Lecture #1 (Part 1) Foundations of Information Systems in Business

1. Lecture #1 (Part 1)Foundations of Information Systems in Business Prof M Benyoucef benyoucef@telfer.uottawa.ca (613) 562-5800, 4787 Office: DMS 6144

2. Outline • Why are information systems (IS) important in Business? • What is an IS? • Dimensions of IS • The MOT Framework • Mini-case: UPS (Pages 16-17) ADM2372, M Benyoucef, Fall'08

3. Why are IS important? • IS represent a large capital investment; as managers, you need to invest this capital wisely • IS help transform organizations • Effect of the Internet & wireless technologies on organizations & individuals • e-commerce; social networking; etc. • Businesses use IS to respond quickly to consumers • Businesses use IS to optimize operations • IS enable the global economy • IS enable the digital firm (see next slide) ADM2372, M Benyoucef, Fall'08

4. IS are used for managing internal processes; for coordination with suppliers and partners; and for e-commerce transactions with customers and suppliers 4 1 2 5 3 ADM2372, M Benyoucef, Fall'08

5. Why are IS important? • IS can be a strategic necessity • Most businesses could not survive without them • IS can bring competitive advantage • They allow firms to differentiate themselves from their competitors • IS provide better decision-making capabilities • IS enable companies to create new products, services, and business models ADM2372, M Benyoucef, Fall'08

6. Information about significant things (employees, items in stock, customers, etc.) within the organization or its environment What is an IS?Definition • “A set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization” ADM2372, M Benyoucef, Fall'08

7. What is an IS?data, information, knowledge • Data: Raw facts representing events such as business transactions • Information: Data shaped into a form that is meaningful and useful to human beings • Knowledge: created by analyzing information; may lead to action ADM2372, M Benyoucef, Fall'08

8. What is an IS?data, information, knowledge From the checkout counter of a supermarket - details of transactions Total sales of Brite Dish Soap, per region, per store Knowledge: “how is this brand of soap doing in the Northwest compared to other brands?” ADM2372, M Benyoucef, Fall'08

9. What is an IS?BI and KM • Business Intelligence (BI): converts data into useful info and, through human analysis, into knowledge • Knowledge Management (KM): the process of acquiring, organizing, and communicating knowledge ADM2372, M Benyoucef, Fall'08

10. What is an IS?Functions of an IS INPUT Processing Classify Arrange Calculate OUTPUT FEEDBACK • Input: captures or collects raw data • Processing: converts raw data into information • Output: transfers information to people or other systems • Feedback: output to help people evaluate input ADM2372, M Benyoucef, Fall'08

11. What is an IS?Who interacts with an IS ENVIRONMENT Suppliers Customers ORGANIZATION Information System INPUT Processing Classify Arrange Calculate OUTPUT FEEDBACK Regulatory Agencies Competitors & Partners Stockholders ADM2372, M Benyoucef, Fall'08

12. What is an IS?Flow of information Top: Management Level Summarized 4 1 2 Detailed Low: Operational Level 3 [Source: Haag et al., 2004] ADM2372, M Benyoucef, Fall'08

13. Generate Invoice Approve Credit Ship Product Submit Order Check Credit Assemble Product Generate Order Sales Accounting Manufacturing What is an IS?Flow of information • e.g., horizontal flow of information: • “Order Fulfillment” is a process involving activities performed by 3 departments: “Sales”, “Accounting”, & “Manufacturing” ADM2372, M Benyoucef, Fall'08

14. What is an IS?Computer based IS • Computer Based Information System (CBIS) • Relies on computer hardware and software for processing and distributing information ADM2372, M Benyoucef, Fall'08

15. Dimensions of IS • Using IS effectively requires understanding the organization, management and information technology (IT) shaping the systems  IS Literacy Computer Literacy ADM2372, M Benyoucef, Fall'08

16. Dimensions of IS IS Literacy and MIS • The field of Management Information Systems (MIS) deals with behavioral and technical issues surrounding the development, use, and impact of information systems in organizations ADM2372, M Benyoucef, Fall'08

