1 Sistem Informasi

Chapter 1
Information Systems in Global Business Today
1.1
2007 by Prentice Hall
Management Information Systems

Chapter 1 Information Systems in Global Business Today
LEARNING OBJECTIVES
Explain why information systems are so essential in business today.

Define an information system from both a technical and a business perspective. Identify and describe the three dimensions of information systems.
1.2

LEARNING OBJECTIVES (Continued)
Assess the complementary assets required for information technology to provide value to a business. Identify the major management challenges to building and using information systems.
1.3

Smart Systems and Smart Ways of Working Help Toyota Become Number One
Problem: Tough competition and demanding customers. Solutions: Redesigned order and production processes reduce costs, increase revenue, and improve customer service. Oracle E-Business Suite makes it possible to build cars to order and forecast demand and production requirements more accurately.
Demonstrates ITs role in analyzing market trends and monitoring quality, efficiency, and costs. Illustrates the emerging digital firm landscape where businesses can use tools to analyze critical data.
1.4

The Role of Information Systems in Business Today
How information systems are transforming business

Increased technology investments by firms (up-to 50% of total investments) Increased responsiveness to customer demands: A Fed-Ex economy Shifts in media and advertising (online newpapers, Internet adverts) New federal security and accounting laws (e.g. storing employee e-mails for 5 years) leading to growth of digital information
1.5

Globalization opportunities
Internet has drastically reduced costs of operating on a global scale Customers shop in a worldwide marketplace
Firms reduce costs by finding low cost suppliers and managing facilities in other countries Small firms can act big Large firms can act small (mass customization)
1.6

The emerging digital firm

Significant business relationships are digitally enabled and mediated (external) Core business processes are accomplished through digital networks (internal) Key corporate assets (like core competencies, financial and human assets) are managed digitally
Digital firms offer greater flexibility in organization and management

Time shifting: operating 24 hrs, 7 days Space shifting: no geographic boundaries
1.7

Virtual Management at Accenture

Consulting firm, 129 000 employees, 48 countries, no headquarters, no branches Read the Interactive Session and then discuss the following questions:
What are the advantages of working in a virtual environment like the one created by Accenture? What are the disadvantages? Would you like to work at a company like Accenture? Why or why not? Explain your answer. What kinds of companies could benefit from being run virtually like Accenture? Could all companies be run virtually like Accenture?
1.8

Business firms invest heavily in information systems to achieve six strategic business objectives:
Operational excellence New products, services, and business models Customer and supplier intimacy Improved decision making Competitive advantage Survival
1.9

Operational excellence:
Improvement of efficiency to attain higher profitability Information systems, technology an important tool in achieving greater efficiency and productivity E.g. Wal-Marts RetailLink system links suppliers to its 5289 stores wordlwide for superior replenishment system
1.10

New products, services, and business models:

Business model: describes how company produces, delivers, and sells product or service to create wealth Information systems and technology are a major enabling tool for new products, services, business models
E.g. Apples iPod, iTunes transformed the old business model of music distribution from CDs into online Netflixs Internet-based DVD rentals vs rental stores
1.11

Customer and supplier intimacy:

Serving customers well leads to customers returning, which raises revenues and profits
E.g. High-end hotels that use computers to track customer preferences (room temperature, TV channels) and use IS to monitor and customize environment
Intimacy with suppliers allows them to provide vital inputs, which lowers costs
E.g. J.C.Penneys information system which links shirt sales records at each store to contract manufacturer in Hong Kong. Supplier produces (quantity, style, color, size) based on the sales records and delivers directly to stores; no inventory storage costs for J.C.Penney, lower price to customer
1.12

Improved decision-making
Without accurate information:
Managers must use forecasts, best guesses, luck Leads to:
Overproduction/underproduction of goods and services Misallocation of resources Poor response times
Poor outcomes raise costs, lose customers E.g. Verizons (phone company) Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc. Fast response through immediate allocation of repair resources
1.13

Competitive advantage
Delivering better performance Charging less for superior products Responding to customers and suppliers in real time Often achieved through one of first four strategic business objectives E.g. Dell: Consistent profitability over 25 years; Dell remains one of the most efficient producer of PCs in world (mass customization) But Dell has lost some of its advantages to fast followers HP (competitive advantage is not sustainable)
1.14

Survival
Information systems and technologies as a necessity for businesses to survive Driven by:
Industry-level changes, e.g. the introduction of ATMs by one bank forces other banks to follow Governmental regulations requiring record-keeping
E.g. Toxic Substances Control Act (records of emloyee exposure for 30 years), Sarbannes-Oxley Act (after the Enron scandal, retain audit papers and records including e-mails for 5 years) Firms need IS capability to respond to these requirements
1.15

