Information Systems in Business Today Management Information Systems

Information Systems in Business Today Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Chapter 1

The Role of Information Systems in Business Today How information systems are transforming business Businesses use information systems to sense and respond to rapidly changing customer demands Increase in wireless technology use i. e. smartphones, tablets Web sites for products and services i. e. Bikroy. com, GP e. Customer Care Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. •

Digital Firms In a digital firm: Significant business relationships are digitally enabled and mediated i. e. relationship between Agora and its suppliers Core business processes are accomplished through digital networks • Digital firms management offer greater flexibility in organization and Time shifting: GP e-customer care offers services 24/7 Space shifting: Products designed in Apple, and manufacturing in China. Apple sends its design specification electronically Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. •

• Business firms invest heavily in information systems to achieve six strategic business objectives: Operational excellence New products and services Customer and supplier intimacy Improved decision making Competitive advantage Survival Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Business Objectives of Information Systems

Operational Excellence Improvement of efficiency to attain higher profitability efficiency and productivity Walmart’s Retail. Link system links suppliers to stores for superior replenishment system Information system is a major enabling tool for new products, and services § Examples: Apple’s i. Pod, i. Tunes, Apple Store, i. Phone, i. Pad, Google’s Android OS, and Netflix Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Information system is an important tool in achieving greater

Customer and Supplier Intimacy § Ø § Serving customers well leads to customers returning, which raises revenues and profits Example: High-end hotels that use computers to track customer preferences Intimacy with suppliers allows a firm to provide vital inputs, which lowers costs Example: J. C. Penney’s information system links sales records to the manufacturers systems in Hong Kong, Bangladesh, China, Sri Lanka, and India. Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Ø

Improved Decision Making § Managers must use best guesses that lead to: q Overproduction, underproduction of goods and services q Misallocation of resources q Poor response times q Less customer retentions A good example of accurate information: Verizon’s (a cell phone service provider in the USA) web-based digital dashboard provides managers with real-time data on customer complaints, network performance, line outages, etc. Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Without accurate information:

Competitive Advantage Doing things better than competitors Charging less for high-turnover products Responding to customers and suppliers in real time Example: Walmart Inc. Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Use of information systems lead to:

Survival § Industry-level changes, e. g. Citibank’s introduction of ATMs lead other competitors to introduce ATMs § Governmental regulations requiring record-keeping including all digital records e. g. Sarbanes-Oxley Act Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Information technologies as necessity of business:

What is an Information Systems? • Information systems: Collect, process, store, and distribute information Support decision making, coordination, and control • Information vs. data Data are streams of raw facts Information is data shaped into meaningful form Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Set of interrelated components (database, network infrastructure, security, computer hardware, software)

• Three activities of information systems produce information organizations need Input: Captures raw data from organization or external environment Processing: Converts raw data into meaningful form Output: Transfers processed information to people or activities that use it Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. 3 activities of Information Systems

Dimensions of Information Systems To use information systems effectively requires an understanding of the ORGANIZATION, MANAGEMENT, and TECHNOLOGY shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment. Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Information Systems are More Than Computers

Organizational Dimensions of Information Systems Ø Organizational levels Business organizations are hierarchies Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Ø Business functions § Sales and marketing § Human resources § Finance and accounting § Manufacturing and production Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon

Management Dimensions of Information Systems – Make sense out of many situations faced by organizations – Make decisions, and formulate plans to solve problems faced by organizations Managers use information systems to complete the jobs. In addition, managers use information systems to create new products and services Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Management’s job is to:

Computer hardware and software Data management technology Networking and telecommunications technology § Networks, the Internet, intranets and extranets, World Wide Web IT infrastructure: provides platform that system is built on Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. Technology Dimensions of Information Systems

Why Invest on Information Systems? Investments in information technology will result in superior § Productivity increases § Revenue increases § Superior long-term strategic positioning Management Information Systems: Managing the Digital Firm, 12 e Authors: Kenneth C. Laudon and Jane P. Laudon Copyright © 2013 Dorling Kindersley (India) Pvt. Ltd. returns: