INFS1602: Information Systems in Business Study Notes

Transcription

1 INFS1602: Information Systems in Business Study Notes Chapter 1: Information Systems in Global Business Today 1.1 The Role of Information Systems in Business Today What s new in management information systems? Successful firms = those that learn to use new/improved technologies. CHANGES Technology 1) Emergence of a cloud computing platform 2) Growth of online software as a service 3) Emergence of a mobile digital platform Management 1) Adoption of online collaboration and social networking software by managers 2) Acceleration of business intelligence applications Allows orgs to rely on more telework, remote work and distributed decision making. Firms can outsource more work and rely on markets (not employees) to build value. Firms can collaborate w/ suppliers/customers to create new products, or make existing products more efficiently. 3) Proliferation of virtual meetings Organisations 1) Wide adoption of Web 2.0 applications 2) Momentum of telework in the workplace 3) Co- creation of business value Globalisation challenges and opportunities World is considered flat Internet + global communications have greatly reduced economic + cultural advantages of developed countries. Challenge for businesses: to avoid markets for goods/services that can be produced offshore/outsourced much less expensively. Emergence of international communications system (Internet) à has drastically reduced costs of operating/transacting on a global scale for firms: o can find low- cost suppliers. o can manage production facilities in other countries. Internet service firms can replicate their business models/services in multiple countries w/out having to redesign fixed- cost IS infrastructure. The emerging digital firm Digital firm: one in which nearly all of the org s significant business relationships w/ customers/suppliers/employees are digitally enabled/mediated. 1

2 o Core business processes are accomplished through digital networks spanning entire org. o Key coroporate assets (incl. financial/human assets) are managed digitally. o Have more flexibility in responding to changing environment. o Involves: o Time shifting: business is conducted continuously, 24/7. o Space shifting: work takes place physically wherever it is best accomplished. Business processes: set of logically related tasks/behaviours that orgs develop over time to produce specific business results. Strategic business objectives of information systems What orgs would like to strategically achieve in future depends on what its systems can do. By achieving one/more following objectives à attain COMPETITIVE ADVANTAGE. 1) Operational excellence Firms continuously seek to improve operational efficiency to achieve higher profitability esp. through IS and technologies. Supporting/streamlining activities along the VALUE CHAIN. 2) New products, services and business models Business model: how a firm produces, delivers and sells a product/service to create value. 3) Customer and supplier intimacy Customers: loyalty/repeat purchases when firms know and serve them well. o Incl. collecting data about behaviours à.: can better meet needs. Suppliers: can better provide vital inputs/lower costs if engaged by firms. 4) Improved decision- making ISs allow firms to use real- time data to make decisions more effective than relying on forecasts/estimates (produce poor outcomes, raise costs, lose customers). 5) Competitive advantage Achieving objectives better than competitors gives an advantage à higher sales à higher profits. 6) Survival ISs are necessities driven by industry- level changes essential for long- term survival. 1.2 Perspectives on information systems Information technology (IT): consists of all the hardware/software that a firm needs to use to achieve its objectives. What is an information system? = a set of interrelated components that collect/retrieve, process, store and distribute info to support decision- making and control in an org. Information: data that have been shaped into a form that is meaningful/useful. 2

