Chapter 1
How are information systems transforming business,
and why are they so essential for running and
managing a business today?
• Email, online conferencing, smartphones, and tablet computers have
become essential tools for conducting business. Information systems
are the foundation of fast-paced supply chains. The Internet allows
many businesses to buy, sell, advertise, and solicit customer feedback
online. Organizations are trying to become more competitive and
efficient by digitally enabling their core business processes and
evolving into digital firms. The Internet has stimulated globalization by
dramatically reducing the costs of producing, buying, and selling
goods on a global scale. New information system trends include the
emerging digital platform, big data, and cloud computing.
• Information systems are a foundation for conducting business today.
In many industries, survival and the ability to achieve strategic
business goals are difficult without extensive use of information
technology. Businesses today use information systems to achieve six
major objectives: operational excellence; new products, services, and
business models; customer/supplier intimacy; improved decision
making; competitive advantage; and day-to-day survival.
What is an information system? How does it work? What are its
management, organization, and technology components? Why are
complementary assets essential for ensuring that information systems
provide genuine value for organizations?
• From a technical perspective, an information system collects, stores,
and disseminates information from an organization's environment
and internal operations to support organizational functions and
decision making, communication, coordination, control, analysis, and
visualization. Information systems transform raw data into useful
information through three basic activities: input, processing, and
output.
• From a business perspective, an information system provides a
solution to a problem or challenge facing a firm and represents a
combination of management, organization, and technology elements.
The management dimension of information systems involves issues
such as leadership, strategy, and management behavior. The
technology dimension consists of computer hardware, software, data
management technology, and networking/ telecommunications
technology (including the Internet). The organization dimension of
information systems involves issues such as the organization's
hierarchy, functional specialties, business processes, culture, and
political interest groups.
In order to obtain meaningful value from information systems,
organizations must support their technology investments with
appropriate complementary investments in organizations and
management.
These complementary assets include new business models and
business processes, supportive organizational culture and management
behavior, and appropriate technology standards, regulations, and laws.
New information technology investments are unlikely to produce high
returns unless businesses make the appropriate managerial and
organizational changes to support the technology.
What academic disciplines are used to study
information systems, and how does each
contribute
to an understanding of information systems?
The study of information systems deals with issues and insights
contributed from technical and behavioral disciplines. The disciplines
that contribute to the technical approach focusing on formal models
and capabilities of systems are computer science, management science,
and operations research.
The disciplines contributing to the behavioral approach focusing on the
design, implementation, management, and business impact of systems
are psychology, sociology, and economics. A sociotechnical view of
systems considers both technical and social features of systems and
solutions that represent the best fit between them.
Review Questions
How are information systems transforming
business, and why are they so essential for
running and managing a business today?
• Describe how information systems have changed the way businesses
operate and their products and services.
• Identify three major new information system
trends.
• Describe the characteristics of a digital firm.
• Describe the challenges and opportunities of globalization in a
"flattened" world.
• List and describe six reasons why information systems are so
important for business today.
What is an information system? How does it work? What
are its management, organization, and technology
components? Why are complementary assets essential
for ensuring that information systems provide genuine
value for organizations?
• Explain the differences between • Describe how the parts of an
information and data. Why is the organization’s culture can be found
former essential to the latter? embedded in its information systems.
• Describe the three activities in an • Describe the features of an
information system that produce the organization’s information value
information that organizations need. chain.
Explain why organizations have a • Based on what you have read,
structure identify the key elements of
organizational and management
composed of different levels and
capital.
specialties.
What academic disciplines are used to study
information systems, and how does each
contribute to an understanding of information
systems?
List and describe each discipline that contributes to a technical
approach to information systems.
• List and describe each discipline that contributes to a behavioral
approach to information systems.
• Describe the sociotechnical perspective on information systems.
Discussion Questions
• Information systems are too important to be left to computer
specialists. Do you agree? Why or why not?
• If you were setting up the website for a professional football team,
what management, organization, and technology issues might you
encounter?
• What are some of the organizational, managerial, and social
complementary assets that help make UPS’s information systems so
successful?
