Management

Information
Systems
Reference Book:
Management Information Systems
MANAGING THE DIGITAL FIRM-12th Edition,
Kenneth C. Laudon & Jane P. Laudon

Chowdhury Ummeh Kulsum Tasnuva

Chapter 1 Faculty Member
Department of Management
Information Systems in University of Chittagong

Global Business Today

Management Information System

or
Management Information Systems

1
 Table Of Contents
Why Study Information systems
01 Data vs Information 08 and
why organizations need It

Process of converting
02 09 6 strategic Business Objective
Data into Information

Organizational Dimension of
03 Systems and Information 10 Information Systems
systems

Characteristics of Good The business Information

04 11
Information value chain

Five Component Contemporary Approaches

05 12 to Information
Framework

Information Systems vs 13 MIS,Potential Risk of IS and

06 sociotechnical Systems
Information Technology

Computer Literacy vs What's new in MIS today

07 14
Information Literacy
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Data and Information

Data Information
• Streams of raw facts representing events • Clusters of facts /data processed and
such as business transactions. converted into a form that are meaningful
• The raw material from which information is and useful to human beings in the processes
generated. such as making decisions.
• Data appear in the form of text, numbers, • Facts, principles, knowledges, experience
figures or any combination of these. and intuition are applied to convert data into
information.
• Must be processed to become useful.

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 Data vs. Information
• Data consists of raw facts (i.e., a list of the exam scores for all the students in the class)
• Information is defined as:
• Knowledge derived from data
• Data presented in a meaningful context
• Data processed by summing, ordering, averaging, grouping, comparing, or other
similar operations
• A difference that makes a difference.
• Information is a collection of facts organized (or processed) in such a way that they have
additional value (i.e., a list of the class grades based on the exam score)
• In a way, information is data that has been transformed into a more useful form.
• Turning data into information is a process performed to achieve a defined outcome and
requires knowledge
• Information is subjective; Information in one person’s context is just a data point in another
person’s context. 5

Perspectives on information Systems

• Three activities of information systems produce information organizations need
1. Input: Captures raw data from organization or external environment
2. Processing: Converts raw data into meaningful form
3. Output: Transfers processed information to people or activities that use it
 Feedback: Output returned to appropriate members of organization to help
evaluate or correct input stage
 Computer/Computer program vs. information system: Computers and
software are technical foundation and tools, similar to the material and tools used
to build a house

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 Functions of an Information System

An information system contains information about an organization and its surrounding environment. Three basic
activities—input, processing, and output—produce the information organizations need. Feedback is output returned to
appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as
customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its
information systems. 7

The Process of Converting Data into Information

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 Characteristics of Good Information
• Subjectivity
• Value and usefulness of information are highly subjective cause
• What is information for one person may not be for other ( change in stock price)
• Relevancy
• Good only when it is relevant & meaningful to decision maker
• Timeliness
• Must be delivered at the right time and the right place to the right one
• Accuracy
• Must be free of errors at any stage
• Correct Information Format
• In right format to be useful to the decision maker.
• Completeness
• If decision maker satisfactorily solve the problem at hand using it.
• Accessibility
• Is useless if it is not readily accessible to decision makers in desired format and when required.

System, Information Systems

• System:
• A group of interrelated or interacting elements forming a unified whole. A set of things
working together as parts of a mechanism or an interconnecting network.
• A combination of some sub-system. E.g.; computer
• Information Systems:
• Set of interrelated components.
• Collects/Creates, processes, store, and distribute information
• By computers and software as a tool
• Support decision making, coordination, control, problem analysis and create new product
• Provide solutions to challenges in business environment.
• Component of IS: Hardware, Software, Data, Procedure, People.

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5
 Using the Five-Component Framework
• The five-component framework can help guide your learning and thinking about
information system both now and in the future.
• Automation occurs when a business process is moved to a computer to perform the business
process
• The Most Important Component-YOU

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Information System Information Technology

An Information System (IS) is a coordinated set of Information Technology (IT) refers to the use of computers,
components and resources designed to collect, store, networks, storage, and other physical devices,
process, and distribute information. It typically involves infrastructure, and processes to create, process, store,
the use of computer hardware and software, databases, secure, and exchange all forms of electronic data. IT
and communication systems to help organizations encompasses both the hardware and software necessary to
manage their operations, interact with customers, and manage and operate information systems
make informed decisions.

Example of an IS: A Customer Relationship Example of Information Technology: Cloud computing.

