Achieving Efficiency and Effectiveness through Systems

This chapter discusses the four components of information systems and the role information technology plays in business. Read it to gain a basic understanding of these two critical topics, then attempt the two case studies and answer the questions that accompany each case.

IS budgeting

The IS budget provides a reference point of efficiency at the firm level instead of the system level. An organization with relative less IS budget when comparing with similar organizations is considered to be more efficient since it achieves the same level of services (output) with less resource (input). The advantage of using IS budget as a reference is that the information needed can be obtained relatively easily from financial documentation.

IS budgets, as measure of efficiency, have some significant limitations however. For one, assuming that two organizations are very similar is an over-simplification of reality. Moreover, a firm's IS budget will depend on the systems it currently has, as well as the one it is currently developing.