IS425 TEXTBOOK NOTES
Knowledge worker—create, modify, synthesize knowledge as fundamental part of their jobs
Knowledge society—education the cornerstone of knowledge society; knowledge as important as land, labour, capital
Knowledge society = knowledge economy, new economy, digital society, network era, Internet era, digital world
e-business—organization that uses information technologies or systems to support nearly every part of its business
“every worker is a knowledge worker”
Digital divide—those with access to information systems have great advantages over those without access
Globalization—the integration of economies throughout the world, enable by innovation and technological progress
The tremendous decrease in communication costs has increased the use of outsourcing—the moving of business processes or
tasks to another company or country
Reasons for outsourcing: reduce or control costs, free up internal resources, gain access to world-class capabilities, increases the
revenue potential of organization, reduce time to market, increase process efficiencies, to be able to focus on core activities, to
compensate for a lack of specific capabilities or skills
SOCIETAL ISSUES IN THE DIGITAL WORLD:
Demographic changes—changes in the structure of populations such as related to age, birth rates, and migration
Urbanization—movement of rural population to urban areas
Shifts in economic power—changes in counties’ purchasing power and control over natural resources
Resource scarcity—limited availability of fossil fuels and natural resources
Climate change—large-scale and long-term regional and global changes in temperatures and weather patterns
Sustainable development—development that meets the needs of the present without compromising the ability of future
generations to meet their own needs
FIVE IT MEGATRENDS THAT SHAPE THE DIGITAL FUTURE
1. Mobile: mobile devices allow running business in real time—at any time, from anywhere
Apps—software programs designed to perform a particular, well-defined function
BYOD—bring your own device
Consumerization of IT—many technologies are first introduced in the consumer marketplace before being used by
organizations
2. Social media: social media are used in various personal and business settings; companies can harness the power of the crowd
Network effect—the notion that the value of a network increases with the number of other users
3. The Internet of things: IoT—a network of a broad range of physical objects that can automatically share data over the
Internet
Sensors—devices that can detect, record and report changes in the physical environment
Smart home technologies (home automation)—technologies enabling the remote monitoring and controlling of
lighting, heating, or home appliances
Industrial Internet of Things (IIoT)—enables the convergence of information technology and operations technology
offering the potential of tremendous improvements in efficiency, product quality, agility, and flexibility, allowing
companies to mass-produce customized products, better monitor supply chains, and so on
4. Cloud computing—applications and data stored in the cloud can be accessed from different devices; good example is Google
such as Gmail, Google docs; cloud computing can enable advanced analytics or massive amounts of Big Data generated by
mobile devices, sensors, or users of social networks
5. Big Data—extremely large and complex datasets, characterized by being of high volume, variety (many different types of
data), velocity (data are being collected and analyzed at ever-increasing rate)
Companies in the Information Age economy are creating value not from people but from data.
