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Chapter 1

Chapter 1. Managing in the Digital World. “ If we'd given customers what they said they wanted, we'd have built a computer they'd have been happy with a year after we spoke to them—not something they'd want now… ” Steve Jobs, Apple Computer. Learning Objectives. Learning Objectives.

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Chapter 1

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  1. Chapter 1 Managing in the Digital World “If we'd given customers what they said they wanted, we'd have built a computer they'd have been happy with a year after we spoke to them—not something they'd want now…”Steve Jobs, Apple Computer

  2. Learning Objectives

  3. Learning Objectives

  4. Information Systems Today • The Knowledge Worker • Term coined by Peter Drucker in 1959 • An individual who is relatively well educated and who creates, modifies, and/or synthesizes knowledge as a fundamental part of a job • Knowledge Society • New Economy/Digital World • Digital Divide

  5. Information Systems: Definition • Combination of five key elements: • People • Hardware • Software • Data • Telecommunications networks

  6. Data: The Root and Purpose of Information Systems • Distinction between: • Data—raw, unformatted information • Example: 5433333353 • Information—data that is transformed to have a meaning • Example: (543) 333-3353 • Knowledge—body of governing procedures used to organize or manipulate data • Wisdom—accumulated knowledge

  7. Data: The Root and Purpose of Information Systems (cont’d)

  8. IT:The Components of Information Systems • Relationship of computer-based information systems to information technology and technology in general

  9. IT: The Components of Information Systems—Technology • Any machine that can supplement or replace human manual work • Examples: • Heating system • Surgical laser

  10. IT: The Components of Information Systems—Information Technology • A type of technology that is controlled by or uses information • Example: Manufacturing robot

  11. IT: The Components of Information Systems—Computer-based IS 1-11 • Systems using computers to provide useful data to people • Example: Specific software used to analyze data 1-11

  12. Learning Objectives

  13. Best Jobs for the Next Decade

  14. Careers and Salaries in the IS Field (National Average)

  15. What Makes IS Personnel Valuable? • Integrated knowledge and skills in three areas: • Technical Competency—skills in hardware, software, networking, and security • Business Competency—understanding of the nature of the business; this is key in addition to technical competency • Systems Competency—understanding of how to build and integrate large scale systems

  16. Hot Skills for 2010 and Beyond

  17. Learning Objectives

  18. The Dual Nature of IS • IS can make you or break you • London Heathrow—The failure • Baggage handling system: original cost of $500 million • Disaster on opening day, costing $ 50 million due to over 28,000 bags being misrouted • FedEx—The success • $ 38 billion family of companies—largest express transportation company • “Information hub for business where managing information is the business”

  19. IS for Competitive Advantage • Both FedEx and London Heathrow were developing strategic information systems • Only strategic information systems can help sustain competitive advantage

  20. Why Information Systems Matter • Nicholas Carr article—“IT Doesn’t Matter” • IT no longer a source of advantage on the firm level • Companies should focus IT on cost reduction and risk mitigation • Many experts disagree with his arguments • Abbie Lundberg—Interview with Carr • Don Tapscott—“The Engine That Drives Success: The Best Companies Have the Best Business Models Because They Have the Best IT Strategies” • Many successful companies use IT to support a unique business strategy

  21. Decision-Making Levels of an Organization

  22. Operational Level • Day-to-day business processes • Interactions with customers • Decisions: • Structured ( Procedures is specified). • Recurring • Can often be automated using IS( Inventory System). • BI used to: • Optimize processes • Understand causes of performance problems

  23. Managerial Level • Functional managers • Monitor and control operational-level activities • Focus: effectively utilizing and deploying resources • Goal: achieving strategic objectives • Managers’ decisions • Semistructured • Moderately complex • Time horizon of few days to few months • BI can help with: • Performance analytics • Forecasts • Providing key performance indicators on dashboards

  24. Managerial Level (cont’d)

  25. Executive Level • The president, CEO, vice presidents, board of directors • Decisions • Unstructured • Long-term strategic issues • Complex and nonroutine problems with long-term ramifications • BI is used to: • Obtain aggregate summaries of trends and projections • Provide KPIs across the organization

  26. Executive Level (cont’d)

  27. Providing Inputs into BI Applications • Decisions made by different departments need to be based on the same underlying data • “Single version of the truth” • BI systems access multiple databases or data warehouses • Data aggregated from operational systems • E.g., Transaction processing systems

  28. Transaction Processing Systems (TPS) • Operational level • Purpose: • Processing of business events and transactions • Increase efficiency • Automation • Lower costs • Increased speed and accuracy • Examples: • Payroll processing • Sales and order processing • Inventory management • Product purchasing, receiving, and shipping • Accounts payable and receivable

  29. Architecture of a TPS

  30. Architecture of a TPS: Inputs • Source documents • Different data entry methods

  31. Architecture of a TPS: Processing • Online processing • Immediate results • Batch processing • Transactions collected and later processed together • Used when immediate notification not necessary

  32. Architecture of a TPS: Outputs • Counts, summary reports • Inputs to other systems • Feedback to systems operator

  33. Summary of TPS Characteristics

  34. Management Information Systems 8-34 • Managerial level • Purpose: • Produce reports • Support of midlevel managers’ decisions • Examples: • Sales forecasting • Financial management and forecasting • Manufacturing, planning and scheduling • Inventory management and planning • Advertising and product pricing

  35. Architecture of an MIS

  36. Summary of MIS Characteristics

  37. Decision Support Systems (DSS) • Decision-making support for recurring problems • Used mostly by managerial level employees • Interactive decision aid • What-if analyses • Analyze results for hypothetical changes • Example: Microsoft Excel

  38. Architecture of a DSS

  39. Common DSS Models

  40. Executive Information Systems • Aka Executive support system • Executive level • Purpose: • Aid in executive decision making • Provide information in highly aggregated form • Examples: • Executive-level decision making • Long-range and strategic planning • Monitoring of internal and external events and resources • Crisis management • Staffing and labor relations

  41. Architecture of an EIS

  42. Summary of EIS Characteristics

  43. Business Processes Supported by Functional Area Information Systems

  44. Organizational Functions and Representative Information Systems

  45. Geographic Information System (GIS) • Use of geographically referenced information • Finding optimal location for a new store • Identification of areas too wet to fertilize (see figure) • Locating target customers • Infrastructure design

  46. Health information technology • (HIT) provides the umbrella framework to describe the comprehensive management of health information across computerized systems and its secure exchange between consumers, providers, government and quality entities, and insurers. Health information technology (HIT) is in general increasingly viewed as the most promising tool for improving the overall quality, safety and efficiency of the health delivery system (Chaudhry et al., 2006). Broad and consistent utilization of HIT will: • Improve health care quality; • Prevent medical errors; • Reduce health care costs; • Increase administrative efficiencies • Decrease paperwork; and • Expand access to affordable care.

  47. Health information technology… cont. Interoperable HIT will improve individual patient care, but it will also bring many public health benefits including: • Early detection of infectious disease outbreaks around the country; • Improved tracking of chronic disease management; and • Evaluation of health care based on value enabled by the collection of de-identified price and quality information that can be compared

  48. End of Chapter Content 1-48

  49. Learning Objectives

  50. Opening Case—Managing in the Digital World: Apple Computer • Apple changed the way in which everyday people use computers • Long list of successful products • Success of iPod: tight integration with iTunes and AppStore

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