Chapter 2
Role of Information
Systems in Business
A Perspective on Information Systems
Competitive Strategies
Five Basic Competitive Forces
Value Chain
Youve used computers since you could reach a keyboard. You can’t imagine life without
tweets, smartphone apps, and Google. Do you really need to be convinced that informa-
tion systems are useful?
Convinced? Perhaps not. But information systems are useful to businesses in ways that
may not be obvious from the ways we use them in our personal life.
e ways in which information systems bring the greatest value to businesses are not
the personal applications that were familiar with. Word processing (for example) is use-
ful, to be sure, but it’s not the sort of thing that has the most business value. Neither are
record-keeping applications such as payroll processing, which at best save the cost of hiring
a few payroll clerks. We have to look for uses that have broader impact on how a company
does business, how it competes with others, how it relates to its customers, and how it can
reshape an industry. at, in turn, means that we must understand how businesses func-
tion in those respects.
is chapter will give you the perspective that you need to put the rest of this book into
that business context.
36 Information Systems: What Every Business Student Needs to Know
As you read this chapter, focus on these key concepts to use on the job:
1. Information systems are more than just computers.
2. Any business can use information systems to improve its position in its industry.
3. ere are many points in any business where information systems can be applied usefully.
4. Using information systems eectively in these ways requires understanding how a
business wants to compete: its competitive strategy.
Every organization wants to succeed. Every organization has a measure for success. For
prot-making companies, this measure has traditionally been net prot. Many companies
look beyond nancial prot to their impacts on stakeholders and the environment, but
they all need measures. For a start-up, this measure may be sales or market share. For a
university, it may be moving up in student quality, in research grants, or in the Carnegie
Foundations classication scheme. For a sports team, it is wins/losses and reaching their
league play-os. Whatever the measures are, even if people in the organization dont think
about them as measures of success, they exist.
e ultimate goal of using information systems is to improve an organizations success
by those measures. e problem with this goal is that it doesnt provide practical guidance.
We have to connect it to reality. at’s where this chapter comes in.
e connection between the three topics of this chapter and success is shown in Figure 2.1:
e industry that a company is in determines, to a high degree, its value chain: the
sequence of activities through which it produces an output that is worth more than the
total cost of its inputs. Most organizations of a given type have similar value chains.
Determines response
Value chain
FIGURE 2.1 Relationships among strategic considerations.

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