introductory comments management of information technology

I N T R O D U C T O RY C O M M E N T S

MANAGEMENT OF INFORMATION TECHNOLOGY

ELEMENTS FOR STUDY OF INFORMATION SYSTEMS

Text’s Three Themes1. Enterprise

Systems2. E-Business3. Information

TechnologyThree Roles1. Systems User2. Systems

Evaluator3. Systems

Designer

INPUT-PROCESS-OUTPUT MODEL FOR INFO SYSTEMS AND BUSINESS PROCESSES

SYSTEMS, COMPONENTS, AND HIDING COMPLEXITY

Note that the diagram omits that System 1.2 consumes inputs A & E and produces outputs C & B. Data flow diagram leveling (Ch 2) makes these relationships clearer.

A HIERARCHY OF INFORMATION QUALITIES

© Pearson Prentice Hall 2009 3-6

Q1 – How does organizational strategy determine information systems structure?

An organization’s goals and objectives are determined by its competitive strategy.

In turn, an organization’s competitive strategy determines every information system’s

Structures Features Functions

Fig 3-1 Organizational Strategy Determines Information Systems


Fig 3-2 Porter’s Five Forces Model of Industry Structure

Q2 – What Five Forces Determine Industry Structure?


Fig 3-3 Examples of Five Forces

Q2 – What Five Forces Determine Industry Structure?


Fig 3-4 Porter’s Four Competitive Strategies

Q3 – What is Competitive Strategy


Q4 – What is a Value Chain?

Each competitive strategy requires a system whose benefits outweigh the risks and provide value to the customer.

Value is defined as the amount of money a customer is willing to spend on a product, service, or resource.

The difference between the value that an activity generates and the cost of the activity is the margin.

A value chain is a network of value-creating activities and is divided into primary activities and support activities.


Fig 3-5 Porter’s Value Chain Model



Primary Activities in the value chain include:

Inbound logistics activities involve receiving and managing raw materials.

Operations activities transform raw materials into final products or create services.

Outbound logistic activities deliver finished products to customers.

Marketing and Sales activities create marketing strategies and sell products or services to customers.

Services activities provide after-sale customer support for products or services.



Support Activities in the value chain indirectly enhance production of products and services.

Firm infrastructure includes general management, finance, accounting, legal, and government affairs (if necessary).

Human Resources recruits, compensates, evaluates and trains employees.

Technology Development includes research and development for new processes or techniques.

Procurement finds suppliers and vendors for raw materials, creates contracts, and negotiates prices of raw materials.



Fig 3-7 Three Examples of Business Processes

Q5 – How Do Business Processes Generate Value?


Fig 3-8 Improved Materials Ordering Process

Q5 – How Do Business Processes Generate Value?


Fig 3-10 Business Process & Information System for Bike Rental

Q6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems?


Each business must first analyze its industry and choose a competitive strategy. Will it be a low-cost provider or differentiate its products from competitors?

Then it must design its business processes to span value-generating activities.

Once those decisions have been made, a business can structure an information system that supports its business processes.

Q6 – How Does Competitive Strategy Determine Business Processes and Structure of Information Systems?


Q7 – How Do Information Systems Provide Competitive Advantages?

There are two ways businesses can respond to the five competitive forces.

They can gain a competitive advantage via their products and services.

They can gain a competitive advantage by developing superior business processes.


A business can gain a competitive advantage via its products by

Creating new products and services, or

Enhancing its existing products or services, or

Differentiating its products and services from its competitors

Information systems can help create a competitive advantage by being part of the product or by providing support to the product.



A company can gain a competitive advantage by using business processes to

Lock in customers via high switching costs, making it too expensive for the customer to switch to a competitor.

Lock in suppliers via easy-to-use connections, discouraging them from changing to another business.

Create entry barriers for new competitors, thereby raising the costs to enter the market.

Establish alliances with other organizations and set standards, reducing purchase costs and providing benefits for everyone.

Reduce costs which in turn reduces prices and increases profitability.


Information Systems are the means for executing business processes, activating the value chain, and achieving the business’s strategy

Summary: Why information systems are developed

introductory comments management of information technology

Documents

services activities

network of value

support activities

porters value chain

primary activities

sales activities

operations activities

information systems