Chapter 1

The Information Systems

Revolution: Transforming
Business and Management
 Chapter 1

OBJECTIVES

• What is the role of information systems in

today’s competitive business environment?

• What exactly is an information system?

What do managers need to know about
information systems?

• How are information systems transforming

organizations and management?
 Chapter 1

OBJECTIVES

• How has the Internet and Internet technology

transformed business?

• What are the major management challenges

to building and using information systems?
 Chapter 1

MANAGEMENT CHALLENGES

1. Design competitive and effective systems

2. Understand system requirements of

global business environment

3. Create information architecture that

supports organization’s goal
 Chapter 1

MANAGEMENT CHALLENGES

4. Determine business value of information

systems

5. Design systems people can control,

understand and use in a socially, ethically
responsible manner
 Chapter 1

WHY INFORMATION SYSTEMS?

The Competitive Business Environment and the Emerging Digital Firm

Four powerful worldwide changes that

have altered the business environment:

3. Emergence of the Global Economy

4. Transformation of Industrial Economies
5. Transformation of the Business Enterprise
6. The Emerging Digital Firm
 Chapter 1

WHY INFORMATION SYSTEMS?

The Competitive Business Environment and the Emerging Digital Firm

Emergence of the Global Economy (1)

• Many countries in Asia and Europe are depends
on imports and exports
• Success of a firm is depends on their ability to
operate globally
• Globalization of the world’s industrial economies
enhances the value of information to firm,
therefore they required a powerful IS like Internet
– Values of communications: to control trade
with distributors and suppliers, control global
corporation, operate 24 hours a day worldwide
 Chapter 1

WHY INFORMATION SYSTEMS?

The Competitive Business Environment and the Emerging Digital Firm

Emergence of the Global Economy (2)

• Globalization has cause a stiff competition
for local business.
– Customer has more choices and ways to buy
products, can shop 24 hours a day,
information is more available at anytime
 Chapter 1

WHY INFORMATION SYSTEMS?

The Competitive Business Environment and the Emerging Digital Firm

Transformation of Industrial Economies

• Transform to knowledge- and information-
based economies  lead to knowledge- and
information-intense products
– Products that requires a great deals of learning
and knowledge to produce, i.e. computer games
• Information technology has contribute to increase
productivity (computerised factory machines), new
products and services (credit card, faster delivery,
worldwide reservation system)
• IS is needed to smoothen the flow of information to
maximize the used of company resources
 Chapter 1

WHY INFORMATION SYSTEMS?

Labor Force Composition 1900-1997

Figure 1-1
 Chapter 1

WHY INFORMATION SYSTEMS?

The Competitive Business Environment and the Emerging Digital Firm

Transformation of the Business Enterprise

• Flattening
• Decentralization
• Flexibility
• Location independence
• Low transaction and coordination costs
• Empowerment
• Collaborative work and teamwork
 Chapter 1

WHY INFORMATION SYSTEMS?

The Competitive Business Environment and the Emerging Digital Firm

Emergence of the Digital Firm

• Digitally-enabled relationships with customers,
suppliers, and employees
• Core business processes accomplished via digital
networks
• Digital management of key corporate assets
• Rapid sensing and responding to environmental
changes
• For example, Amazon-E-commerce company,
banks - E-banking, AirAsia – E-ticking system, E-
genting for room booking, etc.
 System Concepts

• System
– Set of elements or components that
interact to accomplish goals
• Components of a system
– Inputs
– Processing mechanisms
– Outputs
– Feedback

13
System Concepts (continued)

14
What is a System? (continued)

15
What is an Information System?

16
Input, Processing, Output, Feedback
• Input
– Activity of gathering and capturing raw data
• Processing
– Converting data into useful outputs
• Output
– Production of useful information, usually in the
form of documents and reports
• Feedback
– Information from the system that is used to
make changes to input or processing activities

17
 Why Learn About Information Systems?

• Information systems used in most professions

– Sales representatives
– Managers
– Financial planners
• Information technology can help business in
improving business processes, managerial
decision making and workgroup
collaborations.

