Figure 1.2: The Interdependence Between Organizations and Information Systems Operational Intelligence • Improvement of efficiency to attain higher profitability • Information systems, technology an important tool in achieving greater efficiency and productivity • Walmart’s Retail Link system links suppliers to stores for superior replenishment system New Products, Services, and Business Models • Business model: describes how company produces, delivers, and sells product or service to create wealth • Information systems and technology a major enabling tool for new products, services, business models – Examples: Apple’s iPad, Google’s Android OS, and Netflix Customer and Supplier Intimacy • Serving customers well leads them to return, increasing revenue and profits – Example: High-end hotels that use computers to track customer preferences and then monitor and customize the environment • Intimacy with suppliers allows them to provide vital inputs, which lowers costs – Example: JCPenney’s information system which links sales records to contract manufacturer Improved Decision Making • Without accurate information: – Managers must use forecasts, best guesses, luck – Results in:  Overproduction, underproduction  Misallocation of resources  Poor response times – Poor outcomes raise costs, lose customers • Example: Verizon’s web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, and so on Competitive Advantage • Delivering better performance • Charging less for superior products • Responding to customers and suppliers in real time • Examples: Apple, Walmart, UPS Survival • Information technologies as necessity of business • Industry-level changes – Example: Citibank’s introduction of ATMs • Governmental regulations requiring recordkeeping – Examples: Toxic Substances Control Act, Sarbanes-Oxley Act – Dodd-Frank Act What Is an Information System? (1 of 3) • Information system – Set of interrelated components – Collect, process, store, and distribute information – Support decision making, coordination, and control • Information vs. data – Data are streams of raw facts – Information is data shaped into meaningful form Figure 1.3: Data and Information What Is an Information System? (2 of 3) • Three activities of information systems produce information organizations need – Input: Captures raw data from organization or external environment – Processing: Converts raw data into meaningful form – Output: Transfers processed information to people or activities that use it What Is an Information System? (3 of 3) • Feedback – Output is returned to appropriate members of organization to help evaluate or correct input stage • Computer/computer program vs. information system – Computers and software are technical foundation and tools, similar to the material and tools used to build a house Figure 1.4: Functions of an Information System

Information Systems in Business Today Lecture 2

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