Week Two - Information Systems in Business

Explain information technology’s role in business.

Information technology not only has an effect on business for example, on business’s processes, but also has the potiential to transform it for example, by transforming a very small one-person business into a very successful online business. Information technology needs to be embedded in an organisation to have a positive impact on a business – by reducing costs, improving productivity and generating growth. Customer service, finance, sales and marketing, operations management and human resources can all benefit through the implementation of effective information technology solutions.

Information technology plays a critical role in deploying initiatives by facilitating communication and increasing business intelligence.

What are Efficiency and Effectiveness Metrics? Provide some examples of each

Effectiveness metrics measure, measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell through increases. Setting the right organisational goals, stratergies and objectives and succeeding with acheiving them. An example of this is the determination of how well customers are treated at an Apple store when purchasing a new ipod.  Further Examples include :

-usability

-customer satisfaction

-conversion rates

-financial

-  Mean time to repair

-First fix rate

-Change success rate

-Server to system administration ratio

Efficiency metrics refers to the technical aspects such as rate of speed and availability in regards to transactions. This metric is measured in benchmarks. . In general the metric measures  performance of the IT system itself including throughput, speed, and availability. Getting the most from each resource. An example is the measurement of the time it takes someone to get into the supermarket line, the time it amounts for the cashier to scan all items and how long it takes for the credit card to run through.More examples include; throughput, transaction speed, system availability, web traffic.

What does Porter’s Five Forces Model attempt to explain? How does the internet affect each of the five forces?

Porter's 5 forces helps a company identify potential opportunities while deterring potential rivals. The internet affects these forces through;

1.   Buyer power: The internet makes buyers more powerful as consumers are able view the available information immediately regarding an item. It also allows the consumer to bargain for a better price, product and quality due to the many product varieties the buyer is subjected to.

2.   Supplier power: Suppliers are able to reach customers through the use of the internet as a company can send an item to almost any geographical location.

3.   Threat of substitutes: The internet can be viewed as more of a threat in regards to substitutes.

4.   Threat of new entrants: There is a higher increase of threat as it is easy for businesses to enter into a new market.

5.   Rivalry among existing competitors: In regards to competitors and the internet an increase in threats can be witnessed.

In all of these departments the internet plays a major threat, however it can be viewed as a double standard as it makes business more attractive providing more options. As technology increases competition and availability of information also increases.