18
 What Is an Information System?

A set of interrelated components that collect

(or retrieve), process, store, and distribute
information to support decision making and
control in an organization
 Information Concepts

• Information
– One of an organization’s most valuable
resources
– Often confused with the term data

20
 What Is an Information System?

• Data: Streams of raw facts representing

events such as business transactions

• Information: Clusters of facts that are

meaningful and useful to human beings in
the processes such as making decisions
What Is an Information System?

Data and Information

Figure 1-2
 Activities in an Information System

INPUT PROCESS OUTPUT

FEEDBACK
 Activities in Information System

• Input: collect and introduce data to system

– Transaction: a business event, usually
entered as input
– Transaction processing system (TPS): a
system that records transactions
– Input devices include keyboards, bar code
readers, voice recognition systems, touch
screens
• Data processing: perform calculations on
input

24
 Activities in Information System

• Output: what is produced by the

information system
– Output devices include printers and
speakers
• Storage: maintaining vast amounts
of data
– Storage devices include optical discs

25
 Information Systems in Organizations

• Trends that have made information systems important

in business:
– Growing power and decreasing cost of computers
– Growing capacity and decreasing costs of data
storage devices
– Increasing variety and ingenuity of computer
programs
– Available, reliable, affordable, and fast
communications links to the Internet
– Growth of the Internet
– Increasing computer literacy of the workforce

26
 Information Systems in Organizations
(continued)

Management Information Systems, Sixth Edition 27

 Computer-Based Information System
(CBIS)

• Single set of hardware, software, databases,

telecommunications, people, and procedures
– That are configured to collect, manipulate, store,
and process data into information
• Technology infrastructure
– Includes all hardware, software, databases,
telecommunications, people, and procedures
• Configured to collect, manipulate, store, and
process data into information
 A Business Perspective on
Information Systems

• Information systems literacy: Broad-

based understanding of information systems
that includes behavioral knowledge about
organizations and individuals using
information systems as well as technical
knowledge about computers.
• Computer literacy: Knowledge about
information technology, focusing on under-
standing how computer-based technologies
work
 A Business Perspective on
Information Systems

Using information systems

ORGANIZATIONS TECHNOLOGY
Effectively requires an

Understanding of the

INFORMATION Organization, management

SYSTEMS And information technology

Shaping the system.

MANAGEMENT

Figure 1-4
 A Business Perspective on Information
Systems - Organization
• Information systems are a part of
organizations.
• key elements of an organizations are its
– People
– Structure
– Operating procedures,
– Policies
– Culture
• An organization coordinates work
through a structured hierarchy
and formal, standard procedures
 A Business Perspective on Information
Systems - Management

Managerial roles and decisions are

different at different levels:
• Senior managers: make long-range
strategic decisions about products and
services

• Middle managers: Carry out the programs

and plans of senior management

• Operational managers: monitor the firm’s

daily activities
 A Business Perspective on Information
Systems - Technology

Tools managers use to cope with change

• Hardware: Physical equipment

• Software: Detailed preprogrammed
instructions
Storage: Physical media for
storing data and the software
 A Business Perspective on Information
Systems - Technology

• Communications Technology:
transfers data from one physical location
to another

• Networks: link computers to share data

or resources
Business Information Systems

35
Business Information Systems (continued)

36
 Chapter 1

THE NETWORK REVOLUTION AND THE INTERNET

The Widening Scope of Information Systems

• 1950s: Technical changes

• 60s-70s: Managerial controls

• 80s-90s: Institutional core activities

Growing Importance
 Chapter 1

THE NETWORK REVOLUTION AND THE INTERNET

The Widening Scope of Information Systems

Figure 1-8
 Chapter 1

THE NETWORK REVOLUTION AND THE INTERNET

The Widening Scope of Information Systems

• Over time, IS have play a major role in

an organization.
• From it affect the changes in technical
to managerial control and behavior, and
then now towards influenced ‘core’
activities in products, markets,
suppliers and customers.
 New Options for Organizational Design

