-E-mail, online conferencing, smartphones, and tablet computers have become essential tools for conducting business. Information systems are the foundation of fast-paced supply chains. The Internet allows many businesses to buy, sell, advertise, and solicit customer feedback online. Organizations are trying to become more competitive and efficient by digitally enabling their core business processes and evolving into digital firms. The Internet has stimulated globalization by dramatically reducing the costs of producing, buying, and selling goods on a global scale. New information system trends include the emerging mobile digital platform, online software as a service, and cloud computing.
-Information systems are a foundation for conducting business today. In many industries, survival and the ability to achieve strategic business goals are difficult without extensive use of information technology. Businesses today use information systems to achieve six major objectives: operational excellence; new products, services, and business models; customer/supplier intimacy; improved decision making; competitive advantage; and day-to-day survival.
-From a technical perspective, an information system collects, stores, and disseminates information from an organization's environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis, and visualization. Information systems transform raw data into useful information through three basic activities: input, processing, and output.
-From a business perspective, an information system provides a solution to a problem or challenge facing a firm and represents a combination of management, organization, and technology ele- ments. The management dimension of information systems involves issues such as leadership, strategy, and management behavior. The technology dimension consists of computer hardware, software, data management technology, and networking/telecommunications technology (including the Internet). The organization dimension of information systems involves issues such as the organization's hierarchy, functional specialties, business processes, culture, and political interest groups.
-In order to obtain meaningful value from information systems, organizations must support their technology investments with appropriate complementary investments in organizations and management. These complementary assets include new business models and business processes, supportive organizational culture and management behavior, appropriate technology standards, regulations, and laws. New information technology investments are unlikely to produce high returns unless businesses make the appropriate managerial and organizational changes to support the technology.
United Parcel Service's global operations are driven by its information systems technology. What UPS can do is largely a function of its information technology investments. Beginning as a local delivery service in 1907, UPS expanded on the West coast initially, reached New York in the 1930s, and went international in the 1970s. Today, UPS delivers over 18 million packages daily to 220 countries and territories, requiring the talents of 70,000 drivers who are wirelessly connected to UPS databases located in seventeen major data centers throughout the world. UPS maintains a fleet of 95,000 delivery vehicles, and 230 aircraft worldwide.
A multiyear, multi-billion-dollar investment in technology drove the growth of UPS over
the last twenty-five years, beginning in 1990. This investment enabled the development of the DIAD, the Delivery Information Acquisition Device, now in its fifth generation. The DIAD has been a key element in UPS's business technology platform because it connects the drivers to UPS central systems for tracking and delivering packages. UPS was the first firm to use mobile wireless technology for day-to-day operations, and it achieved this distinction twenty years before the iPhone and other smartphones. In 2015, it expects to have deployed over 100,000 new DIAD V units. The new DIAD V performs all the functions of the previous models, but adds additional functionality, better hardware and software, resulting in an ergonomically superior fit for drivers, as well as advances in productivity. For customers, the DIAD platform ensures their packages are tracked in real time from pickup to delivery.
-Systems serving operational management are transaction processing systems (TPS), such as payroll or order processing, that track the flow of the daily routine transactions necessary to conduct business. Management information systems (MIS) produce reports serving middle management by condensing information from TPS, and these are not highly analytical. Decision-support systems (DSS) support management decisions that are unique and rapidly changing using advanced analytical models. All of these types of systems provide business intelligence that helps managers and enterprise employees make more informed decisions. These systems for business intelligence serve multiple levels of management, and include executive support systems (ESS) for senior management that provide data in the form of graphs, charts, and dashboards delivered via portals using many sources of internal and external information.
-Enterprise applications are designed to coordinate multiple functions and business processes. Enterprise systems integrate the key internal business processes of a firm into a single software system to improve coordination and decision making. Supply chain management systems help the firm manage its relationship with suppliers to optimize the planning, sourcing, manufacturing, and delivery of products and services. Customer relationship management (CRM) systems coordinate the business processes surrounding the firm's customers. Knowledge management systems enable firms to optimize the creation, sharing, and distribution of knowledge. Intranets and extranets are private corporate networks based on Internet technology that assemble information from disparate systems. Extranets make portions of private corporate intranets available to outsiders.
Collaboration is working with others to achieve shared and explicit goals. Social business is the use of internal and external social networking platforms to engage employees, customers, and suppliers, and it can enhance collaborative work. Collaboration and social business have become increasingly important in business because of globalization, the decentralization of decision making, and growth in jobs where interac- tion is the primary value-adding activity. Collaboration and social business enhance innovation, productivity, quality, and customer service. Tools for collaboration and social business include e-mail and instant messag- ing, wikis, virtual meeting systems, virtual worlds, cloud-based cyberlockers and online services such as those of Google and Microsoft, corporate collaboration systems such as Microsoft Sharepoint, and enterprise
social networking tools such as Chatter, Yammer, Jive, and IBM Connections.
