UNDERSTANDING IT

APPLICATIONS IN GLOBAL
BUSINESS
Understanding Information Management (IM) and Information
Systems (IS)
Information .
Facts without context is Data
Data processed in context is Information
Information processed in context is Knowledge
Knowledge in context of application is Know-How
Know-how in context of right use is a Wisdom
Data/Information/ Knowledge/ Knowledge Assets & supporting infrastructure
of systems, and Tools to use it is a Business Intelligence
Data
Information
Knowledge
BI
Information Generation
Input Process Output
Information Management
What is it ?
Information Management begins with identification of information needs of the
organization & its users, and plans systems for its generation, maintenance, &
dissemination ensuring quality & security of the information
Why Needed?
Business is an Open System
Strategy: Sense & Respond proactively
Information of customer needs & the competition is necessary for growth
Importance of IM
Business & Industry is information driven
Needs to know JIT status on chosen aspect
Needs to know instantaneous event occurrence
Needs to know Exceptions any where
Needs prompts in terms of Alert, Attention, Action
Needs information support to DSS
Need an Information Management System to process data, events, transactions
producing the information to achieve business goals & performance targets.
Foundations of Information Systems in Business
A system is
A set of interrelated components
With a clearly defined boundary
Working together
To achieve a common set of objectives
By accepting inputs and producing outputs
In an organized transformation process
It is a set of active components arranged in an orderly manner to receive & process inputs to
achieve a system goal in given environmental settings
Information Systems
Why Study Information Systems?
Vital component of successful businesses
Helps businesses expand and compete
Improves efficiency and effectiveness of business processes
Facilitates managerial decision making and workgroup collaboration
A Business System
Information Systems
What is an Information System?
Any organized combination of people, hardware, software, communications networks, and data
resources that stores, retrieves, transforms, and disseminates information in an organization
Information Systems vs. Information Technology
IS : all components and resources necessary to deliver information and information processing
functions to the organization. Could be paper based
IT various hardware components necessary for the system to operate Computer Hardware
Technologies, Computer Software Technologies, Telecommunications Network Technologies, Data
Resource Management Technologies
Components of an IS
Conceptual Framework of IS Knowledge
Fundamental Roles of IS in Business
Types of Information Systems
Operations Support Systems
Efficiently process business transactions
Control industrial processes
Support communication and collaboration
Update corporate databases
Management Support Systems
Provide information as reports and displays
Give direct computer support to managers during decision-making
Purposes of Information Systems
The information systems support of people in organizations
Copyright 2010 John Wiley & Sons, Inc.
Operation Support Systems
What do they do?
Efficiently process business transactions
Control industrial processes
Support communications and collaboration
Update corporate databases
Types of OSS
Transaction Processing Systems
Record and process business transactions
Examples: sales processing, inventory systems, accounting systems
Process Control Systems
Monitor and control physical processes
Example: using sensors to monitor chemical processes in a petroleum refinery
Enterprise Collaboration Systems
Enhance team and workgroup communication
Examples: email, video conferencing
Two Ways to Process Transactions
Batch Processing
Accumulate transactions over time and process periodically
Example: a bank processes all checks received in a batch at night
Online Processing
Process transactions immediately
Example: a bank processes an ATM withdrawal immediately
Management Support Systems
What do they do?
Provide information and support for effective decision making by managers
Management information systems
Decision support systems
Executive information systems
Management Support Systems
Types of Management Support Systems
Management Information Systems (MIS)
Reports and displays
Example: daily sales analysis reports
Decision Support Systems (DSS)
Interactive and ad hoc support
Example: a what-if analysis to determine where to spend advertising dollars
Executive Information Systems (EIS)
Critical information for executives and managers
Example: easy access to actions of competitors
Other Information Systems
Expert Systems
Provide expert advice
Example: credit application advisor
Knowledge Management Systems
Support creation, organization, and dissemination of business knowledge throughout company
Example: intranet access to best business practices
Strategic Information Systems
Help get a strategic advantage over customer
Examples: shipment tracking, e-commerce Web systems
Functional Business Systems
Focus on operational and managerial applications of basic business functions. Examples:
accounting, finance, or marketing
Management Challenges & Opportunities
Measures of Success
Efficiency: Minimize costs, Minimize time , Minimize the use of information resources
Effectiveness: Support an organizations business strategies, Enable its business processes,
Enhance its organizational structure and culture, Increase the customer business value of the
enterprise
Developing IS Solutions
Ethical Challenges of IT
The IS Function represents
The IS function is
A major functional area of business
An important contributor to operational efficiency, employee productivity, morale, customer
service and satisfaction
A major source of information and support for decision making
A vital ingredient in developing competitive products and services in the global marketplace
A dynamic and challenging career opportunity
A key component of todays networked business
Information System Resources
People Resources: Specialists, End users
Hardware Resources: Machines, Media
Software Resources: Programs, Procedures
Data Resources: Product descriptions, customer records, employee files, inventory databases
Network Resources
Communications Media examples include twisted-pair wire, coaxial and fiber-optic cables, microwave,
cellular, and satellite wireless technologies
Network Infrastructure examples include communications processors such as modems and internetwork
processors, and communications control software such as network operating systems and Internet browser
packages
Information Resources
Management reports and business documents using text and graphics displays, audio responses, and paper
forms
Understanding MIS
A system which provides information support to Decision making to control Business Performance
parameters.
