managing the digital firm

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MANAGING THE

DIGITAL FIRM

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What is the role of information systems in today’s competitive business environment?

What exactly is an information system? What do managers need to know about information systems?

How are information systems transforming organizations and management?

OBJECTIVES

How has the Internet and Internet technology transformed business?

What are the major management challenges to building and using information systems?

OBJECTIVES

An organized approach to the study of the information needs of an organization's management at every level in making operational, tactical, and strategic decisions. Its objective is to design and implement procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner.

In a management information system, modern, computerized systems continuously gather relevant data, both from inside and outside an organization. This data is then processed, integrated, and stored in a centralized database (or data warehouse) where it is constantly updated and made available to all who have the authority to access it, in a form that suits their purpose.

MIS: Management Information System

MIS (management information systems) is a general term for the computer systems in an enterprise that provide information about its business operations. It's also used to refer to the people who manage these systems. Typically, in a large corporation, "MIS" or the "MIS department" refers to a central or centrally-coordinated system of computer expertise and management, often including mainframe systems but also including by extension the corporation's entire network of computer resources.

MIS: Management Information System

The Competitive Business Environment and the Emerging Digital Firm

WHY INFORMATION SYSTEMS?

Four powerful worldwide changes that have altered the business

environment:

1. Emergence of the Global Economy2. Transformation of Industrial Economies3. Transformation of the Business Enterprise4. The Emerging Digital Firm


Emergence of the Global Economy

Management and control in a global marketplace

Competition in world markets Global work groups Global delivery systems



Transformation of Industrial Economies

Knowledge- and information-based economies

Productivity

New products and services

Knowledge: a central productive and strategic asset



Transformation of Industrial Economies

Time-based competition

Shorter product life

Turbulent environment

Limited employee knowledge base


Figure 1-1

Labor Force Composition 1900-1997



Transformation of the Business Enterprise

Flattening Decentralization Flexibility Location independence Low transaction and coordination costs Empowerment Collaborative work and teamwork



Emergence of the Digital Firm

Digitally-enabled relationships with customers, suppliers, and employees

Core business processes accomplished via digital networks

Digital management of key corporate assets

Rapid sensing and responding to environmental changes


A set of interrelated components that collect

(or retrieve), process, store, and distribute

information to support decision making and

control in an organization

What Is an Information System?


Data: Streams of raw facts representing events such as business transactions

Information: Clusters of facts that are meaningful and useful to human beings in the processes such as making decisions



Figure 1-2

Data and Information



INPUT OUTPUTPROCESS

FEEDBACK

Essentials of Management Information SystemsChapter 1 Managing the Digital Firm

Activities in an Information System



Functions of an Information System


Figure 1-3

Rely on computer hardware and software

Processing and disseminating information


Computer-Based Information System (CBIS)


Fixed definitions of data, procedures

Collecting, storing, processing, disseminating, using data


Formal Systems


An organizational and management solution

Based on information technology

To a challenge posed by the environment


A Business Perspective on Information Systems



Information Systems

ORGANIZATIONS TECHNOLOGY

MANAGEMENT

INFORMATION

SYSTEMS

Figure 1-4


Information systems literacy: Broad-based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems as well as technical knowledge about computers.

Computer literacy: Knowledge about information technology, focusing on under-standing how computer-based technologies work


A Business Perspective on Information Systems


Sales and marketing

Manufacturing

Finance

Accounting

Human resources


Major Business Functions


Key Elements: People: Managers, knowledge workers,

data workers, production or service workers

Structure: Organization chart , groups of specialists, products, geography


Organizations


Operating procedures: Standard operating procedures (SOP, rules for action)

Politics: Power to persuade, get things done

Culture: Customs of behavior


Organizations


Levels: Senior managers: make long-range

strategic decisions about products and services

Middle managers: Carry out the programs and plans of senior management

Operational managers: monitor the firm’s daily activities


Management


Tools managers use to cope with change

Hardware: Physical equipment

Software: Detailed preprogrammed instructions

Storage: Physical media for storing data and the software


Computer Technology


Communications Technology: transfers data from one physical location to another

Networks: link computers to share data or resources


Computer Technology



CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

SOCIOLOGY

POLITICAL SCIENCE

PSYCHOLOGY

COMPUTER

SCIENCE OPERATIONS

RESEARCH

MANAGEMENT

SCIENCE

TECHNICAL APPROACHES

MIS

BEHAVIORAL APPROACHESFigure 1-5

Optimize systems performance:

Technology and organization

Organizations mutually adjust to one another until fit is satisfactory


Socio-Technical Systems



SOURCE: Liker, et al, 1987Figure 1-6

Socio-technical Systems



TOWARD THE DIGITAL FIRMThe Interdependence Between Organizations and Information

Systems

Figure 1-7

1950s: Technical changes

60s-70s: Managerial controls

80s-90s: Institutional core activities

Growing Importance


THE NETWORK REVOLUTION AND THE INTERNET

The Widening Scope of Information Systems


Figure 1-8

THE NETWORK REVOLUTION AND THE INTERNET

The Widening Scope of Information Systems

Communicate and collaborate

Access information

Participate in discussions

Supply information

Find entertainment

Exchange business transactions


TOWARD THE DIGITAL FIRM

What You Can Do on the Internet

Flattening organizations

Separating work from location

Reorganizing work-flows

Increasing flexibility

Redefining organizational boundaries



New Options for Organizational Design


Figure 1-9


Flattening Organizations Information Systems


Figure 1-10

Redesigned Work Flow For Insurance Underwriting


Electronic commerce

Electronic business

Electronic market: Information systems links, buyers and sellers to exchange information, products, services, payments



The Digital Firm


Figure 1-11


Internet links buyers, sellers

Lower transaction costs

Goods and services advertised, bought, exchanged worldwide

Business-to-business transactions increasing



Electronic Commerce

Internet: Business builds private, secure network

E-mail, Web documents, group software: Extends effective communication and control

Extranet: Extension of intranet to authorized external users


Electronic Business



Information Architecture and Information Technology Infrastructure


Figure 1-12

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MANAGING THE

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