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MANAGING THEMANAGING THE

DIGITAL FIRMDIGITAL FIRM

Chapter

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What is the role of information systems inWhat is the role of information systems in

todays competitive business environment?todays competitive business environment?

What exactly is an information system?What exactly is an information system?

What do managers need to know aboutWhat do managers need to know about

information systems?information systems?

How are information systems transformingHow are information systems transforming

organizations and management?organizations and management?

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

OBJECTIVES

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How has the Internet and Internet technologyHow has the Internet and Internet technology

transformed business?transformed business?

What are the major management challengesWhat are the major management challenges

to building and using information systems?to building and using information systems?

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OBJECTIVES

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1. Design competitive and effective systems1. Design competitive and effective systems

2. Understand system requirements of2. Understand system requirements of

global business environmentglobal business environment

3. Create information architecture that3. Create information architecture that

supports organizations goalsupports organizations goal

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MANAGEMENTCHALLENGES

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4. Determine business value of information4. Determine business value of information

systemssystems

5. Design systems people can control,5. Design systems people can control,

understand and use in a socially, ethicallyunderstand and use in a socially, ethically

responsible mannerresponsible manner

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MANAGEMENTCHALLENGES

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

The Competitive Business Environment and the Emerging Digital Firm

WHY INFORMATIONSYSTEMS?

Four powerful worldwide changes thatFour powerful worldwide changes that

have altered the business environment:have altered the business environment:

1.1. Emergence of the Global EconomyEmergence of the Global Economy

2.2. Transformation ofIndustrial EconomiesTransformation ofIndustrial Economies

3.3.T

ransformation of theB

usinessE

nterpriseT

ransformation of theB

usinessE

nterprise4.4. The Emerging Digital FirmThe Emerging Digital Firm

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

WHY INFORMATIONSYSTEMS?

Emergence of the Global EconomyEmergence of the Global Economy

Management and control in a globalManagement and control in a globalmarketplacemarketplace

Competition in world marketsCompetition in world markets

Global work groupsGlobal work groups

Global delivery systemsGlobal delivery systems

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

WHY INFORMATIONSYSTEMS?

Transformation ofIndustrial EconomiesTransformation ofIndustrial Economies

KnowledgeKnowledge-- and informationand information--basedbased

economieseconomies

ProductivityProductivity

New products and servicesNew products and services

Knowledge: a central productive andKnowledge: a central productive andstrategic assetstrategic asset

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

WHY INFORMATIONSYSTEMS?

Transformation ofIndustrial EconomiesTransformation ofIndustrial Economies

TimeTime--based competitionbased competition

Shorter product lifeShorter product life

Turbulent environmentTurbulent environment

Limited employee knowledge baseLimited employee knowledge base

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Figure 1-1

Labor Force Composition 1900-1997

WHY INFORMATIONSYSTEMS?

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

WHY INFORMATIONSYSTEMS?

Transformation of the Business EnterpriseTransformation of the Business Enterprise

FlatteningFlattening

DecentralizationDecentralization

FlexibilityFlexibility

Location independenceLocation independence

Low transaction and coordination costsLow transaction and coordination costs

EmpowermentEmpowerment

Collaborative work and teamworkCollaborative work and teamwork

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

WHY INFORMATIONSYSTEMS?

Emergence of the Digital FirmEmergence of the Digital Firm

DigitallyDigitally--enabled relationships withenabled relationships withcustomers, suppliers, and employeescustomers, suppliers, and employees

Core business processes accomplishedCore business processes accomplishedvia digital networksvia digital networks

Digital management of key corporateDigital management of key corporateassetsassets

Rapid sensing and responding toRapid sensing and responding toenvironmental changesenvironmental changes

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A set of interrelated components that collectA set of interrelated components that collect

(or retrieve), process, store, and distribute(or retrieve), process, store, and distribute

information to support decision making andinformation to support decision making andcontrol in an organizationcontrol in an organization

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What Is an Information System?

WHY INFORMATIONSYSTEMS?

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Data:Data: Streams of raw facts representingStreams of raw facts representingevents such as business transactionsevents such as business transactions

Information:Information: Clusters of facts that areClusters of facts that aremeaningful and useful to human beings inmeaningful and useful to human beings in

the processes such as making decisionsthe processes such as making decisions

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What Is an Information System?

WHY INFORMATIONSYSTEMS?

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Figure 1-2

Data and Information

WHY INFORMATIONSYSTEMS?

What Is an Information System?

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INPUT OUTPUTPROCESS

FEEDBACK

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Activities in an Information System

WHY INFORMATIONSYSTEMS?

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Functions of an Information System

WHY INFORMATIONSYSTEMS?

Figure 1-3

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Rely on computer hardware andRely on computer hardware and

softwaresoftware

Processing and disseminatingProcessing and disseminating

informationinformation

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Computer-Based Information System (CBIS)

WHY INFORMATIONSYSTEMS?

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Fixed definitions of data, proceduresFixed definitions of data, procedures

Collecting, storing, processing,Collecting, storing, processing,

disseminating, using datadisseminating, using data

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Formal Systems

WHY INFORMATIONSYSTEMS?

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An organizational and managementAn organizational and management

solutionsolution

Based on information technologyBased on information technology

To a challenge posed by theTo a challenge posed by the

environmentenvironment

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

ABusiness Perspective on Information Systems

WHY INFORMATIONSYSTEMS?

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Information Systems

ORGANIZATIONSORGANIZATIONS TECHNOLOGYTECHNOLOGY

MANAGEMENTMANAGEMENT

INFORMATIONINFORMATION

SYSTEMSSYSTEMS

Figure 1-4

WHY INFORMATIONSYSTEMS?

