chapter 2

chapter 2 

Information Systems and the Modern Organization 

* Business Process: a collection of related activities that produce a product or a service of value to the organization, its business partners, and/or its customers. 

• One functional area
• Cross-functional 

 * Business Process Reengineering (BPR)

 a radical redesign of a business process that improves Its efficiency and effectiveness, often by beginning with a “clean sheet.” 

* Business Process Management (BPM)

 A management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.

Business Process Excellence :          

•  Customer satisfaction
• Cost reduction
• Quality
• Differentiation 

* Business Pressures, Organizational   Responses and IT Support

  Business Pressures:

n The business environment is the combination of social, legal, economic, physical, and political factors that affect business activities.

n

n Significant changes in any of these factor are likely to create business pressure on the organization.

nMarket Pressures

nTechnology Pressures

nSocietal Pressures

*Market Pressures : 

1- The Global Economy and Strong Competition: 

n Regional agreements

•        NAFTA – European Union

n BRIC

n Cost of labor

n Outsourcing / off shoring 

2- The Changing Nature of the Workforce: 

n More diversified

n Increasing number of women

n Persons with disabilities

n Teleworking. 

3- Powerful Customers: 

n More knowledgeable customer

n Higher expectations

n Compare prices 

* Technology Pressures : 

 1- Technological Innovation and Obsolescence 

•        Hard to remain technologically current

2-   Information Overload 

•         The internet is bringing flood of information 
• 
  

* Societal Pressures :

ü  Social Responsibility

o   Green IT

o   Digital Divide : the gap between those who have access to ICT and those who do not

ü Government Regulation and Deregulation

o   Compliance with new laws and policies

   

  ü Protection Against Attacks / Natural disaster

       

  ü Ethical Issues  

*Organizational Responses

Ø Strategic Systems

o   increase market share and/or profits

o   better negotiate with suppliers

o   prevent competitors from entering their markets.

Ø Customer Focus

o   Retaining current customers and attracting new ones

Ø Make-to-Order and mass customization

o   producing customized products and services

§  Reebok

§  Dell

Ø E-business and E-commerce

o   Buying and selling products and services electronically.

o   E-business is a broader concept than e-commerce.

o   B2C , C2C, B2B

  

*Competitive Advantage and Strategic Information Systems :

·        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.

·        Strategic Information Systems

·        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 :

v Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. 

v A barrier to entry is a product or service feature that customers expect from organizations in a certain industry. 

v For most organizations, the Internet increases the threat that new competitors will enter a market.

v The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices.

v Internet impact is mixed.  Buyers can find alternative suppliers and compare prices more easily, reducing power of suppliers.

v On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in customers.

v The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices.

v Internet increases buyers’ access to information, increasing buyer power.

   v Internet reduces switching costs, which are the costs, in money and                 time, to buy elsewhere.  This also increases buyer power

v The threat of substitute products or services is high when there are many substitutes for an organization’s products or services and low where there are few substitutes.

v Information-based industries are in the greatest danger from this threat (e.g., music, books, software).  The Internet can convey digital information quickly and efficiently.

v The rivalry among firms in an industry is high when there is fierce competition and low when there is not.

*Porter’s Value Chain Model :

Primary activities

are those business activities that relate to the production and distribution of the firm’s products and services (core business), thus creating value for which customers are willing to pay

Support activities

are those business activities  that do not add value directly to a firm’s products and services, but support the primary activities.  Support activities include accounting, finance, management, human resources management, product and technology development (R&D), and procurement.

*Business – Information Technology   Alignment :

Characteristics of Excellent  Business-IT Alignment

Ø Organizations view IT as an engine of innovation

Ø  Organizations view customers as supremely important

Ø  Organizations provide goals that are clear to IT function

Why business-IT Alignment Fails:

Ø  Business managers and IT managers have different objectives

Ø  The business and IT departments are ignorant of other group’s

Ø expertise

Ø   Lack of communication