Transcript Slide 1

Dr Sherif Kamel
Department of Management
School of Business, Economics and
Communication
Information Technology in the Digital Age
Outline
Digital economy
 From marketplace to marketspace
 Business models
 Business pressures and drivers of change
 Organizational framework and responses
 Information systems building blocks
 Information systems functional perspectives
 Technology trends
 Management issues

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Digital economy – the new economy
eBusiness: the use of electronic technologies to
transact business
 Collaboration: people and organizations interact,
communicate, collaborate and search for
information
 Information exchange: storing, processing and
transmission of information

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Digital economy
The digital economy refers to an economy that is
based on digital technologies, including digital
communication networks, computers, and
software
 The digital economy is also sometimes called the
Internet economy, the New economy, or the Web
economy
 Also known as marketspace

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Digital economy – more issues
Electronic commerce (EC) is the use of webbased systems to support buying, selling, and
customer service
 Click-and-mortar companies add some
eCommerce activities to their regular business
 Networked computing connects several computers
and other electronic devices via
telecommunication networks
 Information technology (IT) refers to the collection
of computer systems used by an organization

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Digital business
Telecommunications
Thin Client
Networks
PC
On-line
Single-station Store
Appliance
E- Com m er ce Ser ver
Linux SSL
Li n u x
Sybase ASE Database
Appliance
Server
Store 3
STARS
Bu si n ess t o Bu si n ess
Of f i ce Su i t e
Ser ver
Vi d eo Con f er en ci n g
SCO Unix
Ser ver
Un i x
Tarentella
Net
Appliance
Store 1
On-line Multi-station Store
Cold Fusion
Wi n d ow s 2 0 0 0
Beacon Hill's Stars
Apache Server
Linux
Credit Card Approval
I P Ad d r ess 2
Apache Server
I P Ad d r ess 3
Field Sales
I P Ad d r ess 1
On-line
Salesperson
POS
You r Dom a i n / URL
Commercial
I nt er net
Hu b
E-commerce
PC
Internet
In-house operations
On-line Customers
Consumer & Business
Consumer
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STARS
Accounting
Phone Orders
Mail Orders
Order Fulfillment
Purchasing
PC
PC
Thin Client
Thin Client
In-office
Copyright © 2005 Sherif Kamel
From marketplace to marketspace
Taking a photo – the old way
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Buy film in a store
Load your camera
Take pictures
Take roll of film to store for processing
Pickup the film when ready
Select specific photos for enlargement
Mail to family and friends
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
From marketplace to marketspace
Taking a photo – the new way
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1st generation digital photography
o
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2nd generation digital photography
o
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Old economy except 6 and 7 were replaced by using a
scanner and emailing
Use a digital camera, no film, no processing
3rd generation digital photography
o
Your digital camera is now your mobile phone, in your
binoculars or a palmtop computer
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Business models