Robotics –use of robots to perform manual tasks
Sharing economy—enabled by mobile devices, social media and cloud computing
Servitization—creation of service-oriented business model enabled by Internet of Things and Big data where companies shift
from selling products to providing them as services
Computer literacy= information literacy==knowing how to use a computer
Healthcare IS—supports patient diagnosis and treatment to analysing patient and diseases data to running doctors’ office and
hospitals
Computer fluency—ability to independently learn new technologies as they emerge and assess their impact on ones’ work and
life
1
,Information system (IS)—the combination of people and information technology that create, collect, process, store and
distribute useful data
Information technology (IT)—includes hardware, software, and telecommunications networks (group of two or more
computer systems linked together with communications equipment)
DATA: THE ROOT AND PURPOSE OF INFORMATION SYSTEMS
Data quality—consisting of completeness, accuracy, timeliness, validity and consistency
Information—data processed; a representation of reality that can help answer questions about who, what, where, and when
Knowledge-the ability to understand information, form opinion, and make decisions or predictions on the information
Good IS personnel possess valuable integrated knowledge and skills in three areas—technical, business, and systems
TYPES OF INFORMATION SYSTEMS
Transaction processing systems—TPS used by broad range of organizations to process customer transactions more efficiently;
TPS data provide input into other IS systems including decision support systems, intelligent systems, business intelligence
systems, knowledge management system, social software, geographic information systems, functional area information systems
Management information systems---most common system that support a broad range of managerial decision making
Internetworking—connecting host computer and their networks together to form even larger networks like the Internet
Systems integration—connecting separate information systems and data to improve business process and decision making
Office automation systems—such as Microsoft Office and OpenOffice.org Productivity suite provide words process,
spreadsheet, and other personal productivity tools, enabling knowledge workers to accomplish their tasks
While the use of technology can enable efficiency and while information systems must provide a return on investment,
technology use can also be strategic and a powerful enabler of competitive advantage
Computer ethics—moral issues and standards of conduct as they pertain to the use of information systems
Information privacy—is concerned with what information an individual should have to reveal to others in the workplace or in
online transactions
The database of intentions: The ‘like’: what I like; the check-in: where am I; the query: what I want; the social graph: who I am &
who I know; that status update: what I’m doing; the purchase: what I buy; the social reader: what I’m interested in
Fair information practice principles: notice/awareness (data privacy statement), choice/consent (opt in, opt out);
access/participation; integrity/security; enforcement/redress
Intellectual property (IP)—creations of the mind that have commercial value
3D printing—enables creating physical 3D objects from digital models; enables lossless duplication of files
PORTER’S COMPETITIVE FORCES MODEL—provides a general view of the firm, its competitors, and the firm’s environment
1. Competitors
2. New market entrants: barriers to entry
3. Substitute products and services
4. Customers: power of customer grows if they can easily switch to competitor’s product and services or if they an force a
business and competitors to compete on price alone where there is little product differentiation
a. Product differentiation
5. Suppliers: the more different suppliers the firm has, the greater control it can exercise over suppliers in terms of price,
quality, and delivery schedules
INFORMATION SYSTEM STRATEGIES FOR DEALING WITH COMPETITVE FORCES
1. Low-cost leadership: use IS to achieve lowest operational costs and lowest prices
a. Efficient customer response system: directly links consumer behaviour to distribution and production and
supply chains (Walmart)
2. Product differentiation: use IS to enable new products and services or greatly change the customer convenience in
using your existing products and services
a. Mass customization—ability to offer individually tailored products or services using the same production
resources as mass production (Nike)
3. Focus on market niche : use IS system to enable a specific Market focus and serve this narrow target market better
than competitors (Hilton hotel; CRM)
4. Strengthening customer and supplier intimacy: use IS to tighten linkages with supplier and develop intimacy with
customers (Toyota, amazon)
2
, a. Strong linkages to customers and suppliers increase switching costs—the cost of switching form one
product to a competing product—and loyalty to your firm
INTERNET’S IMPACT ON COMPETITIVE FORCES
1. Substitute products or services: enables new substitutes to emerge with new approaches to meeting needs and
performing functions
2. Customers bargaining power: availability of global price and product information shifts bargaining power to customers
3. Suppliers’ bargaining power: procurement over Internet tends to raise bargaining power over suppliers; suppliers can
also benefit from reduced barriers to entry and from elimination of distributors and other intermediaries sanding
between them and users
4. Threat of new entrants: internet reduces barriers to entry, provides technology for driving business processes that
makes other things easier to do
5. Positioning and rivalry among existing competitors: widens the geographic market increasing the number of
competitors and reducing differences among competitors; makes it more difficult to sustain operational advantages;
puts pressure to compete on price
Value chain model—highlights specific activities in the business where competitive strategies can best be applied and where
information system are most likely to have a strategic impact; identifies specific, critical leverage points where firms can use IT
most effectively to enhance competitive position
Primary activities—most directly related to the production and distribution of the firm’s products and services—inbound