3 Data: streams of raw facts representing events occurring in orgs/environment before they have been arranged into an understandable form. 3 activities of an IS: à produces info about org and surrounding environment. 1. Input: captures/collects raw data from w/in the org or external environment. 2. Processing: converts raw input into a meaningful form. 3. Output: transfers processed info to people who will use it/activities for which it will be used. o Also requires feedback: output that is returned to appropriate members of org to help them evaluate/correct the input stage. Electronic computers and software are the technical foundations of ISs à provide equipment for storing/processing info. Dimensions of information systems Information systems literacy: broad understanding of ISs which encompasses understanding of management/organisational dimensions of systems and technical dimensions. Computer literacy: focuses primarily on knowledge of info technology. Management information systems (MIS): deals w/ behavioural and technical issues surrounding the development, use and impact of ISs used by managers/employees. 1) Organisations Structure reveals division of labour à responsibility organised as a hierarchy. Business processes incl. formal rules developed over time to guide employers in accomplishing tasks may be written or an informal practice. Each org has a unique culture: fundamental set of assumptions, values and ways of doing things, that has been accepted by most of its members. Senior management: makes long- range strategic decisions about products/services; ensures financial performance of firm. Middle management: carries out programs/plans of senior management. - Knowledge workers: incl. engineers, scien`sts, architects; design products/services and create new knowledge for firm. OperaYonal management: monitors daily acyviyes of business. - ProducGon/service workers: actually produces product/delivers service. - Data workers: incl. secrataries; assist w/ scheduling and communica`ons at all levels. 3

4 2) Management Managers perceive business challenges in the environment à set the organisational strategy for responding to challenges and allocate human/financial resources to coordinate work. 3) Information technology Computer hardware: physical equipment used for input, processing and output activities in an IS. o Consists of computers; input, output, storage devices; telecommunication devices (link). Computer software: detailed, pre- programmed instructions that control/coordinate the computer hardware components in an IS. Data management technology: the software governing the org of data on a physical storage media. Networking and telecommunications technology: (consists of physical devices and software); links various pieces of hardware and transfers data from one physical location to another. Network: links 2/more computers to share data or resources. o Largest network = Internet. Intranets: internal corporate networks based on Internet technology. Extranets: private intranets extended to authorised users outside the org. Information technology infrastructure: consists of all technologies and people required to manage them; provides the platform on which the firm can build its specific ISs. A business perspective on information systems Prime purpose of ISs investment: to create economic value, to contribute to corporate value assumes that ROI will be superior to other investments in buildings, machines etc. Returns (e.g. increases in revenues, increases in productivity etc.) value determined by extent to which IS will lead to better management decisions, more efficient business processes etc. Every firm has an information value chain: raw info is systematically acquired and then transformed through various stages that add value to info. Complementary assets: Organisational capital and the right business model Considerable variation in returns firms receive from their investment variation due to complementary assets: assets required to derive value from a primary investment. o Incl. new bus models, new bus processes, management behaviour, organisational culture. Research: firms that support their technology investments w/ investments in complementary assets receive superior returns. o These investments in org and management = organisational and management capital. Organisational assets Managerial assets Social assets Supportive organisation culture that values efficiency/effectiveness. Appropriate business model. Efficient business processes. Decentralised authority. Teamwork and collaborative work environments. Training programs to enhance management decision skills. Management culture that values flexibility and knowledge- based decision making. The Internet and telecommunications infrastructure. IT- enriched educational programs raising labour force computer literacy. Laws and regulations creating fair, stable market environments. 4

5 1.3 Contemporary approaches to information systems Technical approach Emphasises mathematically based models to study ISs, physical technology and formal capabilities of these systems. Disciplines that contribute to this approach: 1. Computer science 2. Management science 3. Operations research Management science Psychology Computer science MIS Economics Operations research Sociology Behavioural approach Concentrates on changes in attitudes, management and organisational policy, and behaviour. Important part of ISs is concerned w/ behavioural issues that arise in the development and long- term maintenance of ISs. Sociotechnical systems MIS composed of 4 actors: 1. Technologists 2. Business firms 3. Managers and employees. 4. Firms environment Sociotechnical view of systems: sees that optimal organisational performance if achieved by jointly optimising both the social and technical systems used in production. Adoption of perspective helps to avoid a purely technological approach. Performance of a system is optimised when both the technology and the org mutually adjust to one another until a satisfactory fit is obtained. Chapter 2: Information Systems, Organisations, and Strategy 2.1 Organisations and Information Systems Interaction between orgs and information technology is influenced by many factors: o Incl. environment, culture, org structure, bus processes, politics, management decisions. What is an organisation? Organisation: o Technical definition = a stable, formal social structure that takes resources from the environment and processes them to produce outputs. Capital and labour (primary production factors provided by the environment) are transformed by the organisation through the production process into products and services (outputs to the environment). 5

