So here we are, seated in the UNSW Central Lecture Block theatre #6 for our first ever university lecture.
Business has changed in the modern world. Information technology means we should be able to do business better. Patrick has three big ideas for you this week. Here they are:
- Information is a factor of production. In traditional economics, the four ‘factors of production’ are natural resources, labour, production tools (capital), and enterprise. But, in the new economy, information is as precious, if not more precious, than any of these. It is also very different. The concept of scarcity does not translate well into the world of information technology. (Thus the woes of the music industry. Patrick goes on to mention other differences, like intangibility, different usage, value by transfer – but these are fairly obvious.)
- The modern firm is a digital firm. Even if your business isn’t about information, consulting, or services – let’s say your business is an ice-cream truck – you still need information technology. But now, let’s suppose you’re Google. You don’t just need IT. You live and breathe IT. It ‘enables and mediates your business relationships’, as Patrick puts it.
- Software is part of your business design. In some cases, software is the only thing your customers see of your business. ‘It is the new shop window’, Patrick says. (Does that mean the girl over there is window-shopping during her lectures? She keeps looking at pictures of clothes!)
Thus ends the lecture. But I think we should clarify some of the terminology as well:
- Data, information, knowledge. Data refers to meaningful facts about something. Information refers to data that has been processed so that it is suitable for human use and interpretation. Knowledge refers to a collection of information about a specific topic.
- Systems, technology. An information system is a set of interrelated components that manipulate data, information, and knowledge to help an organisation achieve its purposes. Information technology refers to the hardware and software components of the information system.
Tutorial time rolls along soon, and we meet the happy chap whose name is Antonio Pugliano. The case study for this week is on PayPal, an excellent example of Patrick’s Big Ideas For This Week. Does PayPal not treasure information as a factor of production? Does PayPal not relate to you solely through a box of ones and zeroes and some tubes? Do you not see PayPal exclusively through lights on your computer monitor? The lecture notes also add that PayPal and its international success have increased globalisation – so I guess IT shapes the entire economy, not just individual firms. But you knew that already.
I suppose we should also have a read of the textbook chapter. It’s not too exciting though I admit it’s a good taste of IT if you’ve been living under a rock (or, you know, you’re just not that into IT). There’s an introductory case study about a Finnish lumberjack firm that uses computers, a few graphs showing how “IT investment” has increased since 1980, and a metaphor comparing IT to Christopher Columbus in having global impacts. It’s all a bit dry. We become acquainted with the textbook’s adoration of contrived theories. For example, the Six Strategic Business Objectives Of Information Systems:
- Operational Excellence
- New Products, Services, and Business Models
- Customer and Supplier Intimacy
- Improved Decision-Making
- Competitive Advantage
I don’t think you need to be a pragmatist to realise that the real world doesn’t fit into neat categories like that!
Okay, having criticised the textbook extensively for the past two paragraphs and one list, I should say that I do like the textbook’s discussion of complementary assets. The gist of it is this: you bring in technology and expect it to be useful. It can only be useful if you’ve also got the right circumstances in your organisation, your management, and ‘social assets’. I like how this uses all three words of another course I’m studying, MGMT1001 (Managing Organisations & People). Convenient.