Chapter One Overview

1. Chapter One Overview • SECTION 1.1 – INFORMATION SYSTEMS IN BUSINESS • Information Technology’s Role in Business • Information Technology Basics • Roles and Responsibilities in Information Technology • Measuring Information Technology’s Success • SECTION 1.2 – BUSINESS STRATEGY • Identifying Competitive Advantages • The Five Forces Model – Evaluating Business Segments • The Three Generic Strategies – Creating a Business Focus • Value Chain Analysis – Targeting Business Processes

2. SECTION 1.1 INFORMATION SYSTEMS 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. Information Technology’s Impact on Business Operations • Organizations typically operate by functional areas or functional silos • Functional areas are interdependent

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 (or disabler) 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 • Data - raw facts that describe the characteristic of an event • Information - data converted into a meaningful and useful context • Noise – an overload of information

10. IT Resources • People use • Information technology to work with • Information

11. 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

12. 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

13. ROLES AND RESPONSIBILITIES IN ITBrief Summary (CInformationO) Ensure strategic alignment (CTechnologyO) Proper equipment/software (CSecurityO) Protect from viruses & hackers (CPrivacyO) restrict access to private info (CKnowledgeO) databases and AI systems

14. ROLES AND RESPONSIBILITIES IN IT • What concerns CIOs the most

15. ROLES AND RESPONSIBILITIES IN IT • Average CIO compensation by industry

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

17. Why we need MIS majors • 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 • MIS Majors bridge the gap.

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

19. MEASURING INFORMATION TECHNOLOGY’S SUCCESS • Key performance indicator(KPI) – measures that are tied to business drivers • What is an example of a business driver? • Metrics are detailed measures (numbers) that feed KPIs • Performance metrics can measure both efficiency and effectiveness.

20. Efficiency and Effectiveness Metrics • Efficiency IT metric – measures the performance of the IT system itself including throughput, speed, and availability • Effectiveness IT metric – measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases

21. Benchmarking – Baselining 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

22. Benchmarking – Baselining Metrics • E-governement benchmarks

23. The Interrelationships of Efficiency and Effectiveness IT Metrics • Efficiency IT metrics focus on technology and include: • Throughput • Transaction speed • System availability • Information accuracy • Web traffic • Response time

24. The Interrelationships of Efficiency and Effectiveness IT Metrics • Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include: • Usability • Customer satisfaction • Conversion rates • Financial

25. The Interrelationships of 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 • However, to be effective it must implement Internet security • Secure Internet connections must offer encryption and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)

26. The Interrelationships of Efficiency and Effectiveness IT Metrics Reality usually involves tradeoffs.

27. SECTION 1.2 BUSINESS STRATEGY

28. IDENTIFYING COMPETITIVE ADVANTAGES • To survive and thrive an organization must create a competitive advantage • Competitive advantage – a product or service that an organization’s customers place a greater value on than similar offerings from a competitor • First-mover advantage – occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

29. 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

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

31. BCG Model uses metrics • Market growth (High - Low) • Relative market share. (High – Low) • Invest in companies that are high in both

32. THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS • Organizations typically follow one of Porter’s three generic strategies • Broad cost leadership • Broad differentiation • Focused strategy

33. THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS This Porter model doesn’t cover all business situations, particularly E business. Where do you classify Ebay, Google, Yahoo, Amazon? What about Microsoft, Comcast, and other monopolies? Location based businesses – barbers, childcare, car washes, etc

34. Value Creation • Once an organization chooses its strategy, it can use tools such as the value chain. • Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order • Value chain – views an organization as a series of processes, each of which adds value to the product or service for each customer

35. Value Creation Value Chain