Management Information Systems A Strategic Business Perspective Management Information Systems A Strategic Business Perspective

Business perspective on information systems: –Information system is instrument for creating value –Investments in information technology will result in superior returns: Productivity increases Revenue increases Superior long-term strategic positioning Management Information Systems

Business information value chain –Raw data acquired and transformed through stages that add value to that information –Value of information system determined in part by extent to which it leads to better decisions, greater efficiency, and higher profits Management Information Systems

The Business Information Value Chain

Management Information Systems From a business perspective, information systems are part of a series of value- adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability. The Business Information Value Chain

Investing in information technology does not guarantee good returns Factors: –Adopting the right business model –Investing in complementary assets (organizational and management capital) Management Information Systems

Complementary assets: –Assets required to derive value from a primary investment –Firms supporting technology investments with investment in complementary assets receive superior returns –E.g.: invest in technology and the people to make it work properly Management Information Systems

6 Strategic Business Objectives Business firms invest heavily in information systems to achieve six strategic 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 Management Information Systems The Role of Information Systems in Business Today

1)Operational Excellence –Improvement of efficiency to attain higher profitability –Information systems, technology an important tool in achieving greater efficiency and productivity –E.g. Gourmet & Nestle RetailLink system links suppliers to stores for superior replenishment (re-fill) system Management Information Systems The Role of Information Systems in Business Today

2)New products, services, and business models –Business model: describes how company produces, delivers, and sells product or service to create wealth –Information systems and technology are major enabling tools for creation of new products, services, business models Management Information Systems The Role of Information Systems in Business Today

3)Customer and supplier intimacy –Serving customers well leads to customers returning, which raises revenues and profits E.g. High-end hotels that use computers to track customer preferences and use to monitor and customize environment –Intimacy with suppliers allows them to provide vital inputs, which lowers costs Management Information Systems The Role of Information Systems in Business Today

4)Improved decision-making –Without accurate information: Managers must use forecasts, best guesses, luck Leads to: –Overproduction, underproduction of goods and services –Misallocation of resources –Poor response times Poor outcomes raise costs, lose customers –E.g. World Call Pakistan failed to provide managers with real-time data on customer complaints, network performance, line outages, etc. Management Information Systems The Role of Information Systems in Business Today

5)Competitive advantage –Delivering better performance –Charging less for superior products –Responding to customers and suppliers in real time –E.g. Dell: Consistent profitability over 25 years; Dell remains one of the most efficient producer of PCs in world. –But Dell has lost some of its advantages to fast followers-- HP Management Information Systems The Role of Information Systems in Business Today

6)Survival –Information technologies as necessity of business –May be: Industry-level changes, e.g. Citibanks introduction of ATMs Governmental regulations requiring electronic record-keeping –E.g. NADRA Management Information Systems The Role of Information Systems in Business Today

Management Information Systems The Interdependence Between Organizations and Information Technology There is a growing interdependence between a firms information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do.