chapter 2 : Information Systems and the Modern Organization

Learning Objectives ..

2.1 Business process

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.

types of busniss process :

1- one functional area :
within on area in the organization
2- cross functional area :
process must be performed within diffrent functional areas(collaboration)



 

2.2 Business process reengineering and Business process management

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.

BPM helps to :
1-improve profit.
2- create competitive  advantage & flexibility.
3- increase customer satisfaction.

2.3   Business Pressures, Organizational   Responses, and Information Technology   Support

Business Pressures:

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

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

there are three types of business pressure: Market pressure, technology pressure and Societal pressure.

Market Pressures:

The Global Economy and Strong Competition

Cost of labor

Outsourcing / offshoring 

The move to global economy has been facilitated by the emergence of the global Web-based platform

 The Changing Nature of the Workforce

1-More diversified

2--Increasing number of women

3-Persons with disabilities

4-Teleworking

Powerful Customers

More knowledgeable customer

Higher expectations

Compare prices

Online shopping / e-auction 

Customer Intimacy / CRM

Technology Pressure 

Technological Innovation and Obsolescence
Hard to remain technologically current.

Information Overload
The internet is bringing flood of information.

Societal Pressures

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

Government Regulation and Deregulation
Compliance with new laws and policies.
government de-regulations increase competition

Protection Against Attacks / Natural disaster
protection against terrorist attacks.

Ethical Issues
Monitoring e-mails
Customers privacy

Organizational Responses

Strategic Systems

increase market share and/or profits
better negotiate with suppliers
prevent competitors from entering their markets.

Customer Focus

Retaining current customers and attracting new ones

Make-to-Order and mass customization

producing customized products and services

E-business and E-commerce

Buying and selling products and services electronically.
 E-business is a broader concept than e-commerce.
B2C , C2C, B2B

2.4   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

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

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

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

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

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

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

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

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

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

4-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.

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.

5-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

   This model identifies specific activities where organizations can use competitive strategies for greatest impact.

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.

2.5   Business – Information Technology   Alignment

The tight integration of the IT function with the strategy, mission and goals of the organization

The IT function directly support the business objectives of the organization.

Characteristics of Excellent  Business-IT Alignment

1- Organizations view IT as an engine of innovation

2-Organizations view customers as supremely important

3- Organizations provide goals that are clear to IT function

Why business-IT Alignment Fails:

1- Business managers and IT managers have different objectives

 

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

   expertise

 

3-  Lack of communication