Information Systems and the Modern Organization
Doing Business in the Digital Economy
w The digital economy is an economy based on digital technologies, including communication networks (the Internet, intranets, and extranets), computers, software, and other related technologies.
w Also called the Internet economy, the new economy, or the Web economy .
w Digital infrastructures provide a global platform over which people and organizations interact, communicate, collaborate, and search for information.
The Global Platform of the New Economy
w A huge number of digitizable products; that is products that can be converted to digital format. Most common are: books, movies, magazines, TV and radio programming, electronic games, music CDs and computer software.
w Consumers and firm conducting financial transaction digitally.
w Physical goods such as home appliances and automobiles that contain embedded computer chips and connectivity capabilities.
Electronic Business
w Businesses increasingly perform their basic functions: buying and selling goods and services, servicing customers, and collaborating with business partners electronically.
w This process is known as electronic business (E-business) or electronic commerce (E-commerce).
New Economy vs. Old Economy
Example
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Old
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New
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Buying and selling text book
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Visit the bookstore
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Visit web site for publishers and retailers
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Registering for classes
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Walk around campus to Departments, Registrar’s office, etc.
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Access campus web site
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Photography
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Buy film, use camera, take picture, take it for processing
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Use digital camera
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Paying for Gasoline
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Fill up your car, go inside, pay cash or credit card
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Use speed pass token wave over the sensor and go
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Paying the Transportation
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Pay cash, metal tokens
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Metro cards electronic cards
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Paying for goods
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Visit store, take the item, pay , go
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Use self – service kiosks
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Supplying commercial photos
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Use newspapers, paper, catalog or on line
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Use hub-like supply chain with digitized picture
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w Example #1: Registering for Classes
w Old Economy: You would go to the Registrar’s Office on campus with a paper registration document.
w New Economy: You access your campus Web site, log into registration site, and electronically register for classes from anywhere.
w Example #2: Buying and Selling Textbooks
w Old Economy: You go to the bookstore in person and buy new or sell used books.
w New Economy: You go online to the Publisher’s Web site or to Web-based services such as Amazon.com to buy or sell books.
w Example #3: Photography
w Old Economy: You use a camera with film, which you have to purchase and have developed; you mail copies of pictures.
w New Economy: You can scan photos, make copies and e-mail them. Digital cameras require no film or processing. Digital photography and video integrated into cell phones for immediate viewing.
w Example #4: Paying for Gasoline
w Old Economy: You pump your gas and go inside to pay using cash or credit.
w New Economy: Insert credit card at pump, receive authorization, pump gas, receive receipt, drive away. Another example is Speedpass technology.
w Example #5: Paying for Transportation in New York City
w Old Economy: Using tokens for bus and subway transportation.
w New Economy: Bus and subway riders now use MetroCards, contactless cards that have a small radio transmitter that transmit account information to a reader.
w Example #6: Paying for Goods, Checkout
w Old-old Economy: Customer selects goods, waits in line for the cashier to key in price of items, and then pays in cash.
w Old Economy: The clerk swipes the barcode of each item and customer pays in cash, credit, debit. Information scanned is available for immediate analysis known as source-data automation.
w Old Economy: Shoppers take their items to a self-service kiosk and swipe the barcodes themselves.
w New Economy: Wireless technology affixed to each item allows you to select items that pass through a scanner that reads wireless signals, generates a bill, automatically debits your designated account for payment and you leave.
Business Pressures, Organizational Responses, and IT Support
w Business Pressure - The business environment is the combination of social, legal, economic, physical, and political factors that affect business activities.
w Significant changes in any of these factor are likely to create business pressure on the organization.
w The three types of business pressures faced are: market, technology, and societal pressures.
IT Support for Organizational Responses to Business Pressures:
Three Types of Business Pressures
w Market Pressures:
n The Global Economy and Strong Competition
n The Changing Nature of the Workforce
n Powerful Customers
w Technology Pressures:
n Technological Innovation and Obsolescence
n Information Overload
w Societal Pressures:
n Social Responsibility
n Government Regulation and Deregulation
n Protection Against Terrorist Attacks.
n Ethical Issues
Organizational Responses
w Strategic Systems provide advantages that enable organizations to increase market share and/or profits, to better negotiate with suppliers, or prevent competitors from entering their markets.
w Customer Focus is the difference between attracting and keeping customers by providing superb customer service to losing them to competitors.
w Make-to-Order is a strategy of producing customized products and services.
w Mass Customization is producing a large quantity of items, but customizing them to fit the desire of each customer.
w E-business and E-commerce is the strategy of doing business electronically.
Competitive Advantage and Strategic Information Systems
w Competitive Advantage: An advantage over competitors in some measure such as cost, quality, or speed, leads to control of a market and to larger- than average profits.
w Strategic Information Systems (SIS) provide a competitive advantage by helping an organization to implement its strategic goals and to increase its performance and productivity.
Porter’s Competitive Forces Model
w The best-known framework for analyzing competitiveness is Michael Porter’s competitive forces model(Porter, 1985).
w Model is used to develop strategies to increase their competitive edge.
w Demonstrates how IT can make a company more competitive.
Strategies for Competitive Advantage
w Cost Leadership. Produce products and/or services at the lowest cost in the industry.
w Differentiation. Offer different products, services or product features.
w Innovation. Introduce new products and services, add new features to existing products and services or develop new ways to produce them.
w Operational Effectiveness. Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals.
w Customer-orientation. Concentrate on making customers happy.
Why Should You Learn about Information Technology (IT)?
w IT is essential for work in organizations.
w IT will reduce the number of middle managers.
w IT will change the manager’s job.
w IT impacts employees at work.
w IT impacts employees’ health and safety.
w IT is used by all departments.
w IT provides opportunities for people with disabilities.
w IT provides quality-of-life improvements.
w Improvements in health care.
w Crime fighting and other benefits.
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