Management Information Systems Flashcards

Information Systems in Business Today

Learning Outcomes

• 1-1: Information systems are transforming business, and are essential for running and managing a business today.
• 1-2: Understanding of what an information system is, how it works, its management, organization, and technology components. Understanding why complementary assets are essential for ensuring that information systems provide genuine value for organizations.
• 1-3: Understanding of what academic disciplines are used to study information systems, and how each contributes to an understanding of information systems.

Video Cases

• Case 1: Business in the Cloud: Facebook and eBay Data Centers
• Case 2: UPS Global Operations with the DIAD
• Instructional Video: Tour IBM’s Raleigh Data Center

Rugby Football Union Tries Big Data

• Problem: Improving fan engagement through Big Data.
• Solutions:
  • Provide data visualization and real-time statistics to draw in fans.
  • Provide tactical insights to players and coaches that will improve match play.
• Rugby Football Union uses TryTracker to capture and analyze Big Data that will be useful to both fans and players.
• Demonstrates IT’s role in increasing value and revenue in any business.
• Illustrates the potential for technology to improve customer experience.

Introduction

• Information systems and technologies are transforming the global business environment.
• In 2015, global firms and governments spent about €3.4 trillion on information systems hardware, software, and telecommunications equipment. They also spent another €544 billion on business and management consulting and services, much of which involves redesigning firms’ business operations to take advantage of these new technologies.
• Most of the business value of IT investment derives from organizational, management, and cultural changes inside firms. It is not simply the technology that is changing.

How Information Systems Are Transforming Business

• Mobile digital platform.
• Systems used to improve customer experience, respond to customer demand, reduce inventories, and more.
• Growing online newspaper readership.
• Expanding e-commerce and Internet advertising.
• New federal security and accounting laws.
• Some 2.8 billion people worldwide have smartphones (50 percent of the world’s population).
• 1.26 billion use their smartphones for Internet access.
• More than 1 billion people use tablet computers, about 15 percent of the global population.
• An estimated 2.34 billion people now use social networks, with Facebook accounting for 1.7 billion people alone.
• Messaging services like WhatsApp, Facebook Messenger, and Twitter collectively have over 2 billion monthly users.
• Smartphones, social networking, texting, e-mailing, and webinars have all become essential tools of business because that’s where your customers, suppliers, and colleagues can be found.
• June 2015, more than 150 million businesses worldwide had dot-com Internet sites registered.
• In 2016, 1.62 billion Internet users purchased online, generating $1.9 billion in sales.
• In 2015, FedEx moved about 11.5 million packages daily in 220 countries and territories around the world, and United Parcel Service (UPS) mostly moved more than 18 million packages daily.
• Online newspapers are read by one billion people, growing at 10 percent annually, far faster than print newspapers, in comparison with the 2.7 billion people who read a print newspaper.
• An estimated 1.7 billion people watch videos and feature films online, 100 million post to a blog everyday, and 250 million read a blog, creating an explosion of new writers and new forms of customer feedback that did not exist five years ago.
• Global e-commerce and Internet advertising continue to expand. Internet advertising continues to grow at more than 20 percent a year, reaching more than €194 billion in revenues in 2016. That’s about one-third of all advertising in the world.
• Google’s online ad revenues surpassed €80 billion in 2016.

Information Technology Capital Investment

• Total Investment: Shows investment increasing from 2000 to 2015, represented by a line sloping upwards.
• IT Investment: IT investment also increases from 2000 to 2015, but at a lower rate.
• 2000: IT investment is 21% of total investment.
• 2015: IT investment is 37% of total investment.

What’s New In Management Information Systems

Technology

• Cloud computing.
• Big data and the Internet of Things (IoT).
• Mobile digital platform.

Management

• Online collaboration and social networking software.
• Business intelligence.
• Virtual meetings.

Organizations

• Social business.
• Telework.
• Co-creation of business value.