logistics, operations, sales and marketing, service, outbound logistics
Support activities—make the delivery of the primary activities possible and consist of organization infrastructure—admin and
management, human resources, technology, procurement
Benchmarking—comparing the efficiency and effectiveness of your business processes against strict standards and then
measuring performance against those standards
Best practices—identified by consulting companies, research organization, government agencies and industry associations as
the most successful solutions or problem-solving methods for consistently ad effectively achieving a business objective
Value web—collection of independent firms that use information technology to coordinate their value chains to produce a
product or service for a market collectively; across firms
Synergies—the idea of synergies is that when the output of some units can be used as inputs to other units or two organizations
pool markets and expertise, these relationships lower costs and generate profits
Core competency—an activity for which a firm is a world-class leader (P&G and InnovationNet)
Network economics—refer to market situations where the economic value being produced depends on the number of people
using a product
Virtual company—virtual organization—uses networks to link people, assets, and services without being limited by traditional
organizations boundaries or physical locations
Business ecosystem—loosely coupled but interdepending networks of suppliers, distributors, outsourcing firms, transport
service firms and technology manufacturers; across industries
Platforms—Microsoft and Facebook provide platform composed of information systems, technologies and services that
thousands of other firms use the enhance capabilities
Strategic transitions—movement between levels of sociotechnical systems
CORE BUSINESS PROCESSES
1. Order-to-cash process—the processes associated with selling a product or service; create customer record, check
credit, create order, allocate stock, pick, pack and ship, prepare and send invoice, collect payment
2. Procure-to-pay process—the process associated with procuring goods from external vendors; negotiate price and
terms, issue purchase order, receive goods, receive invoice, settle payment
3. Make-to-stock process: process associated with producing goods; procure inputs, schedule production, production,
quality control, stock product
4. Make-to-order process: orders are procured based on forecasts, actual manufacturing does not start until an order is
received; process sales order, design/engineer product, procure inputs, schedule production, production, quality
control, ship product
Core activities—include inbound logistics (receiving), operations and manufacturing, outbound logistics (shipping),
marketing and sales and customer service
3
Knowledge worker—create, modify, synthesize knowledge as fundamental part of their jobs
Knowledge society—education the cornerstone of knowledge society; knowledge as important as land, labour, capital
Knowledge society = knowledge economy, new economy, digital society, network era, Internet era, digital world
e-business—organization that uses information technologies or systems to support nearly every part of its business
“every worker is a knowledge worker”
Digital divide—those with access to information systems have great advantages over those without access
Globalization—the integration of economies throughout the world, enable by innovation and technological progress
The tremendous decrease in communication costs has increased the use of outsourcing—the moving of business processes or
tasks to another company or country
Reasons for outsourcing: reduce or control costs, free up internal resources, gain access to world-class capabilities, increases the
revenue potential of organization, reduce time to market, increase process efficiencies, to be able to focus on core activities, to
compensate for a lack of specific capabilities or skills
SOCIETAL ISSUES IN THE DIGITAL WORLD:
Demographic changes—changes in the structure of populations such as related to age, birth rates, and migration
Urbanization—movement of rural population to urban areas
Shifts in economic power—changes in counties’ purchasing power and control over natural resources
Resource scarcity—limited availability of fossil fuels and natural resources
Climate change—large-scale and long-term regional and global changes in temperatures and weather patterns
Sustainable development—development that meets the needs of the present without compromising the ability of future
generations to meet their own needs
FIVE IT MEGATRENDS THAT SHAPE THE DIGITAL FUTURE
1. Mobile: mobile devices allow running business in real time—at any time, from anywhere
Apps—software programs designed to perform a particular, well-defined function
BYOD—bring your own device
Consumerization of IT—many technologies are first introduced in the consumer marketplace before being used by
organizations
2. Social media: social media are used in various personal and business settings; companies can harness the power of the crowd
Network effect—the notion that the value of a network increases with the number of other users
3. The Internet of things: IoT—a network of a broad range of physical objects that can automatically share data over the
Internet
Sensors—devices that can detect, record and report changes in the physical environment
Smart home technologies (home automation)—technologies enabling the remote monitoring and controlling of
lighting, heating, or home appliances
Industrial Internet of Things (IIoT)—enables the convergence of information technology and operations technology
offering the potential of tremendous improvements in efficiency, product quality, agility, and flexibility, allowing
companies to mass-produce customized products, better monitor supply chains, and so on
4. Cloud computing—applications and data stored in the cloud can be accessed from different devices; good example is Google
such as Gmail, Google docs; cloud computing can enable advanced analytics or massive amounts of Big Data generated by
mobile devices, sensors, or users of social networks
5. Big Data—extremely large and complex datasets, characterized by being of high volume, variety (many different types of
data), velocity (data are being collected and analyzed at ever-increasing rate)
Companies in the Information Age economy are creating value not from people but from data.
