CHAPTER 2
Information Systems Concepts and Management
1
Opening Case
Electronic records to transform healthcare
There are about 2,000 health-based activities every minute in
Canada. These activities could be a visit to a family doctor, an
emergency tooth extraction, taking of x-rays, or many other such
activities.
The Business Problem
How do doctors access a patient’s health record if the person has been to
many different providers in the last few years? What if an x-ray negative is
sent to a hospital for viewing but is lost or damaged in transit? Even within
a single hospital, information about a patient can easily be unavailable as the
patient moves to different departments to receive tests and treatment.
2
Opening Case
Discussion

What are some of the reasons that doctors or hospitals might
purchase information systems that do not meet their needs?

Describe additional information systems that could be used by
doctors or hospitals to meet the needs of their patients or
employees.
3
Opening Case
What we learned from this case?

The opening case illustrates the ambitious desire to have electronic
records available for the Canadian health care system. Some
provinces and hospitals have been able to implement such systems
(for example, the province of Alberta and the London Health
Services Centre in Ontario), but there have also been financial
disasters, such as happened with e-health in Ontario.

These problems show why it is important to effectively manage
information systems, our first topic in this chapter.
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Agenda
2.1 Information Technology (IT) Governance and Management
Corporate Governance
IT Governance
2.2 Types and Purposes of Information Systems
2.2.1 Computer-based information systems
2.2.2 Application programs
2.2.3 Breadth of support of information systems
2.2.4 Support for organizational employees
5
Agenda
2.3 Competitive Advantage and Strategic Information Systems
2.3.1 Definition
2.3.2 Porter’s competitive forces model
2.3.3 Porter’s value chain model
2.3.4 Strategies for competitive advantage
2.4 The Importance of Information Systems and the Management
2.4.1 IT affects employees
2.4.2 IT provides quality of life improvement
2.4.3 Managing information resources
2.4.4 The role of the IS department
6
LEARNING OBJECTIVES
1.
Define IT governance and explain why information systems need
to be effectively managed.(2.1)
2.
Describe the components, types, and purposes of information
systems. (2.2)
3.
Describe Porter’s competitive forces model and his value chain
model, explaining five strategies companies can use to improve
their competitive positions.(2.3)
4.
Explain the importance of information systems to organizations
and society and describe how information resources are
managed.(2.4)
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CHAPTER OVERVIEW
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2.1 Information Technology (IT) Governance
and Management


Corporate governance
IT governance
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
As described in our first chapter, many organizations
have business strategies that then drive the information
systems strategies. These strategies take account of
risks or potential problems that could occur and the
opportunities that organizations have to serve their
customers better or create more value for their
stakeholders.

Large organizations expect the board of directors and
executives to effectively manage the organization, which
is called corporate governance.
10

IT governance, is “a structure of relationships and
processes to direct and control the enterprise in order to
achieve the enterprise’s goals by adding value while
balancing risk versus return over IT and its processes.”

IT governance is about managing IT throughout the
organization. This includes planning, acquisition,
implementation, and ongoing support, as well as
monitoring and evaluation so that decisions can be
made about potential changes.
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2.2 Types and Purposes of Information
Systems
2.2.1 Computer-based information systems
2.2.2 Application programs
2.2.3 Breadth of support of information systems
2.2.4 Support for organizational employees
12
2.2.1 Computer based information systems

Definition
A computer-based information system (CBIS) is an information
system that uses computer technology to collect, process, store,
analyze, and disseminate information for a specific purpose.

Basic Components of Information Systems
o
o
o
o
o
o
Hardware
Software
Database
Network
Procedures
People
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
Hardware is a device such as the processor, monitor, keyboard, and
printer. Together these devices accept data and information, process it, and
display it.

Software is a program or collection of programs that enables the
hardware to process data.

A database is a collection of related files or tables containing data.

A network is a connecting system (wire or wireless) that permits
different computers to share resources.

Procedures are the set of instructions about how to combine the above
components in order to process information and generate the desired
output.

People are those individuals who use the hardware and software,
interface with it, or use its output.
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2.2.2 Application programs

An application program is a computer program
designed to support a specific task or business process.
Each functional area or department within a business
organization uses dozens of application programs. Note
that application programs are synonymous with
applications.

For instance, the human resources department
sometimes uses one application for screening job
applicants and another for monitoring employee
turnover.
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2.2.3 Breadth of support of information
systems



Functional area information systems (FAIS)
Transaction processing systems (TPS)
Electronic commerce systems (B2B,B2C,etc)
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
Functional area information systems (FAIS) support
particular functional areas in an organization.

Transaction processing systems (TPS) support the
monitoring, collection, storage, and processing of data from the
organization’s basic business transactions.

