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CHAPTER ONE. INFORMATION SYSTEMS IN BUSINESS. The Role of IT in Business. Technology is everywhere Watch CNBC and you will see the importance of technology in business Look at productivity articles in the Wall Street Journal Listen to Ben Bernanke speak

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CHAPTER ONE

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Chapter one

CHAPTER ONE

INFORMATION SYSTEMS IN BUSINESS


The role of it in business

The Role of IT in Business

  • Technology is everywhere

    • Watch CNBC and you will see the importance of technology in business

    • Look at productivity articles in the Wall Street Journal

    • Listen to Ben Bernanke speak

  • A basic understanding of technology is a requirement of any business person


Ups an example

UPS – An Example

  • Synchronizing the World of commerce

    • About 14.0 million packages per day in 2012 generating $51.5 billion in revenue for the year

    • 101,000 vehicles

    • 5620 Aircraft (14 hubs)


Ups technology

UPS Technology

  • UPS.com processes 18 million package transactions daily

  • All package tracking is visible from one Web site

  • SCM Technology contributed over 9 Billion in revenue in 2012

  • Current technology investment is about 1.6 billion


Common it goals 1

Common IT Goals (1)

  • Reduce costs

    • Online transactions and statements

    • Online content management

  • Improve customer satisfaction

    • Self-service applications and CRM

  • Develop customer loyalty

    • Rewards and loyalty programs

    • Interactive marketing


Common it goals 2

Common IT Goals (2)

  • Create a competitive advantage

    • Amazon’s recommendations

    • UPS shipment tracking

  • Possess competitive intelligence

  • Streamline and improve the supply chain

    • Electronic data interchange

    • Just-in-time production

  • Growth in new and existing markets

    • Clicks and bricks


Information technology defined

Information Technology Defined

  • The field concerned with managing information is called information technology

  • Management information systems are a business function just as marketing is a business function


Information technology terms

Information Technology (Terms)

  • Data are raw facts

    • A transaction, bank deposit, etc.

  • Information is produced from raw data

    • To be useful, information must be put in the hands of the person that needs it

    • Information must appear in a useful form

      • Timely, relevant, ACTIONABLE


Information technology terms1

Information Technology (Terms)

  • Business intelligence refers to using technology to make better (fact based) decisions

    • Involves the use of complex analytical tools

    • More later in the business intelligence chapter


Information technology terms2

Information Technology (Terms)

  • Knowledge refers to the experience and expertise of individuals and organization


Common organizational units

Common Organizational Units

  • Accounting

  • Finance

  • HR

  • Sales and marketing

  • Operations management

    • Supply chain management

  • Management information systems


Management information systems and the organization

Management Information Systems and the Organization

  • Information must be shared and processed across functional units as business processes

    • Sales quotation (vendor) (Marketing)

    • Purchase order (customer)

    • Shipping documents (vendor) (SCM)

    • Invoice (vendor) (Accounting)

    • Payment (customer)


It roles history

IT Roles (History)

  • Historically, IT was viewed as a necessary evil

    • IT did not make a profit or contribute to an organization’s bottom line

    • IT was just a cost center

    • IT was not a strategic part of the organization

  • In some cases IT has evolved into a profit center


It roles

IT Roles

  • Strategic-level IT positions are becoming commonplace

    • Chief Information Officer

    • Chief Technology Officer

    • Chief Knowledge Officer

    • Chief Data Officer

    • Chief Security Officer


Organizational cultures and it

Organizational Cultures and IT

  • Information Discovery

    • Seek radical new ways to do business

  • Information Inquiring

    • Understand trends and align business with them

  • Information Sharing

  • These cultures are not mutually exclusive

  • Dysfunctional organizations?


The it dilemma

The IT Dilemma

  • IT must understand user and business needs

  • Many failed IT projects are caused by human and organizational factors rather than technical factors

    • Hershey (ERP)

    • United’s baggage system at DIA


Success metrics for it executives

Success Metrics for IT Executives


Benchmarking

Benchmarking

  • Use quantitative metrics to assess efficiency of hardware and software

  • Efficiency benchmarks

    • Transaction processing benchmarks

      • www.tpc.org

    • Raw performance benchmarks

      • www.spec.org


Competitive forces models

Competitive Forces Models

  • These model apply not only to IT but business in general

    • Michael Porter’s Five Forces Model

    • Value chain analysis

    • Generic strategies


Porter s five forces model illustration

Porter’s Five Forces Model (Illustration)


Porter s five forces model 1

Porter’s Five Forces Model (1)

  • Buyer power

    • Reduce buyer power through loyalty programs

      • Frequent flyer

      • Gaming rewards

      • Increase switching costs

  • Supplier power

    • The inverse of buyer power

    • Enhance through B to B exchanges

    • Reverse auctions – Clients competitively bid down cost of goods or services


Five forces model 2

Five Forces Model (2)

  • Substitution threat

    • High when there are many buyer choices

      • Amazon vs. Barnes and Noble

    • Lower when switching costs are high

  • Threat of new entrants

    • High when it’s easy to enter a market

    • UPS / FedEx have a low threat

  • Competition rivalry

    • Groceries and other commoditized items


Porter s three business strategies

Porter’s Three Business Strategies


Porter s three business strategies1

Porter’s Three Business Strategies

  • Cost leadership

    • Lower costs through information technology

    • Hyundai

  • Broad differentiation

    • Audi

  • Focused strategy in narrow markets

    • Porsche


Value chain analysis

Value Chain Analysis

  • Value chain views an organization as a group of processes

    • Each process adds value to a product or service

      • Wal-Mart's supply chain adds value to the organization by reducing cost

      • IT systems support this activity

  • Divide activities into support activities and primary activities


Value chain primary activities

Value Chain (Primary Activities)

  • Activities vary based on what the organization produces

    • Supply chain optimization

      • Warehousing / delivery

    • Manufacturing

      • Materials requirements planning

      • Process control

    • Marketing

      • CRM systems

    • Customer service

      • CRM systems


Value chain support activities

Value Chain (Support Activities)

  • Activities related to the business itself

    • Managing human resources

    • Infrastructure

    • Technology development (It’s a primary activity for Google, Twitter, Facebook)


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