Robotics –use of robots to perform manual tasks
Sharing economy—enabled by mobile devices, social media and cloud computing
Servitization—creation of service-oriented business model enabled by Internet of Things and Big data where companies shift
from selling products to providing them as services
Computer literacy= information literacy==knowing how to use a computer
Healthcare IS—supports patient diagnosis and treatment to analysing patient and diseases data to running doctors’ office and
hospitals
Computer fluency—ability to independently learn new technologies as they emerge and assess their impact on ones’ work and
life
1
,Information system (IS)—the combination of people and information technology that create, collect, process, store and
distribute useful data
Information technology (IT)—includes hardware, software, and telecommunications networks (group of two or more
computer systems linked together with communications equipment)
DATA: THE ROOT AND PURPOSE OF INFORMATION SYSTEMS
Data quality—consisting of completeness, accuracy, timeliness, validity and consistency
Information—data processed; a representation of reality that can help answer questions about who, what, where, and when
Knowledge-the ability to understand information, form opinion, and make decisions or predictions on the information
Good IS personnel possess valuable integrated knowledge and skills in three areas—technical, business, and systems
TYPES OF INFORMATION SYSTEMS
Transaction processing systems—TPS used by broad range of organizations to process customer transactions more efficiently;
TPS data provide input into other IS systems including decision support systems, intelligent systems, business intelligence
systems, knowledge management system, social software, geographic information systems, functional area information systems
Management information systems---most common system that support a broad range of managerial decision making
Internetworking—connecting host computer and their networks together to form even larger networks like the Internet
Systems integration—connecting separate information systems and data to improve business process and decision making
Office automation systems—such as Microsoft Office and OpenOffice.org Productivity suite provide words process,
spreadsheet, and other personal productivity tools, enabling knowledge workers to accomplish their tasks
While the use of technology can enable efficiency and while information systems must provide a return on investment,
technology use can also be strategic and a powerful enabler of competitive advantage
Computer ethics—moral issues and standards of conduct as they pertain to the use of information systems
Information privacy—is concerned with what information an individual should have to reveal to others in the workplace or in
online transactions
The database of intentions: The ‘like’: what I like; the check-in: where am I; the query: what I want; the social graph: who I am &
who I know; that status update: what I’m doing; the purchase: what I buy; the social reader: what I’m interested in
Fair information practice principles: notice/awareness (data privacy statement), choice/consent (opt in, opt out);
access/participation; integrity/security; enforcement/redress
Intellectual property (IP)—creations of the mind that have commercial value
3D printing—enables creating physical 3D objects from digital models; enables lossless duplication of files
PORTER’S COMPETITIVE FORCES MODEL—provides a general view of the firm, its competitors, and the firm’s environment
1. Competitors
2. New market entrants: barriers to entry
3. Substitute products and services
4. Customers: power of customer grows if they can easily switch to competitor’s product and services or if they an force a
business and competitors to compete on price alone where there is little product differentiation
a. Product differentiation
5. Suppliers: the more different suppliers the firm has, the greater control it can exercise over suppliers in terms of price,
quality, and delivery schedules
INFORMATION SYSTEM STRATEGIES FOR DEALING WITH COMPETITVE FORCES
1. Low-cost leadership: use IS to achieve lowest operational costs and lowest prices
a. Efficient customer response system: directly links consumer behaviour to distribution and production and
supply chains (Walmart)
2. Product differentiation: use IS to enable new products and services or greatly change the customer convenience in
using your existing products and services
a. Mass customization—ability to offer individually tailored products or services using the same production
resources as mass production (Nike)
