chapter 1: managing the digital firm
DESCRIPTION
© 2003 by Prentice HallTRANSCRIPT
1.1 © 2003 by Prentice Hall
11
MANAGING THEMANAGING THE
DIGITAL FIRMDIGITAL FIRM
Chapter
1.2 © 2003 by Prentice Hall
• What is the role of information systems in What is the role of information systems in today’s competitive business environment?today’s competitive business environment?
• What exactly is an information system? What exactly is an information system? What do managers need to know about What do managers need to know about information systems?information systems?
• How are information systems transforming How are information systems transforming organizations and management?organizations and management?
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
OBJECTIVES
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• How has the Internet and Internet technology How has the Internet and Internet technology transformed business?transformed business?
• What are the major management challenges What are the major management challenges to building and using information systems?to building and using information systems?
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
OBJECTIVES
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1. Design competitive and effective systems1. Design competitive and effective systems
2. Understand system requirements of 2. Understand system requirements of global business environment global business environment
3. Create information architecture that 3. Create information architecture that supports organization’s goalsupports organization’s goal
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
MANAGEMENT CHALLENGES
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4. Determine business value of information 4. Determine business value of information systemssystems
5. Design systems people can control, 5. Design systems people can control, understand and use in a socially, ethically understand and use in a socially, ethically responsible mannerresponsible manner
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
MANAGEMENT CHALLENGES
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
The Competitive Business Environment and the Emerging Digital Firm
WHY INFORMATION SYSTEMS?
Four powerful worldwide changes that Four powerful worldwide changes that
have altered the business environment:have altered the business environment:
1.1. Emergence of the Global EconomyEmergence of the Global Economy
2.2. Transformation of Industrial EconomiesTransformation of Industrial Economies
3.3. Transformation of the Business EnterpriseTransformation of the Business Enterprise
4.4. The Emerging Digital FirmThe Emerging Digital Firm
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Emergence of the Global EconomyEmergence of the Global Economy
• Management and control in a global Management and control in a global marketplacemarketplace
• Competition in world marketsCompetition in world markets• Global work groupsGlobal work groups• Global delivery systemsGlobal delivery systems
The Competitive Business Environment and the Emerging Digital Firm
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Transformation of Industrial EconomiesTransformation of Industrial Economies
• Knowledge- and information-based economiesKnowledge- and information-based economies
• ProductivityProductivity
• New products and servicesNew products and services
• Knowledge: a central productive and strategic Knowledge: a central productive and strategic assetasset
The Competitive Business Environment and the Emerging Digital Firm
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Transformation of Industrial EconomiesTransformation of Industrial Economies
• Time-based competitionTime-based competition
• Shorter product lifeShorter product life
• Turbulent environmentTurbulent environment
• Limited employee knowledge baseLimited employee knowledge base
The Competitive Business Environment and the Emerging Digital Firm
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Figure 1-1
Labor Force Composition 1900-1997
WHY INFORMATION SYSTEMS?
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Transformation of the Business EnterpriseTransformation of the Business Enterprise
• FlatteningFlattening• DecentralizationDecentralization• FlexibilityFlexibility• Location independenceLocation independence• Low transaction and coordination costsLow transaction and coordination costs• EmpowermentEmpowerment• Collaborative work and teamworkCollaborative work and teamwork
The Competitive Business Environment and the Emerging Digital Firm
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Emergence of the Digital FirmEmergence of the Digital Firm
• Digitally-enabled relationships with Digitally-enabled relationships with customers, suppliers, and employeescustomers, suppliers, and employees
• Core business processes accomplished Core business processes accomplished via digital networksvia digital networks
• Digital management of key corporate Digital management of key corporate assetsassets
• Rapid sensing and responding to Rapid sensing and responding to environmental changesenvironmental changes
The Competitive Business Environment and the Emerging Digital Firm
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A set of interrelated components that collectA set of interrelated components that collect
(or retrieve), process, store, and distribute (or retrieve), process, store, and distribute
information to support decision making and information to support decision making and
control in an organization control in an organization
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
What Is an Information System?