Electronic commerce systems are another type of interorganizational information system. These systems enable
organizations to conduct transactions, called business-to-business
(B2B) electronic commerce, and customers to conduct
transactions with businesses, called business-to-consumer (B2C)
electronic commerce. They are typically Internet-based.
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18
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2.2.4 Support for organizational employees
Office automation systems
 Business intelligence systems
 Expert systems
 Dashboards

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



Office automation systems (OASs) typically support the
clerical staff, lower and middle managers, and knowledge workers.
These people use OASs to development documents, schedule
resources, and communicate.
Business intelligence systems (BIS) 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 or Digital 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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2.3 Competitive Advantage and Strategic
Information Systems
2.3.1 Definition
2.3.2 Porter’s competitive forces model
2.3.3 Porter’s value chain model
2.3.4 Strategies for competitive advantage
22
2.3.1 Definition

A competitive strategy is a statement that identifies a
business’s strategies to compete, its goals, and the plans
and policies that will be required to carry out those
goals.

Through its competitive strategy, an organization seeks
a competitive advantage in an industry. That is, it
seeks to outperform its competitors in some measure
such as cost, quality, or speed.

Competitive advantage helps a company control a
market and generate larger-than-average profits.
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2.3.2 Porter’s competitive forces model
24

The bargaining power of buyers is high when buyers have many
choices and low when buyers have few choices.

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.
25

The bargaining power of buyers is high when buyers have many
choices and low when buyers have few choices.

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.

The rivalry among firms in an industry is high when there is
fierce competition and low when there is not.

A barrier to entry is a product or service feature that
customers expect from organizations in a certain industry.
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2.3.3 Porter’s Value Chain model
This model identifies specific activities where
organizations can use competitive strategies for
greatest impact.
◦ Support activities
◦ Primary activities
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
Primary activities are those 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 for.
These primary business activities include inbound logistics,
operations, outbound logistics, marketing and sales, and customer
service.

Support activities 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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2.3.4 Strategies for competitive advantage
Cost Leadership
 Differentiation
 Innovation
 Operational Effectiveness
 Customer-orientation

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
Cost Leadership. Produce products and/or services at the lowest
cost in the industry.

Differentiation. Offer different products, services or product
features.

Innovation. Introduce new products and services, add new
features to existing products and services or develop new ways to
produce them.
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
Operational Effectiveness. Improve the manner in which
internal business processes are executed so that a firm performs
similar activities better than its rivals.

Customer-orientation. Concentrate on making customers
happy.
31
2.4 The Importance of Information Systems
and Management
2.4.1 IT affects employees
2.4.2 IT provides quality of life improvement
2.4.3 Managing information resources
2.4.4 The role of the IS department
32
2.4 The Importance of Information Systems
and their Management
IT will reduce the number of middle managers.
 IT will change the manager’s job.
 IT impacts employees at work.
 IT provides quality-of-life improvements.

Honda’s ASIMO robot
See video of ASIMO in action
DeLaval Voluntary Milking System (p. 47)
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2.4.2 IT Provides Quality of Life Improvements
Improvements in Health Care
A roving robot camera that can be steered remotely and wirelessly. It can
move through the throat, esophagus, stomach, and small and
large intestines.
The Pill Cam: Wireless endoscopy
The daVinci robot in use
34
Medical Simulation
Two physicians perform a procedure on
a simulated human (mannequin)
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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2.4.3 Managing Information Resources


Which IT resources are managed and by whom?
◦ During the early 1950s, Information Systems Department (ISD)
managed ALL of the only computing resource, the mainframe.
◦ Today, computing resources are located through the organization
and almost all employees use computers in their work. This
system is known as end user computing.
The role of the IS department
◦ The ISD is responsible for corporate-level and shared resources
and for using IT to solve end users’ business problems.
◦ End users are responsible for their own computing resources
and departmental resources.
◦ ISD and end users work together as partners to manage the IT
resources.
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2.4.4 The Role of the IS Department
Traditional Major IS Functions





Managing systems development and systems project management
Managing computer operations
Staffing, training, developing IS skills
Providing technical services
Infrastructure planning, development, control
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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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Closing Case
Letting the computer read to you…
The Business Problem
As an employer, you would like to be inclusive and hire employees who
have special needs, such as difficulty reading. Or, you have an aging
workforce that is having trouble reading fine print on documents and
regular size print on computer screens. Unfortunately, your most senior
executive has experienced macular degeneration (a problem with the back
of the eyes that is more common for individuals who have had cataract
surgery) that has rendered him almost legally blind.
Currently, an executive assistant works full-time with the executive,
assisting with reading and writing and resorting to dictation for many
documents and memos that are typed up. A second assistant is responsible
for reading and transcribing documents so that they can be played by
digital players that can readily navigate through large volumes of text.
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Closing Case
Discussion
1.
Is the Intel Reader a strategic information system for the company
that employs the visually impaired executive? Why or why not?
Support your answer.
2.
How would a company like Intel use information technology to
develop, produce, and market the Intel Reader? For each use of
information technology, identify the type of technology and how it
would be used.
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Closing Case
The Results
In our hypothetical example above, rather than hiring two
assistants to transcribe documents and read aloud, the executive
could make do with a single assistant to move large amounts of
documents rapidly into machine readable and verbal form.
The reader can also be used as a portable device, taken to
meetings and other locations to be able to rapidly convert
documents onsite. Individuals with borderline visual problems can
use the reader to reduce eye strain and help prevent more rapid
visual degeneration.
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