October 21 , 2013
Information Systems (IS) - computer-based tools people use to work with information and support the
information and processing needs of an organization
Information Technology (IT) – the acquisition, processing, storage, and dissemination of vocal, pictorial, textual,
and numerical information by a microelectronics-based combination of computing and telecommunications
Management Information Systems (MIS) – Function that plans for, develops, implements, and maintains IT
hardware, software, and applications that people use to support the goals of an organization
Data, Information & Knowledge
Data – raw facts that describe the characteristics of an object or event (date, item number, item description,
quantity ordered, customer name).
Information – data converted into a meaningful and useful context (bestselling or worst selling item, etc.)
Knowledge – actionable information (information that can be acted upon)
“People use processes to work with information systems to produce information”
Information-Functional Culture – employees use information as a means of exercising influence or power over
Information-Sharing Culture – employees across departments trust each other to use information (usually about
problems & failures) to improve performance
Information-Inquiring Culture – employees across departments search for information to better understand the
future and align themselves with current trends and new directions
Information-Discovery Culture – employees across departments are open to new insights about crisis and radical
changes and seek ways to create competitive advantages
Roles and Responsibilities
Chief information officer (CIO) – Oversees all uses of IT and ensures the strategic alignment of IT with business
goals and objectives
Chief knowledge officer (CKO) - Responsible for collecting, maintaining, and distributing the organization’s
Chief privacy officer (CPO) – Responsible for ensuring the ethical and legal use of information
Chief security officer (CSO) – Responsible for ensuring the safety of IT resources including data, hardware,
software, and people
Chief technology officer (CTO) – Responsible for ensuring the throughput, speed, accuracy, availability, and
reliability of IT Alyssa Soubliere
October 21 , 2013
Identifying Competitive Advantage
Competitive advantage – a product or service that an organization’s customers place a greater value on than
similar offerings from a competitor
First-mover advantage – occurs when an organization can significantly impact its market share by being first to
market with a competitive advantage
Environmental scanning – the acquisition and analysis of events and trends in the environment external to an
Three Common Tools Used to Evaluate:
– Porter’s Five Forces Model
– Porter’s three generic strategies
– Value chains
Five Forces Model
• Buyer power – high when buyers have many choices of whom to buy from and low when their choices are
• Supplier power – high when buyers have few choices of whom to buy from and low when their choices
• Threat of substitute products or services – high when there are many alternatives to a product or service
and low when there are few alternatives from which to choose
• Threat of new entrants – high when it is easy for new competitors to enter a market and low when there
are significant entry barriers to entering a market
• Rivalry among existing competitors – high when competition is fierce in a market and low when
competition is more complacent
– The ability of buyers to affect the price of an item
– Switching cost – Manipulating costs that make customers reluctant to switch to another product
– Loyalty program – Rewards customers based on the amount of business they do with a particular organization
– High when buyers have few choices of whom to buy from and low when their choices are many
– Supply chain – consists of all parties involved in the procurement of a product or raw material
Business-to-Business (B2B) marketplace – an Internet-based service that brings together many buyers and sellers Alyssa Soubliere
October 21 , 2013
- Organizations can create a competitive advantage by locating alternative supply sources (decreasing
supplier power) through B2B marketplaces
Two types of B2B marketplaces:
– Private exchange – a single buyer posts its needs and then opens the bidding to any supplier who would care to bid
– Reverse auction – an auction format in which increasingly lower bids are solicited from organizations willing to supply the
desired product or service at an increasingly lower price
Threat of Substitute Market or Product
Threat of substitute products or services – High when there are many alternatives to a product or service
and low when there are few alternatives
Threat is reduced when Switching Costs are high.