WHY INFORMATION SYSTEMS?
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• Data:Data: Streams of raw facts representing Streams of raw facts representing events such as business transactionsevents such as business transactions
• Information:Information: Clusters of facts that are Clusters of facts that are meaningful and useful to human beings in meaningful and useful to human beings in the processes such as making decisionsthe processes such as making decisions
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
What Is an Information System?
WHY INFORMATION SYSTEMS?
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Figure 1-2
Data and Information
WHY INFORMATION SYSTEMS?
What Is an Information System?
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INPUT OUTPUTPROCESS
FEEDBACK
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Activities in an Information System
WHY INFORMATION SYSTEMS?
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Functions of an Information System
WHY INFORMATION SYSTEMS?
Figure 1-3
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• Rely on computer hardware and Rely on computer hardware and software software
• Processing and disseminating Processing and disseminating informationinformation
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Computer-Based Information System (CBIS)
WHY INFORMATION SYSTEMS?
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• Fixed definitions of data, proceduresFixed definitions of data, procedures
• Collecting, storing, processing, Collecting, storing, processing, disseminating, using datadisseminating, using data
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Formal Systems
WHY INFORMATION SYSTEMS?
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• An organizational and management An organizational and management solutionsolution
• Based on information technologyBased on information technology
• To a challenge posed by the To a challenge posed by the environmentenvironment
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
A Business Perspective on Information Systems
WHY INFORMATION SYSTEMS?
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Information Systems
ORGANIZATIONSORGANIZATIONS TECHNOLOGYTECHNOLOGY
MANAGEMENTMANAGEMENT
INFORMATIONINFORMATION
SYSTEMSSYSTEMS
Figure 1-4
WHY INFORMATION SYSTEMS?
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• Information systems literacy:Information systems literacy: Broad- Broad-based understanding of information systems based understanding of information systems that includes behavioral knowledge about that includes behavioral knowledge about organizations and individuals using organizations and individuals using information systems as well as technical information systems as well as technical knowledge about computers.knowledge about computers.
• Computer literacy:Computer literacy: Knowledge about Knowledge about information technology, focusing on under-information technology, focusing on under-standing how computer-based technologies standing how computer-based technologies workwork
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
A Business Perspective on Information Systems
WHY INFORMATION SYSTEMS?
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• Sales and marketingSales and marketing
• ManufacturingManufacturing
• FinanceFinance
• AccountingAccounting
• Human resourcesHuman resources
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Major Business Functions
WHY INFORMATION SYSTEMS?
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Key Elements:Key Elements:• People:People: Managers, knowledge workers, Managers, knowledge workers,
data workers, production or service data workers, production or service workersworkers
• Structure:Structure: Organization chart , groups of Organization chart , groups of specialists, products, geographyspecialists, products, geography
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Organizations
WHY INFORMATION SYSTEMS?
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• Operating procedures:Operating procedures: Standard operating Standard operating procedures (SOP, rules for action)procedures (SOP, rules for action)
• Politics:Politics: Power to persuade, get things done Power to persuade, get things done
• Culture:Culture: Customs of behavior Customs of behavior
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Organizations
WHY INFORMATION SYSTEMS?
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Levels:Levels:• Senior managers:Senior managers: make long-range make long-range
strategic decisions about products and strategic decisions about products and services services
• Middle managers:Middle managers: Carry out the programs Carry out the programs and plans of senior managementand plans of senior management
• Operational managers:Operational managers: monitor the firm’s monitor the firm’s daily activities daily activities
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Management
WHY INFORMATION SYSTEMS?
