The Information Age in Which You Live:

Changing the Face of Business

Week 1

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LEARNING OUTCOMES1. Define Management Information Systems

and describe the three resources within it—people, information, and information technology.

2. Describe how to use break-even analysis to assess the financial impact of Information Tech.

3. Describe how to use Porter’s Five Forces Model to evaluate an industry.

4. Compare and contrast Porter’s three generic strategies and the Run-Grow-Transform framework as approaches to the development of business strategy.

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Case Study Outrageous Industry Transformation:

Cell Phones Doom Phone Revenues for Hotels

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Cell Phones Doom Phone Revenues for Hotels

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Revenues for HotelsMobile bookingsTech-savvy amenities and features Providing a pleasant stay for pets, too

Source: Top Hotel Trends to Watch in 2015BY ERIN K. SHIELDS | JANUARY 27, 2015

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Cell Phones Doom Phone Revenues for Hotels

This demonstrates the “outrageous” corrective and transformative nature of technology.

Cell phones and technologies of all kinds are transforming entire industries

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Tech on

every industr

y

travel

newspapers

magazines

MusicMovies

Local news

Financial services

The list goes on and on…

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INTRODUCTION

You live in a digital age Average American relies on

more than 250 computers per day

According to Time magazine, 14% of cell phone users stopped having intimate relations to take a phone call

How much do you rely on technology in your daily life?

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Make a list of all the technologies you used in the

last 24 hours.

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This was my world…

Radio- 38 yearsTV- 12 years

Internet- 4 yearsiPod- 3 yearsFB- 2 years

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INTRODUCTION Management information

systems (MIS) – planning for, development, management, and use of information technology to help people performs all tasks related to information processing and management.

Important field of study Important business discipline

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INTRODUCTION

MIS deals with the coordination and use of 3 very important organizational resources1. People2. Information3. Technology

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The Synergy among the Three Resources of MIS

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MIS RESOURCE #1: INFORMATION

Digital Age=Information Age

=

Knowledge is power!

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MIS RESOURCE #1: INFORMATION

Data – raw facts that describe a particular phenomenon such as the current temperature, the price of movie rental, or your age (datum singular)

Information – is data that have a particular meaning within a specific context

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Information Resource

Information is often

aggregated data that has meaning such

as average age, youngest

and oldest customer, and a histogram of customer ages

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Information Resource

Business intelligence (BI) – collective information about…

Students Customers Competitors Business partners Competitive environment

BI can help you make important, strategic decisions

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Information Resource

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A critical characteristic of data, information and

business intelligence is

that of QUALITY

Info. exhibits high quality only if it is pertinent, relevant and

useful

Information Resource

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Information Resource – Quality Attributes

Timeliness When you need it Describing the right time period

Location (no matter where you are)

Form (audio, text, animation, etc.)

Validity (credibility)Lack of any of the above can create GIGO concept in a decision-making process

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Information Resource – Organizational Perspective

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Information Resource – What It Describes

Internal information – operational aspects of the organization

External information – environment surrounding the organization

Objective information – quantifiably describes something that is known

Subjective information – describe something that is unknown

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Overview

IRM provides an integrated view for managing the entire life-cycle of information, from generation, to dissemination, to archiving and/or destruction, for maximizing the overall usefulness of information, and improving service delivery and program management.

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Stacy Snyder

Woman Denied Degree Over 'Drunken Pirate'

MySpace

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MIS RESOURCE #2: PEOPLE

People are the most important resource in any organization, with a focus on

Technology literacy Information literacy Ethical responsibilities

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People Resource

Technology-literate knowledge worker – knows how and when to apply technology

Information-literate knowledge worker

Can define information needs Knows how and where to obtain information Understands information Acts appropriately based on information

Ethics – principles and standards that guide our behavior toward other people

The Information Age in Which You Live:

Changing the Face of Business

Week 2

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Some blog thoughts…Paige: For many people with just a swipe here and there you don't always have the physical proof of how much you are spending and if its out of sight its out of mind.

Katie: Our generation is being brought up with so much technology for communication that it is ruining our communication skills when it comes to being able to talk to someone in person.

Nicole: We live in a society where there have been news stories of people forgetting their children in their car but, they have their cell phones with them.

Michael: People are using the online newspaper vs the paper version way more because it just can be accessed anywhere. This gives us another reason to stare at screens and brings us back to the "problem" of how people are spending to much time staring at their devices and less time interacting face to face.

Sabrina: …this approach can make people become reliant on the convenience of what’s in front of them instead of having to go and access the means of using the library or a bookstore.

Theresa:…countless resources online that can either help or hurt one's education

Veronica: Many retail companies are closing up there shops

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Some blog thoughts…Mamako: I do not even know how much a postal stamp costs. Shannon: In hospitals today there is less of a demand for workers in certain departments due to the advanced machinery that is being used to detect different problems within the patient, rather than things being read by a doctor or nurse.

Richard: We now have things like electrical power to light things up

Carly: So in contrast the postal service and places like UPS and FedX are benefiting from websites like Amazon that have these services.

Nicole: Due to the production of video games, kids no longer want to play and interact with board games, or even want to go outside.

Donna: everything must be charted in "real time".

Justine: Industries need to constantly evolve and use the latest technology in order to prosper

Coulson: most stores that specialized in movie rental have gone out of business

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Scenario Your team is working on a computer-controlled

device for treating cancerous tumors. The computer controls direction, intensity, and timing of a beam that destroys the tumor. Various delays have put the project behind schedule, and the deadline is approaching. There will not be time to complete all the planned testing. The system has been functioning properly in the routine treatment scenarios tested so far. You are the project manager, and you are considering whether to deliver the system on time, while continuing testing and making patches if the team finds bugs.