Management system. It involves delivering computing services (such as servers,
It helps businesses manage customer data, track storage, databases, networking, software, and analytics)
interactions, and improve customer service. over the internet ("the cloud").
Salesforce is a popular CRM system that integrates Amazon Web Services (AWS) is a leading provider of
various functionalities to support sales, marketing, and cloud computing services, allowing businesses to run
customer service. applications and store data without managing physical
servers.

The difference between information systems and information technology is that information system incorporates the technology,
people, and processes involved with information, Information technology is the design and implementation of information, or
data, within the information system. 12

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 Why Study Information Systems(IS)?

"It’s the lack of

understanding of the part of
the upper management • Make you an educated end-user
about how to oversee, • Contribute in the design of new systems (in your job)
budget, and come to grips • Increase organizational success
with the real expense and
value of the enterprise • Advance your career
information infrastructure. • Help you meet the challenges in a global market
And it’s costing companies where management decisions become more
millions of dollars in cost complex
overruns and futile attempts • Learn how data and information is used by the
to improve productivity and organization (information systems literacy)
roll out new products" - Data
Communications
13

Why Organizations Need Information Systems?

• “Today, few if any medium-or large-sized companies can survive without computer and
information systems. The world has become a small place, the competition is no longer
limited by boundaries, the reasons why organization need information systems are...
• Meeting Global Challenges: Produce high quality goods and services that can compete in
world markets
• Capturing Opportunities In The Market Place: Successful companies identify and take
advantages of opportunities in market place through Strategic Information System(SIS)
• Supporting Corporate Strategy: Use 3 basic strategies : Cost strategy, product
differentiation, market niche strategy.
• Linking Departments Whose Functions Is Different: accounting, finance, marketing,
manufacturing, human resources are linked together.
• Enhancing Worker Productivity: Computer and IS have a significant impact on a
company bottom line .
• Increasing The Quality of Good and Services: Using TQM for enhancing quality by top
and middle managers.

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The Role of Information Systems in Business Today
• How information systems are transforming • In the emerging, fully digital firm
business — Significant business relationships are digitally
— Increase in wireless technology use, Web sites enabled and mediated
— Increased business use of Web 2.0 — Core business processes are accomplished
technologies through digital networks
— Cloud computing, mobile digital platform — key corporate assets are managed digitally
allow more
• Digital firms offer greater flexibility in
— distributed work, decision-making, and organization and management
collaboration
— Time shifting, space shifting
• Globalization opportunities
— Internet has drastically reduced costs of
operating
on global scale
— Presents both challenges and opportunities
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How IS transforms business today?

1. Creating globalization opportunities:

• Internet reduced costs of operating, on global scale for Customers and firms.
• Using internet service firms such as Google and e-bay, able to replicate business and
services in multiple countries without higher investment.
2. Helps the emerging digital firm:
• The business relationships in a digital firm are digitally enabled and mediated and It’s core
business processes ( set of logically related tasks and behaviors, like developing new
product, generating and fulfilling and order, creating marketing plan, hiring an employee)
are accomplished through digital networks.
• Key corporate assets (intellectual property, core competencies, financial and human assets)
are manage through digital means.

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 The interdependence Between Organizations and Information Technology

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Firms invest heavily in IS to achieve 6 strategic business

objectives (why firms use IS?)
• Growing interdependence between ability to use information technology and ability to
implement corporate strategies and achieve corporate goals.
• Business firms invest heavily in information systems to achieve six strategic business
objectives:
• Operational excellence (Improvement of efficiency to attain higher profitability)
• New products, services, and business models (Enabled by technology)
• Customer and supplier intimacy (Serving customers raises revenues and profits)
• Improved decision making (More accurate data leads to better decisions)
• Competitive advantage
• Survival

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 6 strategic Business Objectives
1. Operational Excellence:
• Impact: Information systems improve efficiency, streamline processes, and reduce costs,
leading to higher profitability.
• IS Improvement of efficiency of operation to attain higher profitability
• IT tool to achieve greater efficiency and productivity
• Example: Toyota uses its Just-In-Time inventory system to reduce waste and improve
manufacturing efficiency, which boosts profitability. FedEx uses advanced logistics and
tracking systems to optimize its delivery network, improving efficiency and reducing costs.
This leads to faster deliveries and higher profitability.
2. New Products, Services, and Business Models:
• Impact: Technology enables firms to innovate, create new products/services, and develop new
business models.
• Example: Netflix transformed the entertainment industry by using streaming technology,
creating a new business model and disrupting traditional media consumption. Apple
leveraged information systems to introduce the App Store, creating a new business model by
allowing developers to sell apps directly to consumers. This transformed the mobile industry
and created a new revenue stream. 19

