ISYS2140

System Thinking A Business Case for Information Systems Business Processes Some Types of IS
Unit Coordinator Decler M Hague

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Lecture Outline
1. 2. 3. 4. Systems Thinking Defining Information Systems Some Types of Information Systems Business Case for Information Systems
1. More on Strategy 2. Examples of strategy

5. IT Versus IS: Information Technology

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Learning Goal
By the end of this lecture you should have additional relevant information on the relationship between Information Systems and Strategy, definition of IS and IT, and the use of Systems Approach as a means of understanding ISs in practice and as a problem solving perspective
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Quick Review: Organisational Response

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Systems Thinking*

*some slides kindly provided by Dr Simon Poon

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What is a System?
A system is set of inter-related components or subsystems and processes. We generally deal with teleological (purposeful) systems. For such systems, we modify the definition: A system is made up of inter-related components that work together to achieve the overall Purpose of the whole system

Drawing Source: WikiBooks.org, [Goal Structure] Accessed 12/03/2012

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The Systems Approach

The systems approach or systems thinking is a method of analysing or thinking about complex systems from the perspective of the total system, the goals of the overall system, the individual components, and the inter-relationships and inter-dependencies between the components.
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More on Systems
In organisations the Goal can be defined as a Mission Statement
Mission Statement: a way to assert an organisations do
One should ask: What is that the organisation does? Example: Medical Practice:
To Provide Quality Health Care to the members of the Local Community or simply To Provide Quality Health Care

The mission statement guides the endeavours of the organisation.

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Structure of Systems
Overall objective represented as concrete measure(s) of performance, Inputs and Resources Process(es) Outputs Feedback Mechanisms System Boundary System Environment
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Process View of Systems

Input-Output Approach Inputs to the system (from the ext. envt.) Throughput processing/Transformation Outputs of the system (to the ext. envt.) Feedback Mechanisms Inter-connectedness of parts Modeling of the overall system with a view to developing optimal solution The management subsystem (in the organisational context) can be viewed as an informationprocessing system
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Transformation

input

Process

output

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Dynamic Model of Systems

Fundamentally guided by feedback Feedback regulates Performance

Adjust input given samples of the outcome
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The whole picture

System Environment
Management
Control Mechanism

Information Systems

input

Process

output

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An Example: Systems Analysis in an Organisation

Aims at achieving understanding in logical terms of the human activities, events and actions, information transformation processes and data resources relevant to the environment of a new system. By describing in some detail the kind of processes and data that system will deal with, and the relations among them.
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Traditional Approach
Structured Systems Analysis (Since DeMarcos structured systems analysis method (1978)
System is a collection of process Processes interact with data entities Processes accepts inputs and produce outputs Data Flow Diagram
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Data Flow Diagram

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Efficiency-oriented Approaches to Systems Thinking

Concerned primarily with the efficiency of the systems operations, Focus on eliminating all forms of waste and slack and eliminating them from the system to achieve cost savings. Data Flow Diagram (DFD) is an example of the efficiency-oriented approach to systems thinking
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System Theory Approach

Can be used as a Problem Solving approach
Careful description of the total system including: full specifications of the parts or the components and their coordination, identification of the measures of performance in measurable terms, definition of the systems boundaries and by implication, its external environment. Total system objectives performance measures for the whole system Resources available to the system current and potential Systems environment the fixed constraints, what lies outside the system, The components of the system; their activities, goals, and measures of performance. How they mesh with the overall measures of performance, The management of the system
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What is then an Information System?

A system That has components Which work together To handle INFORMATION To support organisations functions;
Such as planning, forecasting, decision making, control, coordination and operations, etc
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What Components?
People Hardware Software Communications Data Processes Procedures
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Examples of IS that you know of?

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TYPES OF INFORMATION SYSTEMS

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Information Systems Inside Your Organization

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Breadth of Support of Information Systems

An application program is a computer program designed to support a specific task, a business process or another application program.
See Section 10.1 & Section 10.2 (R&C) pp266 -273

a) b) c) d)

Functional area information systems Enterprise resource planning systems Transaction processing systems Inter-organisational information systems
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Information Systems Support for Organisation Employees

a) Office automation systems b) Functional area information systems c) Business intelligence systems
a) Expert Systems b) Dashboards
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Information Systems Outside Your Organisation

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IS and IT? INFORMATION TECHNOLOGY EXAMPLES

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IT inspired workplace

Average 40hours/week (for 40 years of working life)

3 0
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Industrial Robots

See video of warehouse robots at work

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Medical Simulation
Two physicians perform a procedure on a simulated human (mannequin) See video of Sim Man in action
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Curiosity note

Supporting End Users

One form of end-user support is the help desk, where IS staffers help users troubleshoot problems with their systems still the same after all these years!!! This video shows the first help desk (http://www.youtube.com/watch?v=oo53pQXHxBI).

