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Chapter 2

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Department
Administrative Studies
Course
ADMS 2511
Professor
Cristobal Sanchez- Rodriguez
Semester
Fall

Description
Office hours: Tuesdays from 2:45-3:45 Office: Atkinson 205 Section V Chapter 2 notes - Information Systems (ISs) collect, process, store, analyze and disseminate information for a specific purpose - Two major determinants of IS support are the organizations structure and the functions that employees perform within the organization - demonstrate that any information system can be strategic meaning that ic an provide a competitive advantage if it is used properly Types of Information Systems Computer Based Information Systems - The IT architecture and IT infrastructure provide the basis for all information systems in the organization - Information System (IS) collects, processes, stores, analyzes and disseminates information for a specific purpose - A Computer Based Information System (CBIS), is an information system that uses computer technology to perform some or all of its intended tasks - not all information systems are computerized, most are - Basic components of information systems are: Hardware: device such as processor, monitor, keyboard, and printer. Together these devices accept data and information, process them and display them Software: a program or collection of programs that enables the hardware to process data Database: is a collection of related files or tables containing data A Network: is a connecting system (wireline or wireless) that permits different computers to share resources Procedures: are 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 - Computer based information systems have many capabilities: - Perform high speed, high volume numerical computations - provide fast, accurate communication and collaboration within and among org - store huge amounts of information in an easy to access small space - allow quick and inexpensive access to vast amounts of information worldwide - interpret vast amounts of data quickly and efficiently - increase the effectiveness and efficiency of people working in groups in one place or in several locations anywhere - automate both semi automatic business processes and manual tasks Application Programs: 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 - collection of application programs in a single department is referred to as departmental information system ex, the collection of application programs in the human resources area are called the human resources information system (HRIS) Breadth of Support of Information Systems - Each department or functional area within an organization has its own collection of application programs or information systems - The Functional Area of Information Systems: each information system supports a particular functional area in the organization, example are accounting IS, finance IS, marketing IS, production/operations management (POM) IS, human resources IS. - below the functional area IS are two information systems that support the entire organization: Enterprise Resource Planning Systems and Transaction Processing Systems - ERP systems: are designed to correct a lack of communication among the functional area ISs. - ERP systems important innovation because various functional area ISs often developed as standalone systems and did not communicate effectively at all with one another - ERP systems resolve this problem by tightly integrating the functional area ISs via a common database which enhances communications among the functional areas of an organization which increases organizational productivity - nearly all ERP systems are transaction processing systems but transaction processing systems are not all ERP systems - A Transaction Processing System (TPS): supports monitoring, collection, storage and processing of data from the organizations basic business transactions each of which generates data - for example each time a cashier swipes an item across bar code reader this is one transaction - TPS collects data as soon as the data is generated and provides the input data for the corporate databases - these support core operations - Interorganizational Information Systems (IOSs): Information systems that connect two or more organizations - they support many inter-organizational operations, of which supply chain management is the best known - an organizations Supply Chain describes the flow of materials, information, money and services from suppliers of raw material through factories and warehouses to the end customers - information flows, financial flows and digitizable products go through the internet, where physical products are shipped Electronic Commerce Systems: another type of inter-organizational 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; typically internet based Support For Organizational Employees - Clerical workers, who support managers at all levels of the organization including accounting, support staff, administrative assistants, data entry personnel and insurance claim processors - lower level managers handle the day to day operations of the organization, making routine decisions such as assigning tasks to employees and placing purchase orders - middle managers make tactical decisions which deal with activities such as short term planning, organizing, and control - Executives, make decisions that deal with situations that can significantly change the manger in which business is done for example introducing a new product line - Knowledge workers are professional employees such as financial and marketing analysts, engineers, lawyers and accountants. - All knowledge workers are experts in a particular subject area, they create information and knowledge which they integrate into the business. They act as advisors to middle managers and executives - one type of system that knowledge workers may use are