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Business Driven Information Systems, Chapter 1 by Baltzan & Phillips

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Business Driven Information Systems discusses various business initiatives first and how technology supports those initiatives second. The premise for this unique approach is that business initiatives should drive technology choices. Every discussion first addresses the business needs and then addresses the technology that supports those needs. This text provides the foundation that will enable students to achieve excellence in business, whether they major in operations management, manufacturing, sales, marketing, etc. BDIS is designed to give students the ability to understand how information technology can be a point of strength for an organization.ISBN: 0073195588Copyright year: 2008All works belong respectively to:Baltzan, Paige, and Amy Phillips. Business Driven Information Systems. Columbus: McGraw Hill, 2008.The publishing of these presentation slides are in no way intended to advertise the information was written by anyone but the original authors. The information is for supplemental use to the textbook written by these respected authors. I do not take credit for the information provided, and in no way mean to infringe on any copyrights imposed by The McGraw-Hill Companies.
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1-1 Information Technology’s Impact on Business Operations
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Page 1: Business Driven Information Systems, Chapter 1 by Baltzan & Phillips

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Information Technology’s Impact on Business Operations

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Information Technology’s Impact on Business Operations

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INFORMATION TECHNOLOGY BASICS

• Information technology (IT) – a field concerned with the use of technology in managing and processing information

• Information technology is an important enabler of business success and innovation

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INFORMATION TECHNOLOGY BASICS

• Management information systems (MIS) – a general name for the business function and academic discipline covering the application of people, technologies, and procedures to solve business problems

• MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources

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INFORMATION TECHNOLOGY BASICS

• When beginning to learn about information technology it is important to understand the following:– Data, information, and business intelligence– IT resources– IT cultures

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Information

• Data - raw facts that describe the characteristic of an event

• Information - data converted into a meaningful and useful context

• Business intelligence – applications and technologies that are used to gather, provide access to, and analyze data and information to support decision-making efforts

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Information

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Information

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Information

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ROLES AND RESPONSIBILITIES IN IT

• Information technology is a relatively new functional area, having only been around formally for around 40 years

• Recent IT strategic positions include:– Chief Information Officer (CIO)– Chief Technology Officer (CTO)– Chief Security Officer (CSO)– Chief Privacy Officer (CPO)– Chief Knowledge Office (CKO)

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ROLES AND RESPONSIBILITIES IN IT

• Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

• Broad CIO functions include:– Manager – ensuring the delivery of all IT projects, on

time and within budget– Leader – ensuring the strategic vision of IT is in line

with the strategic vision of the organization– Communicator – building and maintaining strong

executive relationships

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ROLES AND RESPONSIBILITIES IN IT

• Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT

• Chief Security Officer (CSO) – responsible for ensuring the security of IT systems

• Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information

• Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the organization’s knowledge

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MEASURING IT’S SUCCESS

• Key performance indicator (KPI) – measures that are tied to business drivers

• Metrics are detailed measures that feed KPIs

• Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals

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Efficiency and Effectiveness Metrics

• Efficiency IT metric – measures the performance of the IT system itself including throughput, speed, and availability

• Effectiveness IT metric – measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases

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Benchmarking – Baselining Metrics

• Benchmarks – baseline values the system seeks to attain

• Benchmarking – a process of continuously measuring system results, comparing results (benchmark values), and identifying improvements

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Benchmarking – Baselining Metrics

• Egovernement benchmarks

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The Interrelationships of Efficiency and Effectiveness IT Metrics

• Efficiency IT metrics focus on technology and include:– Throughput– Transaction speed– System availability– Information accuracy– Web traffic– Response time

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The Interrelationships of Efficiency and Effectiveness IT Metrics

• Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include:– Usability– Customer satisfaction– Conversion rates– Financial

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The Interrelationships of Efficiency and Effectiveness IT Metrics

• Security is an issue for any organization offering products or services over the Internet

• It is inefficient for an organization to implement Internet security, since it slows down processing, however, to be effective it must implement Internet security

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The Interrelationships of Efficiency and Effectiveness IT Metrics

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IDENTIFYING COMPETITIVE ADVANTAGES

• To survive and thrive an organization must create a competitive advantage– Competitive advantage – a product or

service that an organization’s customers place a greater value on than similar offerings from a competitor

– First-mover advantage – occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

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IDENTIFYING COMPETITIVE ADVANTAGES

• Organizations watch their competition through environmental scanning– Environmental scanning

• Three common tools used in industry to analyze and develop competitive advantages include:– Porter’s Five Forces Model– Porter’s three generic strategies– Value chains

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THE FIVE FORCES MODEL – EVALUATING BUSINESS SEGMENTS

• Porter’s Five Forces Model determines the relative attractiveness of an industry

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Buyer Power

• Buyer power – high when buyers have many choices of whom to buy from and low when their choices are few

• One way to reduce buyer power is through loyalty programs– Loyalty program – rewards customers

based on the amount of business they do with a particular organization

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Supplier Power

• Supplier power – high when buyers have few choices of whom to buy from and low when their choices are many– Supply chain – consists of all parties involved in

the procurement of a product or raw material

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Supplier Power

• Organizations can create a competitive advantage by locating alternative supply sources (decreasing supplier power)

• Business-to-Business (B2B) marketplace – an Internet-based service that brings together buyers and sellers

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Supplier Power

• Two types of (B2B) marketplaces– Private exchange – single buyer posts

needs and opens bidding to any supplier

– Reverse auction –increasingly lower bids are solicited from organizations willing to supply product or service at a lower price

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Threat of Substitute Products or Services

• Threat of substitute products or services – high when there are many alternatives to a product or service and low when there are few alternatives– Switching cost – costs that can make

customers reluctant to switch

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Threat of New Entrants

• Threat of new entrants – high when it is easy for new competitors to enter a market and low when there are significant entry barriers– Entry barrier – a product or service

that customers have come to expect and must be offered to compete and survive

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Rivalry Among Existing Competitors

• Rivalry among existing competitors – high when competition is fierce in a market and low when competition is more complacent

• Although competition is always more intense in some industries than in others, the overall trend is toward increased competition in just about every industry

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THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS

• Organizations typically follow one of Porter’s three generic strategies when entering a new market

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THE THREE GENERIC STRATEGIES – CREATING A BUSINESS FOCUS

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Value Creation

• Once an organization chooses its strategy, it can use tools such as the value chain to determine the success or failure of its chosen strategy– Business process – a standardized

set of activities that accomplish a specific task

– Value chain – views an organization as a series of processes, each of which adds value to the product or service


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