6 strategic Business Objectives

3. Customer and Supplier Intimacy:
• Impact: Information systems enable businesses to understand and respond to customer needs
and strengthen supplier relationships, increasing revenues and profits.
• Example: Amazon uses personalized recommendation systems based on customer
browsing and purchase data, leading to increased sales and customer loyalty. It also
strengthens supplier relationships by using efficient order management systems.
4. Improved Decision Making:
• Impact: Access to accurate, real-time data helps businesses make better-informed decisions,
leading to better outcomes.
• Example: Starbucks uses sales and customer data to optimize store locations and
inventory, improving decision-making and profitability.
• Zara uses real-time sales data collected from its stores to quickly adjust inventory and
design new clothing lines. This enables the company to make informed, data-driven
decisions about what products to stock and produce.
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 6 strategic Business Objectives
5. Competitive Advantage:
• Impact: Information systems help firms gain a competitive edge through differentiation, cost
leadership, or innovation.
• Example: Walmart uses its advanced supply chain management system to maintain lower
prices and faster delivery, outperforming competitors.
• Nike uses advanced data analytics and digital platforms (like Nike Training Club and Nike
Run Club) to engage customers, gather insights, and offer personalized experiences, which
differentiates it from competitors in the athletic wear industry.
6. Survival:
• Impact: Information systems are essential for keeping up with industry standards, complying
with regulations, and responding to market demands.
• Example: Kodak failed to adapt to digital photography and the shift to online photo
storage, ultimately leading to its downfall. Meanwhile, companies like Canon and Nikon
adapted their business models, incorporating digital technology to survive and thrive in the
digital photography market. 21

Organizational dimension of information systems

• To fully understand information systems, one must
understand the broader organization, management
and information technology.
• Understanding of Information system dimensions
is Information system literacy (technical).
• Where computer literacy is focused on primarily on
knowledge of IT.
• MIS try to achieve this broader information literacy.
• MIS deals with behavioral issues as well as technical
issues surrounding the development, use, and impact
of information systems used by managers and
employees in the firm.

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 Computer Literacy Vs. Information Literacy
• Computer Literacy:
• Working knowledge of computers, their components and their functions
• A tool designed as a complement of the human abilities of a human being
• Its just a system literacy
• Information Literacy:
• Information literacy is the ability to use information systems to achieve a competitive
advantage.
• Includes computer literacy, business style, understanding organization mission and
problem-solving skills.
• Ability to use computers in innovative and meaningful ways to solve business
problems.

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Organizational dimension of information systems

• Information systems are an integral part of organizations. Indeed, for some companies,
such as credit reporting firms, there would be no business without an information system.
• The key elements of an organization are its people, structure, business processes, politics,
and culture.
• Organizations have a structure that is composed of different levels and specialties. Their
structures reveal a clear-cut division of labor.
• Authority and responsibility in a business firm are organized as a hierarchy, or a pyramid
structure.
• The upper levels of the hierarchy consist of managerial, professional, and technical
employees, whereas the lower levels consist of operational personnel.

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 Organizational dimension of information systems
• Senior management makes long-range strategic
decisions about products and services as well as
ensures financial performance of the firm.
• Middle management carries out the programs
and plans of senior management and operational
management is responsible for monitoring the
daily activities of the business.
• Knowledge workers, such as engineers,
scientists, or architects, design products or
services and create new knowledge for the firm,
whereas data workers, such as secretaries or
clerks, assist with scheduling and
communications at all levels of the firm.
• Production or service workers actually pro
duce the product and deliver the service (see
Figure 1-6).
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Organizational dimension of information systems

• Experts are employed and trained for different business functions. The major business
functions, or specialized tasks performed by business organizations, consist of sales and
marketing, manufacturing and production, finance and accounting, and human resources
(see Table 1-2).

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 Organizational dimension of information systems
• An organization coordinates work through its hierarchy and through its business
processes, which are logically related tasks and behaviors for accomplishing work.
Developing a new product, fulfilling an order, and hiring a new employee are examples of
business processes.
• Most organizations’ business processes include formal rules that have been developed over
a long time for accomplishing tasks. These rules guide employees in a variety of
procedures, from writing an invoice to responding to customer complaints.
• Some of these business processes have been written down, but others are informal work
practices, such as a requirement to return telephone calls from co-workers or customers,
that are not formally documented.
• Information systems automate many business processes. For instance, how a customer
receives credit or how a customer is billed is often determined by an information system
that incorporates a set of formal business processes.