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Back to Strategy

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Business Pressures Business Pressures 1. Market Pressures 2. Technology Pressures 3. Societal Pressures

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Business Strategy Impact on IS & IT

Where is the business going and why?
Supports Business

Business Strategy Systems Strategy

Business Decisions Objectives and Direction Change Management

Direction for IS

What is required?

Business Based Demand Oriented Application focused

Infrastructure & Services

Needs and Priorities

IDEAL WORLD

How can it be delivered?

IT Strategy Source:MCNURLIN,B.C.B.C.2008.InformationSystemsManagementinPractice.BarbaraC.
McNurlin,RalphH.Sprague,JR.,TungBui,PearsonEducation,Limited.
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Activity Based Supply-Oriented Technology Focused

Ideal Based on
1. Future can be predicted 2. There is enough time to advance from top to bottom 3. IS and IT support and follows business 4. Top management knows best 5. Leaders provide orders and these are followed 1. Continuous change 2. Time running out 3. IS & IT both support business but also has and impact on business 4. Top Management may not know best
1. Far away from action

5. Orders are not always followed properly

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Source:MCNURLIN,B.C.B.C.2008.InformationSystemsManagementinPractice.BarbaraC. McNurlin,RalphH.Sprague,JR.,TungBui,PearsonEducation,Limited.

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New Era New Approaches: Sense-and-Respond Strategy Making

Old-era strategy One big choice long commitment

time

Strategic Envelope
New-Era Strategy: Many small choices, short commitments

Let strategies unfold rather than plan Formulate strategy close to action Use Strategic Envelope Be at the table Test the future Put the infrastructure in place
Source:MCNURLIN,B.C.B.C.2008.InformationSystemsManagementinPractice. BarbaraC.McNurlin,RalphH.Sprague,JR.,TungBui,PearsonEducation,Limited.
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time

Strategy formulation techniques

Stages of Growth Critical Success Factors Competitive forces model Three emerging forces Value chain analysis Internet Value matrix Linkage analysis planning Scenario Planning
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Porters Competitive Forces Model

The best-known framework for analyzing competitiveness is Michael Porters competitive forces model (Porter, 1985).
Porter, M. E. and Millar, V. E. (1985) How information gives you the competitive edge. Harvard Business Review. July-August, pp149-160.

Photodisc/Getty Images, Inc.

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Porters Competitive Forces Model

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Porters Competitive Forces Model

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.
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Porters Competitive Forces Model

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.
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Porters Competitive Forces Model

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
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Porters Competitive Forces Model

The threat of substitute products or services is high when there are many substitutes for an organizations 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.
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Porters Competitive Forces Model

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

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In Summary
Competitive threat Rivalry amongst existing competitors. Threat of new entrants Threat of substitute products or services Bargaining power of customers Description Competition between existing competitors in the same market The threat of a new company entering into the same market. A company offering alternative products or services in the current market. Customers ability to influence your products or services eg. negotiating lower prices, deals etc through their power to choose competitors products and services. Suppliers ability to sell their good/services to other companies, or competitors.

Bargaining power of suppliers

Laudon, K.C. and Laudon, J.P. 2007a. Essentials of Business Information Systems 7th Ed , Upper Saddle River, New Jersey: Prentice Hall.

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Competitive Advantage and Strategic Information Systems

Competitive Advantage
Porter suggest three strategies to deal with competitive forces:

Differentiate Low Cost Market Segmentation

Find a Niche

Strategic Information Systems

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Strategies for Competitive Advantage

Figure 2.5

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Porters Value Chain Model

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

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Porters Value Chain Model

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Other General Strategies for Competitive Advantage

Cost Leadership Differentiation Innovation Operational Effectiveness Customer-orientation
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Innovative Organizational Responses

Make-to-Order and mass customization
See Reebok See Bodymetrics video

E-business and E-commerce

Internet lowers entry barrier

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Not this one again???? With a quirk!

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Tutorials Monday
Individual Assignment

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Acknowledgements
Some graphical material taken from Microsoft ClipArt Library Part of the material used in this lecture was assembled by Prof. Joseph Davies and Dr Vincent Pang Images and material adapted from the text book resources
Rainer, Cegielski: Introduction to Information Systems: Enabling and Transforming Business, 4th Edition, John Wiley & Sons, 2000-2012

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