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Chapter 1

Chapter 1. Managing in the Digital World. “ If we'd given customers what they said they wanted, we'd have built a computer they'd have been happy with a year after we spoke to them—not something they'd want now… ” Steve Jobs, Apple Computer. Learning Objectives. Learning Objectives.

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Chapter 1

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  1. Chapter 1 Managing in the Digital World “If we'd given customers what they said they wanted, we'd have built a computer they'd have been happy with a year after we spoke to them—not something they'd want now…”Steve Jobs, Apple Computer

  2. Learning Objectives

  3. Learning Objectives

  4. Information Systems Today • The Knowledge Worker • Term coined by Peter Drucker in 1959 • An individual who is relatively well educated and who creates, modifies, and/or synthesizes knowledge as a fundamental part of a job • Knowledge Society • New Economy/Digital World • Digital Divide

  5. Information Systems: Definition • Combination of five key elements: • People • Hardware • Software • Data • Telecommunications networks

  6. Data: The Root and Purpose of Information Systems • Distinction between: • Data—raw, unformatted information • Example: 5433333353 • Information—data that is transformed to have a meaning • Example: (543) 333-3353 • Knowledge—body of governing procedures used to organize or manipulate data • Wisdom—accumulated knowledge

  7. Data: The Root and Purpose of Information Systems (cont’d)

  8. IT:The Components of Information Systems • Relationship of computer-based information systems to information technology and technology in general

  9. IT: The Components of Information Systems—Technology • Any machine that can supplement or replace human manual work • Examples: • Heating system • Surgical laser

  10. IT: The Components of Information Systems—Information Technology • A type of technology that is controlled by or uses information • Example: Manufacturing robot

  11. IT: The Components of Information Systems—Computer-based IS 1-11 • Systems using computers to provide useful data to people • Example: Specific software used to analyze data 1-11

  12. Hot Skills for 2010 and Beyond

  13. Learning Objectives

  14. The Dual Nature of IS • IS can make you or break you • London Heathrow—The failure • Baggage handling system: original cost of $500 million • Disaster on opening day, costing $ 50 million due to over 28,000 bags being misrouted • FedEx—The success • $ 38 billion family of companies—largest express transportation company • “Information hub for business where managing information is the business”

  15. IS for Competitive Advantage • Both FedEx and London Heathrow were developing strategic information systems • Only strategic information systems can help sustain competitive advantage

  16. Why Information Systems Matter • Nicholas Carr article—“IT Doesn’t Matter” • IT no longer a source of advantage on the firm level • Companies should focus IT on cost reduction and risk mitigation • Many experts disagree with his arguments • Abbie Lundberg—Interview with Carr • Don Tapscott—“The Engine That Drives Success: The Best Companies Have the Best Business Models Because They Have the Best IT Strategies” • Many successful companies use IT to support a unique business strategy

  17. Decision-Making Levels of an Organization

  18. Operational Level • Day-to-day business processes • Interactions with customers • Decisions: • Structured ( Procedures is specified). • Recurring / frequent • Can often be automated using IS( Inventory System). • BI (business intelegence) used to: • Optimize processes • Understand causes of performance problems

  19. Managerial Level • Functional managers • Monitor and control operational-level activities • Focus: effectively utilizing and deploying resources • Goal: achieving strategic objectives • Managers’ decisions • Semistructured • Moderately complex • Time horizon of few days to few months • BI can help with: • Performance analytics • Forecasts • Providing key performance indicators on dashboards

  20. Managerial Level (cont’d)

  21. Executive Level • The president, CEO, vice presidents, board of directors • Decisions • Unstructured • Long-term strategic issues • Complex and nonroutine problems with long-term ramifications • BI is used to: • Obtain aggregate summaries of trends and projections • Provide KPI’s (key performance indicator) across the organization

  22. Executive Level (cont’d)

  23. Providing Inputs into BI Applications • Decisions made by different departments need to be based on the same underlying data • “Single version of the truth” • BI systems access multiple databases or data warehouses • Data aggregated from operational systems • E.g., Transaction processing systems