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Organizational dimension of information systems

• Each organization has a unique culture, or fundamental set of assumptions, values, and
ways of doing things, that has been accepted by most of its members.
• You can see organizational culture at work by looking around your university or college.
• Some bedrock assumptions of university life are that professors know more than students,
the reasons students attend college is to learn, and that classes follow a regular schedule.
• Different levels and specialties in an organization create different interests and points of
view. These views often conflict over how the company should be run and how resources
and rewards should be distributed.
• Conflict is the basis for organizational politics. Information systems come out of this
cauldron of differing perspectives, conflicts, compromises, and agreements that are a
natural part of all organizations.

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 Management dimension of IS
• Management’s job is to make sense out of the many situations faced by organizations, make
decisions, and formulate action plans to solve organizational problems.
• Managers perceive business challenges in the environment; they set the organizational
strategy for responding to those challenges; and they allocate the human and financial
resources to coordinate the work and achieve success.
• Managers set organizational strategy for responding to business challenges.
• In addition, managers must act creatively and do more than what already exists:
• Creation of new products and services.
• Occasionally re-creating the organization.

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Technology dimension of information systems

• Information technology is one of many tools managers use to cope with change.
• Information Technology is:
• Hardware: physical components use for inputs
• Software: preprogrammed instructions to control Hardware
• Data management technology: Software that organizing data
• Networking and telecommunications technology
• Networking: Hardware + Software+ link computers
• Internet: “global network of networks” the Universal
• Intranet: Internal corporate networks based on internet technology
• Extranet: Private intranets extended to authorized users outside the
• WWW: “World Wide Web”- service to storing, retrieving,formatting, displaying
information in a page .
• IT infrastructure: platform that the firm can built on its specific information system

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 Solve the case
XYZ Corporation recently implemented a new customer relationship management (CRM)
system to improve its interactions with customers and streamline its operations. The system
includes advanced software, cloud storage, and real-time analytics capabilities. However, the
company is facing several challenges:
1.Employees are struggling to adapt to the new system due to lack of training.
2.Some processes within the organization are not aligned with the functionalities of the CRM
system, causing inefficiencies.
3.The IT team is facing technical glitches related to data integration between the old and new
systems.
• Question:
Analyze the case using the three dimensions of information systems (Technical,Organizational,
and Human).
• Identify the key issues for each dimension and suggest solutions to address them.

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Business perspective on information systems

• Managers and business firms invest in information technology and systems because
they provide real economic value to the business.
• The decision to build or maintain an information system assumes that the returns on this
investment will be superior to other investments in buildings, machines, or other assets.
• We can see that from a business perspective, an information system is an important
instrument for creating value for the firm. Information systems enable the firm to
increase its revenue or decrease its costs by providing information that helps managers
make better decisions or that improves the execution of business processes.
• Investments in information technology will result in superior returns:
• Productivity increases
• Revenue increases
• Superior long-term strategic positioning
• Data driven decision-making
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• Competitive advantage

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 Business perspective on information systems
• From a business perspective, an information system (IS) is not just technology—it is a
solution that aligns technology with business strategies. It helps organizations operate
efficiently, make informed decisions, manage resources, and achieve competitive
advantages by collecting, processing, and analyzing data.

• Key Elements of the Business Perspective on IS

• Organizational Goals: IS supports organizational objectives, such as increasing revenue,
reducing costs, or improving customer satisfaction.
• Business Processes: IS improves workflows by automating tasks, reducing errors, and
ensuring consistency.
• Decision-Making: IS provides data and analytics for making informed strategic decisions.
• Competitive Advantage: IS can differentiate a business by offering unique products/services,
reducing operational costs, or enabling better customer experiences.

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Business perspective on information systems

• Example: Amazon's Use of Information Systems

• Goal Alignment: Amazon's goal is to provide fast and reliable customer service. It uses its
information systems to ensure efficient supply chain management and personalized
recommendations.
• Enhanced Business Processes: Amazon's IS, such as its inventory management system,
tracks stock levels in real time and ensures products are always available.
• Improved Decision-Making: Amazon's data analytics systems analyze customer behavior
to recommend products and adjust inventory levels based on demand predictions.
• Gaining Competitive Advantage: Amazon’s delivery systems, powered by IS, use
optimized routing to ensure faster delivery than competitors, creating a strong competitive
edge.

