Define internally focused systems and externally focused systems

Question

What will be an ideal response?

Answer 1

Information systems (IS) can be used to gain and sustain competitive advantage by supporting and/or streamlining activities along the value chain. IS can be used to support either internally or externally focused business processes.

Internally focused systems support functional areas, business processes, and decision making within an organization. These activities can be viewed as a series of links in a chain along which information flows within the organization. At each stage in the process, value is added in the form of the work performed by people associated with that process, and new, useful information is generated. Information begins to accumulate at the point of entry and flows through the various links, or business processes, within the organization, progressing through the organization with new, useful information being added every step of the way.

In contrast, externally focused systems coordinate business processes with customers, suppliers, business partners, and others who operate outside organizational boundaries. A system that communicates across organizational boundaries is sometimes referred to as an interorganizational system (IOS). The key purpose of an IOS is to streamline the flow of information from one company's operations to another's (e.g., from a company to its potential or existing customers).