EAST AFRICA UNIVERSITY
■ COURSE: MANAGEMENT INFORMATION
SYSTEM
■ CHAPTER FIVE
■ INFORMATION SYSTEMS
■ 02-05-2024
■ ENG. ABDIASIS DHAMAC
Why Information Systems Matter?
There are four reasons why IT makes a difference to the success of a business:
• Capital management
• Foundation of doing business
• Productivity
• Strategic opportunity and advantage
Capital Management:
■ IT is the largest single component of capital investment in the
United States.
• About $1.8 trillion is spent each year by American
businesses.
• Managers and business students need to know how to invest
this capital wisely.
• The success of your business in the future may well depend
on how you make IT investment decisions.
Information Technology Capital
Investment
Foundation of doing business:
• Most businesses today could not operate without extensive use of
information systems and technologies.
• IT can increase market share.
• IT can help a business become a high-quality,
low-cost producer.
• IT is vital to the development of new products.
The Interdependence between Organizations and
Information Systems
Productivity:
• IT is one of the most important tools managers have to increase
productivity and efficiency of businesses.
• According to the Federal Reserve Bank, IT has reduced the rate of
inflation by 0.5 to 1% in the last decade. For firms this means IT is a major
factor in reducing costs.
• It is estimated that IT has increased productivity in the economy by about
1% in the last decade. For firms this means IT is a major source of labor
and capital efficiency.
Strategic Opportunity and Advantage:
• Create competitive advantage: IT makes it possible to develop competitive
advantages.
• New Business Models: Dell Computer has built its competitive advantage
on an IT enabled build-to-order business model that other firms have not
been able to imitate.
Strategic Opportunity and Advantage:
• Create new services: eBay has developed the largest auction trading
platform for millions of individuals and businesses. Competitors have not
been able to imitate its success.
• Differentiate yourself from your competitors: Amazon has become the
largest book retailer in the United States on the strength of its huge online
inventory and recommender system. It has no rivals in size and scope.
How Much Does IT Matter?
• Carr has written that whatever advantages firms build using IT can be
easily copied by competitors.
• This view is not supported by the evidence: Amazon, eBay, Dell, Wal-Mart
and Apple's iTunes are just a few firms that have built and maintained
technology-based advantages.
CONT..
• Commoditization of technology is typically a spur to innovation and new
business models, products and services.
• Competitive advantage derives not from the technology, but on how
businesses use the technology.
• Innovations in business processes, management and organization are not
easily copied from one firm to another.
Transformation of the Business
Enterprise:
• Flattening
• Decentralization
• Flexibility
CONT..
• Location independence
• Low transaction and coordination costs
• Empowerment
• Collaborative work and teamwork
Globalization:
• Management and control in a global marketplace
• Competition in world markets
• Global workgroups
• Global delivery systems
Rise of the Information Economy:
• Knowledge and information-based economies
• New products and services
• Knowledge as a central productive and strategic asset
CONT..
• Time-based competition
• Shorter product life
• Turbulent environment
• Limited employee knowledge base
The Growth of the Information
Economy
Emergence of the Digital Firm:
• Digitally enabled relationships with customers, suppliers, and employees
• Core business processes accomplished using digital networks
• Digital management of key corporate assets
Emergence of the Digital Firm:
What is an Information System?
(Continued)
• Data: Streams of raw facts representing events such as business
transactions
• Information: Clusters of facts meaningful and useful to human beings in
the processes such as making decisions
Data and Information
Functions of an Information System
Computer-Based Information System
(CBIS)
• Rely on computer hardware and software
• Processing and disseminating information
• Fixed definitions of data and procedures
• Collecting, storing, and using information
Information Systems Are More than Computers
PERSPECTIVES ON
INFORMATION SYSTEMS
• Information systems literacy: Broad-based understanding of information
systems that includes behavioral knowledge about organizations,
management and individuals using information systems as well as
technical knowledge about computers
• Computer literacy: Knowledge about information technology, focusing on
understanding how computer technologies work
■
THE END
THANKS ALL
