1.2 Understanding Information Systems

The information systems (IS) discipline underlies the intersection of organizations, people, and information technology. Information technology is a means to an end which is defined by the context in which it is being used. In the business management context, IS are developed to support the organizational processes that are performed by people. Therefore, the design of IS must incorporate many reference disciplines as indicated in the Venn diagram below:

As indicated in this diagram, IS draws from many core disciplines and crossover, or reference, disciplines including business management, economics, organization behavior, psychology, human-computer interaction, computer science and engineering, and information technology. Why does the IS field need to draw from so many disciplines? To answer this, let's begin with a high-level discussion of organizations and business management.

Organizations exist in marketplaces with varying goals of survival, profit, philanthropy, and more. Achieving these goals requires that a great many sets of actions, or business processes, be executed in a coordinated sequence. Business processes can be separated into high-level areas (e.g., accounting, marketing, management and strategy, operations, purchasing, etc.) that can be further broken down into very granular forms (e.g., process payroll, balance ledger, etc.). The exact nature of the business process—from high-level or coarse granularity to low-level or fine granularity—depends on the organization’s specific goals, the chosen strategies for achieving those goals, and the structure of the organization. IS should be developed to support, or fit with, each of the unique processes, structures, and goals of the organization. As a result, IS professionals must have business acumen; in other words, they must understand how businesses operate, meet customer needs, compete in their marketplace, and become profitable, which is the domain of business management and economics disciplines.

The people who work within the organization to achieve its goals represent another IS variable, one with potentially greater variance than the organization itself. People work within organizations for a variety of personal and professional goals (e.g., to make a living, to fulfill a purpose supported by the organization, or for enjoyment) which may or may not be in line with organizational goals. People are unique and vary greatly, each with different habits and perceptions of social norms. As a result, two people may have two entirely different patterns of behavior for completing a task. If IS supports only one type of person, other patterns (and people) may be inhibited. Therefore, developing a successful IS incorporates a degree of human psychology. IS professionals need to understand not only how people think and work, but how they will influence, and be influenced by, the formal organizational characteristics. This is the discipline of organization behavior--another key ingredient to developing successful IS.

With this understanding of organizations and people, it is easy to see the importance of implementing a flexible and agile IT infrastructure. The IT infrastructure represents the hardware, software, and networking technology used to create, store, share, analyze, and otherwise manage the information used to complete business processes. Clearly, to be effective, an IS professional must also be up-to-date on the wide world of IT capabilities that are constantly changing and improving. This means that she or he needs to have some expertise in the fields of computer science and engineering.

However, no matter how intentional an organization is about implementing the perfect IS, the "people" factor is the ultimate wild card that will always use IS in ways that were never expected. This is because people are creative and learn in very unique ways. Although an IT may be built with a particular use in mind, people will adapt and find new ways of using technology that the IT creators never considered or intended. As a result, people represent a volatile variable that must be supported by technology in order to help the people achieve organizational goals and support business processes. This is the domain of the human-computer interaction discipline.

Okay, that is six unique reference disciplines: management and economics, organization behavior, psychology, human-computer interaction, computer science and engineering, and information technology. How can one person become an expert on all of those topics by the end of a bachelor's degree? The answer is: you won't. And no one will expect you to. However, you can learn enough to understand how to solve practical and relevant problems. At first, those problems will be small and require only a basic understanding of all (or many) of those disciplines. But over time, and with experience, you will develop deeper levels of expertise and a unique blend of knowledge that will make you valuable to many organizations. Over the course of your education and career, you will become an expert in skills, domains, and technologies that other IS professionals will not. Each IS professional has the opportunity to uniquely contribute to the field of IS by pursuing the paths that are of most worth or interest - and these vary from organization to organization, person to person, and problem to problem. 

Example

Back in 2010, a good friend of mine (I'll call her "Jamie") was promoted to the role of "Director of Operations" at her mid-sized company fairly early in her career. One of her responsibilities was the company's call center which took inbound sales calls based on the TV commercials and website. This call center was the epitome of "average." It had an average rate of employee turnover, an average rate of success on sales calls (known as the "conversion rate"), and average pay and benefits. As a result, the company was considering closing the call center and outsourcing it to some third party that specialized in call center sales. To create a viable competitive advantage to merit continuing operation, the call center needed to either operate with a higher conversion rate or lower cost than the industry average.

