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CHAPTER 2 Information Systems: Concepts and Management CHAPTER OUTLINE 2.1 Types of Information Systems 2.2 Competitive Advantage and Strategic Information Systems 2.3 Why Are Information Systems Important to Organizations and Society? 2.4 Managing Information Resources LEARNING OBJECTIVES Describe the components of computer-based information systems. Describe the various types of information systems by breadth of support. Identify the major information systems that support each organizational level. Describe strategic information systems (SISs), and explain their advantages. Learning Objectives (continued) Describe porter’s competitive forces model and his value chain model, and explain how IT helps companies improve their competitive positions. Describe five strategies that companies can use to achieve competitive advantage in their industries. Describe how information resources are managed, and discuss the roles of the information systems department and the end users. Chapter Opening Case Upstream activities: exploration and production Downstream activities: refining, marketing, transportation, sales 2.1 Types of Information Systems Computer-based information systems (CBIS) use computer technology to perform some or all of their tasks and are composed of: Hardware Software A Database A Network Procedures People Information Systems Inside Your Organization Information Technology Outside Your Organization Application Programs An application program is a computer program designed to support a specific task, a business process or another application program. Breadth of Support of Information Systems Functional area information systems Enterprise resource planning systems Transaction processing systems Interorganizational information systems Information Systems Support for Organization Employees Office automation systems Functional area information systems Business intelligence systems Expert Systems Dashboards 2.2 Competitive Advantage and Strategic Information Systems Competitive Advantage Strategic Information Systems (SIS) Porter’s Competitive Forces Model The best-known framework for analyzing competitiveness is Michael Porter’s competitive forces model (Porter, 1985). Porter’s Competitive Forces Model Porter’s Competitive Forces Model Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. A barrier to entry is a product or service feature that customers expect from organizations in a certain industry. For most organizations, the Internet increases the threat that new competitors will enter a market. Porter’s Competitive Forces Model The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices. Internet impact is mixed. Buyers can find alternative suppliers and compare prices more easily, reducing power of suppliers. On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in customers. Porter’s Competitive Forces Model The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices. Internet increases buyers’ access to information, increasing buyer power. Internet reduces switching costs, which are the costs, in money and time, to buy elsewhere. This also increases buyer power. Porter’s Competitive Forces Model The threat of substitute products or services is high when there are many substitutes for an organization’s products or services and low where there are few substitutes. Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The Internet can convey digital information quickly and efficiently. Porter’s Competitive Forces Model The rivalry among firms in an industry is high when there is fierce competition and low when there is not. Porter’s Value Chain Model This model identifies specific activities where organizations can use competitive strategies for greatest impact. Primary activities Support activities Porter’s Value Chain Model Strategies for Competitive Advantage Cost Leadership Differentiation Innovation Operational Effectiveness Customer-orientation 2.3 Why are Information Systems Important to Organizations & Society IT will reduce the number of middle managers. IT will change the manager’s job. IT impacts employees at work. IT provides quality-of-life improvements. Ergonomic Products When ergonomics doesn’t work When all else fails……. Enabling People with Disabilities to Work with Computers The Robot Revolution See Invasion of the Humanoid Robots The Robot Revolution See video of Big Dog robot in action The Robot Revolution (continued) See ASIMO commercial See video of ASIMO in action Honda’s ASIMO robot DeLaval Voluntary Milking System Improvements in Health Care Improvements in Health Care (continued) The Pill Cam: Wireless endoscopy The daVinci Surgical Robot The robot The surgeon’s console The daVinci Surgical Robot (continued) The daVinci robot in use Medical Simulation Two physicians perform a procedure on a simulated human (mannequin) Managing Information Resources Which IT Resources are Managed and By Whom? The Role of the IS Department Traditional Major IS Functions Managing systems development and systems project management Managing computer operations Staffing, training, developing IS skills Providing technical services Infrastructure planning, development, control New (Consultative) IS Functions Initiating and designing strategic information systems Incorporating the Internet and e-commerce into the business Managing system integration Educating non-IS managers about IT Educating IS staff about the business Supporting end-user computing Partnering with executives Managing outsourcing Innovate Ally with vendors and IS departments in other organizations Supporting End Users One form of end-user support is the help desk, where IS staffers help users troubleshoot problems with their systems. This video shows the first help desk. Chapter Closing Case Todd Pacific Shipyards Wireless PDA