IT Slide01

Management Information Systems:
Managing the Digital Firm

Sixteenth Edition
Chapter 1
Information Systems in Global
Business Today
Copyright © 2020, 2018, 2016 Pearson Education, Inc. All Rights Reserved
How Information Systems Are
Transforming Business (1 of 2)
• In 2017, more than 140 million businesses had dot-com
addresses registered
• 273 million adult Americans online; 190 million purchased
online
• 269 million Americans have mobile phones
• 200 million use social networks
How Information Systems Are
Transforming Business (2 of 2)
• Social networking tools being used by businesses to
connect employees, customers, and managers
• Internet advertising continues to grow at more than 20
percent per year
• New laws require businesses to store more data for longer
periods
• Changes in business result in changes in jobs and careers
Figure 1.1 Information Technology
Capital Investment
What’s New in Management
Information Systems (1 of 3)
• IT Innovations
– Cloud computing, big data, Internet of Things
– Mobile digital platform
– AI and machine learning
• New Business Models
– Online streaming music and video
– On-demand e-commerce services
• E-commerce Expansion
– E-commerce expands to nearly $1 trillion in 2018
– Netflix now has more than 125 million US subscribers
– Online services now approach online retail in revenue
– Online mobile advertising now larger than desktop
• Management Changes
– Managers use social networks, collaboration tools
– Business intelligence applications accelerate
– Virtual meetings proliferate
• Firms and Organizations Change
– More collaborative, less emphasis on hierarchy and
structure
– Greater emphasis on competencies and skills
– Higher-speed/more accurate decision making based on data
and analysis
– More willingness to interact with consumers (social media)
– Better understanding of the importance of IT
SUT – IE – Information Technology - Turban
Digital Transformation
• “Application of digital capabilities to processes, products, and assets to
improve efficiency, enhance customer value, manage risk, and uncover
new monetization opportunities.” Bill Schmarzo, CIO.com
• “The use of technology to radically improve the performance or reach of an

organization. In a digitally transformed business, digital technologies
enable improved processes, engaged talent, and new business models.”
Deloitte
8
Industry 4.0
• AKA fourth industrial revolution
• Industry 4.0 refers to a new phase in the Industrial Revolution that focuses
heavily on interconnectivity, automation, machine learning, and real-time
data. Industry 4.0, which encompasses IIoT and smart manufacturing,
marries physical production and operations with smart digital technology,
machine learning, and big data to create a more holistic and better
connected ecosystem for companies that focus on manufacturing
and supply chain management. Epicor.com
9
Industry 4.0
10
Globalization Challenges and
Opportunities: A Flattened World
(1 of 2)
• Internet and global communications have greatly
changed how and where business is done
– Drastic reduction of costs of operating and transacting
on global scale
– Competition for jobs, markets, resources, ideas
– Growing interdependence of global economies
Globalization Challenges and
Opportunities: A Flattened World
(2 of 2)
– Requires new understandings of skills, markets,
opportunities
– Challenges yes, but opportunities as well
– Over half of the revenue of S&P 500 US firms is
generated off shore
– Information systems enable globalization of commerce
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
• Growing interdependence between:
– Ability to use information technology
– Ability to implement corporate strategies and achieve
corporate goals
Strategic Business Objectives of
• 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
Figure 1.2 The Interdependence Between
Organizations and Information Systems
Operational Excellence
• Improved efficiency results in higher profits
• Information systems and technologies help improve
efficiency and productivity
• Example: Walmart
– Power of combining information systems and best
business practices to achieve operational efficiency—
and over $485 billion in sales in 2017
– Most efficient retail store in world as result of digital
links between suppliers and stores
New Products, Services, and
Business Models
• Information systems and technologies enable firms to create
new products, services, and business models
• Business model: how a company produces, delivers, and sells
its products and services
• Example: Apple
– Transformed old model of music distribution with iTunes
– Constant innovations—iPod, iPhone, iPad, etc.
Customer and Supplier Intimacy
• Customers who are served well become repeat customers who
purchase more
– Example: Mandarin Oriental Hotel
– Uses IT to foster an intimate relationship with its customers,
keeping track of preferences, etc.
• Close relationships with suppliers result in lower costs
– Examples: Mandarin Oriental Hotel and JC Penney (in text)
– JC Penney uses IT to enhance relationship with supplier in
Hong Kong
Improved Decision Making (1 of 2)
• Without accurate information:
– Managers must use forecasts, best guesses, luck
– Results in:
▪ Overproduction, underproduction
▪ Misallocation of resources
▪ Poor response times
Improved Decision Making (2 of 2)
• Poor outcomes raise costs, lose customers
• Real-time data improves ability of managers to make
decisions.
• Example: Verizon’s web-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, etc.
Competitive Advantage
• Often results from achieving previous business objectives
• Advantages over competitors
• Charging less for superior products, better performance,
and better response to suppliers and customers
• Examples: Apple, Walmart, UPS are industry leaders
because they know how to use information systems for this
purpose
Survival
• Businesses may need to invest in information systems out
of necessity; simply the cost of doing business
• Keeping up with competitors
– Citibank’s introduction of ATMs
• Federal and state regulations and reporting requirements
– Toxic Substances Control Act and the Sarbanes-Oxley
Act
What Is an Information System?
(1 of 3)
• Information technology: the hardware and software a
business uses to achieve objectives
• Information system: interrelated components that manage
information to:
– Support decision making and control
– Help with analysis, visualization, and product creation
• Data: streams of raw facts
• Information: data shaped into meaningful, useful form
Figure 1.3 Data and Information
Figure 1.4 Functions of an
Information System
Figure 1.5 Information Systems Are
More Than Computers
Approach of This Text:
Sociotechnical Systems
• Sociotechnical view
– Optimal organizational performance achieved by jointly
optimizing both social and technical systems used in
production
– Helps avoid purely technological approach
Management Information Systems:
Managing the Digital Firm
Sixteenth Edition
Chapter 2
Global E-Business and
Collaboration
Business Processes (1 of 2)
• Business processes
– Flows of material, information, knowledge
– Logically related set of tasks that define how specific
business tasks are performed
– May be tied to functional area or be cross-functional
• Businesses: Can be seen as collection of business
processes
• Business processes may be assets or liabilities
Business Processes (2 of 2)
• Examples of functional business processes
– Manufacturing and production
▪ Assembling the product
– Sales and marketing
▪ Identifying customers
– Finance and accounting
▪ Creating financial statements
– Human resources
▪ Hiring employees
Figure 2.1 The Order Fulfillment Process
How Information Technology Improves
Business Processes
• Increasing efficiency of existing processes
– Automating steps that were manual
• Enabling entirely new processes
– Changing flow of information
– Replacing sequential steps with parallel steps
– Eliminating delays in decision making
– Supporting new business models
Different Types of Information
Systems for Different Management
Levels ESS
DSS
MIS
TPS
Groups (1 of 2)
• Transaction processing systems
– Serve operational managers and staff
– Perform and record daily routine transactions necessary to
conduct business
▪ Examples: sales order entry, payroll, shipping
– Allow managers to monitor status of operations and
relations with external environment
– Serve predefined, structured goals and decision making
Figure 2.2 A Payroll TPS
Groups (2 of 2)
• Systems for business intelligence
– Data and software tools for organizing and analyzing
data
– Used to help managers and users make improved
decisions
• Management information systems
• Decision support systems
• Executive support systems

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Management Information Systems:

Managing the Digital Firm

• “The use of technology to radically improve the performance or reach of an

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