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 The Business Information Value Chain
• Every business has an information value chain, illustrated in Figure 1-7, in which raw
information is systematically acquired and then transformed through various stages that add
value to that information.
• The value of an information system to a business, as well as the decision to invest in any new
information system, is, in large part, determined by the extent to which the system will lead to
better management decisions, more efficient business.
• 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.
• Business perspective:
— Calls attention to organizational and managerial nature of information systems.

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The Business Information Value Chain

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 The Business Information Value Chain
• The Business Information Value Chain describes how information systems (IS) create value
for businesses by transforming data into useful information and insights, which in turn help
organizations improve processes, decision-making, and ultimately achieve business goals.

Example: Netflix and the Business Information Value Chain

Netflix is a well-known example of a company that effectively uses the Business Information
Value Chain to provide value to its customers and gain a competitive edge in the streaming
industry.
1. Data Collection
Netflix collects massive amounts of raw data, including:
•What users watch (movies, series, genres).
•When and how long users watch.
•User interactions, such as pausing, rewinding, or skipping.
•Ratings and reviews provided by users.
•Device usage data (TV, phone, tablet, etc.). 37

The Business Information Value Chain

2. Data Processing 3. Information Generation
• The raw data is processed and organized • Processed data is turned into actionable
using advanced data analytics tools and insights, such as:
algorithms. Key activities include: • Predicting what type of content a user is
• Categorizing viewing habits by genre, time of likely to enjoy.
day, and demographics. • Identifying trends, such as the rising
• Grouping users into clusters based on their popularity of a specific genre.
preferences (e.g., “comedy lovers” or “true • Determining which original content to
crime fans”). produce or license (e.g., Netflix Originals).
• Filtering out irrelevant or noisy data to focus
on actionable insights.

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 The Business Information Value Chain
5. Business Processes 6. Business Value Creation
• These decisions improve business operations, • The result is significant value creation for
such as: Netflix:
• Streamlining the production of Netflix • Customer Satisfaction: Personalized
Originals to align with viewer preferences. recommendations keep users engaged,
• Optimizing the streaming experience by increasing retention rates.
preloading likely-to-be-watched content for • Revenue Growth: Increased user satisfaction
users. drives subscriptions and renewals.
• Competitive Advantage: Netflix leverages
its data-driven insights to stay ahead of
competitors like Hulu and Disney+.
• Cost Efficiency: By producing content that
aligns with user preferences, Netflix avoids
costly failures.
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Complementary Assets: Organizational Capital And The Right

Business Model
• Awareness of the organizational and managerial dimensions of information systems can help us
understand why some firms achieve better results from their information systems than others. Studies
of returns from information technology investments show that there is considerable variation in the
returns firms receive.
• Information technology investments alone cannot make organizations and managers more effective
unless they are accompanied by supportive values, structures, and behavior patterns in the organization
and other complementary assets. Business firms need to change how they do business before they can
really reap the advantages of new information technologies.
• Some firms fail to adopt the right business model that suits the new technol ogy, or seek to preserve an
old business model that is doomed by new technology. For instance, recording label companies
refused to change their old business model, which was based on physical music stores for distribution
rather than adopt a new online distribution model. As a result, online legal music sales are dominated
not by record companies but by a technology company called Apple Computer.
• Complementary assets refer to resources, capabilities, or organizational elements that must be present
for a primary investment—such as information technology (IT)—to deliver maximum value. Without
these complementary assets, the primary investment may not yield significant benefits.
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Complementary Assets: Organizational Capital And The Right
Business Model
• Complementary assets are those assets required to derive value from a primary investment
(Teece, 1988). For instance, to realize value from automo biles requires substantial
complementary investments in highways, roads, gasoline stations, repair facilities, and a legal
regulatory structure to set standards and control drivers.
• Complementary assets refer to resources, capabilities, or organizational elements that must be
present for a primary investment—such as information technology (IT)—to deliver maximum
value. Without these complementary assets, the primary investment may not yield significant
benefits.
• Research on business information technology investment indicates that firms that support
their technology investments with investments in complementary assets, such as new business
models, new business processes, management behavior, organizational culture, or training,
receive superior returns, whereas those firms failing to make these complementary
investments receive less or no returns on their information technology investments.