What's New In Management Information Systems - Technology

• Cloud Computing:
  • A flexible collection of computers on the Internet begins to perform tasks traditionally performed on corporate computers.
  • Major business applications are delivered online as an Internet service (Software as a Service or SaaS).
• Big Data:
  • Businesses look for insights from huge volumes of data from Web traffic, e-mail messages, social media content, and machines (sensors) that require new data management tools to capture, store, and analyze.
• Mobile Digital Platform:
  • The Apple iPhone and tablet computers and Android mobile devices are able to download hundreds of thousands of applications to support collaboration, location-based services, and communication with colleagues.
  • Small tablet computers, including the iPad and Kindle Fire, challenge conventional laptops as platforms for consumer and corporate computing.

What's New In Management Information Systems - Management

• Managers adopt online collaboration and social networking software to improve coordination, collaboration, and knowledge sharing:
  • Google Apps, Google Sites, Microsoft Windows SharePoint Services, and IBM Lotus Connections are used by over 100 million business professionals worldwide to support blogs, project management, online meetings, personal profiles, social bookmarks, and online communities.
• Business intelligence applications accelerate:
  • More powerful data analytics and interactive dashboards provide real-time performance information to managers to enhance decision-making.
• Virtual meetings proliferate:
  • Managers adopt telepresence videoconferencing and Web conferencing technologies to reduce travel time and cost while improving collaboration and decision-making.

What's New In Management Information Systems - Organizations

• Social Business:
  • Businesses use social networking platforms, including Facebook, Twitter, and internal corporate social tools, to deepen interactions with employees, customers, and suppliers.
  • Employees use blogs, wikis, e-mail texting, and SMS messaging to interact in online communities.
• Telework gains momentum in the workplace:
  • The Internet, wireless laptops, smartphones, and tablet computers make it possible for growing numbers of people to work away from the traditional office.
  • Fifty-five percent of U.S. businesses have some form of remote work program.
• Co-creation of business value:
  • Sources of business value shift from products to solutions and experiences, and from internal sources to networks of suppliers and collaboration with customers.
  • Supply chains and product development become more global and collaborative; customer interactions help firms define new products and services.

What’s New In Management Information Systems - Overview

• A continuing stream of information technology innovations is transforming the traditional business world.
• Examples include the emergence of cloud computing, the growth of a mobile digital business platform based on smartphones and tablet computers, big data, business analytics, and the use of social networks by managers to achieve business objectives.
• For instance, the emergence of online video services like Netflix for streaming, Apple iTunes, Amazon, and many others for downloading video has forever changed how premium video is distributed and even created.
• Netflix in 2016 attracted more than 75 million subscribers worldwide to what it calls the “Internet TV” revolution.
• Netflix has moved into premium TV show production with 30 original shows such as House of Cards and Orange Is the New Black, challenging cable and broadcast producers of TV shows, and potentially disrupting cable network dominance of TV show production.
• Apple’s iTunes now accounts for 67 percent of movie and TV show downloads and has struck deals with major Hollywood studios for recent movies and TV shows. A growing trickle of viewers are unplugging from cable and using only the Internet for entertainment.
• E-commerce generated about 600 billion in revenues in 2016 and is estimated to grow to nearly 900 billion by 2020. E-commerce is changing how firms design, produce, and deliver their products and services.
• Facebook and other social networking sites such as YouTube, Twitter, and Tumblr along with Netflix, Apple Beats music service, and many other media firms exemplify the new face of e-commerce in the twenty-first century. They sell services.

Interactive Session: Management

• Class Discussion
  • What kinds of applications are described here? What business functions do they support? How do they improve operational efficiency and decision making?
  • Identify the problems that businesses in this case study solved by using mobile digital devices.
  • What kinds of businesses are most likely to benefit from equipping their employees with mobile digital devices such as iPhones and iPads?
  • One company deploying iPhones has said, “The iPhone is not a game changer; it's an industry changer. It changes the way that you can interact with your customers” and “with your suppliers.” Discuss the implications of this statement.

Globalization: Challenges and Opportunities

• Internet has drastically reduced costs of operating on global scale.
• Increases in foreign trade, outsourcing.
• Presents both challenges and opportunities.

