What makes management information systems the most exciting topic in business today is the continual change in technology, management use of the technology, and the impact on business success. New start-up firms arrive in traditional industries using the latest technologies and business models. These changes present challenges to all business managers who need to decide how to adapt their firm to new developments. What are the benefits and costs of these new developments in hardware, software, and business practice?
Prior to AD 1500, there was no truly global economic system of trade that connected all the continents on earth although there were active regional trade markets. After the sixteenth century, a global trading system began to emerge based on advances in navigation and ship technology. The world trade that ensued after these developments has brought the peoples and cultures of the world much closer together. The Industrial Revolution was really a worldwide phenomenon energized by expansion of trade among nations, making nations both competitors and collaborators in business. The Internet has greatly heightened the competitive tensions among nations as global trade expands and strengthened the benefits that flow from trade, and also created significant dislocations in labor markets.
What does globalization have to do with management information systems? The answer is simple: everything. The emergence of the Internet into a full-blown international communications system has drastically reduced the costs of operating and transacting on a global scale. Communication between a factory floor in Shanghai and a distribution center in Amsterdam, is now instant and virtually free. Customers now can shop in a worldwide marketplace, obtaining price and quality information reliably 24 hours a day. Firms producing goods and services on a global scale achieve extraordinary cost reductions by finding low-cost suppliers and managing production facilities in other countries. I
Internet service firms, such as Google and eBay, can replicate their business models and services in multiple countries without having to redesign their expensive, fixed-cost information systems infrastructure. What makes information systems so essential today? Why are businesses investing so much in information systems and technologies? They do so to achieve six important business objectives: operational excellence; new products, services, and business models; customer and supplier intimacy; improved decision making; competitive advantage; and survival.
An information system (IS) can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making, coordinating, and control in an organization. In addition, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products. Information systems contain information about significant people, places, and things within the organization or in the environment surrounding it. By information, we mean data that have been shaped into a form that is meaningful and useful to human beings. Data, in contrast, are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use.