  24. Transaction Processing Systems (TPS) • Operational level • Purpose: • Processing of business events and transactions • Increase efficiency • Automation • Lower costs • Increased speed and accuracy • Examples: • Payroll processing • Sales and order processing • Inventory management • Product purchasing, receiving, and shipping • Accounts payable and receivable

  25. Architecture of a TPS

  26. Architecture of a TPS: Inputs • Source documents • Different data entry methods

  27. Architecture of a TPS: Processing • Online processing • Immediate results • Batch processing • Transactions collected and later processed together • Used when immediate notification not necessary

  28. Architecture of a TPS: Outputs • Counts, summary reports • Inputs to other systems • Feedback to systems operator

  29. Summary of TPS Characteristics

  30. Management Information Systems 8-30 • Managerial level • Purpose: • Produce reports • Support of midlevel managers’ decisions • Examples: • Sales forecasting • Financial management and forecasting • Manufacturing, planning and scheduling • Inventory management and planning • Advertising and product pricing

  31. Architecture of an MIS

  32. Summary of MIS Characteristics

  33. Decision Support Systems (DSS) • Decision-making support for recurring problems • Used mostly by managerial level employees • Interactive decision aid • What-if analyses • Analyze results for hypothetical changes • Example: Microsoft Excel

  34. Architecture of a DSS

  35. Common DSS Models

  36. Executive Information Systems • Aka Executive support system • Executive level • Purpose: • Aid in executive decision making • Provide information in highly aggregated form • Examples: • Executive-level decision making • Long-range and strategic planning • Monitoring of internal and external events and resources • Crisis management • Staffing and labor relations

  37. Architecture of an EIS

  38. Summary of EIS Characteristics

  39. Business Processes Supported by Functional Area Information Systems

  40. Organizational Functions and Representative Information Systems

  41. Geographic Information System (GIS) • Use of geographically referenced information • Finding optimal location for a new store • Identification of areas too wet to fertilize (see figure) • Locating target customers • Infrastructure design

  42. Health information technology • (HIT) provides the umbrella framework to describe the comprehensive management of health information across computerized systems and its secure exchange between consumers, providers, government and quality entities, and insurers. Health information technology (HIT) is in general increasingly viewed as the most promising tool for improving the overall quality, safety and efficiency of the health delivery system (Chaudhry et al., 2006). Broad and consistent utilization of HIT will: • Improve health care quality; • Prevent medical errors; • Reduce health care costs; • Increase administrative efficiencies • Decrease paperwork; and • Expand access to affordable care.

  43. Health information technology… cont. Interoperable HIT will improve individual patient care, but it will also bring many public health benefits including: • Early detection of infectious disease outbreaks around the country; • Improved tracking of chronic disease management; and • Evaluation of health care based on value enabled by the collection of de-identified price and quality information that can be compared

  44. End of Chapter Content 1-44

  45. Learning Objectives

  46. Opening Case—Managing in the Digital World: Apple Computer • Apple changed the way in which everyday people use computers • Long list of successful products • Success of iPod: tight integration with iTunes and AppStore

  47. Apple Computers • A company’s survival may depend upon those employees who fail over and over as they try new ideas (Consultant & author Tom Peters) • Apple has had many failures: • Mac TV, PowerMac G4 Cube, Lisa, Newton, etc. • Apple’s overall success shows that a company without an interesting list of failures probably isn’t trying hard enough.

  48. Bionic Contact Lens • Bionic eye implants for blind and partially blind people are being developed • Problems that must be solved first: • Plastics for electronic must be biocompatible • LED must be small enough to fit over the eye without causing discomfort, and yet must be functional • Where will the power for the device come from?

  49. The Two Steves—Jobs & Wozniak • Knew each other in high school • Started selling Apple computers in 1976 • Both left Apple in 1985 • In 1996 Jobs returned to become Apple’s CEO

  50. Worldwide Internet Usage • In 2008 about 17 percent of active Internet users were located in the United States • Internet usage: • Highest—North America: 74 percent of population • Lowest—Africa: 5.3 percent of population

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