Information systems topic 2, Lecture notes of Information Systems

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Information Systems in Global

Business Today

Lecture 2 DIS 302: E-Business Based on: Laudon & Laudon (2007) Dr Njihia, UON-DMS

THE ROLE OF INFORMATION

SYSTEMS IN BUSINESS TODAY

Information Systems in Global Business Today

• (^) Information systems are transforming business and the visible results of this include the increased use of cell phones and wireless telecommunications devices, a massive shift toward online news and information, booming e-commerce and Internet advertising, and new federal security and accounting laws that address issues raised by the exponential growth of digital information.
• (^) The Internet has also drastically reduced the costs of businesses operating on a global scale.

• (^) These changes have led to the emergence of

the digital firm, a firm in which:

• (^) Most of the firm's significant business relationships with customers, suppliers, and employees are digitally enabled and mediated.
• (^) Core business processes , or logically related business tasks, are accomplished through digital networks.

• (^) Information systems are essential for conducting day- to-day business in the U.S. and most other advanced countries, as well as achieving strategic business objectives. Some firms, such as Amazon and E*Trade, would be nonexistent without information systems.
• (^) Some service industries, such as finance, insurance, and real estate industries, could not operate without information systems. The ability of a firm to use IT is becoming intertwined with the firm's ability to implement corporate strategy.

THE INTERDEPENDENCE BETWEEN ORGANIZATIONS AND INFORMATION SYSTEMS There is a growing interdependence between a firm’s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.

• (^) Customer and supplier intimacy: Improved communication with and service to customers raises revenues, and improved communication with suppliers lowers costs.
• (^) Improved decision making: Without accurate and timely information, business managers must make decisions based on forecasts, best guesses, and luck, a process that results in over and under- production of goods, raising costs, and the loss of customers.

• (^) Competitive advantage: Implementing effective and efficient information systems can allow a company to charge less for superior products, adding up to higher sales and profits than their competitors.
• (^) Survival: Information systems can also be a necessity of doing business. A necessity may be driven by industry- level changes, as in the implementation of ATMs in the retail banking industry. A necessity may also be driven by governmental regulations, such as federal or state statutes requiring a business to retain data and report specific information.

Perspectives on Information Systems

• (^) An information system is a set of interrelated

components that collect or retrieve, process, store,

and distribute information to support decision

making and control in an organization. Information

systems can also be used to analyze problems,

visualize complex subjects, and create new products.

• (^) Information is data , or raw facts, shaped into useful

form for humans.

DATA AND INFORMATION

FUNCTIONS OF AN INFORMATION SYSTEM

FUNCTIONS OF AN INFORMATION SYSTEM

• (^) An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.

INFORMATION SYSTEMS ARE MORE THAN COMPUTERS Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment.

IS & organization

• (^) The dimensions of information systems include organizations, management, and information technology.
• (^) The key elements of an organization are its people, structure, business processes, politics, and culture. An organization coordinates work through a structured hierarchy and formal standard operating procedures. Managerial, professional, and technical employees form the upper levels of the organization's hierarchy while lower levels consist of operational personnel.