1-1 chapter one overview section 1.1 – information systems in business –information...
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Chapter One Overview
• SECTION 1.1 – INFORMATION SYSTEMS IN BUSINESS– Information Technology’s Role in Business– Information Technology Basics– Roles and Responsibilities in Information Technology– Measuring Information Technology’s Success
• SECTION 1.2 – BUSINESS STRATEGY– Identifying Competitive Advantages– The Five Forces Model – Evaluating Business Segments– The Three Generic Strategies – Creating a Business Focus– Value Chain Analysis – Targeting Business Processes
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved
SECTION 1.1SECTION 1.1
INFORMATION SYSTEMS IN BUSINESS
INFORMATION SYSTEMS IN BUSINESS
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Information Technology’s Impact on Business Operations
• Organizations typically operate by functional areas or functional silos
• Functional areas are interdependent
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INFORMATION TECHNOLOGY BASICS
• Information technology (IT) – any computer-based tool that people use to work with information and support the information and information-processing needs of an organization
• Information technology is an important enabler (or disabler) of business success and innovation
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INFORMATION TECHNOLOGY BASICS
• Management information systems (MIS) – the function that plans for, develops, implements, and maintains IT hardware, software, and applications that people use to support the goals of an organization
• MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources
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Information
• Data - raw facts that describe the characteristic of an event
• Information - data converted into a meaningful and useful context
• Noise – an overload of information
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ROLES AND RESPONSIBILITIES IN IT
• Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives
• Broad CIO functions include:– Manager – ensuring the delivery of all IT projects, on
time and within budget– Leader – ensuring the strategic vision of IT is in line
with the strategic vision of the organization– Communicator – building and maintaining strong
executive relationships
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ROLES AND RESPONSIBILITIES IN IT
• Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT
• Chief Security Officer (CSO) – responsible for ensuring the security of IT systems
• Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information
• Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the organization’s knowledge
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ROLES AND RESPONSIBILITIES IN ITBrief Summary
(CInformationO) Ensure strategic alignment
(CTechnologyO) Proper equipment/software
(CSecurityO) Protect from viruses & hackers
(CPrivacyO) restrict access to private info
(CKnowledgeO) databases and AI systems
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Why we need MIS majors
• Business personnel possess expertise in functional areas such as marketing, accounting, and sales
• IT personnel have the technological expertise
• This typically causes a communications gap between the business personnel and IT personnel
• MIS Majors bridge the gap.
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Improving Communications
• Business personnel must seek to increase their understanding of IT –Why?
• IT personnel must seek to increase their understanding of the business – Why?
• It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel
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MEASURING INFORMATION TECHNOLOGY’S SUCCESS
• Key performance indicator (KPI) – measures that are tied to business drivers
• What is an example of a business driver?
• Metrics are detailed measures (numbers) that feed KPIs
• Performance metrics can measure both efficiency and effectiveness.
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Efficiency and Effectiveness Metrics
• Efficiency IT metric – measures the performance of the IT system itself including throughput, speed, and availability
• Effectiveness IT metric – measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases
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Benchmarking – Baselining Metrics
• Regardless of what is measured, how it is measured, and whether it is for the sake of efficiency or effectiveness, there must be benchmarks – baseline values the system seeks to attain
• Benchmarking – a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance
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The Interrelationships of Efficiency and Effectiveness IT Metrics
• Efficiency IT metrics focus on technology and include:– Throughput– Transaction speed– System availability– Information accuracy– Web traffic– Response time
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The Interrelationships of Efficiency and Effectiveness IT Metrics
• Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include:– Usability– Customer satisfaction– Conversion rates– Financial
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The Interrelationships of Efficiency and Effectiveness IT Metrics
• Security is an issue for any organization offering products or services over the Internet
• It is inefficient for an organization to implement Internet security, since it slows down processing– However, to be effective it must implement Internet
security – Secure Internet connections must offer encryption
and Secure Sockets Layers (SSL denoted by the lock symbol in the lower right corner of a browser)
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The Interrelationships of Efficiency and Effectiveness IT Metrics
Reality usually involves
tradeoffs.
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved
SECTION 1.2SECTION 1.2
BUSINESS STRATEGYBUSINESS STRATEGY
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IDENTIFYING COMPETITIVE ADVANTAGES
• To survive and thrive an organization must create a competitive advantage– Competitive advantage – a product or
service that an organization’s customers place a greater value on than similar offerings from a competitor
– First-mover advantage – occurs when an organization can significantly impact its market share by being first to market with a competitive advantage
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IDENTIFYING COMPETITIVE ADVANTAGES
• Organizations watch their competition through environmental scanning– Environmental scanning – the acquisition and
analysis of events and trends in the environment external to an organization
• Three common tools used in industry to analyze and develop competitive advantages include:– Porter’s Five Forces Model– Porter’s three generic strategies– Value chains
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THE FIVE FORCES MODEL – EVALUATING BUSINESS SEGMENTS
• Porter’s Five Forces Model determines the relative attractiveness of an industry
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BCG Model uses metrics
• Market growth (High - Low)• Relative market share. (High – Low)
• Invest in companies that are high in both
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THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS
• Organizations typically follow one of Porter’s three generic strategies – Broad cost leadership– Broad differentiation– Focused strategy
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THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS
This Porter model doesn’t cover all business situations, particularly E business.
Where do you classify Ebay, Google, Yahoo, Amazon?
What about Microsoft, Comcast, and other monopolies?
Location based businesses – barbers, childcare, car washes, etc
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Value Creation
• Once an organization chooses its strategy, it can use tools such as the value chain.– Business process – a standardized set of
activities that accomplish a specific task, such as processing a customer’s order
– Value chain – views an organization as a series of processes, each of which adds value to the product or service for each customer