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©2002, Pearson Education Canada1.1
c h a p t e r
11MANAGING THE DIGITAL MANAGING THE DIGITAL
FIRM:FIRM:
CANADA AND BEYONDCANADA AND BEYOND
©2002, Pearson Education Canada1.2
Learning Objectives
• Analyze the role of information systems (IS) in today’s competitive business environment
• Define an information system from both a technical and business perspective, and distinguish between computer literacy & IS literacy
(continued . . .)
©2002, Pearson Education Canada1.3
Learning Objectives
• Explain how information systems are transforming organizations and management
• Assess the relationship between the digital firm, electronic commerce, electronic business and Internet technology
(continued . . .)
©2002, Pearson Education Canada1.4
Learning Objectives (Continued)
• Identify the major management challenges of building and using information systems
©2002, Pearson Education Canada1.5
Management Challenges
• Why information systems?
• Contemporary approaches to information systems
• New role of info systems in organizations
• Learning to use information systems: new opportunities with technology
©2002, Pearson Education Canada1.6
Why Information Systems?
• Organizations need IS to survive and prosper
• New challenges in the Canadian environment– Emergence of the global economy
– Transformation of industrial economies
– Transformation of the enterprise
– Emergence of the digital firm
©2002, Pearson Education Canada1.7
What is an Information System?
• A set of interrelated components that – collect (or retrieve),
– process,
– store, and
– distribute information
• to support decision-making and control in an organization.
©2002, Pearson Education Canada1.8
DATA vs. INFORMATION
• Raw facts
• Represent events
• E.g. sales from a cash register
• Organized data• Meaningful to
people• E.g. sales trends,
comparison of brands
©2002, Pearson Education Canada1.9
Four activities in an IS
1. INPUT 2.PROCESSING 3.OUTPUT
4. FEEDBACK
©2002, Pearson Education Canada1.10
Interaction with the IS
Information
System
ORGANIZATION
SUPPLIERSCUSTOMERS
REGULATORY AGENCIES
STOCKHOLDERS
COMPETITORS
©2002, Pearson Education Canada1.11
A Business Perspective on IS
Info
Systems
ORGANIZATIONS TECHNOLOGY
MANAGEMENT
©2002, Pearson Education Canada1.12
Literacy Components
• Information Systems Literacy– Broad understanding of computer-based IS
– Encompasses management & organizational dimensions
– Includes technical dimensions (IT)
• Computer Literacy– Knowledge of technical dimensions (IT)
©2002, Pearson Education Canada1.13
IS Support Business Functions
• Sales & Marketing
• Manufacturing & Production
• Finance
• Accounting
• Human Resources
©2002, Pearson Education Canada1.14
People in the Organization
• Managers
• Knowledge Workers– Create knowledge for the organization
• Data Workers– Process the organization’s paperwork
• Production & Service Workers
©2002, Pearson Education Canada1.15
Management in the Organization
• Senior managers– Long term strategic decisions
• Middle managers– Carry out plans of senior management
• Operational managers– Monitor organization’s daily activities
©2002, Pearson Education Canada1.16
Information Technology (IT) Infrastructure
• Computer Hardware
• Computer Software
• Storage Technology
• Communications Technology
©2002, Pearson Education Canada1.17
Approaches to IS
• Technical Approach– Emphasizes mathematically based models
to study IS
• Behavioural Approach
©2002, Pearson Education Canada1.18
Two Approaches to IS
SOCIOLOGYSOCIOLOGY
ECONOMICSECONOMICSPSYCHOLOGYPSYCHOLOGY
COMPUTER COMPUTER
SCIENCESCIENCEOPERATIONS OPERATIONS
RESEARCHRESEARCH
MANAGEMENTMANAGEMENT
SCIENCESCIENCE
TECHNICAL APPROACHESTECHNICAL APPROACHES
MISMIS
BEHAVIOURAL APPROACHESBEHAVIOURAL APPROACHES
©2002, Pearson Education Canada1.19
The Preferred Approach to IS
IS performance is optimized when both the organization and the technology adjust to each other, until a good fit is obtained
The Sociological Approach:
©2002, Pearson Education Canada1.20
Interdependence of IS and the Organization
hardware
telecommunicationsdatabase
software
INFORMATION SYSTEMORGANIZATION
Business strategy
Rules & procedures
©2002, Pearson Education Canada1.21
The Impact of the Internet
Communicate & Collaborate
Access Information
Participate in Discussions
Supply Information
Find Entertainment
Exchange Business
Transactions
©2002, Pearson Education Canada1.22
Impact of IS on Organizational Design
• Flattening organizations
• Separating work from location
• Reorganizing workflows
• Increasing organizational flexibility
• Changing management process
• Redefining organizational boundaries
©2002, Pearson Education Canada1.23
Internet-based technologies
• Intranet– An internal network based on
Internet technologies
• Extranet– Private intranet that is accessible to
authorized outsiders
©2002, Pearson Education Canada1.24
The Emerging Digital Firm
• Electronic market– A marketplace that is created by computer &
communications technologies, linking buyers and sellers
• E-commerce– buying & selling goods and services electronically
• E-business– Organizational communication, coordination &
management using Internet technologies
©2002, Pearson Education Canada1.26
Key Management Issues
• Strategic Challenge: – How can business use IT to become competitive,
effective and digitally enabled?
• Globalization Challenge
• Information Architecture & Infrastructure Challenge
• IS Investment Challenge
• Responsibility & Control Challenge
©2002, Pearson Education Canada1.27
Positive Impacts of IS
• Perform calculations & process paperwork faster than people
• Help companies learn about their customer’s preferences & purchases
• Provide new efficiencies (e.g. ATMs)
• Provide advances in medicine
• Internet allows distribution of information widely and quickly
©2002, Pearson Education Canada1.28
Negative Impacts of IS
• May replace people & eliminate jobs
• May allow organizations to violate personal privacy
• System outages can cause critical shutdowns
• Heavy users may experience health problems
• Internet can be used to distribute illegal copies of software and violate intellectual property regulations