An integrated IT enabled system for generating information for supporting strategic, operational,
and tactical decisions to be taken by the users in the organization.
Goals and Objectives of MIS
MIS goal is to provide information support to management to achieve business goals, objectives
and the targets by measuring performance parameters and pointing to adverse variances in critical
result areas.
It proactively suggests areas of action by providing triggers of Attention, Alert,& Action at
appropriate time during the business operations.
Features of a Good MIS
Intelligently highlights a problem demanding management attention
Enables resolution through decision or action based on built in business rules or DSS system
Provides access to information to develop desktop applications for Decision Maker
Provides Just in Time information & knowledge support
Continuously highlights status of business performance parameters
Flexible design for ease of maintenance
Benefits of MIS
Improves organizations competitive effectiveness
Tracks & monitors Competitive Necessities & Advantages
Ensures efficient & effective use of resources
Enables proactive management of business by using principle of forward control
Builds management competence through Information and Knowledge databases to face the competition
Helps to build a learning organization
Keeps business organization on growth path
THANK YOU!
STRATEGIC ADVANTAGE
USING IT APPLICATIONS
What Is A Strategy?
Strategy
The determination of long term objectives, actions, alternatives and
resources
A set of actions to accomplish a particular high level objective
A programme that sets out objectives, policies and resource allocations
Corporate Strategy and Business Strategy
Corporate strategy refers to the overarching strategy of the diversified
firm. Such a corporate strategy answers the questions of "which
businesses should we be in?" and "how does being in these businesses
create synergy and/or add to the competitive advantage of the
corporation as a whole?
Business strategy refers to the aggregated strategies of single business
firm or a strategic business unit (SBU) in a diversified corporation
Strategic IT
Technology is no longer an afterthought in business strategy, but
the cause and driver
IT can change the way businesses compete
A strategic information systemis any information system that
uses IT to help an organization
Gain a competitive advantage
Reduce a competitive disadvantage
Or meet other strategic enterprise objectives
Identifying Competitive Advantages
To survive and thrive an organization must create a competitive
advantage
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
Identifying Competitive Advantages
Organizations watch their competition through environmental
scanning
Environmental scanning the acquisition and analysis of
events and trends in the environment external to an
organization
Three common tools used in industry to analyze and develop
competitive advantages include:
Porters Five Forces Model
Competitive strategies
Value chains
The Five Forces Model
Competitive Forces
Competitive Forces
and Strategies
Five Competitive Strategies (1 Of 2)
Cost Leadership
Become low-cost producers
Help suppliers or customers reduce costs
Increase cost to competitors
Differentiation Strategy
Differentiate a firms products from its competitors
Focus on a particular segment or niche of market
Innovation Strategy
Unique products, services, or markets
Radical changes to business processes
Five Competitive Strategies (2 Of 2)
Growth Strategy
Expand companys capacity to produce
Expand into global markets
Diversify into new products or services
Alliance Strategy
Establish linkages and alliances with customers, suppliers,
competitors, consultants, and other companies
Includes mergers, acquisitions, joint ventures, virtual
companies
Using Competitive Strategies
These strategies are not mutually exclusive
Organizations use one, some, or all
A given activity could fall into one or more categories of
competitive strategy
Not everything innovative serves to differentiate one organization
from another
Likewise, not everything that differentiates organizations is
necessarily innovative
How IT Can Help Implement Basic Strategies ?
(1 Of 2)
Lower Costs
Use IT to reduce the cost of the business processes
Use IT to lower the costs of customers or suppliers
Differentiate
Develop new IT features to differentiate products and services
Use IT features to reduce the differentiation advantages of
competitors
Use IT features to focus products and services at selected market
niches
Innovate
Create new products and services that include IT components
Develop unique new markets or market niches with the help of IT
Make changes to business processes with IT that dramatically cut
costs, improve quality, efficiency or customer service, or shorten time
to market
How IT Can Help Implement Basic Strategies ?
(2 Of 2)
Promote Growth
Use IT to manage regional and global business expansion
Use IT to diversify and integrate into other products and services
Develop Alliances
Use IT to create virtual organizations of business partners
Use IT to link various business stakeholders
Other Competitive Strategies (1 Of 2)
Lock in Customers and Suppliers
Deter them from switching to competitors
Build in Switching Costs
Make customers and suppliers dependent on the use of innovative IS
Erect Barriers to Entry
Discourage or delay other companies from entering the market
Increase the technology or investment needed to enter
Other Competitive Strategies (2 Of 2)
Build Strategic IT Capabilities
Take advantage of strategic opportunities when they arise
Improve efficiency of business practices
Leverage Investment in IT
Develop products and service that would not be possible without a
strong IT capability
Customer Focused Business
What is the business value in being customer-focused?