In 1997, Walmart moved Retail Link to an extranet that allowed suppliers to directly link over the Internet into Walmart's inventory management system. In 2000, Walmart hired an outside firm to upgrade Retail Link from being a supply chain management tool toward a more collaborative forecasting, planning, and replenishment system. Using demand aggre- gation software provided by Atlas Metaprise Software, Walmart purchasing agents can now aggregate demand from Walmart's 5,000 separate stores in the United States into a single RFQ from suppliers. This gives Walmart tremendous clout with even the largest suppliers.
In addition, suppliers can now immediately access information on inventories, purchase orders, invoice status, and sales forecasts, based on 104 weeks of online, real-time, item- level data. The system does not require smaller supplier firms to adopt expensive EDI soft- ware solutions. Instead, they can use standard browsers and PCs loaded with free software from Walmart. There are now over 20,000 suppliers—small and large—participating in Walmart's Retail Link network.
All modern organizations are hierarchical, specialized, and impartial, using explicit routines to maximize efficiency. All organizations have their own cultures and politics arising from differences in interest groups, and they are affected by their surrounding environment. Organizations differ in goals, groups served, social roles, leadership styles, incentives, types of tasks performed, and type of structure. These features help explain differences in organizations' use of information systems. Information systems and the organizations in which they are used interact with and influence each other. The introduction of a new information system will affect organizational structure, goals, work design, values, competition between interest groups, decision making, and day-to-day behavior. At the same time, information systems must be designed to serve the needs of important organizational groups and will be shaped by the organization's structure, business processes, goals, culture, politics, and manage- ment. Information technology can reduce transaction and agency costs, and such changes have been accentuated in organizations using the Internet. New systems disrupt established patterns of work and power relationships, so there is often considerable resistance to them when they are introduced. In Porter's competitive forces model, the strategic position of the firm, and its strategies, are determined by competition with its traditional direct competitors, but they are also greatly affected by new market entrants, substitute products and services, suppliers, and customers. Information systems help companies compete by maintaining low costs, differentiating products or services, focusing on market niche, strengthening ties with customers and suppliers, and increasing barriers to market entry with high levels of operational excellence.
The value chain model highlights specific activities in the business where competitive strategies and infor- mation systems will have the greatest impact. The model views the firm as a series of primary and support activities that add value to a firm's products or services. Primary activities are directly related to production and distribution, whereas support activities make the delivery of primary activities possible. A firm's value chain can be linked to the value chains of its suppliers, distributors, and customers. A value web consists of information systems that enhance competitiveness at the industry level by promoting the use of standards and industry-wide consortia, and by enabling businesses to work more efficiently with their value partners.
Because firms consist of multiple business units, information systems achieve additional efficiencies or enhance services by tying together the operations of disparate business units. Information systems help businesses leverage their core competencies by promoting the sharing of knowledge across business units. Information systems facilitate business models based on large networks of users or subscribers that take advantage of network economics. A virtual company strategy uses networks to link to other firms so that a company can use the capabilities of other companies to build, market, and distribute products and services. In business ecosystems, multiple industries work together to deliver value to the customer. Information systems support a dense network of interactions among the participating firms.
Information technology is introducing changes for which laws and rules of acceptable conduct have not yet been developed. Increasing computing power, storage, and networking capabilities—including the Internet—expand the reach of individual and organizational actions and magnify their impacts. The ease and anonymity with which information is now communicated, copied, and manipulated in online environments pose new challenges to the protection of privacy and intellectual property. The main ethical, social, and political issues raised by information systems center around information rights and obligations, property rights and obligations, accountability and control, system quality, and quality of life. -The oldest method for building systems is the systems life cycle, which requires that information systems be developed in formal stages. The stages must proceed sequentially and have defined outputs; each requires formal approval before the next stage can commence. The systems life cycle is useful for large projects that need formal specifications and tight management control over each stage of systems building, but it is very rigid and costly.
-Prototyping consists of building an experimental system rapidly and inexpensively for end users to interact with and evaluate. Prototyping encourages end-user involvement in systems development and iteration of design until specifications are captured accurately. The rapid creation of prototypes can result in systems that have not been completely tested or documented or that are technically inadequate for a production environment.
-Using a software package reduces the amount of design, programming, testing, installation, and maintenance work required to build a system. Application software packages are helpful if a firm does not have the internal information systems staff or financial resources to custom develop a system. To meet an organization's unique requirements, packages may require extensive modifications that can substantially raise development costs.
-End-user development is the development of information systems by end users, either alone or with minimal assistance from information systems specialists. End-user developed systems can be created rapidly and informally using user-friendly software tools. However, end-user development may create information systems that do not necessarily meet quality assurance standards and that are not easily controlled by traditional means.
-Outsourcing consists of using an external vendor to build (or operate) a firm's information systems instead of the organization's internal information systems staff. Outsourcing can save application development costs or enable firms to develop applications without an internal information systems staff. However, firms risk losing control over their information systems and becoming too dependent on external vendors. Outsourcing also entails hidden costs, especially when the work is sent offshore.
9th EditionJ. Douglas Faires, Richard L. Burden
7th EditionDavid Burton
2nd EditionTimothy Sauer
8th EditionPeter V. O'Neil