Introduction to Information Systems

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Introduction to Information Systems

• Professor Paul Morrison
• March 22, 2006

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Todays Lecture

• Module focus IT Transforms industries
• Porter 5-Force Model of Competition
• IT effects on competition
• Types of IT systems
• Types of E-commerce
• Focus B2B and B2C

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IT Transforms Industries

• Changes cost structure economics
• Disconnects service, info, tangibles
• Hard to imitate successful change
• Must change human, technical, business process,
  and customer systems
• First-mover advantages, natural monopolies
  Microsoft, eBay, Yahoo!
• Technical change from science change continues at
  rapid pace

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Porters 5-Forces Model (p306)
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Power of Suppliers

• Greater if few suppliers
• Greater if large relative to firms
• Greater if supply is vital
• Greater if many customers
• Greater if customers cannot backward integrate
• Greater if no substitutes for supply

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Power of Buyers (customers)

• Greater if few buyers
• Greater if large relative to firms
• Greater if there are many firms
• Greater if buyers have substitutes
• Greater if buyers can backward integrate
• Greater if product is a commodity

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Threat of Entry

• Greater if few barriers to entry
• Low capital, scale, patent protection,
  brand-name, distribution network requirements,
  first-mover advantage
• Greater if outside firms large, rich
• Greater if industry profits high
• Greater if low barriers to exit

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Threat of Substitutes

• Greater if different product/ service provides
  very similar function, cost
• Greater if industry product / service very
  expensive, important
• Greater if rate of technological change high
• Greater if switching costs low
• Greater if high variety outside strat.

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Intensity of Rivalry

• High barriers to exit
• Low barriers to entrance
• Commodities
• Similar size, strategies, technology
• High capital intensity, fixed costs, scale
• Slow industry growth in demand

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IT Effects on Competition

• Reduce Costs Increase Speed
• Customization Segmentation
• Convenience Flexibility
• Automate Reduce Inventories
• Info available More Value-Added
• Separate services, info, tangibles
• Wide scope markets buyers, suppliers

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IT effects on 5 forces

• Increase threat of substitutes
• Increase differentiation, variety of strategies
• Increase number of suppliers, buyers
• Various effects on barriers to entry
• Increase barriers to exit
• Increase perfect information
• Reduce switching costs

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E-Commerce v. Business Processes

• Business Processes Info Systems deliver on the
  promises made by E-Commerce Strategy
• Just as... Operations Management delivers on the
  promises made by Marketing

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Types of IT Systems

• Business Process/ Operations Support
• Transaction Processing
• Office Automation / Productivity
• Process Control
• Collaboration
• Expert systems
• Knowledge Management

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Management Support Information Systems

• MIS (Management Information Systems) versus DSS
  (Decision Support Systems) difference?
• Older, rigid format, periodic reports
• versus
• Interactive, flexible, what if scenarios

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Concepts in B2B E-Commerce

• One-to-one connection between partners, or
  suppliers and buyers
• Electronic marketplaces or exchanges with
  many companies

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B2B E-Commerce, continued

• Maint, Repair, Ops (MRO) supplies
• versus
• Direct Materials
• Horizontal markets many industries
• versus (usually MRO)
• Vertical markets within an industry (usually
  Direct Materials)

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Concepts in B2C E-Commerce

• Go anywhere through Internet search
• Mass customization
• Types of products (remember Marketing?)
• Convenience
• Specialty / Shopping
• Commodity-like (books, music)
• Digital low or zero tangibles

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Concepts Not to worry about...

• Systems development
• IT Careers
• Payment Systems
• Security
• Differences between MIS, DSS, ESS
• Hardware, varieties of software