CSUN Information Systems

IS312 Information Systems for Business

http://www.csun.edu/~dn58412/IS312/IS312_SP13.htm Lecture 1 Business Driven Information Systems (Ch . 1 )

LEARNING OBJECTIVES
BUSINESS DRIVEN INFORMATION
SYSTEMS Competing in the Information Age The Challenge: Departmental Companies The Solution: Management Information Systems BUSINESS STRATEGY Identifying Competitive Advantages The Five Forces Model Evaluating Industry

Attractiveness The Three Generic Strategies Choosing a Business Focus Value Chain Analysis Executing Business Strategies
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LEARNING OBJECTIVES
IS IN MODERN BUSINESS ENVIRONMENT
The global business environment and the new

information technology infrastructure Relationships among business pressures, organizational responses, and information systems The role of IS and IS personnel in modern organizations

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DID YOU KNOW ?

What you need to know to survive in the brave new world !

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Tools of Trade

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Competing In The Information Age

Fact - The confirmation or validation of an
event or object

Information age - The present time, during

which infinite quantities of facts are widely available to anyone who can use a computer

Knowledge worker Individual valued for

their ability to interpret and analyze information
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Competing In The Information Age . . .

The core drivers of the information age
Data - Raw facts that describe the characteristics of
an event or object

Information - Data converted into a meaningful

and useful context

Business intelligence - Information collected from

multiple sources for strategic decision making.

Knowledge - Skills, experience, and expertise

coupled with information and intelligence that creates a persons intellectual resources
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THE CHALLENGE: Departmental Companies

Common Departments Working Independently

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THE SOLUTION : Integrated Companies

Common Departments Working Interdependently

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 Systems thinking A way of monitoring the

entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part

THE SOLUTION: Information Systems

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THE SOLUTION : Information Systems . . .

Business Perspective (Management Information
Systems) : a business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decision-making and problemsolving. Systems Perspective (Information Systems) : a combinations of hardware, software, and telecom networks that people build and use to collect, create, and distribute useful data in organizations for decision making
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IS Department Roles & Responsibilities

Chief information officer (CIO) Oversees all
uses of IT and ensures the strategic alignment of IT with business goals and objectives

Chief knowledge officer (CKO) - Responsible

for collecting, maintaining, and distributing the organizations knowledge

Chief privacy officer (CPO) Responsible for

ensuring the ethical and legal use of information
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IS Department Roles & Responsibilities . . .

Chief security officer (CSO) Responsible for
ensuring the security of IT systems

Chief technology officer (CTO) Responsible

for ensuring the throughput, speed, accuracy, availability, and reliability of IT

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IDENTIFYING COMPETITIVE ADVANTAGES

Business strategy A leadership plan that
achieves a specific set of goals or objectives such as

Developing new products or services Entering new markets Increasing customer loyalty

Attracting new customers

Increasing sales
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IDENTIFYING COMPETITIVE ADVANTAGES . . .

Competitive advantage A product or
service that an organizations 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 . . .

Competitive Intelligence The process of
gathering information about the competitive environment to improve the companys ability to succeed

Competitive Intelligence analysis tools

Porters Five Forces Model Porters Three Generic Strategies Porters Value Chain
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PORTERS FIVE FORCES MODEL :

Evaluating Industry Attractiveness

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Buyer Power
Buyer power The ability of buyers to affect
the price of an item

Switching cost Manipulating costs that make

customers reluctant to switch to another product

Loyalty program Rewards customers based on

the amount of business they do with a particular organization

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Buyer Power . . .
Bargaining power of buyers
high when buyers have many choices 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.

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Supplier Power
Supplier power The suppliers ability to
influence the prices they charge for supplies

Supply chain Consists of all parties involved in

the procurement of a product or raw material

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Supplier Power . . .
Bargaining power of suppliers
high when buyers have few choices low when buyers have many choices.
Buyers can use the Internet to find alternative
suppliers and compare prices more easily, reducing power of suppliers. But companies can use the Internet to integrate their supply chains, suppliers can lock in customers.