However, Jamie was an IS graduate. She understood the latest technologies available at the time and saw an opportunity to introduce a competitive advantage at this call center. So she put together a team of developers to create a software tool that looked up each inbound phone number to determine the location of the call which also gave her the most likely income level, political and religious affiliation, and many other factors that vary and can be predicted by geographic region. In addition, she used voice recognition software (which was fairly new and cutting-edge at that time) to determine the sex of the caller and predict their likely age and ethnicity. This software also transcribed the caller's speech into text, and classified the accent and tone of the voice. Jamie's team developed new software that used all of those data points to predict, in real-time, whether the caller was likely to purchase this company's product. This new IS tool was implemented as a street stoplight animation that appeared on the call center employee's screen about 15-30 seconds into a conversation. The animation gave either a red, yellow, or green light indicating whether the employee should continue pushing a sale (green light), politely end the conversation (red light), or make a judgment call (yellow light).

Because of this new IS feature, the call center employees spent more time talking with customers who actually made purchases and much less time with those who were not going to purchase after all. The call center's sales increased and employee turnover decreased because they felt like "all-stars" as their sales conversion rates increased. Because of her IS skills and confidence, Jamie had turned this call center into a competitive advantage that was worth keeping in-house.

IS as Unstructured Problem Solving

Based on this example, another way to understand the role of IS is through the lens of an IS professional who solves unstructured business problems by creatively deploying structured information technology solutions. The problem in the example above was that the call center was less successful than it could have been if out-sourced. This problem was unstructured because there is not a clear, single, "best" solution that can be taught in some business school textbook. There were many ways to solve that problem (including out-sourcing the call center). Jamie, as an IS professional, had to use her understanding of the company's needs, her understanding of the people who would use the IS, her understanding of human-computer interface options that would best deliver the IS, and her understanding of the latest information technology available to come up with a creative solution.

Does IS -> Business or Business -> IT?

There are many perspectives on the value and purpose of IS. In his landmark 2004 book, Does IT Matter?, Nicholas Carr argues that "IT doesn't matter." His logic was that other early technologies such as electricity and railroads were once considered strategic, competitive advantages to those who adopted them. However, as every corporation in a marketplace adopted the same technology, these technologies no longer provided a competitive advantage, but simply became a necessary commodity of doing business. Carr argued that, in his view, IT had become the same type of commodity as electricity and railroads. Because no business could gain any advantage through its use of IT, companies should minimize their use of, and expenditures for, IT.

Although both research and practice have since shown that this is a very perfunctory view, Carr raised an important point that should not be ignored. While IT is necessary to support all business processes, not all business processes are part of an organization's set of core competencies—those aspects of the business that make it most unique in the marketplace and provide the most value to consumers. Therefore, some portions of the IT infrastructure should be minimized.

Despite this view, it is easy to find examples of businesses that have used IT in new and creative ways that have given them measurable competitive advantages over other firms (see example above). And, if these technological innovations help an organization achieve the first-mover advantage, they can create a sustainable competitive advantage. One of the primary—and most recent—sources of technological innovation is the field of data mining and machine learning. Data mining leads to business intelligence (BI) which is created as organizations think of unique ways to collect and analyze data in order to predict consumer preferences, reduce operating costs, and more. The IT infrastructure can be thought of as fulfilling two general purposes (in addition to supporting organizations and people): (1) IT should be used to support the structure of the organization deemed necessary to meet the strategy (at the lowest IT cost possible), and (2) IT should be used in creative ways to give the organization a sustainable strategic and competitive advantage (in which additional investments in IT may return value).

In summary, this section introduced the concept of IS and the adaptive role of IT in supporting business processes and the people who execute them. In general, the exact structure of the IS should be based on the needs of the business and not simply on the "latest and greatest" capabilities of state-of-the-art technology. Paradigms should shift because of potentially better business processes, not because of a new technology. For example, there is no reason to invest in getting Google Glass for every employee unless there is a real business value in doing so. However, history has shown that this argument is only generally true. In relatively rare instances of technological innovation, a remarkable new technology changes the paradigm and the business process must then be adjusted. The advent of the Internet is a prime example, but it’s not the only one. Mobile devices (of every type) are quickly causing organizations to rethink their processes simply because of the availability of new technology. The limitations on the value of technology are based solely on the limitations of the imagination (and occasionally some physical, hardware constraints).