Digital organization
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Geen strafpunten op de MPC vragen op examen
1 Information systems in business today
1.3 niet leren
The grocery store of the future: look at Kroger
Case is on Blackboard
Problem
o Limited facility capacity (possibility of long waiting lines at cashiers)
o Intense competition with low profit margins
o High customer expectations
Solutions
o Information systems to improve checkout experience
o Temperature sensors to reduce food spoilage costs
o Online ordering service with local pickup
o Mobile shopping app to improve buying experience
Kroger case illustrates the potential of IT to improve customer experience
o Key business metric at Kroger is customer satisfaction level
o They want to digital transform themselves so they become a digital organization.
Now you can order your groceries online and an autonomous vehicle delivers it to
your house.
Chapter opening case: rugby football union tries big data
Problem
o Improving fan engagement through Big Data
Solutions
o Provide data visualization and real-time statistics to draw in fans
o Provide tactical insights to players and coaches that will improve match play
Rugby Football Union uses TryTracker to capture and analyze Big Data that will be useful to
both fans and players
Demonstrates IT’s role in increasing value and revenue in any business
Illustrates the potential of IT to improve customer experience
1.1 How are information systems transforming business, and why are they so essen-
tial for running and managing a business today?
Increasing IT-related spending
o Hardware, software, and telecommunications equipment
o Consulting services
Smartphones and other mobile devices
Widespread access to the internet
1
, Online social networks: to contact al large group of persons
Laws requiring organizations to store digital records (e.g. Email): information has to rest se-
cure and private.
In 1 second (source: internetlivestats.com):
o ≈ 8100 tweets sent
o ≈ 860 Instagram photos uploaded
o ≈ 3300 Skype calls
o ≈ 60 TB of internet traffic generated
o ≈ 69,000 Google searches
o ≈ 75,000 YouTube videos opened
o ≈ 2.7 million Emails sent
enormous amount
Hype cycle for emerging technologies, 2018
Stage of which technology is at this moment. Now it’s mainstream adopted so every com-
pany uses it.
Flying adopted vehicles is in very early stage of adoption. They are a yellew triangle so they
will be adopted in more than 10 years
The grey dots are the things that are already very much used and are adopted in less than 2
years
Information technology capital investment
Companies substitute other things of investment for digital investment.
2
,1.1.1 What’s new in Managemnt information systems (MIS)
IT innovations
o Cloud computing: you pay for what you use, you don’t save the data on your com-
puters but in the cloud
o Big data and Internet of things (equipping with sensors and then you can use the
data to improve certain things)
New business models
o Online video streaming services like (e.g. Netflix: you need a good connection so 20
years ago it was not possible, Amazon)
E-commerce expanding
o Selling physical products (e.g. Zalando)
o Selling services (e.g. Netflix, Spotify)
o Selling both (e.g. Amazon)
Management changes
o Managers have online, nearly instant access to information to support decision-mak-
ing. They don’t have to wait on sales reports but they can check it on their phone
Changes in firms and organizations
o Digital transformation resulting in ‘Digital organizations’
1.1.2 Globalization challenges and opportunities: a flattened world
Information systems enables globalization:
o Internet has drastically reduced costs of operating on global scale
o Outsourcing of business activities
o Customers can shop in a worldwide marketplace, anytime, anywhere
o Increases in foreign trade
So there is a total globalization of the economy
1.1.3 The emerging digital firm
In a digital organization:
o Significant business relationships (customers, suppliers, employees) are digitally ena-
bled
o Core business processes are digitally enabled (e.g. hiring an employee, fulfilling a cus-
tomer order)
o Key corporate assets (information) are managed digitally
Digital organizations offer greater flexibility in organization and management
3
, o Time shifting (anytime), space shifting (any place)
Organizations can be more or less digital
Information becomes competitive important
1.1.4 Strategic business objectives of information systems
Growing interdependence between:
o An organization’s information systems
o Ability to implement corporate strategies and achieve corporate goals. This has an
influence on the decisions and the structure of the organization
Firms invest heavily in information systems to achieve six strategic business objectives:
o Operational excellence (Kroger: temperature with fresh products)
o New products, services, and business models
o Customer and supplier intimacy (Kroger: they want high customer satisfaction)
o Improved decision making
o Competitive advantage
o Survival
Operational excellence
Improve the efficiency of operations to achieve higher profitability
E.g. Walmart: they connected their shops to the suppliers. The supplier can see what the cur-
rent stock is in each shop and they provide new stock automatically when the supplies need
to be stocked
New products, services and business models
Information systems and technology a major enabling tool for new products, services, and
business models
E.g. Uber: it does not own any vehicles. They doesn’t invest in vehicles but in information sys-
tems., Spotify, Airbnb, bol.com, netflix
Customer and supplier intimacy
Customer intimacy
o If the customers are happy they will come back.