The Interdependence Between Organizations and Information Technology
There is a growing interdependence between a firms information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.
Figure 1-2
1.16

Perspectives on Information Systems
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
Knowledge?
1.17

Information system: Three activities 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
1.18

Feedback:
Output returned to appropriate members of organization to help evaluate or correct 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
1.19

Functions of an Information System

Other environmental factors? (t,p,e)
An information system contains information about an organization and its surrounding environment. Three basic activities input, processing, and outputproduce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.
Figure 1-4
1.20

Information Systems Are More Than Computers

Computers are like the tools and materials used to make a house (griders,cement, hammers, nails), but these by themselves do not make a house; you need the architectural design, setting and static knowledge to build the house.
Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment.
Figure 1-5
1.21

Organizational dimension of information systems

Hierarchy of authority, responsibility
Senior management Middle management Operational management Knowledge workers Data workers Production or service workers
1.22

Levels in a Firm
Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.
Figure 1-6
1.23

Organizational dimension of information systems (cont.)

Separation of business functions
Sales and marketing Human resources Finance and accounting Production and manufacturing
Unique business processes Unique business culture Organizational politics
1.24

Management dimension of information system

Managers set organizational strategy for responding to business challenges Managers control and coordinate In addition, managers must act creatively:
Creation of new products and services Occasionally re-creating the organization
1.25

Technology dimension of information systems

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

1.26

UPS Competes Globally with Information Technology Read the Interactive Session: Technology, and then discuss the following questions:
What are the inputs, processing, and outputs of UPSs package tracking system? What technologies are used by UPS? How are these technologies related to UPSs business strategy? What problems do UPSs information systems solve? What would happen if these systems were not available?
1.27

Dimensions of UPS tracking system

Organizational:
Procedures for tracking packages and managing inventory and provide information
Management:
Monitor service levels and costs
Technology:
Handheld computers, bar-code scanners, networks, desktop computers, etc.
1.28

Business perspective on information systems:

Information systems are instruments for creating value Investments in information systems and technology will result in superior returns:
Productivity increases Revenue increases Superior long-term strategic positioning
But not always!!

1.29

Investing in information technology does not guarantee good returns (big failures by firms like HP, Nike, Nestle) Considerable variation in the returns firms receive from systems investments Success requires a business perspective: attention to the organizational and managerial nature of information systems Success Factors:
Adopting the right business model Investing in COMPLEMENTARY ASSETS (organizational and management capital)
1.30

Complementary assets: Assets required to derive value from a primary investment Firms supporting technology investments with investment in complementary assets receive superior returns E.g.: invest in technology and the people to make it work properly
1.31

Complementary assets include:

Organizational investments, e.g.
Appropriate business model Efficient business processes
Managerial investments, e.g.

Incentives for management innovation Teamwork and collaborative work environments
Social investments, e.g.

The Internet and telecommunications infrastructure Technology standards
1.32

The Business Information Value Chain
From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability.
Figure 1-7
1.33

Challenge of Information Systems: Key Management Issues
Major management challenges:

1. Design competitive and effective systems: rethinking of business processes, not simple automation
2. Understand system requirements of global business environment: language, cultural and regulatory barriers
3. Create information architecture that supports organizations goal
1.34

Challenge of Information Systems: Key Management Issues
4. Determine the business value of information systems 5. Design systems people can control, understand and use in a socially, ethically responsible manner
1.35

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Chapter 1

Information Systems in Global Business Today

2007 by Prentice Hall

Management Information Systems

Explain why information systems are so essential in business today.

2007 by Prentice Hall

Management Information Systems

LEARNING OBJECTIVES (Continued)

2007 by Prentice Hall

Management Information Systems

Management Information Systems

The Role of Information Systems in Business Today

How information systems are transforming business

Management Information Systems

The Role of Information Systems in Business Today

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

The emerging digital firm

Digital firms offer greater flexibility in organization and management

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

Virtual Management at Accenture

Management Information Systems

The Role of Information Systems in Business Today

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

New products, services, and business models:

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

Customer and supplier intimacy:

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

Management Information Systems

The Role of Information Systems in Business Today

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

2007 by Prentice Hall

Management Information Systems

The Role of Information Systems in Business Today

The Interdependence Between Organizations and Information Technology

Management Information Systems

Perspectives on Information Systems

Information vs. data

Management Information Systems

Perspectives on Information Systems

Information system: Three activities produce information organizations need

2007 by Prentice Hall

Management Information Systems

Perspectives on Information Systems

Computer/Computer program vs. information system

2007 by Prentice Hall

Management Information Systems

Perspectives on Information Systems

Functions of an Information System