6 Organisation Inputs from the environment Outputs to the environment Production process Focus on how inputs are combined to create outputs when technology changes are introduced into the firm. Firm is seen as indefinitely malleable, w/ capital + labour substituting for each other. Limitation: technical definition isn t very descriptive or predictive of real- world orgs. o Behavioural definition = collection of rights, privileges, obligations and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution. Suggests that building new ISs, or rebuilding old ones, impacts org s inner workings. Some ISs change organisational balance of rights, privileges, obligations etc. that have been established over a long period of time. Features of organisations Are bureaucracies with clear- cut divisions of labour and specialisation. Arrange specialists in a hierarchy of authority everyone is accountable to someone. 1) Routines and business processes Have routines i.e. standard operating procedures. As employees learn routines, they become highly productive and efficient à.: firm can reduce costs. Collections of routines = business processes. 2) Organisational Politics People in different positions have different perspectives about how rewards, resources etc. should be distributed à political struggle for resources, competition and conflict w/in org. Political resistance poses a barrier to organisational change. 3) Organisational Culture Encompasses assumptions about what products the org should produce, how it should produce them, where and for whom. Promotes common understanding, agreement on procedures and common practices.: restrains political conflict. Powerful restraint on change à inertia; technology may not suit existing culture à.: culture must slowly adjust. 4) Organisational Environments Orgs reside in environments from which they draw resources and to which they supply Gs + Ss. Orgs are dependant on social/physical surrounding environment à must respond to govt. regulation, actions of customers, competition by other firms etc. Can also influence their environments. ISs play a key role as environmental scanners help managers identify external changes that might require an organisational response. Disruptive technologies: substitute products that perform as well/better than anything currently produced. 6

7 o Can radically change environment à may put entire industries out of business or simply extend market. 5) Organisational Structure Mintzberg s classification of structural types: 1. Entrepreneurial Young small firm in a fast- changing environment. structure Simple structure à managed by an entrepreneur as single CEO. 2. Machine Large bureaucracy in slow- changing environment, producing standard products. bureaucracy Dominated by a centralised management team and centralised decision- making. 3. Divisionalised Combination of multiple machine bureaucracies, each producing a different bureaucracy good/service, all topped by one central HQ. 4. Professional Knowledge- based org where Gs+Ss depend on expertise/knowledge of bureaucracy professionals. 5. Adhocracy Task force org that must respond to rapidly changing environments. 6) Other organisational features Types of goals (e.g. coercive, utilitarian, normative). Leadership. Types of tasks performed and technology used. 2.2 How information systems impact organisations and business firms Economic impacts IT changes both the relative costs of capital and the costs of info à considered a FOP that can be substituted for capital + labour. As cost of IT decreases: o Substituted for labour. o Substituted for other forms of capital (e.g. buildings, machinery)..: over time managers should increase investments in IT because of its declining cost relative to other capital investments. IT reduces transaction costs à as transaction costs decrease, firm size (i.e. no of employees) decreases. o When firms lower transaction costs à easier/cheaper to contract w/ external suppliers for purchases of Gs + Ss instead of using internal sources to produce themselves..: firms reduce no.s of employees (reduce size) less expensive to outsource work. IT reduces internal management costs à as management costs decrease, revenues increase and firm size (no. of middle managers/clerical workers) decreases. o à agency theory: firm viewed as a nexus of contracts among self- interested individuals rather than as unified, profit- maximising entity. Principal (owner) employs agents (employees) à need constant supervision. As firm grows, agency + coordination costs increase. IT reduces costs of acquiring/analysing info.: reduces agency costs à manager can oversee a greater no of employees..: expect firms to shrink in size over time as more capital is invested in IT. Organisational and behavioural impacts 7