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Sales and marketingSales and marketing

ManufacturingManufacturing

FinanceFinance

AccountingAccounting

Human resourcesHuman resources

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MajorBusiness Functions

WHY INFORMATIONSYSTEMS?

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Key Elements:Key Elements:

People:People:Managers, knowledge workers,Managers, knowledge workers,

data workers, production or servicedata workers, production or serviceworkersworkers

Structure:Structure: Organization chart , groups ofOrganization chart , groups of

specialists, products, geographyspecialists, products, geography

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Organizations

WHY INFORMATIONSYSTEMS?

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Operating procedures:Operating procedures: Standard operatingStandard operatingprocedures (SOP, rules for action)procedures (SOP, rules for action)

Politics:Politics: Power to persuade, get things donePower to persuade, get things done

Culture:Culture: Customs of behaviorCustoms of behavior

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Organizations

WHY INFORMATIONSYSTEMS?

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Levels:Levels:

Senior managers:Senior managers: make longmake long--rangerangestrategic decisions about products andstrategic decisions about products andservicesservices

Middle managers:Middle managers: Carry out the programsCarry out the programsand plans of senior managementand plans of senior management

Operational managers:Operational managers: monitor the firmsmonitor the firmsdaily activitiesdaily activities

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Management

WHY INFORMATIONSYSTEMS?

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Tools managers use to cope with changeTools managers use to cope with change

Hardware:Hardware:Physical equipmentPhysical equipment

Software:Software: Detailed preprogrammedDetailed preprogrammedinstructionsinstructions

Storage:Storage: Physical media forPhysical media forstoring data and the softwarestoring data and the software

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

ComputerTechnology

WHY INFORMATIONSYSTEMS?

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Communications Technology:Communications Technology:transfers data from one physical locationtransfers data from one physical location

to anotherto another

Networks:Networks: link computers to share datalink computers to share dataor resourcesor resources

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

ComputerTechnology

WHY INFORMATIONSYSTEMS?

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

CONTEMPORARYAPPROACHESTOINFORMATIONSYSTEMS

SOCIOLOGY

SOCIOLOGY

POLITICALPOLITICAL

SCIENCESCIENCEPSYCHOLOGYPSYCHOLOGY

COMPUTERCOMPUTER

SCIENCESCIENCEOPERATIONSOPERATIONS

RESEARCHRESEARCH

MANAGEMENTMANAGEMENT

SCIENCESCIENCE

TECHNICALAPPROACHESTECHNICALAPPROACHES

MISMIS

BEHAVIORALAPPROACHESBEHAVIORALAPPROACHESFigure 1-5

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Optimize systems performance:Optimize systems performance:

Technology and organizationTechnology and organization

Organizations mutually adjust to oneOrganizations mutually adjust to oneanother until fit is satisfactoryanother until fit is satisfactory

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Socio-Technical Systems

CONTEMPORARYAPPROACHESTOINFORMATIONSYSTEMS

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

SOURCE: Liker, et al, 1987

Figure 1-6

Socio-technical Systems

CONTEMPORARYAPPROACHESTOINFORMATIONSYSTEMS

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

TOWARD THE DIGITAL FIRM

The Interdependence Between Organizations and Information Systems

Figure 1-7

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1950s:1950s: Technical changesTechnical changes

60s60s--70s:70s:M

anagerial controlsM

anagerial controls

80s80s--90s:90s: Institutional core activitiesInstitutional core activities

Growing ImportanceGrowing Importance

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

THENETWORKREVOLUTIONAND THEINTERNET

The Widening Scope ofInformation Systems

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Figure 1-8

THENETWORKREVOLUTIONAND THEINTERNET

The Widening Scope ofInformation Systems

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Communicate and collaborateCommunicate and collaborate

Access informationAccess information

Participate in discussionsParticipate in discussions

Supply informationSupply information

Find entertainmentFind entertainment

Exchange business transactionsExchange business transactions

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TOWARD THE DIGITAL FIRM

What You Can Do on the Internet

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Flattening organizationsFlattening organizations

Separating work from locationSeparating work from location

Reorganizing workReorganizing work--flowsflows

Increasing flexibilityIncreasing flexibility

Redefining organizational boundariesRedefining organizational boundaries

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TOWARD THE DIGITAL FIRM

New Options forOrganizational Design

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Figure 1-9

TOWARD THE DIGITAL FIRM

Flattening Organizations Information Systems

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Figure 1-10

Redesigned Work Flow ForInsurance Underwriting

TOWARD THE DIGITAL FIRM

i f f i Si f f i S

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Electronic commerceElectronic commerce

Electronic businessElectronic business

Electronic market: Information systemsElectronic market: Information systems

links, buyers and sellers to exchangelinks, buyers and sellers to exchange

information, products, services, paymentsinformation, products, services, payments

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

TOWARD THE DIGITAL FIRM

The Digital Firm

E i l f M I f i SE i l f M I f i S

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Figure 1-11

TOWARD THE DIGITAL FIRM

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E ti l f M t I f ti S tE ti l f M t I f ti S t

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Internet:Internet: Business builds private, secureBusiness builds private, securenetworknetwork

EE--mail, Web documents, groupmail, Web documents, groupsoftware:software: Extends effectiveExtends effectivecommunication and controlcommunication and control

Extranet:Extranet: Extension of intranet toExtension of intranet toauthorized external usersauthorized external users

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

Electronic Business

TOWARD THE DIGITAL FIRM

E ti l f M t I f ti S tE ti l f M t I f ti S t

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 1 Managing the Digital FirmChapter 1 Managing the Digital Firm

InformationArchitecture and Information Technology Infrastructure

TOWARD THE DIGITAL FIRM

Figure 1-12

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MANAGING THEMANAGING THE

DIGITAL FIRMDIGITAL FIRM

Chapter