Value-added
In understanding the value-added process, we first must recognize that there is a path that products take from their beginnings as raw materials until they eventually end up in the possession of the final user. There is also a path for services that may be slightly different, but a path nonetheless. An example of the value chain or path is given in the beginning of the second chapter. At each stage of the path, the value of the product is changed and enhanced in some way. What we are interested in here is, what does the term value-added mean and how can information systems add value?
The current view of the value-added process and role of information systems is that the two are interdependent. We use information systems to create the products and services. At the same time we also use information systems to enhance the value of the products and/or services. Let’s consider some examples of how information systems can add value.
Recently a new bookstore opened in my area. The bookstore promises service and value above what other bookstores offer. How can an information system help them do this? One example is their information desk. Online computer inventories of books, music, and magazines make it possible for staff to quickly determine if a requested book is in stock and where the customer can find it. Valuable service has been given to the customer. A customer database can be maintained and targeted mailings sent to selected customers. A scanner is used at the checkout to speed processing of purchases. Again, value is delivered to the customer.
In a bank, information systems are used to access credit information to quickly determine the credit standing of loan applicants. Information systems are used to maintain account information and prepare consolidated bank statements. Information systems make it possible for bank customers to use automated teller machines to get cash, make deposits, and check account balances at any hour of the day. In all these cases value is being created for the bank customers through the use of information systems.