Discussion: Business Goals IS

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Discussion: Business Goals IS

Discussion: Business Goals IS

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What If a Manager Doesn’t Participate? Decisions about IS directly affect the profits of a business. The basic formula Profit = Revenue − Expenses can be used to evaluate the impact of these decisions. Adopting the wrong technologies can cause a company to miss business opportunities and any revenues those opportunities would generate. For example, inadequate IS can cause a breakdown in servicing customers, which hurts sales. Poorly deployed social IT resources can badly damage the reputation of a strong brand. On the expense side, a miscalculated investment in technology can lead to over- spending and excess capacity or underspending and restricted opportunity. Inefficient business processes sustained by ill‐fitting IS also increase expenses. Lags in implementation or poor process adaptation reduces profits and there- fore growth. IS decisions can dramatically affect the bottom line.

Failure to consider IS strategy when planning business strategy and organizational strategy leads to one of three business consequences: (1) IS that fail to support business goals, (2) IS that fail to support organizational systems, and (3) a misalignment between business goals and organizational capabilities. These consequences are discussed briefly in the following section and in more detail in later chapters. The driving questions to consider are the poten- tial effects on an organization’s ability to achieve its business goals. How will the consequences impact the way people work? Will the organization still be able to implement its business strategy?

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6 Introduction

Information Systems Must Support Business Goals IS represent a major investment for any firm in today’s business environment. Yet poorly chosen IS can actually become an obstacle to achieving business goals. The results can be disastrous if the systems do not allow the orga- nization to realize its goals. When IS lack the capacity needed to collect, store, and transfer critical information for the business, decisions can be impacted and options limited. Customers will be dissatisfied or even lost. Production costs may be excessive. Worst of all, management may not be able to pursue desired business directions that are blocked by inappropriate IS. Victoria’s Secret experienced this problem when a Superbowl ad promoting an online fashion show generated so many inquiries to its Web site that the Web site crashed. Spending large amounts of money on the advertisement was wasted when potential customers could not access the site. Likewise, Toys “R” Us experienced a similar calamity when its well‐publicized Web site was unable to process and fulfill orders fast enough one holiday season. It not only lost those customers, but it also had a major customer‐relations issue to manage as a result.

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