decision support system, which support advanced ‘what if’ analysis and simulations for example they might be asked whether a new piece of equipment should be purchased or not and then would prepare a financial analysis to aid in the decision making process - Office Automation System (OASs) – support clerical staff, lower and middle managers and knowledge workers – use OAS to develop documents (word), schedule resources (electronic calenders) and communicate (email) - functional area information systems summarize data and prepare reports primarily for middle managers, but sometimes for lower level managers as well - functional area systems that help management in their decision making are called management information systems: produce summarized reports (such as hours worked by department) or reports that provide information based on specific criteria (such as sales or expenses over a certain dollar amount) - Business Intelligence (BI) systems: provide computer based support for complex, non routine decisions, primarily for middle managers and knowledge workers. - these systems are typically used with a data warehouse and allow users to perform their won data analysis - Expert Systems (ES) – attempt to duplicate the work of human experts by applying reasoning capabilities, knowledge, expertise within a specific domain, primarily designed to support knowledge workers - Dashboards (also called digital dashboards) support all managers of the organization. - dashboards provide rapid access to timely information and direct access to structures information in the form of reports. Dashboards that are tailored to executives needs are called executive dashboards. Type of System Function Example Functional Area IS Supports the activities A system for processing within a specific functional payroll area Transaction Processing Processes transaction data A Walmart checkout point System from business events of sale terminal Enterprise resource Integrates all functional Oracle, SAP planning system areas of the organization Office Automation System Supports daily work Microsoft Office activities of individuals and groups. Management Information Produces reports A report on total sales for System summarized from each customer transaction data, usually in one functional area. Decision support system Provides access to data and A “what if” analysis of analysis tools changes in budget Expert System Mimics human experts in a A credit card approval particular area and makes a analysis decision Executive Dashboard Presents structured, A report showing the status summarized information of sales by product about aspects of business important to executives Supply chain management Manages flow of products, The Walmart Retail Link system services, and information System, connecting among organizations suppliers to Walmart Electronic commerce Enables transactions among www.dell.com system organizations and between organizations and customers Diagram on page 35 Competitive Advantage and Strategic Information Systems - 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, where 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 - information technologies simply offer the tools that can increase an organizations success through its traditional sources of competitive advantage, such as low cost, excellent customer service and superior supply chain management - Strategic Information Systems (SISs) provide a competitive advantage by helping an organization implement strategic goals and increase its performance and productivity - any information system that helps an organization gain a competitive advantage or reduce a competitive disadvantage is a strategic information system Porters Competitive Forces Model - best known frame work for analyzing competitiveness is Michael Porter’s competitive forces model - companies use Porters model to develop strategies to increase their competitive edge - it also demonstrates how IT can make a company more competitive - 5 major forces that could endanger or enhance a company’s position in a given industry - Porter concludes that the overall impact of the web is to increase competition which generally diminishes a firm’s profitability 1. The threat of the entry of new competitors: threat of new competitor entry is high when it is easy to enter your market and low when significant barriers to entry exist. An entry barrier is a product or service feature that customers have learned to expect from organizations in a certain industry. For example, the threat of entry into automobile manufacturing is very low because the auto industry has major entry barriers, particularly enormous capital costs for the manufacturing facility and equipment. For most firms the web increases the threat that new competitors will enter the market by sharply reducing traditional barriers to entry such as the need for a sales force or a physical storefront to sell goods and services. Today competitors just need to set up a website. The geographical reach of the web enables distant competitors to compete more directly with an existing firm. 2. The bargaining power of suppliers: supplier power is high when buyers have few choices about who they can buy form and low when buyers have many choices. Therefore organization would rather have more potential suppliers which puts them in a better position to negotiate price, quality and delivery terms. The internets impact on suppliers is mixed since buyers can find alternative suppliers and compare prices more easily, reducing each suppliers bargaining power. On the other hand as companies use the internet to integrate their supply chains, participating suppliers prosper by locking in customers. 3. The bargaining power of customers (buyers): buyer power is high when buyers have many choices about who they can buy from and low when buyers have few choices. The web also significantly increases
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