOR
ORGANIZATIONAL DESIGN
• Flattening organizations
• Separating work from location
• Reorganizing work-flows
• Increasing flexibility
• Redefining organizational
boundaries
30
THE DIGITAL FIRM
• ELECTRONIC MARKET: A marketplace that is
created by computer and communication technologies
that link many buyers and sellers.
• ELECTRONIC COMMERCE: The process of buying
and selling goods and services electronically involving
transactions using the Internet, networks, and other
digital technologies.
• ELECTRONIC BUSINESS: The use of the Internet and
other digital technology for organizational
communication and coordination and the management
of the firm.
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ELECTRONIC COMMERCE
• Internet links buyers, sellers
• Lowers transaction costs
• Goods & services advertised, bought,
exchanged worldwide
• Business-to-business transactions
increasing
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ELECTRONIC BUSINESS
• INTRANET: Business builds private,
secure network
• E-MAIL, WEB DOCUMENTS, GROUP
SOFTWARE: Extends effective
communication & control
• EXTRANET: Extension of Intranet
to authorized external users
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part 4
USING INFO SYSTEMS
——CHALLENGES
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KEY MANAGEMENT ISSUES
• The Strategic Business Challenge: How can
businesses use information technology to
design organizations that are competitive
and effective?
• The Globalization Challenge: How can
firms understand the business and system
requirements of a global economic
environment?
35
KEY MANAGEMENT ISSUES
• The Information Architecture Challenge:
How can organizations develop an
information architecture and information
technology infrastructure that supports their
business goals?
– Information architecture
– Information technology infrastructure
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KEY MANAGEMENT ISSUES
• The Information Systems Investment
Challenge: How can organizations
determine the business value of information
systems?
• The Responsibility & Control Challenge:
How can organizations design systems that
people can control and understand?
37
DISCUSSION
• Some people say that information system
literacy is more important than computer
literacy. Do you agree? Explain why or
why not.
38
ASSIGNMENT
• Answer the case study questions on page
33.
You should write it in English.
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That’s all for this chapter!
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