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Tools managers use to cope with changeTools managers use to cope with change
• Hardware:Hardware: Physical equipment Physical equipment
• Software:Software: Detailed preprogrammed instructions Detailed preprogrammed instructions
• Storage:Storage: Physical media for Physical media for
storing data and the softwarestoring data and the software
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Computer Technology
WHY INFORMATION SYSTEMS?
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• Communications Technology:Communications Technology: transfers data from one physical location transfers data from one physical location to anotherto another
• Networks:Networks: link computers to share data link computers to share data or resourcesor resources
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Computer Technology
WHY INFORMATION SYSTEMS?
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
SOCIOLOGYSOCIOLOGY
POLITICAL POLITICAL SCIENCESCIENCE
PSYCHOLOGYPSYCHOLOGY
COMPUTER COMPUTER
SCIENCESCIENCEOPERATIONS OPERATIONS
RESEARCHRESEARCH
MANAGEMENTMANAGEMENT
SCIENCESCIENCE
TECHNICAL APPROACHESTECHNICAL APPROACHES
MISMIS
BEHAVIORAL APPROACHESBEHAVIORAL APPROACHESFigure 1-5
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Optimize systems performance:Optimize systems performance:
• Technology and organization Technology and organization
• Organizations mutually adjust to one another Organizations mutually adjust to one another until fit is satisfactoryuntil fit is satisfactory
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Socio-Technical Systems
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
SOURCE: Liker, et al, 1987Figure 1-6
Socio-technical Systems
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Interdependence Between Organizations and Information Systems
Figure 1-7
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• 1950s:1950s: Technical changes Technical changes
• 60s-70s:60s-70s: Managerial controls Managerial controls
• 80s-90s:80s-90s: Institutional core activities Institutional core activities
Growing ImportanceGrowing Importance
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
THE NETWORK REVOLUTION AND THE INTERNET
The Widening Scope of Information Systems
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Figure 1-8
THE NETWORK REVOLUTION AND THE INTERNET
The Widening Scope of Information Systems
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• Communicate and collaborateCommunicate and collaborate
• Access informationAccess information
• Participate in discussionsParticipate in discussions
• Supply informationSupply information
• Find entertainmentFind entertainment
• Exchange business transactionsExchange business transactions
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
What You Can Do on the Internet
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• Flattening organizationsFlattening organizations
• Separating work from location Separating work from location
• Reorganizing work-flowsReorganizing work-flows
• Increasing flexibilityIncreasing flexibility
• Redefining organizational boundariesRedefining organizational boundaries
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
New Options for Organizational Design
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Figure 1-9
TOWARD THE DIGITAL FIRM
Flattening Organizations Information Systems
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Figure 1-10
Redesigned Work Flow For Insurance Underwriting
TOWARD THE DIGITAL FIRM
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• Electronic commerceElectronic commerce
• Electronic businessElectronic business
• Electronic market: Information systems Electronic market: Information systems links, buyers and sellers to exchange links, buyers and sellers to exchange information, products, services, paymentsinformation, products, services, payments
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Digital Firm
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Figure 1-11
TOWARD THE DIGITAL FIRM
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• Internet links buyers, sellersInternet links buyers, sellers
• Lower transaction costsLower transaction costs
• Goods and services advertised, bought, Goods and services advertised, bought, exchanged worldwideexchanged worldwide
• Business-to-business transactions Business-to-business transactions increasingincreasing
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Electronic Commerce
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• Internet:Internet: Business builds private, secure Business builds private, secure networknetwork
• E-mail, Web documents, group E-mail, Web documents, group software:software: Extends effective Extends effective communication and controlcommunication and control
• Extranet: Extranet: Extension of intranet to Extension of intranet to authorized external usersauthorized external users
Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Electronic Business
TOWARD THE DIGITAL FIRM
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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm
Information Architecture and Information Technology Infrastructure
TOWARD THE DIGITAL FIRM
Figure 1-12
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MANAGING THEMANAGING THE
DIGITAL FIRMDIGITAL FIRM
Chapter