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Threat of Substitute Products or Services

Threat of substitute products or services
high when there are many substitutes for an organizations products or services

low when 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.
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Threat of New Entrants

Threat of new entrants / competitors
high when it is easy to enter a market low when significant barriers to entry exist. Entry barrier A feature of a product or service
that customers have come to expect and entering competitors must offer the same for survival

Internet increases the threat that new

competitors will enter a market.

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Rivalry Among Existing Competitors

Rivalry among existing competitors
high when competition is fierce in a market low when competitors are more complacent Product differentiation Occurs when a
company develops unique differences in its products or services with the intent to influence demand

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Sources of Competitive Advantage

Best-made product Superior customer service Lower costs Superior manufacturing technology Shorter lead times Well-known brand name High value per cost

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 Intensification: improving processes to serve current

Business Strategies

customers better: reengineer the current processes, eliminate ineffective operations. Extension: using efficient existing processes to enter new markets to gain competitive advantage. Augmentation: expanding processes to provide additional services to current customers. Conversion: taking a process that the company performs well and performing it as a service to other companies. Innovation: applying existing processes that one performs well to create and deliver different goods or services. Diversification: creating new processes to deliver new goods or services
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PORTERS THREE GENERIC STRATEGIES : Choosing A Business Focus

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PORTERS THREE GENERIC STRATEGIES : Choosing A Business Focus . . .

Example:

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PORTERS VALUE CHAIN : Executing Business Strategies

Business process A standardized set of
activities that accomplish a specific task, such as a specific process

Value chain analysis Views a firm as a

series of business processes that each add value to the product or service

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VALUE CHAIN ANALYSIS : Primary Activities

Inbound logistics - Acquires raw materials and
resources, and distributes

Operations - Transforms raw materials or inputs

into goods and services

Outbound logistics - Distributes goods and

services to customers

Marketing and sales - Promotes, prices, and sells

products to customers

Service - Provides customer support

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VALUE CHAIN ANALYSIS : Support Activities

Firm infrastructure Includes the company format or
departmental structures, environment, and systems

Human resource management Provides employee

training, hiring, and compensation

Technology development Applies technologies to

processes to add value

Procurement Purchases inputs such as raw

materials, resources, equipment, and supplies

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PORTERS VALUE CHAIN

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Value Chain & Five Forces Model

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How Companies Do Business

Business Process: A collection of related
activities that produce a product or a service of value to the organization, its business, and/or its customers. (Ordering an E-ticket from an airline Web site.) Business Process Management: A management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business process. (Business Process Reengineering / Redesign)
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Business Process Reengineering/Redesign

IT/IS contributes to Business Process Reengineering / Redesign (BPR) : Efficient: Do thing right (cheaper) Effective: Do right thing (better) Competitive: Do thing differently (faster/newer)

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 Globalization is the integration of economies

Modern Business Environment : Globalization

throughout the world, enabled by technological progress. Globalization manifests itself through changes in economy, cultures and technology.

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Globalization

Technological Changes
systems

Availability of low cost communication Increase in international trade of goods and

services

Economic Changes Cultural Changes

Increased access to other cultures (through

TV, Internet, etc.)
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Globalization

Globalization

created a new world characterized by: Worldwide communication Collaboration without barriers

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Globalization 1.0

Mainly European countries are globalizing Power is the primary driver Industries changed Slow pace of change

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Globalization 2.0
Companies are globalizing Reduction in transportation and

telecommunications costs Mainly Europe and America involved

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Globalization 3.0
Individuals and small groups are globalizing Fast changes Emergence of new industries

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Evolution of Globalization: Summary

The World is Flat (Thomas Friedman)

The convergence of 10 Flatteners or key

factors enabling globalization 3.0
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Flattener #1: The Fall of the Berlin Wall

November 9, 1989 Fall of communism and centrally planned

economies Shifted the world toward free-market economies The rise of European Union and the idea of the world as a single, global market

