Lecture 1 - Chapter 1

Essentials of Management
Information Systems
Fourteenth Edition, Global Edition
Chapter 1
Business Information Systems in
Your Career
Copyright © 2020 Pearson Education Ltd.

How Information Systems are
Transforming Business
• In 2018, more than 150 million businesses had dot-com
addresses registered.
• 230 million adult Americans shopped online; 190 million
purchased online.
• Internet advertising continues to grow at around 15 percent
per year.
• New laws require businesses to store more data for longer
periods.
• Changes in business result in changes in jobs and careers.

Key Challenges in Management
Information Systems
• New technologies
– Artificial intelligence
– Cloud computing, Big Data, Internet of Things
– Mobile digital platform
• Management
– Return on investment (ROI)
– Online collaboration
– Social networking
• Organizations
– Security and privacy
– Social business
– Telework gains
Globalization Challenges and
Opportunities: A Flattened World
• Internet and global communications have greatly reduced
economic and cultural advantages of developed countries.
– Drastic reduction of costs of operating and transacting on
global scale
– Competition for jobs, markets, resources, ideas
– Dependence on imports and exports
– Requires new understandings of skills, markets,
opportunities

Business Drivers of Information
Systems
• Businesses invest in IT to achieve six important business
objectives.
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival

Operational Excellence
• Improved efficiency results in higher profits.
• Information systems and technologies help improve
efficiency and productivity.
• Example: Walmart
– Power of combining information systems and best business
practices to achieve operational efficiency—and over $514
billion in sales in 2019
– Most efficient retail store in world as result of digital links
between suppliers and stores

New Products, Services, and
Business Models
• Information systems and technologies enable firms to
create new products, services, and business models.
• Business model: how a company produces, delivers, and
sells its products and services
• Example: Apple
– Transformed old model of music distribution with iTunes
– Constant innovations—iPod, iPhone, iPad, etc.

Customer and Supplier Intimacy
• Customers who are served well become repeat customers
who purchase more.
– Mandarin Oriental Hotel
▪ Uses IT to foster an intimate relationship with its customers,
keeping track of preferences, and so on
• Close relationships with suppliers result in lower costs.

– JC Penney
▪ IT to enhance relationship with supplier in Hong Kong

Improved Decision Making
• If managers rely on forecasts, best guesses, and luck, they
will misallocate employees, services, and inventory.
• Real-time data improves ability of managers to make
decisions.
• Verizon: web-based digital dashboard to update managers
with real-time data on customer complaints, network
performance, and line outages

Competitive Advantage
• Often results from achieving previous business objectives
• Advantages over competitors:
– Charging less for superior products, better performance,
and better response to suppliers and customers
– Examples: Apple, Walmart, and UPS are industry leaders
because they know how to use information systems for this
purpose

Survival
• Businesses may need to invest in information systems out
of necessity; it is simply the cost of doing business.
• Keeping up with competitors
– Citibank’s introduction of ATMs
• Federal and state regulations and reporting requirements
– Toxic Substances Control Act and the Sarbanes-Oxley Act

What Is an Information System?
(1 of 2)
• Information technology: the hardware and software a

business uses to achieve objectives
• Information system: interrelated components that manage
information to:
– Support decision making and control
– Help with analysis, visualization, and product creation
• Data: streams of raw facts
• Information: data shaped into meaningful, useful form

What Is an Information System?
(2 of 2)
• Activities in an information system that produce

information:
– Input
– Processing
– Output
– Feedback
• Sharp distinction between computer or computer
program versus information system

Figure 1.1 Data and Information

Figure 1.2 Functions of an
Information System

The Role of People and Organizations
• Information systems literacy
– Includes behavioral and technical approach
• Computer literacy
– Focuses mostly on knowledge of IT
• Management information systems (MIS)
– Focuses on broader information systems literacy
– Issues surrounding development, use, impact of information
systems used by managers and employees
– Focuses on firm performance, productivity, and competitive
challenges

Figure 1.3 Information Systems Are
More Than Computers

Dimensions of Information Systems
(1 of 3)
• Organizations
– Coordinate work through structured hierarchy and business
processes
– Business processes: related tasks and behaviors for
accomplishing work
▪ Examples: fulfilling an order, hiring an employee
▪ May be informal or include formal rules
– Culture embedded in information systems
▪ Example: UPS’s concern with placing service to customer first

(2 of 3)
• People
– Information systems require skilled people to build,
maintain, and use them.
– Employee attitudes affect their ability to use systems
productively.
– Role of managers:
▪ Perceive business challenges
▪ Set organizational strategy
▪ Allocate human and financial resources
▪ Creative work: new products, services

(3 of 3)
• Technology
– IT Infrastructure: Foundation or platform that information
systems are built on
▪ Computer hardware
▪ Computer software
▪ Data management technology
▪ Networking and telecommunications technology
– Internet and web, extranets, intranets
– Voice, video communications

The Problem-Solving Approach
• Few business problems are simple or straightforward.
• Most business problems involve a number of major factors
that can fall into three main categories:
– Organization
– Technology
– People

A Model of the Problem-Solving
Approach (1 of 7)
• Problem solving: four-step process
1. Problem identification
2. Solution design
3. Choice
4. Implementation