o Example: High-end hotels that use computers to track customer preferences and
then customize the environment. QR code on your phone and when you scan it in
the hotel it will register your temperature in your room or your preferences of drinks
Supplier intimacy
o E.g. Just-in-time (JIT) manufacturing, Toyota
Improved decision making
Leveraging information systems to enable informed decision-making
4
, o Allowing managers to have the right information at the right time
Example: Verizon’s web-based digital dashboard to provide managers with real-time data
(customer complaints, network performance, line outages, etc.). If there are troubles they
can log in and check things by their smartphone
Competitive advantage
Can be achieved through:
o Delivering better performance
o Charging less for superior products
o Responding to customers and suppliers in real-time
If you have any of the previous objectives you can have a competitive advantage temporarily
or sustainable
Examples: Walmart and UPS (tracking system that is superior to other systems)
Survival
Leveraging information systems as a necessity
Responses to industry-level changes
o Example: Citibank’s introduction of ATM’s transformed the industry. If other banks
do not follow, they die.
Governmental regulations requiring digital record-keeping
o Example: Sarbanes-Oxley Act (requires keeping all Emails for five years)
1.2 What is an information system? How does it work? What are its management,
organization, and technology components? Why are complementary assets es-
sential for ensuring that information systems provide genuine value for organiza-
tions?
Information system (IS)
o Set of interrelated components
o Collect, process, store, and distribute information
o Support decision making
Information vs. data
o Data are streams of raw facts
o Information is data shaped into meaningful form (to humans)
o Product number, product name and product price goas in as rough data and the in-
formation system outputs information that can support decision making.
5
, Three activities of information systems produce information organizational decision-makers
need
o Input: Captures raw data
o Processing: Converts raw data into meaningful form (i.e. information)
o Output: Transfers processed information to support decision-making
Kroger: input (temperature in cold food storage) processing (calculating
how much the temperature is above or under the normal temperature) out-
put (adapt the temperature)
1.2.1 Dimensions of information systems
Organizations
Management
Technology
o Not only technology
o Academic discipline of Management Infor-
mation Systems (MIS) (in Dutch “beleidsin-
formatica”) deals with all these dimensions
Organizations:
Hierarchy of authority, responsibility
o Knowledge workers: design new products or services, create new knowledge (e.g.
engineers, scientists, architects)
o Data workers: assist with scheduling and communications at all levels of the firm
o Production or service workers: produce product, deliver the service
Separation of business functions (specialized tasks)
o Sales and marketing
o Human resources
o Finance and accounting
o Manufacturing and production
Business processes
o Formal or informal practices
Organizational culture:
o Fundamental set of assumptions, values and ways of doing things that has been ac-
cepted by most of its members
6
, o UPS has a culture of high customer satisfaction level. Customers can check where
their package is.
Organizational politics: Conflict is the basis of organizational politics. Also change manage-
ment is very important. When you implement an MIS in an organization it is a huge change
and you have to familiarize your personnel with the new system.
Management:
Managers sense business challenges and opportunities
Managers set organizational strategy in response
Managers allocate resources to carry out strategy
Cfr. Chapter 12: How information systems can enhance managerial decision-making
Technology
It provides the opportunity
Information Technology (IT) represents the technical foundation of hardware, software, and
technologies
o Hardware: physical equipment used for input, processing and output activities in an
information system.
o Software: detailed, preprogrammed instructions that control and coordinate the
computer hardware components in an information system
o Data management technology: software governing the organization of data on physi-
cal storage media
o Network and communication technology (network, internet, intranet, extranet): con-
sists of both physical devices and software, links various pieces of hardware and
transfers data from one physical location to another.
Network: links two or more computers to share data or resources (e.g.
printer)
Internet: the world’s largest and most widely used network, it connects mil-
lions of networks
Intranet: internal corporate networks, link different systems and networks
within the firm
Extranet: private intranets who can be used by outsiders
Example: UPS Tracking system
Organizational
o Anchors the tracking system in UPS’s sales and production business functions
o Business processes related to tracking packages and managing inventory and provide
information
Management
o Set the strategy of combining low cost and superior service
o Make the decision to support this by using an information system
o Monitoring service levels and costs
Technology
o Handheld computers, bar-code scanners, networks, desktop computers, etc.