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What is the central issue?

Who is affected by your decision?

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Law & Ethics

Law can be defined as a consistent set of universal rules that are widely published, generally accepted, and usually enforced.

Consistent Universal Published Accepted Enforced

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Law & Ethics

Ethics is derived from the Greek word ethos (character), and from the Latin word mores (customs). Together they combine to define how individuals choose to interact with one another.

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Laws & Ethics

Characteristics Ethics involves learning what is right and

wrong, and then doing the right thing. Most ethical decisions have extended

consequences. Most ethical decisions have multiple

alternatives. Most ethical decisions have mixed

outcomes. Most ethical decisions have uncertain

consequences. Most ethical decisions have personal

implications.

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People Resource - Ethics

You always want your

actions to fall in Quadrant I – both ethical

and legal.

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MIS RESOURCE #3: INFORMATION TECHNOLOGY

Information technology (IT) – computer-based tools that people use to work with information

Hardware – physical devices that make up a computer

Software – set of instructions that your hardware executes to carry out a specific task for you

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Information Technology – Hardware

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Information Technology – Hardware

1. Input device – tool for entering information and commands

2. Output device – tool for see or hearing results

3. Storage device – tool for storing information

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Information Technology – Hardware

4. CPU – hardware that interprets and executes instructions (RAM temporarily stores information and software for the CPU)

5. Telecommunications device – for sending info

6. Connecting devices – like cables, ports, etc.

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Information Technology – Software

Two types of software Application software – enables you to

solve specific problems and perform specific tasks (Word, payroll, inventory management, etc)

System software – handles tasks specific to technology management (operating system, anti-virus, etc)

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FINANCIAL IMPACT OF INFORMATION TECHNOLOGY

Regardless of the resource, you must always assess its financial impact

Many times, you will do so using break-even analysis

IT can definitely impact break-even analysis

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Break-Even Analysis Example

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Why is this important from a technological point of

view?Technology can help do one or any combination of the following three:• Reduce fixed costs• Reduce variable costs• Increase revenue

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Reducing Fixed Costs with IT

Digital storefronts – no physical retail space

Telecommuting – fewer expenses related to office space

VoIP – using the Internet for phone calls

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Reducing Fixed Costs with IT

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Reducing Variable Costs with IT

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Reducing Variable Costs with IT

Virtual goods – because they are digital, there is no cost to duplicate and sell again and again

Crowdsourcing – use non-paid non-employees to create value

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Increasing Revenue with IT

Recommendation engines – to drive complementary sales

Long-tail economics – to sell products/services that are too expensive for physical stores to carry Physical stores only carry what

they can sell large amounts of Because of fixed costs

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INDUSTRY IMPACT OF INFORMATION TECHNOLOGY

Porter’s Five Forces Model helps business people understand the relative attractiveness of an industry and the industry’s competitive pressures in terms of

1. Buyer power2. Supplier power3. Threat of substitute products or

services4. Threat of new entrants5. Rivalry among existing competitors

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PORTER’S FIVE FORCES MODEL

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Buyer Power Buyer power – high when

buyers have many choices and low when their choices are few

Competitive advantages are created to get buyers to stay with a given company

NetFlix – set up and maintain your movie list

United Airlines – frequent flyer program

Apple iTunes – buy/manage your music

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Buyer Power

Competitive advantage – providing a product or service in a way that customers value more than what the competition is able to do

First-mover advantage – significant impact on gaining market share by being the first to market with a competitive advantage

All competitive advantages are fleeting

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Supplier Power

Supplier power – high when buyers have few choices and low when choices are many

The opposite of buyer power

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Threat of Substitute Products and Services

Threat of substitute products and services – high when there are many alternatives for buyers and low when there are few alternatives

Switching costs can reduce this threat

Switching cost – a cost that makes buyers reluctant to switch to another product/service

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Threat of New Entrants

Threat of new entrants – high when it is easy for competitors to enter the market and low when entry barriers are significant

Entry barrier – product or service feature that customers have come to expect and that must be offered by an entering organization

Banking – ATMs, online bill pay, etc

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Rivalry Among Existing Competitors

Rivalry among existing competitors – high when competition is fierce and low when competition is more complacent

General trend is toward more competition in almost all industries

IT has certainly intensified competition in all sectors of business

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STRATEGY IMPACT OF INFORMATION TECHNOLOGY

Porter identified 3 generic business strategies for beating the competition

1. Overall cost leadership

2. Differentiation3. Focus

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Overall Cost Leadership

Overall cost leadership – offering the same or better quality product or service at a price that is less than what any of the competition is able to do

Walmart (Always Low Prices, Every Day Low Prices)

Dell – a computer the way you want it at an affordable price

Hyundai and Kia – reliable low-cost cars

Grocery stores – high-volume, low-margin

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Differentiation

Differentiation – offering a product or service that is perceived as being “unique” in the marketplace

Hummer – Like Nothing Else Audi and Michelin – safety Lund’s & Byerly’s – high-end

grocery store Apple

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Focus

Focus – focusing on offering products or services

To a particular segment or buyer group

Within a segment of a product line To a specific geographic market

Examples Restaurants Physician offices Legal offices

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Run-Grow-Transform (RGT) Framework

Run-grow-transform (RGT) framework – the allocation in terms of percentages of IT dollars on various types of business strategies

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RGT Framework

How will you allocate IT dollars to

Run – optimizing execution of existing processes

Grow – increasing market share, products, and service offerings

Transform – innovating business processes, products, and/or services

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Porter and RGT

Run = overall cost leadership Grow = focus and

differentiation Transform = (new)

differentiation