Approach (2 of 7)
• Problem identification includes:
– Agreement that problem exists
– Definition of problem
– Causes of problem
– What can be done given resources of firm

Approach (3 of 7)
• Typical organizational problems
– Outdated business processes
– Unsupportive culture and attitudes
– Political in-fighting
– Turbulent business environment, change
– Complexity of task
– Inadequate resources

Approach (4 of 7)
• Typical technology problems
– Insufficient or aging hardware
– Outdated software
– Inadequate database capacity
– Insufficient telecommunications capacity
– Incompatibility of old systems with new technology
– Rapid technological change

Approach (5 of 7)
• Typical people problems
– Lack of employee training
– Difficulties of evaluating performance
– Legal and regulatory compliance
– Work environment, ergonomics
– Poor or indecisive management
– Lack of employee support and participation

Approach (6 of 7)
• Solution design
– Often many possible solutions
– Consider as many as possible to understand range of
solutions
• Solution Evaluation and Choice – factors include:
– Cost
– Feasibility given resources and skills
– Length of time needed to implement solution

Approach (7 of 7)
• Implementation
– Building or purchasing solution
– Testing solution, employee training
– Change management
– Measurement of outcomes
– Feedback, evaluation of solution
• Problem solving is a continuous process, not a single
event
– Sometimes chosen solution doesn’t work or needs
adjustment

Figure 1.4 Problem Solving Is a
Continuous Four-Step Process

The Role of Critical Thinking in
Problem Solving (1 of 2)
• Without critical thinking, easy to jump to conclusions,
misjudge a problem, and waste resources
• Critical thinking:
– Sustained suspension of judgment with an awareness of
multiple perspectives and alternatives
– Ability to collect and analyze data that might help
understand the nature of the problem; a “data driven”
approach

The Role of Critical Thinking in
Problem Solving (2 of 2)
• Four elements of critical thinking:
1. Maintaining doubt and suspending judgment
2. Being aware of different perspectives
▪ Including technology, organization, and people perspectives
3. Testing alternatives and letting experience guide
4. Being aware of organizational and personal limitations

The Connections Among Business
Objectives, Problems, and Solutions
• When firms cannot achieve business objectives these
objectives become challenges.
• Information systems often present solutions, partially or
fully, to these challenges.

How Information Systems Will Affect
Business Careers (1 of 9)
• Success in today’s job market requires a broad set of
skills.
• Job candidates must have problem-solving skills as well as
technical skills so that they can complete specific tasks.
• The service sector will account for 95 percent of the new
jobs that are created or open up by 2022.

• Accounting:
– Accountants increasingly rely on information systems to
summarize transactions, create financial records, organize
data, and perform financial analysis.
– Skills:
▪ Knowledge of databases and networks
▪ Online financial transactions and reporting systems
▪ How systems are used to achieve accounting functions

• Finance:
– Relationship between information systems and financial
management and services is so strong that many advise
finance majors to co-major in information systems.
– Skills:
▪ Use systems for financial reporting, direct investment activities,
implementation of cash management strategies
▪ Plan, organize, implement information systems strategies for
the firm

• Marketing:
– No field has undergone more technology-driven change in
the past five years than marketing and advertising.
– Skills:
▪ Work with databases for tracking and reporting on customer
behavior, product performance, customer feedback, product
development
▪ Enterprise systems for product management, sales force
management, customer relationship management

• Operations management in services and manufacturing:
– Production managers, administrative service managers, and
operations analysts
– Skills:
▪ Hardware and software platforms for operations management
▪ Use database and analytical software for coordinating and
optimizing resources required for producing goods and
services

• Management:
– The job of management has been transformed by
information systems.
– Impossible to manage business today without information
systems
– Skills:
▪ Use of information systems for each function of job, from
desktop productivity tools to applications coordinating the
entire enterprise

• Information systems:
– Fast changing and dynamic profession because information
technologies are among most important tools for achieving
business firms’ key objectives
– Domestic and offshore outsourcing
– Skills:
▪ Uses of new and emerging hardware and software to achieve
six business objectives
▪ An ability to take a leadership role in the design and
implementation of new information systems

• Outsourcing and offshoring:
– Two types: outsourcing to domestic U.S. firms and
outsourcing to low-wage countries such as India, China
– Production programming, system maintenance, call centers
– Benefits:
▪ Lower cost of building and maintaining systems within U.S.
▪ Increased need for managerial positions

• Common requirements for all majors
– How I T helps achieve six business objectives
– Central role of databases
– Business analytics and intelligence systems
– Working with specialists and systems designers
– Ethical, social, legal environment and issues
▪ Use of IT to meet legal requirements

Interactive Session – Will AI Kill
Jobs?
• Class discussion
– Identify the problem described in this case study. In what
sense is it an ethical dilemma?
– Should more tasks be given to AI? Why or why not? Explain
your answer.
– Can the problem of AI reducing employment be solved?
Explain your answer.

How Will MISHelp My Career?
• The Company: Power Financial Analytics Data Services
Inc.
• Position Description
• Job Requirements
• Interview Questions

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Essentials of Management

Copyright © 2020 Pearson Education Ltd.

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• Close relationships with suppliers result in lower costs.

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• Information technology: the hardware and software a

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• Activities in an information system that produce

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