Business model is a method of doing business
by which a company can generate revenue to
sustain itself – how a company adds value to
create a product or service “the value chain”
o
o
o
Nokia makes and sells cell phones
TV stations provide free broadcasting (complex mix of
advertisers and content providers)
Internet portals (Yahoo) revenue generation
mechanisms
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Copyright © 2005 Sherif Kamel
Case: Bristol-Myers Squibb (BMS)
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Problem
o
o
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Solution
o
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BMS is a leading manufacture of pharmaceutical drugs,
beauty and infant-food products
Struggling to stay ahead in the new digital economy
BMS initiated multiple web-based projects, overhauled
its management structure, revamped its procurement
and supply chain processes, and expanded its portfolio
of websites
Outcome
o
BMS experienced over 100 million US dollars in annual
savings just from eProcurement
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Copyright © 2005 Sherif Kamel
BMS lessons learnt
Global competition drives large corporations to
find ways to reduce costs, increase productivity
and improve customer service
 Achievements could be realized through proper
web-based systems
 Major initiatives that BMS embarked upon
included
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o
o
o
Reduce costs by introducing an eProcurement
Increase sales by utilizing the WWW
Improve relationships with employees and customers
(CRM)
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Digital economy business models
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Name-your-own price
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Dynamic brokering
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Affiliate marketing
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eMarketplaces and exchanges
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Copyright © 2005 Sherif Kamel
Name your-own price
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Pioneered by www.priceline.com – a model that
allows customers to state a price they are willing
to pay for a product or service
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Copyright © 2005 Sherif Kamel
Dynamic brokering
In the digital age customers can specify
requirements for a service or a product
 Such specifications are broadcast over the
Internet “webcasted” to service providers in an
automatic invitation to submit bids
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Affiliate marketing
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An arrangement in which marketing partners place
a banner of a company, such as
www.amazon.com on their website
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eMarketplaces and exchanges
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Thousands of electronic marketplaces, of different
varieties, have sprung up – vertical and horizontal
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Copyright © 2005 Sherif Kamel
Model environments
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Internet
o
From about 50 million Internet users in 1997, there
could be as many as 750 million by 2007
Intranets utilize information technology to provide
organizations with internal communication
systems
 Extranets combine intranets with the Internet to
create a powerful inter-organizational systems for
collaboration (groupware)
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Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Business pressures
and drivers of change
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Business pressures
and drivers of change
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Market pressures
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Global economy and strong competition
o
o
Global competition is intensified as governments become involved
through the use of subsidies, tax policies, import/export regulations
and incentives
Rapid and inexpensive communication and transportation modes
increase the magnitude of international trade
Changing nature of the workforce
o
o
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The workforce is becoming more diversified, with more females,
single parents, minorities, and handicapped persons working in all
types of positions
Powerful customers
o
Consumer sophistication and expectations increase as customers
become more knowledgeable about the availability and quality of
products and services
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Technology pressures
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Technology innovations and obsolescence
o
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Today’s state-of-the-art products may be obsolete
tomorrow – thus technology accelerates the competitive
forces
Information overload
o
o
The amount of information available on the Internet
more than doubles every year
The management of information is critical
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Social pressures
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Social responsibility
o
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Government regulations
o
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Regulation issues involve health, safety, environmental
control, and equal opportunity
Government deregulation
o
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Issues range from the environment to education
Deregulation can be a blessing to one company but a
curse to another company
Ethical issues
o
Business ethics relates to standards of right and wrong
in business practices
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Copyright © 2005 Sherif Kamel
Organizational framework
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Copyright © 2005 Sherif Kamel
Organizational responses
Organizations need to respond to business,
societal and technical pressures with critical
response activities
 A typical industry-level response to the digital
economy is disintermediation, or the elimination of
intermediary organizations
 Organizations can also take proactive measures,
to create a change in the market place
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o
Exploiting opportunities created by external pressures
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Organizational responses
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Strategic systems for competitive advantage
o
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Provide organizations with strategies to increase their market
share, better negotiate with suppliers, or stop competitors
Continuous improvement efforts (operational efficiency)
o
Aim to improve a company’s productivity and quality. Examples
include:
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Improved productivity
Managing enterprise data
Just-in-time (JIT)
Innovation and creativity
Total quality management
Change management
Knowledge management
Customer service
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Copyright © 2005 Sherif Kamel
Organizational responses
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Business process reengineering (BPR)
o
o
Refers to the introduction of a major innovation in an
organization’s structure and the way it conducts
business
Major areas in which IT supports BPR:
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Reducing cycle time and time to market
Empowerment of employees and collaborative work
Customer-focused approach and CRM
Restructuring and team-based structure
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Organizational responses
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Business alliances
o
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Many companies realize that alliances with other
companies, even competitors, can be very beneficial
Electronic commerce/electronic business
o
Doing business electronically is the newest and perhaps
most promising strategy that many companies can
pursue
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Organizational response to
drivers of change
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Information systems (IS)
Information systems (IS) collect, process, store,
analyze, and disseminate information for a specific
purpose
 Information Systems are comprised of
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o
o
o
o
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inputs (data, instructions)
outputs (reports, calculations)
feedback mechanisms that controls the operation
an environment that it works within
Computer-based information system (CBIS) is an
information system that uses computer technology
to perform some or all of its intended tasks
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
IS as a system
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
IS building blocks
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Hardware
o
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Software
o
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connecting system that permits the sharing of resources between
computers
Procedures
o
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collection of related files, tables, relations, and so on, that stores
data
Network
o
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programs that enable the hardware to process data
Data
o
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devices such as processor, monitor, keyboard, and printer
instructions about how to combine the above components
People
o
individuals who work with the system or use its output
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
mCommerce
mCommerce (mobile commerce) refers to the
conduct of eCommerce via wireless devices
 Commercial application of mobile computing
based on wireless networks
 Growing interest in mCommerce because the
number of mobile devices is projected to top 1.5
billion by 2005
 Location-based commerce (lCommerce) is an
application of mCommerce that offers customers
the location information of anything they want to
purchase
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Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Future devices @ home
Network computer (NC) first introduced in 1997,
does not have a hard drive – served by a central
computing station, and temporarily receives and
can use applications and data stored elsewhere
on the network
 Integrated home computing (IHC) – home
computing, television, telephone, home security
systems, and other devices will be integrated and
managed in one unit (smart home)

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Applications and operations
Marketing
 Sales
 Manufacturing
 Purchasing
 Finance
 Accounting
 Retail operations
 Wholesale
 Human resources
 Content management
 …and more…

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Information systems
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Functional perspective
o
Marketing
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o
Identify customers
Determine what they want
Planning products
Advertising and promoting products
Determine prices for products
Sales
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Contact customers
Sell the product
Take the order
Follow-up on the sale
5 year sales forecast
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Information systems
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Functional perspective
o
Manufacturing
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o
Control Equipment and machinery
Design new products
When and quantity of products to produce
New production facilities
Generate the work order
Purchasing
-
Which vendors
Quantity to purchase
Coop, rebate tracking
Handle delivery discrepancies
Generate the purchase order
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Information systems
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Functional perspective
o
Finance
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o
Financial Assets
Investment management
Banking
Long term budgets
Accounting
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Accounts Receivable
Disbursements
Payroll
Depreciation
Earned Coop and Rebates
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Copyright © 2005 Sherif Kamel
Information systems
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Functional perspective
o
Human Resources
-
Employee wages, salaries and benefits
Long term labor requirements
Tracking vacation, sick,
Track employee skills
Interview and review employees
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Technology trends
Internet
 Mobile Computing and mCommerce
 Wireless networks
 Smart devices
 Networked enterprise
 Network computer

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Why study IS?
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You will be more effective in your chosen career if you
understand information and comprehend how successful
information systems are built, used, and managed
You also will be more effective if you know how to
recognize and avoid unsuccessful systems and failures
Developing computer literacy will only enhance your
information literacy
Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel
Management issues
Recognizing opportunities for using IT and webbased systems
 Who will build, operate, and maintain the
information systems

o
o
Need to minimize the cost of IT while maximizing its
benefits
Opt for outsourcing (partial – full-fledged)
Cost-benefit analysis
 Ethics and social issues when implementing IT
 Organizational transformation

Copyright © 2002 Turban, McLean and Wetherbe
Copyright © 2005 Sherif Kamel