Chapter 1: The Role of Information Systems in Business Today

The Role of Information Systems in Business Today

• How information systems are transforming business

– Emerging mobile digital platform

– Growing business use of “big data”

– Growth in cloud computing

• Globalization opportunities

– Internet has drastically reduced costs of operating on global scale

– Increases in foreign trade, outsourcing

– Presents both challenges and opportunities

• In the emerging, fully digital firm:

– Significant business relationships are digitally

enabled and mediated.

– Core business processes are accomplished through

digital networks.

– Key corporate assets are managed digitally.

• Digital firms offer greater flexibility in

organization and management.

– Time shifting, space shifting

• Firms invest heavily in information

systems to achieve six strategic business

objectives:

1. Operational excellence

2. New products, services, and business models

3. Customer and supplier intimacy

4. Improved decision making

5. Competitive advantage

6. Survival

• Improved decision making

– Without accurate information:

• Managers must use forecasts, best guesses, luck

• Results in:

– Overproduction, underproduction

– Misallocation of resources

– Poor response times

• Poor outcomes raise costs, lose customers

– Example: Verizon’s Web-based digital dashboard to

provide managers with real-time data on customer

complaints, network performance, line outages, and so

on

• Competitive advantage

– New products, services, and business

models

– Charging less for superior products

– Responding to customers and suppliers in

real time

– Examples: Apple, Walmart, UPS

• Survival

– Information technologies as necessity of business

– Industry-level changes

• Example: Citibank’s introduction of ATMs

– Governmental regulations requiring record-

keeping

• Examples: Toxic Substances Control Act,

Sarbanes-Oxley Act

• Dodd-Frank Act

• 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.