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SECTION 1.1

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SECTION 1.1

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    1. SECTION 1.1 INFORMATION SYSTEMS IN BUSINESS

    2. INFORMATION TECHNOLOGY’S ROLE IN BUSINESS Information technology is everywhere in business

    3. Information Technology’s Impact on Business Operations

    4. Information Technology’s Impact on Business Operations

    5. Information Technology’s Impact on Business Operations

    6. http://money.cnn.com/magazines/business2/101dumbest/2007/index.html

    7. INFORMATION TECHNOLOGY BASICS Information technology (IT) – any computer-based tool that people use to work with information and support the information and information-processing needs of an organization Information technology is an important enabler of business success and innovation

    8. INFORMATION TECHNOLOGY BASICS Management information systems (MIS) – the function that plans for, develops, implements, and maintains IT hardware, software, and applications that people use to support the goals of an organization MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources

    9. INFORMATION TECHNOLOGY BASICS When learning about information technology it is important to understand the following: Information IT resources IT cultures

    10. IT Resources What are the components of an Information System? People use Information technology to work with Data & Information

    11. IT Resources: People People IS Specialists/Personnel End Users

    12. ROLES AND RESPONSIBILITIES IN IT (People) Information technology is a relatively new functional area, having only been around formally for around 40 years Recent IT strategic positions include: Chief Information Officer (CIO) Chief Technology Officer (CTO) Chief Security Officer (CSO) Chief Privacy Officer (CPO) Chief Knowledge Office (CKO)

    13. ROLES AND RESPONSIBILITIES IN IT Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives Broad CIO functions include: Manager – ensuring the delivery of all IT projects, on time and within budget Leader – ensuring the strategic vision of IT is in line with the strategic vision of the organization Communicator – building and maintaining strong executive relationships

    14. ROLES AND RESPONSIBILITIES IN IT Average CIO compensation by industry

    15. ROLES AND RESPONSIBILITIES IN IT What concerns CIO's the most

    16. ROLES AND RESPONSIBILITIES IN IT Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT Chief Security Officer (CSO) – responsible for ensuring the security of IT systems Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the organization’s knowledge

    17. The Gap Between Business Personnel and IT Personnel Business personnel possess expertise in functional areas such as marketing, accounting, and sales IT personnel have the technological expertise This typically causes a communications gap between the business personnel and IT personnel

    18. ROLES AND RESPONSIBILITIES IN IT Skills pivotal for success in executive IT roles

    19. Improving Communications Business personnel must seek to increase their understanding of IT IT personnel must seek to increase their understanding of the business It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel

    20. IT Resources: Information Technology Hardware (HW): The physical components of information systems Hardware components include processors, input and output devices, storage devices, etc.

    21. IT Resources: Information Technology Software (SW): The instructions that operate the information system; “programs” System software controls the hardware (Windows XP) Application software allows users to perform specific tasks to increase productivity (MS Word, Invoicing SW)

    22. IT Resources: Information Technology Telecommunications/Networking: The combination of HW and SW needed for the electronic transmission of signals for communication & data transfer Allows two or more computers or devices to communicate (Internet, intranets, extranets)

    23. IT Resources: Data & Information Data - raw facts that describe the characteristics of an event; the raw input for entry into an information system Examples: Number of hours worked Number of items sold Names of customers Data can be represented in several ways Alphanumeric, image, audio, video

    24. IT Resources: Data & Information Information – data that has been converted into a meaningful and useful context a collection of data organized in such a way that they have value beyond the facts themselves data that has been processed, interpreted, or formatted into a meaningful context for users

    25. IT Resources: Data & Information

    26. IT Cultures Organizational information cultures include: Information-functional culture Information-sharing culture Information-inquiring culture Information-discovery culture

    27. MEASURING INFORMATION TECHNOLOGY’S SUCCESS Tangible vs. Intangible Costs & Benefits Tangible - Costs and benefits that are easily measured/quantified (headcount or labor cost) Intangible - Costs and benefits that are not easily measured/quantified (increased customer service)

    28. MEASURING INFORMATION TECHNOLOGY’S SUCCESS Key performance indicators (KPI) – measures that are tied to business drivers Metrics are detailed measures that feed KPIs Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals

    29. Benchmarking – Baseline Metrics Regardless of what is measured, how it is measured, and whether it is for the sake of efficiency or effectiveness, there must be benchmarks – baseline values the system seeks to attain. Benchmarking – a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance

    30. Efficiency and Effectiveness Metrics Efficiency IT metrics – focus on the technology; measure the performance of the IT system itself including: Throughput Transaction speed System availability Information accuracy Web traffic Response time

    31. Efficiency and Effectiveness Metrics Effectiveness IT metrics – are determined according to an organization’s goals, strategies, and objectives; measure the impact IT has on business processes and activities including: Usability Customer satisfaction Conversion rates Financial indicators

    32. An Example of a tradeoff between Efficiency and Effectiveness IT Metrics Security is an issue for any organization offering products or services over the Internet It is inefficient for an organization to implement Internet security, since it slows down processing, adds costs and steps However, to be effective it must implement Internet security

    33. The Interrelationships of Efficiency and Effectiveness IT Metrics

    34. IDENTIFYING COMPETITIVE ADVANTAGES Competitive advantage – a product or service that an organization’s customers place a greater value on than similar offerings from a competitor; the ability to do something better, faster, more economically or uniquely when compared with competitors First-mover advantage – occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

    35. IDENTIFYING COMPETITIVE ADVANTAGES Organizations watch their competition through environmental scanning Environmental scanning – the acquisition and analysis of events and trends in the environment external to an organization Three common tools used in industry to analyze and develop competitive advantages include: Porter’s Five Forces Model Porter’s three generic strategies Value chains

    36. THE FIVE FORCES MODEL – EVALUATING BUSINESS SEGMENTS Porter’s Five Forces Model determines the relative attractiveness of an industry

    37. Threat of Substitute Products or Services Threat of substitute products or services – high when there are many alternatives to a product or service and low when there are few alternatives from which to choose Switching costs – costs that can make customers reluctant to switch to another product or service

    38. Rivalry Among Existing Competitors Rivalry among existing competitors – which firms are producing the substitutes; rivalry is high when competition is fierce in a market and low when competition is not as fierce Although competition is always more intense in some industries than in others, the overall trend is toward increased competition in just about every industry

    39. Threat of New Entrants Threat of new entrants – high when it is easy for new competitors to enter a market, and low when there are significant entry barriers to entering a market Entry barrier – a product or service feature that customers have come to expect from organizations in a particular industry and must be offered by an entering organization to compete and survive

    40. Buyer Power (or Bargaining Power of Customers) Buyer power – high when buyers have many choices from whom to buy, and low when their choices are few One way to reduce buyer power is through loyalty programs Loyalty program – rewards customers based on the amount of business they do with a particular organization

    41. Supplier Power (or Bargaining Power of Suppliers) Supplier power – high when buyers have few choices from whom to buy, and low when their choices are many Supply chain – consists of all parties involved in the procurement of a product or raw material

    42. Supplier Power (or Bargaining Power of Suppliers) Organizations that are buying goods and services in the supply chain can create a competitive advantage by locating alternative supply sources (decreasing supplier power) through B2B marketplaces Business-to-Business (B2B) marketplace – an Internet-based service that brings together many buyers and sellers

    43. Supplier Power Private exchange – a type of B2B marketplace where a single buyer posts its needs and then opens the bidding to any supplier who would care to bid May use a Reverse auction format – an auction format in which increasingly lower bids are solicited from organizations willing to supply the desired product or service at an increasingly lower price

    44. THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS Organizations typically follow one of Porter’s three generic strategies when entering a new market Broad cost leadership Broad differentiation Focused strategy: Focused low cost Focused differentiation

    45. THE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS

    46. THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS

    47. Value Creation & Value Chain Analysis Value chain - the set of activities or business processes through which a company transforms its inputs into outputs (products or services) At each step, the firm has the potential to “add value” to the product/service Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

    48. Value Creation & Value Chain Analysis Primary Value Activities - most directly affect a product’s competitive advantage – they are most directly related to providing value to the customer Receive & store raw materials (Inbound logistics) Make the product or service (Production) Deliver the product or service (Outbound logistics) Market & sell the product or service Service after the sale (Customer service)

    49. Value Creation & Value Chain Analysis Support Value Activities - support the primary activities; add value to the business process indirectly Firm Infrastructure Human Resource Management Technology Development (and R & D) Procurement

    50. The Value Chain and IS Each value chain activity provides a potential opportunity to increase value to the customer So – we can analyze a firm’s value chain to determine where & how we can use I.S. to increase value & gain competitive advantage I.S. can support/improve both primary & secondary activities

    51. Value Creation Value Chain

    52. Value Creation Affecting Industry Forces with your value chain

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