Threat of New Entrants
o Threat of new entrants – High when it is easy for new competitors to enter a market and low when there
are significant entry barriers
– Entry barrier – A feature of a product or service that customers have come to expect and
entering competitors must offer the same for survival
Rivalry Among Competitors
o Rivalry among existing competitors – High when competition is fierce in a market and low when
competitors are more complacent
– Product differentiation – Occurs when a company develops unique differences in its products or
services with the intent to influence demand
Three Generic Strategies
*Organizations are encourages to follow only ONE strategy*
Value Chain Analysis
o Business process – A standardized set of activities that accomplish a specific task, such as a specific
o Value chain analysis – Views a firm as a series of business processes that each add value to the product or
• Operational decision making - Employees develop, control, and maintain core business activities required
to run the day-to-day operations Alyssa Soubliere
October 21 , 2013
• Structured decisions - Situations where established processes offer potential solutions
• Managerial decision-making – Employees evaluate company operations to identify, adapt to, and
• Semi-structured decisions – Occur in situations in which a few established processes help to evaluate
potential solutions, but not enough to lead to a definite recommended decision
• Strategic decision making – Managers develop overall strategies, goals, and objectives
• Unstructured decisions – Occurs in situations in which no procedures or rules exist to guide decision
makers toward the correct choice
• Metrics – Measurements that evaluate results to determine whether a project is meeting its goals
• Common Types -
– KPIs – Key Performance Indicators
– Efficiency and Effectiveness
• Benchmark – Baseline values the system seeks to attain
• Benchmarking – A process of continuously measuring system results, comparing those results to optimal
system performance (benchmark values), and identifying steps and procedures to improve system
Key Performance Indicators (KPI’s)
• Key performance indicators (KPIs) – The quantifiable metrics a company uses to evaluate progress
toward critical success factors
– Turnover rates of employees
– Number of product returns
– Number of new customers
– Average customer spending
Efficiency and Effectiveness Metrics
• Efficiency metrics – Measure the performance of IS itself, such as throughput, transaction speed, and
• Effectiveness metrics – Measures the impact IS has on business processes and activities, including
customer satisfaction and customer conversation rates
Efficiency IS Metrics
The amount of information that can travel through a system at any point in time. Alyssa Soubliere
October 21 , 2013
The amount of time a system takes to perform a transaction.
The number of hours a system is available for users.
Web Traffic Includes a host of benchmarks such as the number of pages viewed, the number of unique visitors and
the average length of viewing time.
The time it takes to respond to interactions such as a mouse click.
The ease with which people perform transactions and/or find information.
Customer Satisfaction Measured by such benchmarks as satisfaction surveys, customer retention percentages, and increasing
revenue per customer.
Conversion Rates The number of customers an organization “touches” for the first time and persuades to purchase a
Financial Such as Return on Investment (the earning power of an organization’s assets), Cost/Benefit Analysis and
Break Even Analysis.
Transaction Processing Systems
• Transaction processing system (TPS) – Basic business system that serves the operational level and assists
in making structured decisions
• Online transaction processing (OLTP) - Capturing of transaction and event information using technology
to process, store, and update
• Source document – The original transaction record
Decision Support Systems
• Decision support system (DSS) – Models information to support managers and business professionals
during the decision-making process
• Online analytical processing (OLAP) – Manipulation of information to create business intelligence in
support of strategic decision making
• Three quantitative models used by DSS include:
• What-if analysis
• Sensitivity analysis
• Goal-seeking analysis
• Artificial intelligence (AI) – Simulates human intelligence such as the ability to reason and learn
• Intelligent system – Various commercial applications of artificial intelligence Alyssa Soubliere
October 21 , 2013
Customer facing processes – result in a product or service that is received by an organization’s external customer.
Business facing processes – are invisible to the external customer but are essential to the effective management of
Business Process Re-engineering
Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s
Business process improvement – attempts to understand and measure current processes and upgrade them.
Business process re-engineering (BPR) – the analysis and redesign of workflow within and between enterprises
Business Process Modelling
• Business process modeling (or mapping) - The activity of creating a detailed flow chart or process map of
a work process showing its inputs, tasks, and activities, in a structured sequence
• Business process model - A graphic description of a process, showing the sequence of process tasks,
which is developed for a specific
– As-Is process model
– To-Be process model
Digital Darwinism – implies that organizations which cannot adapt to the new demands placed on them for
surviving in the information age are doomed to extinction.
Disruptive vs. Sustaining
– Disruptive technology – a new way of doing things that opens new markets and destroys old
– Sustaining technology – Produces improvements to products that customers are eager to buy.
Internet… Disruptive Business Technology
o One of the biggest forces changing business is the Internet. Alyssa Soubliere
October 21 , 2013
o Organizations must be able to transform as markets, economic environments, and technologies change.
Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from
a disruptive technology
Evolution of the Internet
– Internet – computer networks that pass information from one to another using common
– Protocol – standards that specify the format of data as well as the rules to be followed during
– World Wide Web (WWW) – a global hypertext system that uses the Internet as its transport mechanism
– Hypertext transport protocol (HTTP) – the Internet standard that supports the exchange of information
on the WWW
– The Internet’s impact on information:
– Easy to compile.
– Increased richness.
– Increased reach.
– Improved content .
– It can also cause a gap between winners and losers in the game of business:
– Digital divide – when those with access to technology have great advantages over those without
access to technology.
o Web 2.0 is a set of economic, social, and technology trends that collectively form the basis for the next
generation of the Internet.
o Mash-up – Website or Web application that uses content from more than one source to create a
completely new product or service
– Application programming interface
– Mash-up editor
o Web 3.0 – Based on “intelligent” Web applications using natural language processing, machine-based
learning and reasoning, and intelligence applications
o Semantic Web – Structuring data so web pages describe things in a way that computers can “understand”
and, thus, find, share and integrate ideas more effectively for people.
o The Semantic Web encompasses one or more of the following:
o Transforming the web into a database.
o An Evolutionary Path to artificial intelligence.
o The realization of the semantic Web and SOA (service –oriented architecture) Alyssa Soubliere
October 21 , 2013
o Evolution toward 3D.
Accessing Internet Information
o Four tools for accessing Internet information
1. Intranet – internalized portion of the Internet, protected from outside access, for employees
2. Extranet – an intranet that is available to strategic allies
3. Portal – Web site that offers a broad array of resources and services
4. Kiosk – publicly accessible computer system that allows interactive information browsing
Providing Internet Information
o Three common forms of service providers
1. Internet service provider (ISP) –provides individuals and other companies access to the Internet
2. Online service provider (OSP) – offers an extensive array of unique Web services
3. Application service provider (ASP) – offers access over the Internet to systems and related
services that would otherwise have to be located in organizational computers
o Common ISP services include:
1. Web hosting
2. Hard-disk storage space
o ISPs, OSPs, and ASPs use service level agreements (SLA) which define the specific responsibilities of the
service provider and set the customer expectations
– E-commerce – the buying and selling of goods and services over the Internet
– E-business – the conducting of business on the Internet including not only buying and selling, but
also serving customers and collaborating with business partners
Opening New Markets
o Mass customization – The ability of an organization to tailor its products or services to the customers’
o Personalization – Occurs when a company knows enough about a customer’s likes and dislikes that it can
fashion offers more likely to appeal to that person
o The Long Tail – Refers to the tail of a typically sales curve
o Intermediary – Agents, software, or businesses that provide a trading infrastructure to bring buyers and
o Cybermediation Alyssa Soubliere
October 21 , 2013
Advantages of E-business
o Reducing Costs—Business processes that take less time and human effort.
o Improving Operations—Communications customized to meet consumer needs and available 24/7.
o Improving Effectiveness—Web sites must increase revenue and new customers and reduce service calls
o Interactivity metrics measure E-business success: number of repeat visits, times spent on site and
number of pages viewed among other activities.
Advantages of the Web
o Improving Effectiveness through E-business marketing
– Associate (Affiliate) programs
– Banner Ads
– Tracking Click-throughs
– Pop-up ads
– Viral marketing
Measuring Website Success
o Stickiness—visit duration time.
o Raw Visit Depth—total Web page exposures per session.
o Unidentified visitor—no information about visitor is available.
o Unique visitor—recognized and counted once in a period of time.
o Identified visitor—can be tracked across multiple web visits.
o Hits—A single request made by a visitor to view a web page.
o Types of Businesses:
– Brick and Mortar—Physical store, no Web site.
– Pure-play (virtual) business—Web site only.
– Click and Mortor—Physical store and Web site.
o E-auctions are a successful E-business model.
– Forward Auction—Seller offers to many buyers who bid and the highest bid wins.
– Reverse Auction—Buyer specifies product or service and lowest seller bid wins contract.
o Electronic marketplace (e-marketplace) – interactive business communities providing a central market
where multiple buyers and sellers can engage in e-business activities
o Common B2C e-business models include: Alyssa Soubliere
October 21 , 2013
– e-shop – a version of a retail store where customers can shop any time without leaving their