CHAPTER 1

INTRODUCTION : BUSINESS AND

INFORMATION TECHNOLOGY
 Learning Objectives
Discuss business pressures and responses
in today’s Information Age
Differentiate between data and
information, and describe the
characteristics of high-quality data.
Name and describe the components of an
information system.
Describe the capabilities expected of
information systems in modern
organizations.
Describe opportunities for strategic use of
information systems.
 Case : Blades Board & Skate rapid
growth
 The Business Problem
 retailer of ice and inline skates and
snowboards
the business needed a computer system that could
instantly track sales and inventory at all of its stores
 The Solution
point-of-sales (POS) systems
 computerized cash registers that use specialized software
to record transaction data such as the stock numbers of
items sold, cost , time of sale, and information on the
customer, such as name
help retailers cut costs, increase profits, and serve
customers better by making the most of sales information
 Case (continued…)
 The Results
 Quicker, more accurate, and more
detailed picture of sales and inventory
Tied into the firm’s accounting software
Order products from vendors only when
needed, decreasing the amount of
warehouse space
 Case (continued…)
What have we learned from this case??

Information Technologies are woven into

complex systems
interrelating with other systems
permeating every business process
enabling tremendous gains in knowledge, productivity, and
profitability
A great variety of information can now be gathered at
each part of each business process, and information
can be distributed throughout the organization, giving
knowledge and insight for competitive decision
making and strategic advantage.
 Business in the Information
Age:
Pressures
Global Competition for Market and for
Labor
Need for Real-time Operations
Changing Work Force
Customer-Oriented Operations
Technological Innovation and
Obsolescence
Information Overload
Social Responsibility of Organizations
Government Regulation and Deregulation
Ethical Issues
Organizational Responses to Business
Pressures in the Information Age
 Business in the Information
Age:
Responses
Strategic Systems
Customer Focus and Customer Service
mass customization
Continuous Improvement Efforts
just-in-time (JIT)  total quality management (TQM)
Business Process Reengineering
Empowering Employees and Fostering Collaborative Work
Team-based Structure
Business Alliances
supply chain management and enterprise resource planning (ERP)
Electronic Commerce
 Business Pressures &
Organizational Responses :
Summary
Business Pressures Organizational Responses
Global Competition for Strategic Systems
Market and Labor Customer Focus and
Need for Real-time Customer Service
Operations Continuous Improvement
Changing Work Force Efforts (Just-in-Time,
Customer Orientation Total Quality
Technological Innovation Management)
and Obsolescence Business Process
Information Overload Reengineering (BPR)
Social Responsibility Team-based Structure
Government Regulation Business Alliances
and Deregulation Electronic Commerce
Ethical Issues
 Why You Need to Learn About
Information Technology
IT is Generally Interesting
IT Facilitates Work in Organizations
IT Offers Career Opportunities
IT is Used by All Departments
Locating real estate at nations bank
Using IT to strategic advantage at McDonald’s
Canada
Using IT to manage human resources at the
City of Winnipeg in Manitoba, Canada
 Why You Need to Learn About
Information Technology
(continued…)
Web-based One-to-One Marketing at Liberty
Financial Companies
one-to-one Web Marketing
aims to personalize a user’s online experience by offering
services and advertisements that are likely to appeal to
that person
Web-site operator can use the information it collects on
individuals to provide customized content
used Web-based marketing software to build its
database of customer profiles
investors able to find exactly the information they
need, quickly and easily from Web sites
 What is a Computer-Based
Information System?
 A computer-based information system (CBIS) is an
information system that uses computer and often
telecommunications technology to perform some or
all of its intended tasks. An information technology
is a particular component of a system, like a personal
computer, a printer, or a network. But few
information technologies are used alone. Rather,
they are most effective combined into information
systems. The basic components of information
systems are the following:
Hardware  Software
Database  Network
Procedures  People
 Components of Computer-
based Information System

HARDWARE SOFTWARE

PEOPLE
DATABASE PROCEDURES

NETWORK
 Capabilities of Information
Systems
Provide Fast and Accurate Transaction
 Provide Large Capacity, Fast Access Storage
 Provide Fast Communications (machine to machine, human to human)
 Reduce Information Overload
 Span Boundaries
 Provide Support for Decision Making
 Provide a Competitive Weapon
 General Technological Trends for
IT


