MIS390:

Lesson 1: Information Systems Overview

The Digital Firm

A continuous stream of information technology innovations, such as smartphones, tablets, kiosks, big data, and cloud computing, are essential tools required for conducting business in the 21st century. These tools have enabled organizations to create new or improved business models and processes with information technologies. As a result, we are witnessing a significant transformation of business operations.

Characteristics of a Digital Firm

Business transformation creates the conditions for a digital firm. There are three important characteristics of a digital firm:

• First, nearly all the organization’s significant business relationships with customers, suppliers, and employees are enabled or mediated by digital technologies. 
• Second, core business processes are facilitated through digital networks that span the entire organization. A business process is defined as a set of actions that are completed to achieve a specific objective for the business, such as processing an online order, producing a product, delivering finished product to the customer, and providing after-sales service.
• Third, new technologies enable organizations to create new business models. A business model describes how an organization produces, delivers, and sells a product or service. For example, Video 1.1 illustrates how Uber's significant business relationships and core business processes are enabled by information technologies.

Finally, digital firms are capable of sensing and responding to domestic and global environments more rapidly than traditional firms. As a result, digital firms may have an advantage over traditional firms at surviving and prospering in turbulent environments.