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Flattener #2: Netscape Browser

August 9, 1995 First mainstream browser Gave individuals access to the Internet &
World Wide Web Failures and over-investments of dot-com
companies make telecommunication infrastructure affordable to public

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Flattener #3: Work Flow Software

Applications that allow people worldwide to

communicate XML allows applications to talk to each other New possibilities for information sharing

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Flattener #4: Open Sourcing

Software and source code freely available
to everyone Linux operating system, Apache web server,
Firefox web browser, OpenOffice suite Constant evolution contributed by users

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Flattener #5: Outsourcing

Outsourcing companies profited from the
drop in telecommunications costs Companies can now use talented engineers from anywhere in certain activities

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Flattener #6: Offshoring

Companies set up entire factories in countries
such as China Mass production Low costs

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Flattener #7: Supply Chaining

Integration of retailers, suppliers, and
customers Faster in collaboration in production,
scheduling

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Flattener #8: Insourcing

Delegation of companys key operations
to a subcontractor UPS provides complete supply chain
solutions to companies

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Flattener #9: Informing

Informing is to individuals what outsourcing,
offshoring, and insourcing is to companies Individuals have access to massive amounts of information (search engines)

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Flattener #10: The Steroids

Technologies that support different types
of collaboration, amplify other flatteners Digital Mobile Virtual Personal

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The Great Convergence

The convergence of three powerful,

technological forces: Cheap and ubiquitous computing devices Low-cost, high bandwidth Open standards Computing everywhere and anywhere, anytime and all the time, with access to limitless amounts of information, services, and entertainment.
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The Great Convergence

The creation of a global, Web-enabled

playing field that allows for multiple forms of collaboration the sharing of knowledge and work in real time, without regard to geography, distance, or even language. The field now includes some 3 billion new people, formerly digitally disenfranchised.
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Business Pressures, Organizational Responses, and IT Support

Business Pressures Technology Pressures Market Pressures Societal Pressures

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Business Pressures, Organizational Responses, and IT Support

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Technology Pressures

Technological innovation and

obsolescence (new hardware every year, new software every 3 years) Information overload

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Market Pressures

New ways to do business with new

technology The global economy and strong competition (competitors, suppliers) The changing nature of the workforce (employees) Powerful customers
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Societal Pressures

Social Responsibility Government Regulation and

Deregulation Protection Against Terrorist Attacks Ethical Issues

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Organizational Responses

Strategic systems Customer focus Make-to-order and mass customization E-business and e-commerce

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IS for Modern Business

Does organization really need IS ? Can we
live without it ? Modern organizations have computers and
computer-based applications in all their functional areas (Accounting, Finance, HR, Production, etc..) IS contributes to meeting organizational goals: Effective: Do right thing Efficient: Do thing right Competitive: Do thing differently

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IS for Competitive Advantage

How can business system gain
organizational competitive advantage? Competition: doing things faster, better, cheaper. Strategic Systems meeting strategic plan.

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Some Visions of Visionary Business Leaders

2011 Your Visionary Manager: We dont need the passing fad IS !!!

2012 Your Visionary Manager declares bankruptcy !!!

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Why Are Information Systems Important to YOU ?

IS applies to nearly every functional area

within a firm One may become indispensable in a firm through mastering tech skills Anticipated growth in tech hiring (although upward fluctuation) Be prepared, dont miss the train

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Misinformation about Information Systems Career Opportunities

Myth #1: There are no computing jobs. Myth #2: There will be no IT jobs when I
graduate. Myth #3: All IT-related jobs are moving offshore. Myth #4: IT salaries are lower due to cheap overseas labor.

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What Makes IS Personnel Valuable ?

Integrated knowledge and skills in three

areas: Technical Competency - skills in hardware,
software, networking and security

Business Competency understanding of the

nature of the business; this is key in addition to the technical competency

System Competency understanding of how

to build and integrate large scale systems
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Best Jobs for the Next Decade

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Show Me The Money !!!

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Show Me The Money ( Again ) !!!

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