S2_-BI_FS25

Course Overview

Definition of Information Systems (IS):
- Interrelated components designed to manage information to:
  - Support decision-making and control
  - Aid in analysis, visualization, and product creation
- Comprised of hardware, software, people, communications networks, data, and processes.
- Information Technology (IT) Relation:
  - Application of digital technologies for business purposes, focusing on data management, processes, storage, and exchange.

Purpose of Information Systems:
- Increase productivity and revenue aligned with long-term strategies.
Learning Objectives:
- Understand definitions of organisations and the features managers need to know to effectively utilize IS.
- Examine the impact of IS on business organisations and corporate strategy.
- Explore how companies can gain competitive advantages through the use of IS.

Technical Definition of Organisation:
- A stable, formal social structure processing resources to produce outputs.
- Key Properties:
  - Stability: More stable than informal groups due to longevity and routine.
  - Legal Entity: Follows internal rules and legal statutes.
  - Social Structure: Consists of social elements actively involved in the organisation.

Inputs: Resources provided by the environment.
Transformation: The organisation transforms inputs into outputs through production processes.
Outputs: The products and services consumed by the environment, creating a feedback loop.

Behavioural Definition of Organisation:
- Collection of rights, privileges, obligations, and responsibilities which evolve over time.
- Emphasis on group dynamics and informal rules of engagement.

Two-Way Relationship:
- Structure, processes, and organisational culture all influence the IT used.
- IT affects organisational structures, decision-making processes, and can lead to flattening hierarchies.

Economic Impacts:
- IS is a production factor, substituting labour (reducing middle management) and capital.
Transaction Cost Theory:
- Explains existence and behaviour of organisations concerning transaction costs.
- IT lowers market transaction costs, allowing for external transactions instead of vertical integration.
Agency Theory:
- Focus on self-interest alignment between principals and agents in an organisation.
- IT can reduce agency costs, facilitating growth without the proportional increase in supervision costs.

Flattening of Organisations:
- IT enables faster decision-making, empowers lower-level employees, and reduces management layers.
- Resistance to Change:
  - Resistance stemming from political dynamics and necessary adjustments in structure, tasks, innovation, and culture.

Value Chain Model:
- A model identifying key activities that can be optimized for competitive advantages.
- Value Web:
  - Connects a firm's value chain with those of suppliers and customers, increasing customer-driven operations.

Definition:
- SIS influence goals, operations, products, and relationships, enabling competitive advantages.
Examples of SIS Changing Core Business:
- Hanover Compressor evolved from a gas compression focus to a comprehensive solution provider.
- Cardinal Health shifted from distribution to providing innovative health solutions.

Organisations produce output through stable structures that process environmental resources.
The choice of IS is influenced by the characteristics of the organisation, which in turn shapes the operational environment.
The integration of IS into management structures leads to neater hierarchies, facilitating quicker decision-making.
Understanding competitive forces is crucial for performance, along with adapting to the ever-changing environment.
Different value chain approaches, linear and web, impact competitive advantage.