3. Focus on market niche : use IS system to enable a specific Market focus and serve this narrow target market better
than competitors (Hilton hotel; CRM)
4. Strengthening customer and supplier intimacy: use IS to tighten linkages with supplier and develop intimacy with
customers (Toyota, amazon)
2
, a. Strong linkages to customers and suppliers increase switching costs—the cost of switching form one
product to a competing product—and loyalty to your firm
INTERNET’S IMPACT ON COMPETITIVE FORCES
1. Substitute products or services: enables new substitutes to emerge with new approaches to meeting needs and
performing functions
2. Customers bargaining power: availability of global price and product information shifts bargaining power to customers
3. Suppliers’ bargaining power: procurement over Internet tends to raise bargaining power over suppliers; suppliers can
also benefit from reduced barriers to entry and from elimination of distributors and other intermediaries sanding
between them and users
4. Threat of new entrants: internet reduces barriers to entry, provides technology for driving business processes that
makes other things easier to do
5. Positioning and rivalry among existing competitors: widens the geographic market increasing the number of
competitors and reducing differences among competitors; makes it more difficult to sustain operational advantages;
puts pressure to compete on price
Value chain model—highlights specific activities in the business where competitive strategies can best be applied and where
information system are most likely to have a strategic impact; identifies specific, critical leverage points where firms can use IT
most effectively to enhance competitive position
Primary activities—most directly related to the production and distribution of the firm’s products and services—inbound
logistics, operations, sales and marketing, service, outbound logistics
Support activities—make the delivery of the primary activities possible and consist of organization infrastructure—admin and
management, human resources, technology, procurement
Benchmarking—comparing the efficiency and effectiveness of your business processes against strict standards and then
measuring performance against those standards
Best practices—identified by consulting companies, research organization, government agencies and industry associations as
the most successful solutions or problem-solving methods for consistently ad effectively achieving a business objective
Value web—collection of independent firms that use information technology to coordinate their value chains to produce a
product or service for a market collectively; across firms
Synergies—the idea of synergies is that when the output of some units can be used as inputs to other units or two organizations
pool markets and expertise, these relationships lower costs and generate profits
Core competency—an activity for which a firm is a world-class leader (P&G and InnovationNet)
Network economics—refer to market situations where the economic value being produced depends on the number of people
using a product
Virtual company—virtual organization—uses networks to link people, assets, and services without being limited by traditional
organizations boundaries or physical locations
Business ecosystem—loosely coupled but interdepending networks of suppliers, distributors, outsourcing firms, transport
service firms and technology manufacturers; across industries
Platforms—Microsoft and Facebook provide platform composed of information systems, technologies and services that
thousands of other firms use the enhance capabilities
Strategic transitions—movement between levels of sociotechnical systems
CORE BUSINESS PROCESSES
1. Order-to-cash process—the processes associated with selling a product or service; create customer record, check
credit, create order, allocate stock, pick, pack and ship, prepare and send invoice, collect payment
2. Procure-to-pay process—the process associated with procuring goods from external vendors; negotiate price and
terms, issue purchase order, receive goods, receive invoice, settle payment
3. Make-to-stock process: process associated with producing goods; procure inputs, schedule production, production,
quality control, stock product
4. Make-to-order process: orders are procured based on forecasts, actual manufacturing does not start until an order is
received; process sales order, design/engineer product, procure inputs, schedule production, production, quality
control, ship product
Core activities—include inbound logistics (receiving), operations and manufacturing, outbound logistics (shipping),
marketing and sales and customer service
3