The Emerging Digital Firm

• In a fully digital firm:
  • Significant business relationships are digitally enabled and mediated.
  • Core business processes are accomplished through digital networks.
  • Key corporate assets are managed digitally.
• Digital firms offer greater flexibility in organization and management.
  • Time shifting, space shifting.

Strategic Business Objectives of Information Systems

• Growing interdependence between:
  • Ability to use information technology and
  • Ability to implement corporate strategies and achieve corporate goals.
• Firms invest heavily in information systems to achieve six strategic business objectives:
  1. Operational excellence
  2. New products, services, and business models
  3. Customer and supplier intimacy
  4. Improved decision making
  5. Competitive advantage
  6. Survival

The Interdependence Between Organizations and Information Systems

• Depicts a cyclical relationship between Business Strategic Objectives, Business Processes, the Business Firm, and Information Systems. Information Systems includes Hardware, Software, Data Management, and Telecommunications.

Operational Intelligence

• Improvement of efficiency to attain higher profitability.
• Information systems, technology an important tool in achieving greater efficiency and productivity.
• Walmart’s Retail Link system links suppliers to stores for a superior replenishment system.

New Products, Services, and Business Models

• Business model: Describes how a company produces, delivers, and sells a product or service to create wealth.
• Information systems and technology are a major enabling tool for new products, services, and business models.
  • Examples: Apple’s iPad, Google’s Android OS, and Netflix.

Customer and Supplier Intimacy

• Serving customers well leads them to return, increasing revenue and profits.
  • Example: High-end hotels that use computers to track customer preferences and then monitor and customize the environment.
• Intimacy with suppliers allows them to provide vital inputs, which lowers costs.
  • Example: JCPenney’s information system which links sales records to contract manufacturers.

Improved Decision Making

• Without accurate information:
  • Managers must use forecasts, best guesses, luck.
  • Results in:
    • Overproduction, underproduction
    • Misallocation of resources
    • Poor response times
  • Poor outcomes raise costs, lose customers.
• Example: Verizon’s web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, and so on.

Competitive Advantage

• Delivering better performance.
• Charging less for superior products.
• Responding to customers and suppliers in real-time.
• Examples: Apple, Walmart, UPS.

Survival

• Information technologies as necessity of business.
• Industry-level changes
  • Example: Citibank’s introduction of ATMs.
• Governmental regulations requiring record-keeping
  • Examples: Toxic Substances Control Act, Sarbanes-Oxley Act, Dodd-Frank Act.

What Is an Information Technology?

• Information technology (IT) consists of all the hardware and software that a firm needs to use in order to achieve its business objectives.
• IT includes not only computer machines, storage devices, and handheld mobile devices but also software, such as the Windows or Linux operating systems, the Microsoft Office desktop productivity suite, and the many thousands of computer programs that can be found in a typical large firm.
• “Information systems” are more complex and can be best understood by looking at them from both a technology and a business perspective.

What Is an Information System?

• An information system can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization.
• In addition to supporting decision making, coordination, and control, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products.
• Information systems contain information about significant people, places, and things within the organization or in the environment surrounding it. By information, we mean data that have been shaped into a form that is meaningful and useful to human beings.
• Data, in contrast, are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use.
• Information system
  • Set of interrelated components
  • 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

Data and Information

• Presents a visual representation of how raw data (e.g., individual sales records) is transformed into meaningful information (e.g., sales report).

What Is an Information System? - Activities

• Three activities of information systems produce information organizations need:
  • Input: Captures raw data from the organization or external environment.
  • Processing: Converts raw data into a meaningful form.
  • Output: Transfers processed information to people or activities that use it.
• Feedback: Output is returned to appropriate members of the organization to help evaluate or correct the input stage.
• Computer/computer program vs. information system
  • Computers and software are technical foundation and tools, similar to the material and tools used to build a house.

Functions of an Information System

• Depicts the flow of data through an information system, including the environment (suppliers, customers, regulatory agencies, stockholders, competitors), input, processing, output, and feedback.