17. Dimensions of IS Organization - People - Structure - Business processes - Culture - Politics Management: managers who understand the role of IS in creating business value Information Technology (IT) - Hardware - Software - Data Management Technology - Networking & Telecommunications Technology ADM2372, M Benyoucef, Fall'08

18. Dimensions of IS • The IT dimension • Hardware: Physical equipment (computers, input/output devices, storage devices, etc.) • Software: Detailed preprogrammed instructions • Data Management: Software for managing the data on storage devices • Networking & Telecommunications Technology: Transfers data from one physical location to another ADM2372, M Benyoucef, Fall'08

19. Dimensions of IS • The IT dimension • Internet: international network of many networks • Intranets: internal corporate networks • Extranets: private intranets extended to authorized external users • WWW: system with universal standards for storing, retrieving, & displaying information in a networked environment ADM2372, M Benyoucef, Fall'08

20. The MOT Framework • MOT (Management, Organization, Technology) Framework: • A diagram that graphically illustrates how management, organization, & technology elements work together to create an IS solution to a business problem ADM2372, M Benyoucef, Fall'08

21. The MOT Framework • Let us revisit the Toyota Case discussed on Fri Sep 05 (Go to the course website, click on “Schedule & Slides”) ADM2372, M Benyoucef, Fall'08

22. Mini-case: UPS Competes Globally with IT (Pages 16-17) ADM2372, M Benyoucef, Fall'08

23. UPS • www.ups.com • World largest air & ground package service • Started in 1907 by 2 teenagers from Seattle • The promise: “best service & lowest rates” • Delivers 14.1 million items a day worldwide • Spends billions of dollars on IT to boost customer service while keeping costs low ADM2372, M Benyoucef, Fall'08

24. UPS & Information Technology UPS Truck Driver Picks up the package Handheld Computer called Delivery Information Acquisition Device (DIAD) UPS Main Computers Cellular Telephone Network ADAPTER - Customer’s Signature - Pickup time - Etc. ADM2372, M Benyoucef, Fall'08

25. Barcode Scanner UPS & Information Technology UPS Main Computers Along the route from sender to receiver CSR (Customer Service Representative) Package Internet Services on the UPS website: track packages, calculate shipping rates, schedule pickups, payment, etc. Customers tracking their packages ADM2372, M Benyoucef, Fall'08

26. UPS - other services • Businesses can embed UPS functions (tracking, etc.) into their own website • UPS implemented custom built software to optimize package loading and delivery (using operations research) • UPS manages other companies’ logistics through its “Supply Chain Solutions” division ADM2372, M Benyoucef, Fall'08

27. Question 1 • What are the inputs, processing, and outputs of UPS’s package tracking system? • Inputs • package information, customer signature, pickup, delivery, current location (while en route), etc. • Processing • data transmitted to a central computer and stored, & organized so that it can be searched • Outputs • pickup & delivery times, location while en route • various reports, such as “all packages for a specific account” • “summary reports” for management ADM2372, M Benyoucef, Fall'08

28. Question 2 • What technologies are used? • Handheld computers (DIADs), bar code scanners, telecommunications for transmitting data, cellular phone networks, the Internet, & computers • How are these technologies related to UPS’s business strategy? • UPS strategy: “best service and lowest rates” • technology enables data to flow seamlessly throughout UPS  technology enables UPS to be more competitive, efficient, and profitable ADM2372, M Benyoucef, Fall'08

29. Question 3 • What problems do UPS’s IS solve? • The need to meet high customer expectations • The need to keep customers from going to the competition • The need to lower costs by optimizing operations (truck loading, delivery, etc.) ADM2372, M Benyoucef, Fall'08

30. Question 3 • What would happen if these systems were not available? • UPS might not be able to compete effectively • UPS would, as it has through most of its history, attempt to provide information to its customers, but at higher prices ADM2372, M Benyoucef, Fall'08

31. MOT Framework • - High customer expectations • Customers have a choice to go elsewhere • Need to optimize operations • Consolidate UPS’s leading position • Monitor the performance of the delivery process Organizational processes designed around package dataentry/scanning in real time - Increase customer satisfaction - Increase revenue - Track packages - Generate reports for management - Manage business accounts Web based tracking system that is aware of the location of a package as it moves from pickup to delivery ADM2372, M Benyoucef, Fall'08