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Complementary Assets: Organizational Capital And The Right

Business Model
• Types of Complementary Assets 3.Social/Relational Assets
1.Organizational Assets 1. Strong relationships with partners,
1. Strong management support. customers, and suppliers.
2. Efficient business processes. 2. Supportive regulatory and social
environment.
3. A collaborative company culture.
4.Technological Assets
2.Human Assets
1. Existing systems that integrate well with
1. Skilled employees trained to use the new technologies.
technology.
2. Infrastructure such as high-speed internet
2. Leadership that understands the and data storage.
importance of IT.
3. Ongoing learning and development
programs.

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 Example of Complementary Assets in Pathao
• Pathao, one of the leading ride-sharing and delivery service platforms in Bangladesh, is a great
example of how complementary assets ensure the success of a business investment in
technology.
• Pathao invested in its digital platform, a mobile app, to connect riders, drivers, and delivery
personnel. However, the success of this investment depended on several complementary
assets.
Organizational Assets:
1. Efficient Operational Model: Pathao designed an operational structure to efficiently
connect drivers and riders, minimizing delays and ensuring seamless ride allocation.
1.Example: Pathao’s algorithm ensures that nearby drivers are prioritized for ride
requests, reducing customer wait times.
2. Scalable Business Model: Pathao expanded its services to include food delivery, courier
services, and Pathao Mart, ensuring multiple revenue streams.

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Example of Complementary Assets in Pathao

Human Assets:
1. Driver and Delivery Personnel Training: Drivers are trained to use the app, follow
navigation systems, and provide quality service to customers.
1.Example: Training sessions ensure drivers can handle cashless payments or resolve
app issues effectively.
2. Customer Support Team: Pathao employs a dedicated team to resolve customer
complaints and inquiries, such as fare disputes or app errors, ensuring high user
satisfaction.
Technological Assets:
1. Reliable Mobile Application: The Pathao app is designed with user-friendly navigation,
real-time tracking, and multiple payment options.
1.Example: GPS integration allows customers to track their rides or deliveries in real
time, creating trust in the service.
2. Payment Integration: Pathao supports cashless payment methods, such as mobile wallets
(bKash, Nagad), in addition to cash, making transactions more convenient.
3. Data Analytics: Pathao uses data analytics to identify peak demand areas, optimize driver
allocation, and improve service efficiency.
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 Example of Complementary Assets in Pathao
Social/Relational Assets:
• Partnerships with Local Businesses: Pathao partners with restaurants for food delivery
and with e-commerce businesses for courier services.
• Example: Collaboration with local restaurants allows Pathao Food to offer a wide
range of dining options on its platform.
• Government Compliance: Pathao works closely with regulatory authorities to ensure
compliance with traffic and ride-sharing laws, ensuring operational continuity.
• Customer Trust: Pathao builds trust by offering transparent pricing, safety features (e.g.,
SOS button), and the ability to rate drivers.
Marketing and Branding:
• Pathao promotes its services through targeted marketing campaigns on social media,
highlighting convenience, affordability, and reliability.
• Example: Pathao’s campaigns encourage customers to use the app for quick rides
during traffic congestion or as a delivery partner for online shopping.

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Example of Complementary Assets in Pathao

• Business Value Creation
• By combining its technological investment with complementary assets, Pathao achieved the
following:
• Enhanced Customer Experience: Riders and customers enjoy real-time tracking, reliable
service, and convenient payment options.
• Operational Efficiency: Optimized driver allocation and data-driven decisions improve the
overall efficiency of the platform.
• Revenue Growth: Diversification into food delivery and logistics generates additional revenue
streams.
• Competitive Advantage: Pathao stays ahead of competitors like Uber and Shohoz by offering
localized services and adapting to customer needs.
• Scalability: Complementary assets allow Pathao to scale operations beyond major cities and into
smaller towns.
• If Pathao had only invested in the app without training its drivers, developing customer support,
or building strong partnerships, the platform would not have succeeded. The example of Pathao
shows how complementary assets—like human resources, operational processes, and
partnerships—are critical to maximizing the value of a technological investment. 46

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 Complementary Assets: Organizational Capital And The Right
Business Model

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Contemporary Approaches to Information Systems

• The study of information systems is a
multidisciplinary field.
• No single theory or perspective dominates. Figure 1-9
illustrates the major disciplines that contribute
problems, issues, and solutions in the study of
information systems.
• In general, the field can be divided into technical and
behavioral approaches.
• Information systems are sociotechnical systems.
Though they are composed of machines, devices, and
“hard” physical technology, they require substantial
social, organizational, and intellectual investments to
make them work properly.

