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Chapter 1
Managing the Digital Firm
Chapter 1
Managing the Digital Firm
Chapter Objective:
ÈExplain why information systems are so important today for business andmanagement
ÈEvaluate the role of information systems in today¶s competitive businessenvironment.
È Assess the impact of the Internet and Internet technology on business andgovernment.
ÈDefine an information system from both a technical and businessperspective.
È Identify the major management challenges to building and using
information systems.
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Why Information Systems?Why Information Systems?
È An entirely new Internet business culture « new ways of conducting
business.
È Businesspeople working with high-speed Internet connections,wireless networks, cellular phones, hybrid handheld devices.
È Online services for purchasing goods and services are more and more
expected on the western world.
È Business communication with vendors, customers & employees any
time of day or night over the Internet.
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Information Technology (IT):
refers to all of the computer-based information
systems used by organizations and their underlying
technologies.
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Foundation of Doing BusinessFoundation of Doing Business
È In US, millions of managers & workers in the labor force rely on
information systems every day to conduct business.
È In many industries, survival and even existence without extensive use of Information systems is impossible.
È E-commerce and firms like Amazon, eBay, Google, University of
Phoenix would not simply exist without IT.
È Service Industries (finance, insurance, real state) & personal services
(travel, medicine, education) could not operate without IT.
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Strategic Opportunity & AdvantageStrategic Opportunity & Advantage
È To take advantage of new opportunities in markets,
develop new products, and create new services ± big
investment in IT might be required by the firm.
È Information systems also help to achieve a strategic
advantage over competitors.
ProductivityProductivity
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How Much Does IT Matter?How Much Does IT Matter?
IT Matters «
È
not all investments in IT work out or have strategic value.
È Some are just needed to stay in business, to comply with
government reporting requirements and to satisfy the
needs of customers and vendors.
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Digital Convergence and the
Changing Business Environment
Digital Convergence and the
Changing Business EnvironmentFive factors to consider when assessing the growing impact
of IT in business firms:
È Internet growth & technology convergence
È Transformation of the business enterprise
È Growth of a globally connected economy
È Growth of knowledge and information based economies
È Emergence of the digital firm
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The Internet & Technology
Convergence
The Internet & Technology
ConvergenceÈ New business models based on Internet.
È
Cellular phones are becoming Internet access devices.
ÈNew market for online streaming media, music, video
download.
ÈSuppliers of big chains like Wal-Mart, Sears can not do
business unless adopted internet based digital technology.
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Transformation of the Business
Enterprise
Transformation of the Business
EnterpriseÈ Firms are no longer limited by traditional organizational
boundaries or physical locations in how they design,
develop, and produce goods and services.
È There are also changes in the management of the
enterprise. New business Enterprise is flattened (less
hierarchical), decentralized, flexible, location independentand there is more empowerment.
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GlobalizationGlobalization
È Information Systems facilitate imports and exports, foreign
trades.
È Information Systems provide the communication and
analytic power that firms need to conduct trade and manage
businesses on a global scale.
È IS has great role on ± management and control in a global
marketplace, forming global workgroups, managing global
delivery systems.
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Rise of the Information EconomyRise of the Information Economy
È Western and advanced world are being transformed from industrial
economies to knowledge and information based service economies.
È Manufacturing has been moving to lower-wage countries.
È Today most people on the western world no longer work on farms on
in factories. Instead they on sales, education, health care, banks,
insurance firms, law firms and so on.
È In a knowledge and information based economy, knowledge and
information are the sources for creating wealth.
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Emergence of the Digital FirmEmergence of the Digital Firm
Digital Firm:
Internal tasks and most business relationships with
customers, suppliers and employees are digitally enabled.
Digital firms are hoped to be more productive, effective and
efficient.
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Perspectives on Information
Systems
Perspectives on Information
SystemsÈ Data vs. Information
È Informal Information System
È Formal Information System
È Computer based Information System (CBIS)
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Business Perspective on
Information Systems
Business Perspective on
Information SystemsÈ Information systems provide economic value to the
business. That¶s why money is spent on IS / IT
È the result is: more profit, more market share, more return
on investment, increases in revenue, etc.
È Sometimes firms are forced to spend on IT just to stayon business (small banks investing on ATM)
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È Computer Literacy: focuses primarily on knowledge of informationtechnology.
È Information Systems Literacy: IT knowledge, plus understandingabout organization & management.
È Knowledge Workers: design products or services and create newknowledge (engineers, architects, scientists)
È Data Workers: process the organization¶s paperwork (secretaries,bookkeepers, clerks)
È Production / Service Workers: actually produce the organization¶s
products or services.
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È Operational Managers: responsible for monitoring the firm¶s daily
activities.
È Middle Managers: carry out the programs and plans of senior management.
È Senior Managers: make long-range strategic decisions about what
products and services to produce.
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È Computer Hardware
È Computer Software
È Storage Technology
È Communication Technology
È Internet & World Wide Web (WWW)
È IT Infrastructure: provides the foundation, or platform, on which the
firm can build its specific information systems.
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The Challenge of Information
Systems
The Challenge of Information
Systems
È The Information Systems investment challenge
È The Strategic Business challenge
È The Globalization challenge
È The Information Technology Infrastructure challenge
È Ethics and Security challenge
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