Chapter 01: An Introduction to Information

Systems

Stair, Reynolds and Chesney Fundamentals of Business Information Systems

(97818448008843) © Cengage Learning 2008

Permission received from

T Fuchs (Cengage Learning) –

14/01/2009

Organizations & Info Systems

• Organization: a collection of people and other

resources established to accomplish a set of goals

For-profit organization

Non-profit organization

• An organization is a system

– Input: resources (materials, people, money)

– Process: business processes

– Output: goods or services

• Business Organization (aka company / firm):

– A system designed for the purpose of creating products

and services for customers

Organization

NAME SCOPE PERSPECTIVE EXAMPLE

Calculation Single purpose Eliminate tedious

human calculations.

Payroll

General ledger

Stock control

Functional Business function To improve operation &

management of

individual departments.

Human resources

Order entry

Manufacturing

Financial reporting

Integrated Business process Develop IS to integrate

separate departments

into organization-wide

business processes.

Customer

Relationship

Management

(CRM)

Enterprise

Resource Planning

(ERP)

Categories of Information Systems

• Research & Development (R&D)

– Conducts basic research & relates new discoveries to

the firm’s current or new products.

• Production (operations)

– Takes in raw materials & people work to produce

finished goods (or services).

– May be a manufacturing activity or an operations

activity (retail).

• Marketing & Sales

– Handles planning, pricing, promoting, selling &

distributing goods & services to customers.

Departments (Functions)

• Accounting & Finance

– Tracks all financial activity.

– Handles cash management, pays accounts, & taxes,

issues salary cheques, records payments, makes

investments, compiles financial statements & reports.

• Human Resources (Personnel)

– Finds & hires people, administers sick leave & retirement

matters.

– Also concerned with compensation levels, professional

development, employee relations.

• Information Systems

– Manages the organization’s computer based systems &

plans for & purchases new systems.

Departments (Functions)

VALUE CHAIN

• Value chain:

– a series (chain) of activities that includes inbound logistics,

warehouse and storage, production, finished product storage,

outbound logistics, marketing and sales, & customer service

• Upstream management:

– management of raw materials, inbound logistics, and

warehouse & storage facilities

• Downstream management:

– management of finished product storage, outbound logistics,

marketing and sales, & customer service

Porter’s Value chain from the customer’s

perspective.

VALUE CHAIN cont.....

VALUE CHAIN

(Manufacturing Company)

DRAW VALUE CHAINS FOR THE FOLLOWING:

1. Wooden chair

2. Bicycle

3. Bottle of wine

4. You have decided to open an Internet site to buy and sell used

music CDs to other students. Describe the value chain

activities for your new business.

e.g. Sales & marketing, production, logistics, etc.

INTRODUCTION TO INFO SYSTEMS IN

ORGANIZATIONS

CLASS EXERCISE 2

• Supply Chain Management (SCM)

– Helps determine what supplies are required for value chain

– What quantities needed to meet customer demand

– How supplies should be processed into finished & services

– Shipment must be scheduled, monitored & controlled

• Customer Relationship Management (CRM)

– Marketing & sales

– Sales

– After-sales service

– Help to retain loyal customers

MANAGING THE VALUE CHAIN

ORGANIZATIONAL CHANGE

How organizations plan for, implement, and handle

change.

Causes:

• Internal New managers; staff leaving

• External Competitors; new laws; economic conditions

Types:

• Sustaining new or cheaper equipment

• Disruptive downsizing; mergers

USER SATISFACTION &

TECHNOLOGY ACCEPTANCE

To be effective, reengineering & continuous improvement efforts must result in satisfied users & be accepted and used throughout the organization.

• Technology diffusion: measure of widespread use of

technology

• Technology infusion: extent to which technology

permeates a department

• Technology acceptance model (TAM): specifies factors

that can lead to higher acceptance & usage of technology.

System must be easy to use & useful to user.

COMPETITIVE ADVANTAGE

• ..the ability of a firm to outperform its industry, that is,

to earn a high rate of profit than the industry norm.

• PORTER’S Five –forces model:

Factors that force an organization to seek competitive

advantage..........

The Competitive Environment

Threat of New

Entrants

Rivalry Among Existing

Competitors

Bargaining Power of Customers

Bargaining Power of Suppliers

Threat of Substitutes

Strategies to reach

Competitive Advantage

Improving existing products & service

Creating new products & services

Altering the industry structure

Differentiation Strategies

Cost Leadership Strategies

Niche Strategies

Strategic Planning for Competitive

Advantage (continued)

Competitive Advantage Factors and Strategies (Examples)

Strategic Planning for Competitive

Advantage (continued)

: Competitive Advantage Factors and Strategies (Examples)

Evaluating IS

Some approaches to evaluating IS include:

• Productivity

– Output achieved divided by input required

– Higher level of output for a given level of input means

greater productivity

• Return On Investment (ROI) & Value of info systems

– Earnings growth

– Market share

– Customer awareness and satisfaction

– Total cost of ownership

Careers in Information Systems

Systems Development

(SDLC steps)

• In-house?

• Outsource?