Week 2: Information Systems In Business

Explain Information Technology’s Role In Business?

Information Technology plays a ‘support’ role in business. In short, it is an enabler – connecting each department and facilitating communication and data transfer. In today’s dynamic business environment the achievement of an organisation’s broad strategic goals greatly depend on their ability to undertake company-wide initiatives. Information technology supports the implementation of these initiatives by facilitating interdepartmental communication. It can do this, through services such as instant messaging and wireless broadband which allow workers to communicate in faster and more efficient ways.

For this reason, when information technology is successfully embedded within an organisation it has the ability to;

·         Reduce Costs

·         Improve Productivity

·         Generate Growth

What Are Efficiency And Effectiveness Metrics? Provide Some Examples Of Each.

The establishment and maintenance of developing an extensive IT system can cost a business huge expenditure. For this reason, businesses use Efficiency and Effectiveness IT metrics to measure the payoff, impact, and value gained from types of technology, and justify the expenditure.

Efficiency Metrics are measurements of  the IT system itself, such as throughput, speed and availability. In this way, metrics that measure efficiency are focused on the extent to which the organisation is using its technology to get the optimal performance from each resource.

Effectiveness Metrics are measurements of the impact the IT system in question has on the business and its processes and activities. Looking at measurements of things such as customer satisfaction, usability and conversion rates this type of metric is focused on how the technology is assisting the organisation to achieve its objectives and goals.

What does Porter’s Five Forces Model attempt to explain? How does the internet affect the model?

Michael Porter’s Five Forces Model attempts to explain how an industry’s relative attractiveness can be impacted by competitive forces such as;

      ·         Buyer Power

 

 

      ·         Supplier Power

 

 

      ·         Threat of Substitute Products/Services

 

 

      ·         Threat of new Entrants

 

 

      ·         Rivalry Among Existing Competitors

According to this model, the existing rivalry among competitors is at the centre of any industry and a company’s sales can be negatively affected by;

·         Knowledgeable Customers using their Buying Power to pit rivals against each other in order to force down prices

·         Suppliers with significant influence and power driving down profits by charging higher prices for supplies

·         New Entrants stealing potential investment capital from existing companies

·         Customers being stolen or lured away by substitute products.

As the internet continues to be used in business services and transactions Porter’s model will continue to evolve in order to incorporate the impact the worldwide web threatens to have on business. In today’s dynamic, technologically savvy business environment each of the Five Forces in Porter’s model are affected by the internet. For example, with the advent of internet shopping, buyers now have more power than ever before, with the ability to quickly and efficiently compare prices and take their business overseas and interstate when local offerings do not fit their needs. In this way the threat of new entrants and the threat of substitutes have also been magnified as a result of the internet. Now instead of only competing with stores in the nearby area, businesses face the threat of overseas companies such as Aldi, Coca-Cola and McDonald’s entering their country’s market and stealing potential capital and customers. Similarly, many suppliers have now begun utilising technological systems to more effectively and efficiently manage and distribute their stock, allowing them to reduce their costs and give them more power in the marketplace.

Describe The Relationship Between Business Processes And Value Chains?

The two concepts of business processes and value chains are intrinsically linked. The term business processes refers to a standardised set of activities that accomplish a specific task, and the Value Chain is the way in which these processes build on each other to add value to the finished product or service for each customer. In this way, in today’s fast-changing business environment organisations are being forced to continually perform one or more business processes in the form of a value chain to create more overall value for consumers than their competitors.