Why do information systems exist?
because they are an integral part of a modern organisation
Theory of the Firm
firms are established because it is profitable to do so; firms organise to reduce the transaction costs of repeated and complicated activities involved in creating, selling & distributing goods & services - Coase (1937)
system of interdependence between supply of a good or service and its price. It generally sends the price up when supply is below demand, & down when supply exceeds demand. Price mechanism also restricts supply when suppliers leave the market due to low prevailing prices, & increases it when more suppliers enter the market due to high obtainable prices.
a theory explaining the relationship between principals (shareholders) and agents (company's executives). In this relationship the principal delegates or hires an agent to perform work.
Two problems that the Agency Theory addresses?
1) the goals of the principal and agent are not in conflict (agency problem) 2) the principal & agent reconcile different tolerances for risk
Transaction costs & costs of organising graph
x-axis: Number of transactions y-axis: Costs top: Total costs +ve: Organising costs -ve: Transaction costs
Accounting Information Systems (AIS)
a system of collection, storage & processing of financial & accounting data that is used by decision makers
Business pressures and responses
Pressures on business -> Organisational response -> Contracting relationships -> Information systems ERP, intranet, extranet -> Demand for technologies -> Network/internet advances -> (back to beginning)
Drivers of business & information system change?
- Globalisation - Deregulation - Advances in technology - Outsourcing & downsizing
Information technology (IT)
application of computers & telecommunications equipment to store, retrieve, transmit & manipulate data, often in the context of a business or enterprise
What two laws best describe the impact of technological change?
Metcalfe's Law & Moore's Law
the value of a network doubles with every new connection (node - n). The more interconnected people are, the more valuable the network
argues that chip density doubles every 18 months
What do Metcalfe's Law & Moore's Law mean?
Metcalfe's Law is often cited as a description of the rapid growth of the World Wide Web. Together with Moore's Law about the rate at which computer power is accelerating. Metcalfe's Law can be used to explain the rising wave of IT that we are riding through the 21st century.
Enterprise resource planning (ERP)
Integrates all aspects of an organisation's activities into one system, (including traditional AIS); integrates internal & external management information across an entire organisation - embracing finance/accounting, manufacturing, sales & service, customer relationship management, etc.
the process of inventing objects or items that display a new physical order in response to function
Three components of good design?
1) determine objectives (not always an easy task) 2) determine what needs to be done to achieve those objectives 3) choose the 'best' components to execute the actions needed to achieve objectives
a set of two or more interrelated components that interact to achieve a goal. Most systems are composed of smaller subsystems that support the larger system - E.g. a faculty of business is a system composed of various departments, each of which is a subsystem. Moreover, a faculty itself is a subsystem of a university.
What is each subsystem designed to do?
to achieve one or more organisational goals
When does goal conflict occur in a system?
when a subsystem is inconsistent with the goals of another system or with the system as a whole