Keep customers loyal
Anticipate their future needs
Respond to customer concerns
Provide top-quality customer service
Focus on customer value
Quality, not price, has become the primary determinant of
value
Consistently
Providing Customer Value
Companies that consistently offer the best value from the
customers perspective
Track individual preferences
Keep up with market trends
Supply products, services, and information anytime, anywhere
Tailor customer services to the individual
Use Customer Relationship Management (CRM) systems to
focus on the customer
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, such as processing a customers
order
Value chain views an organization as a series of processes,
each of which adds value to the product or service for each
customer
Using IS In The Value Chain
Use the value chain to highlight where competitive strategies will add the
most value
A company that emphasizes strategic business use of IT would use it
to gain a competitive differentiation : Products, Services, Capabilities
GAINING STRATEGIC ADVANTAGE
BY INFORMATION TECHNOLOGY
APPLICATIONS
Strategic Initiatives
Organizations can undertake high-profile strategic initiatives
including:
Supply chain management (SCM)
Customer relationship management (CRM)
Business process reengineering (BPR)
Enterprise resource planning (ERP)
Supply Chain Management
Supply Chain Management (SCM) involves the management
of information flows between and among stages in a supply chain
to maximize total supply chain effectiveness and profitability
Four basic components of supply chain management include:
1. Supply chain strategy strategy for managing all resources
to meet customer demand
2. Supply chain partner partners throughout the supply
chain that deliver finished products, raw materials, and
services.
3. Supply chain operation schedule for production activities
4. Supply chain logistics product delivery process
Customer Relationship Management
Customer relationship management (CRM) involves
managing all aspects of a customers relationship with an
organization to increase customer loyalty and retention and an
organization's profitability
CRM is not just technology, but a strategy, process, and business
goal that an organization must embrace on an enterprise wide
level
CRM can enable an organization to:
Identify types of customers
Design individual customer marketing campaigns
Treat each customer as an individual
Understand customer buying behaviors
Business Process Reengineering (BPR / Reengineering)
Business Process - a standardized set of activities that
accomplish a specific task, such as processing a customers order
What is BPR?
Fundamental rethinking and radical redesign of business
processes. Seeks to achieve improvements in cost, quality,
speed, and service
Organizational redesign approaches are an important enabler of
reengineering
Includes use of IT, process teams, case managers
The Role of IT In BPR
IT plays a major role in reengineering most business processes
Can substantially increase process efficiencies
Improves communication
Facilitates collaboration
Many processes are reengineered with
Enterprise resource planning software
Web-enabled electronic business and commerce systems
Enterprise Resource Planning
Enterprise resource planning (ERP) integrates all
departments and functions throughout an organization into a
single IT system so that employees can make decisions by viewing
enterprisewide information on all business operations
Successful ERP projects share 3 attributes
1. Overall fit
2. Proper business analysis
3. Solid implementation plans
Agile Company
Agility is the ability to prosper
In rapidly changing, continually fragmenting global markets
By selling high-quality, high-performance, customer-configured products
and services
By using Internet technologies
Strategies for Agility: An agile company
Presents products as solutions to customers problems
Cooperates with customers, suppliers and competitors
Brings products to market as quickly and cost-effectively as possible
Organizes to thrive on change and uncertainty
Leverages the impact of its people and the knowledge they possess
A Virtual Company
A virtual company uses IT to link
People
Organizations
Assets
Ideas
Inter-enterprise information systems link
Customers
Suppliers
Subcontractors
Competitors
Building A Knowledge-creating Company
A knowledge-creating company or learning organization
Consistently creates new business knowledge
Disseminates it throughout the company
Builds it into its products and services
Two kinds of Knowledge
Explicit Knowledge: Data, documents, and things written down or
stored in computers
Tacit Knowledge
The how-to knowledge in workers minds
Represents some of the most important information within an
organization
A knowledge-creating company makes such tacit knowledge
available to others
Knowledge Management Systems (KMS)
Knowledge includes
Processes, procedures, patents, reference works, formulas,
best practices, forecasts, and fixes
Knowledge management systems
A major strategic use of IT
Manages organizational learning and know-how
Helps knowledge workers create, organize, and make available
important knowledge
Makes this knowledge available wherever and whenever it is
needed
Gap between IT people and Business people
Business personnel possess expertise in functional areas such as
marketing, accounting, and sales
IT personnel have the technological expertise
This typically causes a communications gap between the business
personnel and IT personnel
Improving communications
Business personnel must seek to increase their understanding
of IT
IT personnel must seek to increase their understanding of the
business
It is the responsibility of the CIO to ensure effective
communication between business personnel and IT personnel
Organizational Fundamentals Ethics and Security
Ethics and security are two fundamental building blocks that
organizations must base their businesses on to be successful
Ethics the principles and standards that guide our behavior
toward other people
Information security the protection of information from
accidental or intentional misuse by persons inside or outside an
organization
THANK YOU