Information Technology Foundations-BIT 112
CHAPTER 2
Information Systems:
Concepts and Management
Information Technology Foundations-BIT 112
Chapter Outline
• 2.1 Types of Information Systems
• 2.2 Competitive Advantage and Strategic Information
Systems
• 2.3 Why Are Information Systems Important to
Organizations and Society?
• 2.4 Managing Information Resources
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Learning Objectives
• Describe the components of computer-based
information systems.
• Describe the various types of information systems by
breadth of support.
• Identify the major information systems that support
each organizational level.
• Describe strategic information systems (SISs), and
explain their advantages.
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Learning Objectives (continued)
• Learn about Porter’s competitive forces model and
value chain model, and explain how IT helps
companies improve their competitive positions.
• Describe five strategies that companies can use to
achieve competitive advantage in their industries.
• Describe how information resources are managed, and
discuss the roles of the information systems
department and the end users.
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Application Programs
• An application program is a computer program
designed to support a specific task, a business process
or another application program.
• A collection of Application Programs is often called
an Information System.
– Example: Collection of application programs in the Finance
Department = Finance Information System.
• Note: The term “Application” is synonymous with
“Application Program”.
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Classroom Table Discussion
• In the course of your life and career, you will work
with companies that utilize a variety of information
systems at various levels of the organization.
• At
your table group spend
the next
few minutes
Companies
Have
Failed
When
identifying and discussing the universal use of
They Dosystems
NotinKeep
State
information
your everyday
life.Of The
• Capture
a list
of 5 or 6 information
technologies you
Art
Information
Systems.
have interacted with in the last week.
• Some examples are:
– ATM machines.
– Grocery store checkout line cash registers with bar code
scanners
– Use of a bank card / credit cards for purchases.
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Major Types of Information System
• Functional area information systems
– Support particular functional areas in an organization.
• Enterprise resource planning systems (ERP)
– An integrated information system that serves all departments within an
enterprise. Evolving out of the manufacturing industry, ERP implies the
use of packaged software rather than proprietary software written by or
for one customer.
– An ERP system can include software for manufacturing, order entry,
accounts receivable and payable, general ledger, purchasing,
warehousing, transportation and human resources.
• Transaction processing systems (TPS)
– Support the monitoring, collection, storage, and processing of data from
the organization’s basic business transactions.
– Many support an entire organization.
• Interorganizational information systems
– Connect two or more organizations.
– Examples are supply chain management systems and electronic
commerce systems.
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Information Systems Inside An
Organization / Company See Pgs 34-35
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Information Systems that Support an
Organization’s / Company’s Employees
• Office automation systems (OAS)
– Typically support the staff, managers, and knowledge workers.
– OASs are used to development documents, schedule resources, and
communicate.
• Functional area information systems (FAIS)
– Summarize data and prepare reports, primarily for middle managers.
• Business Intelligence systems (BI)
– Provide computer-based support for complex, non-routine systems,
primarily for middle managers and knowledge workers.
• Expert Systems (ES)
– Attempt to duplicate the work of human experts by applying reasoning
capabilities, knowledge, and expertise within a specific domain.
• Dashboards
– Support all managers by providing rapid access to timely information
and direct access to structured information in the form of reports.
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Components of an Information System
• Computer-based information systems (CBIS) use
computer technology to perform some or all of their tasks
and are composed of:
– Hardware: a device such as a processor, monitor, keyboard or
printer
– Software: a program or collection of programs that enable
hardware to process data.
– Database: a collection of related files or tables containing data.
– Network: a connecting system (wireline or wireless) that permits
different computers to share resources.
– Procedures: the set of instructions about how to combine the
above components in order to process information and generate
the desired output.
– People: those individuals who use the hardware and software,
interface with it, or uses its output.
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Information Technology Outside An
Organization / Company
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2.2 Competitive Advantage and Strategic
Information Systems
• Competitive Advantage
– An advantage over competitors in some measure such as
cost, quality, or speed, leads to control of a market and to
larger- than average profits.
• Strategic Information Systems (SIS)
– Provide a competitive advantage by helping an organization
to implement its strategic goals and to increase its
performance and productivity.
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Porter’s Competitive Forces Model
• The best-known framework for analyzing competitiveness
is Michael Porter’s (Porter, 1985) Competitive Forces
Model.
–
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Porter’s Five Forces
• Competitive Forces Model is used to develop
strategies to increase a company’s competitive edge.
– Demonstrates how IT can make a company more
competitive.
• Five Forces
–
–
–
–
–
Entry Barrier
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of Substitute Products or Services
Rivalry Among Existing Firms in the Industry
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Entry Barrier
• Threat of entry of new competitors is high when it is
easy to enter a market and low when significant
barriers to entry exist.
– An entry barrier is a product or service feature that
customers expect from organizations in a certain industry.
– The product or feature must be offered by the competing
organization for it to survive in the marketplace.
– For most organizations, the Internet increases the threat that
new competitors will enter a market.
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Bargaining Power of Suppliers
• The bargaining power of suppliers is high when
buyers have few choices and low when buyers have
many choices.
• Internet impact is mixed.
– Buyers can find alternative suppliers and compare prices
more easily, reducing power of suppliers.
– On the other hand, as companies use the Internet to
integrate their supply chains, suppliers can lock in
customers.
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Bargaining Power of Buyers
• The bargaining power of buyers is high when buyers
have many choices and low when buyers have few
choices.
