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Information Systems for Competitive Advantage

Businesses continually seek to establishcompetitive advantage in the marketplace.

There are eight principles: The first three principles concern products.

The second three principles concern the creation

of barriers.

The last two principles concern establishingalliances and reducing costs.

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Figure 2-1 Principles of Competitive Advantage

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 Information System that Creates a Competitive

Advantage

 ABC invested heavily in information

technology.

 ABC led the shipping industry in the

application of information systems for

competitive advantage.

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How this System Creates a AC! Inc Competitive

Advantage

 ABC information system provides thefollowing: Enhances an existing product

ifferentiates the ABC package delivery product

from competitors

!ock"s customers into the ABC system

#aises the barrier to market entry

#educes costs

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Information Systems for Pro"lem Solving

$nformation systems can be used to solveproblems.

%roblem definition A problem is a perceived difference between what

is and what is not. A problem is a perception. A good problem definition defines the differences

between what is and what ought to be bydescribing both the current and desired situations.

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Information Systems for Pro"lem Solving

%roblem definition &continued' ifferent problem definitions re(uire the

development of different information systems.

 All personnel in the organi)ation must have a clear

understanding of which definition of the problem

the information system will address.

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A Customer #elationship $anagement System

 A Customer #elationship *anagement &C#*'system is an information system that

maintains data about customers and all of

their interactions with the system.

C#* systems vary in their si)e and

complexity.

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%nowledge $anagement System

 A knowledge management system &+*,' is

an information system for storing andretrieving organi)ational knowledge.

This knowledge can be in the form of data-documents- or employee knowhow.

+*, goal is to make the organi)ationknowledge available to Employees /endors

Customers $nvestors %ress and who else who needs the knowledge

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Figure 2-& '(ample Customer #elationship

$anagement )C#$* System

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Figure 2-+ Customer Support %nowledge

$anagement System

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A $anufacturing ,uality-Control Information System

*any organi)ations believe that the optimalway to provide customer service is to eliminate

the need for it.

0ne way to improve customer service is toimprove manufacturing (uality.

The type of system to develop depends on theway the organi)ation defines the problem.

Before developing the system- the organi)ationmust have a complete- accurate- and agreedupon problem definition.

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Information Systems for ecision $a.ing

eveloping an information system is tofacilitate decision making.

ecision making in organi)ations is varied

and complex.

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ecision /evel

ecisions occur at three levels in

organi)ations.

0perational decisions concern daytoday

activities. $nformation systems that support operational

decision making are called transaction processing

systems &T%,'.

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ecision /evel )Continued*

*anagerial decisions concern the allocation

and utili)ation of resources. $nformation systems that support managerial

decision making are called managementinformation systems &*$,'.

,trategic decision making concern broaderscope organi)ational issues. $nformation systems that support strategic

decision making are called executive informationsystems &E$,'.

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ecision-$a.ing imensions

Figure 2-10

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he ecision Process

Two decision processes &method by which a

decision is to be made' are structured andunstructured. ,tructured decision process is one for which there

is an understood and accepted method for making

the decision. 1nstructured process is one for which there is no

agreed on decision making process.

The terms structured and unstructured refersto the decision processnot the underlying

sub2ect.

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Figure 2-11 #elationship of ecision /evel and

ecision ype Figure

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ifferent ypes of Information Systems for

ifferent ypes of ecisions

 Automated information systems are those by

which the computer hardware and programcomponents do most of the work. 3umans start the programs and use the results.

 Augmentation information systems are those

in which humans do the bulk of the work. These systems augment- support- or supplement

the work done by %eople &email- instantmessaging- videoconferencing- etc' to aid in

decision making.

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Figure 2-12 Automated vs Augmentation IS

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Figure 2-13 How ecision /evel! ecision ype

and IS ype Are #elated

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Information Systems and ecision Steps

 A way to examine the relationship betweeninformation systems and decision making isto consider how an information system isused during the steps of the decision makingprocess.

There are five steps $ntelligence gathering Alternative formulation

Choice $mplementation #eview

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Figure 2-14 ecision-$a.ing Steps

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Summary

0rgani)ations develop and use information

systems to gain competitive advantage- tosolve problems- and to assist in decision

making

4igure 56 lists eight principles of competitive

advantage.

 A problem is a perceived difference between

what is and what ought to be.

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Summary )Continued*

ecisions can be made at the operational&T%,'- managerial &*$,'- and strategic &E$,'levels.

ecisions vary according to whether astructured or unstructured process is used tomake them.

 Automated information systems are those inwhich the computer and program side of thefive components do most of the work.

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Summary )Continued*

 Augmentation information systems are thosein which humans do most of the work.

 Another way to consider information systems

and decision making is to consider the steps

of the decision process.

ifferent types of information systems areused for different steps of the decision

process as summari)ed in 4igure 567.

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%ey erms and Concepts

 Augmentation information

systems Automated information systems

Customer relationshipmanagement &C#*'

Executive information systems&E$,'

+nowledge managementsystems &+*,'

 *anagement information

systems &*$,'*anagerial decision

*anufacturing informationsystems

 

0perational decision

%rinciples of competitiveadvantage

%roblem

,trategic decision

,tructured decision,witching costs

Transaction processingsystems &T%,'

1nstructured decision

 

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%ey erms and Concepts )Continued*

 ,tructured decision,witching costs

Transaction processing systems&T%,'

1nstructured decision