Dimensions of Information Systems

• Highlights the three dimensions of information systems: Organizations, Management, and Technology.

Information Systems Are More Than Computers

• Presents a diagram emphasizing that information systems encompass Organizations, Management, and Technology.

Dimensions of Information Systems: Organizations

• Hierarchy of authority, responsibility
  • Senior management
  • Middle management
  • Operational management
  • Knowledge workers
  • Data workers
  • Production or service workers
• Separation of business functions
  • Sales and marketing
  • Human resources
  • Finance and accounting
  • Manufacturing and production
• Unique business processes
• Unique business culture
• Organizational politics

Levels in a Firm

• Illustrates the hierarchy within a firm, from senior management to production and service workers, including the roles of middle management, scientists, knowledge workers, and data workers.

Dimensions of Information Systems: Organizations - Functions

• Sales and marketing: Selling the organization's products and services.
• Manufacturing and production: Producing and delivering products and services.
• Finance and accounting: Managing the organization's financial assets and maintaining the organization's financial records.
• Human resources: Attracting, developing, and maintaining the organization's labor force; maintaining employee records.

Dimensions of Information Systems: Management

• Managers set organizational strategy for responding to business challenges.
• Managers must act creatively
  • Creation of new products and services
  • Occasionally re-creating the organization

Dimensions of Information Systems: Technology

• Computer hardware and software.
• Data management technology.
• Networking and telecommunications technology
  • Networks, the Internet, intranets, extranets, World Wide Web.
• IT infrastructure: Provides platform that a system is built on.

Interactive Session: Technology

• Class Discussion
  • What technologies are used by JurongHealth? What purpose do they serve?
  • Search the web for RFID. Suggest an example of using RFID for locating and tracking people.
  • What information systems are implemented by JurongHealth? Describe the input, processing, and output of any one such system.
  • Why are information systems important for JurongHealth?

It Isn’t Just Technology: A Business Perspective on Information Systems

• Information system is an instrument for creating value.
• Investments in information technology will result in superior returns
  • Productivity increases
  • Revenue increases
  • Superior long-term strategic positioning
• Business information value chain
  • Raw data acquired and transformed through stages that add value to that information
  • Value of information system determined in part by the extent to which it leads to better decisions, greater efficiency, and higher profits
• Business perspective
  • Calls attention to organizational and managerial nature of information systems
• Investing in information technology does not guarantee good returns
• There is considerable variation in the returns firms receive from systems investments
• Factors
  • Adopting the right business model
  • Investing in complementary assets (organizational and management capital)

The Business Information Value Chain

• Illustrates the transformation of data into business value through various stages, including data collection, transformation, dissemination and storage into business systems, and the ultimate impact on firm profitability and strategic position.

Variation in Returns on Information Technology

• A graph plotting IT Capital Stock relative to the industry average against Productivity (relative to industry average), demonstrating that increased IT investment does not always correlate with increased productivity.

Contemporary Approaches to Information Systems

• Presents a diagram showing the various disciplines that contribute to the study of information systems, including technical approaches (computer science, management science, operations research) and behavioral approaches (psychology, economics, sociology).

Technical Approach

• Emphasizes mathematically based models
• Computer science, management science, operations research

Behavioral Approach

• Behavioral issues (strategic business integration, implementation, etc.)
• Psychology, economics, sociology

Approach of This Text: Sociotechnical Systems

• Management information systems
  • Combines computer science, management science, operations research, and practical orientation with behavioral issues
• Four main actors
  • Suppliers of hardware and software
  • Business firms
  • Managers and employees
  • Firm’s environment (legal, social, cultural context)
• Sociotechnical view
  • Optimal organizational performance achieved by jointly optimizing both social and technical systems used in production
  • Helps avoid purely technological approach

A Sociotechnical Perspective on Information Systems

• Illustrates the need to jointly optimize both the technology and the organization when designing information systems, considering various alternatives and their impact on the final design.