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 Contemporary Approaches to Information Systems
• Contemporary approaches to information systems involve using various theoretical
frameworks and methodologies to study and implement information systems. These
approaches can be broadly classified into technical approaches and behavioral approaches.
Organizations often use a combination of both to maximize the efficiency and usability of their
systems.
• Contemporary approaches to information systems recognize that technology alone is not
enough. By combining technical expertise with behavioral insights, organizations can build
systems that are both efficient and user-friendly. For example, Amazon's predictive inventory
management (technical) paired with its emphasis on customer satisfaction (behavioral)
showcases the synergy of these approaches in a modern business context.

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Contemporary Approaches to Information Systems

1. Technical Approaches: These focus on the formal models and capabilities of information
systems, emphasizing technology and efficiency. The technical approach to information systems
emphasizes mathematically based models to study information systems, as well as the physical
technology and formal capabilities of these systems. The disciplines that contribute to the
technical approach are computer science, management science, and operations research.
a) Management Science Approach
• Focus: Developing mathematical and statistical models to optimize decision-making and
operations.
• Example:
• Amazon: Uses machine learning algorithms (a management science technique) to
optimize its inventory management. Predictive analytics ensures warehouses stock the
right products based on customer demand, minimizing overstock and understock
situations.

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 Contemporary Approaches to Information Systems
b) Computer Science Approach
• Focus: The study of computing, software, and hardware to design efficient information
systems.
• Example:
• Google Search Engine: Google’s information retrieval system is built using advanced
computer science principles, such as algorithms and data structures, ensuring fast and
accurate search results.
c) Operations Research Approach
• Focus: Applying mathematical techniques to solve organizational problems such as logistics,
scheduling, and resource allocation.
• Example:
• FedEx: Uses operations research to optimize its delivery routes. By analyzing factors like
traffic, weather, and distance, FedEx ensures faster and more cost-efficient deliveries.
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Contemporary Approaches to Information Systems

2. Behavioral Approaches
• These focus on the human and organizational aspects of information systems, ensuring that
systems are user-friendly, ethical, and aligned with business goals.
• An important part of the information systems field is concerned with behavioral issues that
arise in the development and long-term maintenance of information systems. Issues such as
strategic business integration, design, implementation, utilization, and management cannot be
explored usefully with the models used in the technical approach. Other behavioral disciplines
contribute important concepts and methods.
a) Sociology Approach
• Focus: Studying the impact of information systems on individuals, groups, and organizations.
• Example:
• Workplace Collaboration Tools: Microsoft Teams is designed to foster collaboration
among employees. Sociological studies of team dynamics help refine features like video
calls, shared documents, and chat threads.
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 Contemporary Approaches to Information Systems
b) Psychology Approach
• Focus: Examining how individuals interact with systems to design user-friendly interfaces and
reduce cognitive load.
• Example:
• Apple's iPhone Interface: Apple’s intuitive design principles, such as gesture-based
navigation and minimalistic layouts, are rooted in understanding user psychology to
improve user experience.
c) Economics Approach
• Focus: Analyzing the cost-benefit aspects of information systems to ensure value creation.
• Example:
• Netflix: Uses economic models to assess the cost of content delivery versus the value of
customer satisfaction. Investments in streaming infrastructure, such as high-quality
servers, are based on economic justifications.
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Contemporary Approaches to Information Systems

3. Socio-Technical Systems Approach
• This combines both technical and behavioral perspectives, emphasizing that organizations need
to balance both aspects to ensure the success of an information system.
• A sociotechnical system is an approach to understanding the interaction between people
(social factors) and technology (technical factors) in an organization. It emphasizes that both
social and technical elements must be considered together to achieve optimal performance and
effectiveness.
• Example:
• Tesla’s Autopilot System:
• Technical Component: Sophisticated AI algorithms, sensors, and cameras.
• Behavioral Component: Ensuring drivers are aware of system limitations and
providing interfaces that encourage safe usage (e.g., hands-on-wheel alerts).