7
Guest lectures belangrijk! Ook studeren!!
Geen strafpunten op de MPC vragen op examen
1 Information systems in business today
1.3 niet leren
The grocery store of the future: look at Kroger
Case is on Blackboard
Problem
o Limited facility capacity (possibility of long waiting lines at cashiers)
o Intense competition with low profit margins
o High customer expectations
Solutions
o Information systems to improve checkout experience
o Temperature sensors to reduce food spoilage costs
o Online ordering service with local pickup
o Mobile shopping app to improve buying experience
Kroger case illustrates the potential of IT to improve customer experience
o Key business metric at Kroger is customer satisfaction level
o They want to digital transform themselves so they become a digital organization.
Now you can order your groceries online and an autonomous vehicle delivers it to
your house.
Chapter opening case: rugby football union tries big data
Problem
o Improving fan engagement through Big Data
Solutions
o Provide data visualization and real-time statistics to draw in fans
o Provide tactical insights to players and coaches that will improve match play
Rugby Football Union uses TryTracker to capture and analyze Big Data that will be useful to
both fans and players
Demonstrates IT’s role in increasing value and revenue in any business
Illustrates the potential of IT to improve customer experience
1.1 How are information systems transforming business, and why are they so essen-
tial for running and managing a business today?
Increasing IT-related spending
o Hardware, software, and telecommunications equipment
o Consulting services
Smartphones and other mobile devices
Widespread access to the internet
1
, Online social networks: to contact al large group of persons
Laws requiring organizations to store digital records (e.g. Email): information has to rest se-
cure and private.
In 1 second (source: internetlivestats.com):
o ≈ 8100 tweets sent
o ≈ 860 Instagram photos uploaded
o ≈ 3300 Skype calls
o ≈ 60 TB of internet traffic generated
o ≈ 69,000 Google searches
o ≈ 75,000 YouTube videos opened
o ≈ 2.7 million Emails sent
enormous amount
Hype cycle for emerging technologies, 2018
Stage of which technology is at this moment. Now it’s mainstream adopted so every com-
pany uses it.
Flying adopted vehicles is in very early stage of adoption. They are a yellew triangle so they
will be adopted in more than 10 years
The grey dots are the things that are already very much used and are adopted in less than 2
years
Information technology capital investment
Companies substitute other things of investment for digital investment.
2
,1.1.1 What’s new in Managemnt information systems (MIS)
IT innovations
o Cloud computing: you pay for what you use, you don’t save the data on your com-
puters but in the cloud
o Big data and Internet of things (equipping with sensors and then you can use the
data to improve certain things)
New business models
o Online video streaming services like (e.g. Netflix: you need a good connection so 20
years ago it was not possible, Amazon)
E-commerce expanding
o Selling physical products (e.g. Zalando)
o Selling services (e.g. Netflix, Spotify)
o Selling both (e.g. Amazon)
Management changes
o Managers have online, nearly instant access to information to support decision-mak-
ing. They don’t have to wait on sales reports but they can check it on their phone
Changes in firms and organizations
o Digital transformation resulting in ‘Digital organizations’
1.1.2 Globalization challenges and opportunities: a flattened world
Information systems enables globalization:
o Internet has drastically reduced costs of operating on global scale
o Outsourcing of business activities
o Customers can shop in a worldwide marketplace, anytime, anywhere
o Increases in foreign trade
So there is a total globalization of the economy
1.1.3 The emerging digital firm
In a digital organization:
o Significant business relationships (customers, suppliers, employees) are digitally ena-
bled
o Core business processes are digitally enabled (e.g. hiring an employee, fulfilling a cus-
tomer order)
o Key corporate assets (information) are managed digitally
Digital organizations offer greater flexibility in organization and management
3
, o Time shifting (anytime), space shifting (any place)
Organizations can be more or less digital
Information becomes competitive important
1.1.4 Strategic business objectives of information systems
Growing interdependence between:
o An organization’s information systems
o Ability to implement corporate strategies and achieve corporate goals. This has an
influence on the decisions and the structure of the organization
Firms invest heavily in information systems to achieve six strategic business objectives:
o Operational excellence (Kroger: temperature with fresh products)
o New products, services, and business models
o Customer and supplier intimacy (Kroger: they want high customer satisfaction)
o Improved decision making
o Competitive advantage
o Survival
Operational excellence
Improve the efficiency of operations to achieve higher profitability
E.g. Walmart: they connected their shops to the suppliers. The supplier can see what the cur-
rent stock is in each shop and they provide new stock automatically when the supplies need
to be stocked
New products, services and business models
Information systems and technology a major enabling tool for new products, services, and
business models
E.g. Uber: it does not own any vehicles. They doesn’t invest in vehicles but in information sys-
tems., Spotify, Airbnb, bol.com, netflix
Customer and supplier intimacy
Customer intimacy
o If the customers are happy they will come back.