 Strategic Questions and
Information Technology
Answer
Information Technology and organizational
strategy are inseparable
Porter’s strategic analysis model (5 forces
models)
the relative power of buyers and suppliers,
threats from substitute products and services,
and the ease or difficulty with which new
competitors can enter the industry
Value chain
the discrete steps involved in the
manufacturing of a product or the provision of
a service
 Strategic Questions (continued…)
Strategic Questions
 Can we use IT to gain leverage over our suppliers? To improve our
bargaining power? To reduce their bargaining power?
 Can we use IT to reduce purchasing costs? To reduce our order
processing costs? To reduce suppliers’ billing costs?
 Can we use IT to identify alternative supply sources? To locate substitute
products? To identify lower-price suppliers?
 Can we use IT to improve the quality of products and services we receive
from suppliers? To reduce order lead times? To monitor quality? To
leverage supplier service data for better service to our customers?
 Can we use IT to give us access to vital information about our suppliers
that will help us reduce our costs? To select the most appropriate
products? To negotiate price breaks? To monitor work progress and
readjust our schedules? To assess quality control?
 Can we use IT to give our suppliers information important to them that
will in turn yield a cost, quality, or service reliability advantage to us? To
conduct electronic exchange of data to reduce their costs? To provide
master production schedule changes?
 Strategic Questions
(continued…)
 Strategic Questions
 Can we use IT to reduce our customer’s cost of doing business with us? To
reduce paperwork for ordering or paying? To provide status information
more rapidly? To reduce our costs and prices?
 Can we provide some unique information to our customers that will make
them buy our products/service? Can we provide better billing or account
status data? Can we provide options to switch to higher-value substitutes?
Can we be first with an easy-to-duplicate feature that will provide value
simply by being first?
 Can we use IT to increase our customers’ costs of switching to a new
supplier? Can we provide proprietary hardware or software? Can we
make customers dependent upon us for their data? Can we make our
customer service more personalized?
 Can we use external database sources to learn more about our customers
and discover possible market niches? To relate buying from us to buying
other products? To analyze customers interactions with us and questions
to us to develop customized products/services or methods of responding to
customer needs?
 Strategic Questions (continued…)
Strategic Questions
 Can we use IT to help our customers increase their revenues? To provide
proprietary market data to them? To support their access to their markets
through our channels?
 Can we use IT to raise the entry barriers of new competitors into our
markets? To redefine product features around IT components? To
provide customer services through IT?
 Can we use IT to differentiate our products/services? To highlight existing
differentiations? To create new differentiations?
 Can we use IT to make a preemptive move over our competition? To offer
something new because we have proprietary data?
 Can we use IT to provide substitutes? To simulate other products? To
enhance our existing products?
 Can we use IT to match an existing competitor’s offerings? Are competitor
products/services based on unique IT capabilities or technologies and
capabilities generally available?
 Information Technology
Answer (continued…)
 Information Technology Answers
 Consolidated Stores invested $80 million in
KBToys.com, a site it will jointly own with startup
BrainPlay.com
PetSmart plans to invest $16 million in 1999 in
PetSmart.com, a site it will jointly own with startup
PetJungle.com
Toys “R” Us invested $80 million to relaunch
Toysrus.com, which will be run as a standalone
business
CVS spent $30 million to buy online pharmacy
Soma.com
 The Plan of This Book
Part 1 INFORMATION TECHNOLOGY IN THE BUSINESS ENVIRONMENT
1. Introduction : Business and Information Technology
2. Organizational Structure and Information Technology
Part 2 INFORMATION TECHNOLGY INFRASTRUCTURE
3. Computer Hardware
4. Computer Software
5. Managing Organizational Data and Information
6. Telecommunications and Networks
7. The Internet and Intranets
Part 3 APPLYING INFORMATION TECHNOLOGY FOR COMPETITIVE ADVANTAGE
8. Interorganizational and Global Information Systems
9. Functional and Enterprise Systems
10. Data, knowledge, and Decision Support
11. Intelligent Systems in Business
12. Electronic Commerce
13. Strategic Information Systems and Reorganization

Part 4 DEVELOPING AND MANAGING INFORMATION SYSTEMS

14. Information Systems Development
15. Implementing IT:Ethics, Impacts, and Security
What’s in IT for Me?
For Accounting
Information systems capture, organize,
analyze, and disseminate data and
information throughout modern
organizations
For Finance
Information systems turn financial world on
speed, volume, and accuracy of
information flow
What’s in IT for Me?
(continued …)
 For Marketing
The Internet and the World Wide Web have
opened an entirely new channel for
marketing and provided much closer contact
between the consumer and the supplier
For Production/Operations Management
Every process in a product or service’s value
chain can be enhanced by the proper use of
computer-based information systems
 What’s in IT for Me?
(continued …)

 For Human Resource Management

Employees can handle much of their personal
business themselves, and the Internet makes a
tremendous amount of information available to
the job seeker
For Management Information Systems (MIS)
The opportunities for those planning a career in
MIS grows as fast as the adoption of information
technologies into organizations everywhere