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 Sociotechnical Systems
• Sociotechnical view of systems is optimal
organizational performance is achieved by jointly
optimizing both the social and technical systems
used in production.
• Adopting a sociotechnical systems perspective
helps to avoid a purely technological approach to
information systems.
• For instance, the fact that information technology
is rapidly declining in cost and growing in power
does not necessarily or easily translate into
productivity enhancement or bottom-line profits.
• Likewise, the fact that a firm has recently
introduced new business procedures and processes
does not necessarily mean employees will be more
productive in the absence of investments in new
information systems to enable those processes.
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Sociotechnical Systems: Example: Uber Ride-Sharing Platform

1.Technical System:
1. Uber’s app, GPS, payment system, and backend servers form the technical infrastructure.
The app matches riders with drivers, calculates fares, and processes payments in real-
time.
2.Social System:
1. Uber drivers and passengers interact through the app. Drivers use the app to receive ride
requests, navigate to passengers' locations, and complete the journey. Passengers use the
app to book rides, track drivers, and make payments.
2. The company also has a customer support team to assist with issues that arise during
rides, ensuring a smooth experience for both drivers and passengers.
• Sociotechnical Integration:
• Uber's success depends on both the technology (the app's efficiency, real-time updates,
payment processing) and the social interaction between drivers and passengers.
• Problems like drivers not being able to navigate the app or disputes between drivers and
passengers affect the system's overall performance, demonstrating the need for both well-
functioning technology and effective human interaction.
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 Potential Risks of Information system
• “Deskilling “of workers: While Is can increase operational efficiency and improve profits,
sometimes it also the root cause of work-force reduction.
• Information overload: As IS generate reports easily and quickly, however this improvement
can sometimes lead to overload /excessive of information.
• Employee Mistrust: Companies use to monitor the activities of employees which may lead to
cause of mistrust and dislike .
• Increased Competitive Pressure: As growing development of IS , large companies with
greater investment in IS pushed out the small companies in competition.
• Misinvestment with IS: Investment in inappropriate technology or poor applications of good
technologies result in poor returns and decrease the value of Is and thus generate loss of the
firm.
• Challenges in Developing IS: The most difficult task and challenging because of time
constraint and budget.
• Security Breaches: The risk of securing the assets from theft and hacking.
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Management Information Systems

• MIS as a field of study: An interdisciplinary field that is influenced by computer science,
political science, psychology, operation research, linguistics, sociology and organizational
theory and behavior.
• MIS as an Information system: MIS is a broad class of systems that provides information to
facilitate organizational decision making.
• MIS is the development and use of information systems that help businesses achieve their
goals and objectives.There are three key elements:
• Components of an information systems
• Development and use of information systems
• Achieving business goals and objectives
• MIS deals with behavioral issues as well as technical issues used by managers ans employees
of the firm.
• Management information system (MIS) is a system that provides information needed to
manage organizations effectively. Management information systems involve three primary
resources: technology, information, and people.
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 Management Information Systems
• Management Information System (MIS) is a system used to collect, process, store, and
disseminate information to help in managerial decision-making. It integrates data from
different sources, processes it, and provides meaningful insights to support decision-making at
various levels of an organization.
• A real-life example of MIS is Walmart's inventory and sales system. Here's how it works:
1.Data Collection: Walmart tracks sales, inventory levels, and customer preferences through
sensors, barcode scanners, and loyalty programs.
2.Data Processing: The system analyzes sales trends, inventory data, and customer behavior to
identify patterns.
3.Information Storage: Processed data is stored in a centralized database, accessible to
managers and executives.
4.Information Dissemination: MIS generates reports on sales, stock levels, and market trends
for decision-makers.
5.Decision Support: Managers use the data for inventory replenishment, sales forecasting, and
product placement to optimize operations.
• Walmart’s MIS helps streamline operations, reduce costs, and make informed, data-driven
decisions.
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What’s New in MIS Today?

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What’s New in MIS Today?

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What’s New in MIS Today?

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 MIS Trends in Business
• AI Integration: • Example: IBM Food Trust tracks food products
• Impact: Boosts decision-making, automates via blockchain for transparency and safety.
tasks, and personalizes customer experiences. • Real-Time Data Processing:
• Example: Amazon uses AI to optimize • Impact: Enables quick responses to market
inventory and recommend products, increasing changes and operational disruptions.
sales and reducing costs. • Example: Uber uses real-time data to optimize
• Cloud Computing: ride matching and routes.
• Impact: Reduces infrastructure costs, enables• Mobile MIS:
scalability, and improves collaboration. • Impact: Provides on-the-go access to data for
• Example: Salesforce integrates CRM functions faster decision-making.
to enhance customer relationships and • Example: Microsoft Power BI enables
productivity. executives to access business insights from
• Big Data Analytics: mobile devices.
• Impact: Provides insights into customer• These innovations enhance business efficiency,
behavior and operational performance for data- improve customer experience, and enable quicker,
driven decisions. data-driven decision-making.
• Example: Walmart uses big data to optimize
inventory and improve supply chain efficiency.
• Blockchain:
• Impact: Enhances data security and
transparency, reducing fraud and increasing
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