Information Technology Reference
In-Depth Information
As you read this chapter, consider the following:
•
How do FedEx information systems contribute to the value of the services the company
provides?
•
How can FedEx itself act as a component of the information systems used by its
business customers?
•
Why is FedEx more valuable today than it was ten years ago?
Organizations of all types use information systems to cut costs and increase profits.
After graduating, a management major might be hired by a shipping company to help
design a computerized system to improve employee productivity. A marketing major
might work for a national retailer using a network to analyze customer needs in
different areas of the country. An accounting major might work for an accounting or
consulting firm using a computer to audit other companies' financial records. A real
estate major might use the Internet and work in a loose organizational structure with
clients, builders, and a legal team located around the world. A biochemist might con-
duct research for a drug company and use a computer to evaluate the potential of a
new cancer treatment. An entrepreneur might use information systems to advertise
and sell products and bill customers.
Although your career might be different from your classmates', you will almost
certainly work with computers and information systems to help your company or
organization become more efficient, effective, productive, and competitive in its
industry. In this chapter, you will see how information systems can help organiza-
tions produce higher-quality products and services to increase their return on in-
vestment. We begin by investigating organizations and information systems.
Why Learn About
Information
Systems in
Organizations?
Information systems have changed the way organizations work in recent years. While it once
was used primarily to automate manual processes, information technology has transformed
the nature of work and the shape of organizations themselves. In this chapter and throughout
the topic, you will explore the benefits and drawbacks of information systems in today's
organizations.
An
organization
is a formal collection of people and other resources established to accomplish
a set of goals. The primary goal of a for-profit organization is to maximize shareholder value,
often measured by the price of the company stock. Nonprofit organizations include social
groups, religious groups, universities, and other organizations that do not have profit as their
goal.
An organization is a system, which means that it has inputs, processing mechanisms,
outputs, and feedback. An organization constantly uses money, people, materials, machines
and other equipment, data, information, and decisions. As shown in Figure 2.1, resources
such as materials, people, and money serve as inputs to the organizational system from the
environment, go through a transformation mechanism, and then are produced as outputs to
the environment. The outputs from the transformation mechanism are usually goods or
services, which are of higher relative value than the inputs alone. Through adding value or
worth, organizations attempt to achieve their goals.
How does the organizational system increase the value of resources? In the transformation
mechanism, subsystems contain processes that help turn inputs into goods or services
of increasing value. These processes increase the relative worth of the combined inputs on
their way to becoming final outputs. Let's reconsider the simple car wash example from
Chapter 1 (see Figure 1.3). The first process is washing the car. The output of this
organization
A formal collection of people and
other resources established to
accomplish a set of goals.