• Internet increases buyers’ power.
– Internet provides access to information, increasing buyer
power.
– Internet reduces switching costs, which are the costs, in
money and time, to buy elsewhere. This also increases
buyer power.
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Threat of Substitute Products or Services
• The threat of substitute products or services is high
when there are many substitutes for an organization’s
products or services and low where there are few
substitutes.
• Information-based industries are in the greatest danger
from this threat (e.g., music, books, software). The
Internet can convey digital information quickly and
efficiently.
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Rivalry Among Existing Firms in the
Industry
• Finally, the rivalry among firms in an industry is high
when there is fierce competition and low when there
is not.
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Porter’s Value Chain Model
• The Value Chain Model (1985) identifies specific
activities where organizations can use competitive
strategies for greatest impact.
– Primary activities
• Business activities that relate to the production and
distribution of the firm’s products and services, thus creating
value for which customers are willing to pay. Primary
activities include inbound logistics, operations, outbound
logistics, marketing and sales, and customer service.
– Support activities
• Activities that do not add value directly to a firm’s products
and services, but support the primary activities. Support
activities include accounting, finance, management, human
resources management, product and technology development
(R&D), and procurement.
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Porter’s Value Chain Model
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What Strategies Might Companies Use To
Gain Competitive Advantage?
• Cost leadership
• Differentiation
• Innovation
• Operational effectiveness
• Customer-orientation
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Strategies for Competitive Advantage
• Cost Leadership strategy
– Produce products and/or services at the
lowest cost in the industry.
• Differentiation strategy
– Offer different products, services or product features.
• Innovation strategy
– Introduce new products and services, add new features to existing
products & services or develop new ways to produce them.
• Operational Effectiveness strategy
– Improve the manner in which internal business processes are
executed so that a firm performs similar activities better than its
rivals.
• Customer-orientation strategy
– Concentrate on making customers happy.
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2.3 Why are Information Systems
Important to Us, Organizations, & Society
• IT will reduce the management overhead – increases
the number of employees who can report to a single
manager.
• IT will change the Manager’s job – more informed
decisions.
• IT impacts employees at work.
• IT provides quality-of-life improvements!!!
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Enabling People with Disabilities to Work
with Computers
(a) Computer for visually-impaired user
(b) Computer for hearing-impaired user
(c) Computer for motor-impaired user
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The Robot Revolution
See Invasion of
the Humanoid
Robots
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The Robot Revolution
See video of
Big Dog robot
in action
http://www.youtube.com/
watch?v=W1czBcnX1W
w
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The Robot Revolution (continued)
See ASIMO commercial
See video of ASIMO in action
Honda’s ASIMO robot
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DeLaval Voluntary Milking System
• See P 47 – Voluntary cause cows return to the system
on their own.
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Improvements in Health Care
• A roving robot camera that can be steered remotely
and wirelessly. Can move through the throat,
esophagus, stomach, and small & large intestines.
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Improvements in Health Care (continued)
• The Pill Cam: Wireless
endoscopy.
– Patient swallows the Pill
Cam (camera). The
camera takes an image of
the digestive tract at
intervals, and sends the
images to a device that
patients wear on their
belts.
– May do away with
endoscopy and the need
for general anesthetic for
the procedure.
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The daVinci Surgical Robot
The robot
The surgeon’s console
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The daVinci Surgical Robot (continued)
The daVinci robot in use
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Medical Simulation
Two physicians
perform a
procedure on a
simulated human
(mannequin)
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Classroom Table Discussion
• Besides our inability to predict the future, what are
other reasons why IT Information Systems projects
might fail?
• Lack
of understanding
of the
thenext
business
problem
At your
table group spend
few minutes
• Lack
of userand
involvement
identifying
discussing possible reasons why an
• Ainformation
schedule which
too aggressive
systemismight
fail when it is launched.
•• Inadequate
Capture a listtesting
of 4 or 5 reasons.
• Trying to make too many changes at one time
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2.4 Managing Information Resources
• Which IT Resources are Managed and By Whom?
– During the early 1950s, the Information Systems Department (IS
Dept) managed ALL of the computing resources, namely the
mainframe.
– Today, computing resources are located through the organization
and almost all employees use computers in their work.
• This is known as end user computing.
• The Role of the IS Department
– The IS Dept is responsible for corporate-level and shared
resources and for using IT to solve end users’ business problems.
– In most companies, the end users are responsible for managing
their own computing resources.
– IS Dept and end users work together as partners to manage the IT
resources.
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Information Technology Foundations-BIT 112
Traditional Major IS Department
Functions
• Managing systems development and systems project
management.
• Managing computer operations.
• Staffing, training, developing IS skills.
• Providing technical services.
• Infrastructure planning, development, and control.
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Information Technology Foundations-BIT 112
New (Consultative) IS Functions
• Initiating and designing strategic information systems.
• Incorporating the Internet and e-commerce into the
business.
• Managing system integration.
• Educating non-IS managers about IT.
• Educating IS staff about the business.
• Supporting end-user computing.
• Partnering with executives.
• Managing outsourcing.
• Innovate.
• Ally with vendors and IS departments in other
organizations.
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Supporting End Users
• One form of end-user support is the help desk, where
IS staffers help users troubleshoot problems with their
systems.
•
This video shows the first help desk.
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Chapter Closing Case P55
Todd Pacific
Shipyards
Wireless PDA
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