o Example: High-end hotels that use computers to track customer preferences and
then customize the environment. QR code on your phone and when you scan it in
the hotel it will register your temperature in your room or your preferences of drinks
Supplier intimacy
o E.g. Just-in-time (JIT) manufacturing, Toyota
Improved decision making
Leveraging information systems to enable informed decision-making
4
, o Allowing managers to have the right information at the right time
Example: Verizon’s web-based digital dashboard to provide managers with real-time data
(customer complaints, network performance, line outages, etc.). If there are troubles they
can log in and check things by their smartphone
Competitive advantage
Can be achieved through:
o Delivering better performance
o Charging less for superior products
o Responding to customers and suppliers in real-time
If you have any of the previous objectives you can have a competitive advantage temporarily
or sustainable
Examples: Walmart and UPS (tracking system that is superior to other systems)
Survival
Leveraging information systems as a necessity
Responses to industry-level changes
o Example: Citibank’s introduction of ATM’s transformed the industry. If other banks
do not follow, they die.
Governmental regulations requiring digital record-keeping
o Example: Sarbanes-Oxley Act (requires keeping all Emails for five years)
1.2 What is an information system? How does it work? What are its management,
organization, and technology components? Why are complementary assets es-
sential for ensuring that information systems provide genuine value for organiza-
tions?
Information system (IS)
o Set of interrelated components
o Collect, process, store, and distribute information
o Support decision making
Information vs. data
o Data are streams of raw facts
o Information is data shaped into meaningful form (to humans)
o Product number, product name and product price goas in as rough data and the in-
formation system outputs information that can support decision making.
5
, Three activities of information systems produce information organizational decision-makers
need
o Input: Captures raw data
o Processing: Converts raw data into meaningful form (i.e. information)
o Output: Transfers processed information to support decision-making
Kroger: input (temperature in cold food storage) processing (calculating
how much the temperature is above or under the normal temperature) out-
put (adapt the temperature)
1.2.1 Dimensions of information systems
Organizations
Management
Technology
o Not only technology
o Academic discipline of Management Infor-
mation Systems (MIS) (in Dutch “beleidsin-
formatica”) deals with all these dimensions
Organizations:
Hierarchy of authority, responsibility
o Knowledge workers: design new products or services, create new knowledge (e.g.
engineers, scientists, architects)
o Data workers: assist with scheduling and communications at all levels of the firm
o Production or service workers: produce product, deliver the service
Separation of business functions (specialized tasks)
o Sales and marketing
o Human resources
o Finance and accounting
o Manufacturing and production
Business processes
o Formal or informal practices
Organizational culture:
o Fundamental set of assumptions, values and ways of doing things that has been ac-
cepted by most of its members
6
, o UPS has a culture of high customer satisfaction level. Customers can check where
their package is.
Organizational politics: Conflict is the basis of organizational politics. Also change manage-
ment is very important. When you implement an MIS in an organization it is a huge change
and you have to familiarize your personnel with the new system.
Management:
Managers sense business challenges and opportunities
Managers set organizational strategy in response
Managers allocate resources to carry out strategy
Cfr. Chapter 12: How information systems can enhance managerial decision-making
Technology
It provides the opportunity
Information Technology (IT) represents the technical foundation of hardware, software, and
technologies
o Hardware: physical equipment used for input, processing and output activities in an
information system.
o Software: detailed, preprogrammed instructions that control and coordinate the
computer hardware components in an information system
o Data management technology: software governing the organization of data on physi-
cal storage media
o Network and communication technology (network, internet, intranet, extranet): con-
sists of both physical devices and software, links various pieces of hardware and
transfers data from one physical location to another.
Network: links two or more computers to share data or resources (e.g.
printer)
Internet: the world’s largest and most widely used network, it connects mil-
lions of networks
Intranet: internal corporate networks, link different systems and networks
within the firm
Extranet: private intranets who can be used by outsiders
Example: UPS Tracking system
Organizational
o Anchors the tracking system in UPS’s sales and production business functions
o Business processes related to tracking packages and managing inventory and provide
information
Management
o Set the strategy of combining low cost and superior service
o Make the decision to support this by using an information system
o Monitoring service levels and costs
Technology
o Handheld computers, bar-code scanners, networks, desktop computers, etc.
7