• Flattening organizations
– - to remove the layer of management and work as peer and
team.
• Separating work from location
– thru email, Internet and video conferencing
• Reorganizing work-flows
– Computerized information system has slowly replacing
manual system where it able the staff to complete the work
more efficient and effectively.
• Increasing flexibility
– Companies can use communications technology to organize
in more flexible ways
• Redefining organizational boundaries – to have a
networked information systems
• The changing management process - from manual
system to computerized process
 Chapter 1

TOWARD THE DIGITAL FIRM

Flattening Organizations Information Systems

Figure 1-9
 Chapter 1

TOWARD THE DIGITAL FIRM

How Information Technology Increases organizational Flexibility

Small companies
• Desktop machines, inexpensive computer-aided design (CAD)
software, and computer-controlled machine tools provide the precision,
speed and quality of giant manufacturers.
• Information immediately accessed by the telephone and
communications links eliminate the need for research staff and business
libraries.
Large companies
• Custom manufacturing system offer customized products
• Massive databases of customer records to analyze the customer
preferences
• Information can help lower level employees to solve problem more
easily
 Chapter 1

TOWARD THE DIGITAL FIRM

Redesigned Work Flow For Insurance Underwriting

An application requiring 33 days in a paper system would only take 5 days using

computers, networks and a streamlined work flow.

Figure 1-10
 TOWARD THE DIGITAL FIRM

• Electronic commerce: The buying and selling,

marketing and servicing and delivery and payment
of products/services and information over the
Internet.
• Electronic business : The use of Internet
technologies to internetwork and empower
business processes, electronic commerce and
enterprise communication and collaboration within
a company.
• Electronic market: Information systems links,
buyers and sellers to exchange information,
products, services, payments
TOWARD THE DIGITAL FIRM

Figure 1-11
 Electronic Commerce

• Internet links buyers, sellers

• Lower transaction costs

• Goods and services advertised, bought,

exchanged worldwide

• Business-to-business transactions
increasing
 Electronic Business

• Internet: Business builds private, secure

network

• E-mail, Web documents, group

software: Extends effective
communication and control

• Extranet: Extension of intranet to

authorized external users
 5 key IS
challenges confronting managers:
1. The Strategic Business Challenge
 How can business use IT to design org that are competitive
and effective?
 The power of computer hardware and software has grown
much more rapidly than the ability of org to apply and use this
technology
 To stay competitive, many org needs to redesigned by
making fundamental changes in organizational behavior,
develop new business models, design, produce, deliver and
maintain goods and services
 Such as using Internet to have e-commerce, e-business,
Intranet or Extranet
 5 key IS
challenges confronting managers:
2. The Globalization Challenge
 How can firms understand the business and
system requirements of a global economic
environment?
 To develop integrated, multinational IS,
businesses must develop global hardware,
software and communication standards and
create cross-cultural accounting and reporting
structures
 It is to cater selling goods in different countries.
 5 key IS challenges confronting managers:

3. The Information Architecture and Infrastructure

Challenge
 How can org develop an info architecture and IT
infrastructure that supports their business goals ?
 Creation of a new system involve installation of new
machine which requires redesigning the org and
building a new information architecture and
information technology (IT) infrastructure
 INFORMATION ARCHITECTURE OF THE ORGANIZATION

Today’s managers must know how to arrange and coordinate the various computer

technologies and business system applications to meet the information needs of each level of their organization,

and the needs of the organization as a whole.

 5 key IS challenges confronting managers:

4. The Information System Investment Challenge

 How can organizations determine the business value
of information systems?
 Tangible benefits : sales increase
 Intangible benefits: customer satisfaction or even
staff is more motivated in doing the works
 5 key IS challenges confronting managers:

5. The Responsibility and Control Challenge

 How can org ensure that their information systems
are used in an ethically and socially responsible
manner?
 IS must be designed so that they functions as
intended produce accurate and reliable information
and human can control the process
 New problems and challenges of which managers
are award such as privacy, eliminate jobs performed
by employees, injuries such as repetitive stress
injury
 THE END.

ANY QUESTIONS???