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Chapter 1 Information Systems in Global Business Today 55

Every business has an information value chain, illustrated in Figure 1.7, in
which raw information is systematically acquired and then transformed through
various stages that add value to that information. The value of an information
system to a business, as well as the decision to invest in any new information
system, is, in large part, determined by the extent to which the system will lead
to better management decisions, more efficient business processes, and higher
firm profitability. Although there are other reasons why systems are built, their
primary purpose is to contribute to corporate value.
From a business perspective, information systems are part of a series of
value-adding activities for acquiring, transforming, and distributing informa-
tion that managers can use to improve decision making, enhance organiza-
tional performance, and, ultimately, increase firm profitability.
The business perspective calls attention to the organizational and managerial
nature of information systems. An information system represents an organiza-
tional and management solution, based on information technology, to a chal-
lenge or problem posed by the environment. Every chapter in this book begins
with a short case study that illustrates this concept. A diagram at the beginning
of each chapter illustrates the relationship between a business challenge and
resulting management and organizational decisions to use IT as a solution to
challenges generated by the business environment. You can use this diagram
as a starting point for analyzing any information system or information system
problem you encounter.
Review the diagram at the beginning of this chapter. The diagram shows how
the Ponsse wood production firm systems solved the business problem pre-
sented by the need to integrate its production and manufacturing processes.

FIGURE 1.7 THE BUSINESS INFORMATION VALUE CHAIN

From a business perspective, information systems are part of a series of value-adding activities for acquiring,
transforming, and distributing information that managers can use to improve decision making, enhance organizational
performance, and, ultimately, increase firm profitability.

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