ch01_5e.pdf

1
Fundamentals of Information
Systems, Fifth Edition
Chapter 1
An Introduction to Information Systems
in Organizations

Principles and Learning Objectives
•  The value of information is directly linked to how it
helps decision makers achieve the organization’s
goals
–  Distinguish data from information and describe the
characteristics used to evaluate the value of data
Fundamentals of Information Systems, Fifth Edition 2

(continued)
•  Knowing the potential impact of information
systems and having the ability to put this
knowledge to work can result in a successful
personal career and organizations that reach their
goals
–  Identify the basic types of business information
systems and discuss who uses them, how they are
used, and what kinds of benefits they deliver

(continued)
•  System users, business managers, and information
systems professionals must work together to build
a successful information system
–  Identify the major steps of the systems development
process and state the goal of each

(continued)
•  The use of information systems to add value to the
organization can also give an organization a
competitive advantage
–  Identify the value-added processes in the supply
chain and describe the role of information systems
within them
–  Identify some of the strategies employed to lower
costs or improve service
–  Define the term competitive advantage and discuss
how organizations are using information systems to
gain such an advantage

(continued)
•  Cooperation between business managers and IS
personnel is the key to unlocking the potential of
any new or modified system
–  Define the types of roles, functions, and careers
available in information systems

Information Concepts
•  Data, information, and knowledge
–  Data: Raw facts
–  Information: Collection of facts organized in such a
way that they have additional value beyond the value
of the facts themselves
–  Process: Set of logically related tasks performed to
achieve a defined outcome
–  Knowledge: Awareness and understanding of a set
of information

Data, Information, and Knowledge

(continued)

The Characteristics of Valuable
Information
•  If information is not accurate or complete
–  People can make poor decisions, costing thousands,
or even millions, of dollars
•  Information can be of little value to the organization
–  If information is not relevant, not delivered to
decision makers in a timely fashion, or too complex
to understand

The Value of Information
•  Valuable information
–  Can help people and their organizations perform
tasks more efficiently and effectively
–  Can help managers decide whether to invest in
additional information systems and technology

What Is an Information System?
•  Feedback mechanism
–  The component that helps organizations achieve
their goals, such as increasing profits or improving
customer service

What Is an Information System?
(continued)

Input, Processing, Output, Feedback
•  Input
–  Gathering and capturing raw data
•  Processing
–  Converting or transforming data into useful outputs
•  Output
–  Production of useful information, usually in the form
of documents and reports
•  Feedback
–  Output that is used to make changes to input or
processing activities

Manual and Computerized Information
Systems
•  An information system can be:
–  Manual
•  Example: Developing patterns and trends on graph
paper for stock analysis
–  Computerized
•  Example: Using program trading to track the market
and trade large blocks of stocks when discrepancies
occur

Computer-Based Information Systems
•  Single set of hardware, software, databases,
telecommunications, people, and procedures
configured to collect, manipulate, store, and
process data into information
•  Information technology (IT)
–  Hardware, software, databases, and
telecommunications

(continued)

(continued)
•  CBIS components
–  Hardware: Computer equipment used to perform
input, processing, and output activities
–  Software: Computer programs that govern the
operation of the computer
–  Database: Organized collection of facts and
information
–  Telecommunications: Electronic transmission of
signals for communications
–  Networks: Connect computers and equipment in a
building, around the country, and around the world

(continued)
•  CBIS components (continued)
–  Internet: World’s largest computer network
–  People: Manage, run, program, and maintain the
system
–  Procedures: Strategies, policies, methods, and
rules for using a CBIS

Business Information Systems
•  Most common types of information systems used
are those designed for:
–  Electronic and mobile commerce
–  Transaction processing
–  Management information
–  Decision support

(continued)

Electronic and Mobile Commerce
•  E-commerce
–  Any business transaction executed electronically
between:
•  Companies (B2B)
•  Companies and consumers (B2C)
•  Consumers and other consumers (C2C)
•  Business and the public sector
•  Consumers and the public sector

(continued)
•  Mobile commerce (m-commerce)
–  Transactions conducted anywhere, anytime
•  Electronic business (e-business)
–  Uses information systems and the Internet to
perform all business-related tasks and functions

(continued)

Enterprise Systems: Transaction
Processing Systems and Enterprise
Resource Planning
•  Transaction
–  Any business-related exchange
•  Transaction processing system (TPS)
–  Organized collection of people, procedures,
software, databases, and devices used to record
completed business transactions
•  Enterprise resource planning
–  Programs that manage the vital business operations
for an entire multisite, global organization

Enterprise Systems: Transaction
Processing Systems and Enterprise
Resource Planning (continued)

Information and Decision Support
Systems
•  Management information systems
software, databases, and devices
–  Provides routine information to managers/decision
makers
•  Decision support systems
software, databases, and devices that support
problem-specific decision making

Systems (continued)

Specialized Business Information
Systems: Knowledge Management,
Artificial Intelligence, Expert Systems,
and Virtual Reality
•  Knowledge management systems (KMSs)
software, databases, and devices
•  Artificial intelligence (AI)
–  Field in which the computer system takes on the
characteristics of human intelligence
–  Robotics, vision systems, and natural language
processing

and Virtual Reality (continued)

and Virtual Reality (continued)
•  Expert systems
–  Give the computer the ability to make suggestions
and act like an expert in a particular field
•  Virtual reality
–  The simulation of a real or imagined environment
that can be experienced visually in three dimensions

Systems Development
•  Creating or modifying existing business systems
•  Systems development failures can be a result of:
–  Poor planning and scheduling
–  Insufficient management of risk
–  Poor requirements determination
–  Lack of user involvement
•  Outsourcing
–  Allows a company to focus on what it does best and
delegate other functions

Systems Development (continued)

Systems Investigation and Analysis
•  Systems investigation
–  Goal is to gain understanding of the problem to be
solved or opportunity to be addressed
•  Systems analysis
–  Defines problems and opportunities of the existing
system

Systems Design, Implementation, and
Maintenance and Review
•  Systems design
–  Determines how the new system will work to meet
the business needs defined during systems analysis
•  Systems implementation
–  Creating or acquiring the system components
defined in the design step, assembling them, and
putting the new system into operation
•  Systems maintenance and review
–  Checking and modifying the system so that it
continues to meet changing business needs

Organizations and Information
Systems
•  Organization
–  Collection of people and other resources established
to accomplish a set of goals
–  Has inputs, processing mechanisms, outputs, and
feedback

Systems (continued)

Systems (continued)
•  Value chain
–  Series of activities that includes inbound logistics,
warehouse and storage, and production
•  Supply chain management (SCM)
–  Helps determine what supplies are required for the
value chain and what quantities are needed to meet
customer demand
•  Customer relationship management (CRM)
–  Helps companies manage all aspects of customer
encounters, including marketing and advertising

Systems (continued)

Organizational Culture and Change
•  Organizational culture
–  Major understandings and assumptions
–  The understandings are often not stated or
documented as goals or formal policies
•  Organizational change
–  How organizations plan for, implement, and handle
change
–  Can be sustaining or disruptive

User Satisfaction and Technology
Acceptance
•  Technology acceptance model (TAM)
–  Specifies factors that can lead to higher acceptance
and usage of technology
•  Technology diffusion
–  Measure of widespread use of technology
•  Technology infusion
–  Extent to which technology permeates a department

Competitive Advantage
•  Significant, long-term benefit to a company over its
competition
•  An organization often uses its information system
to help achieve a competitive advantage

Factors That Lead Firms to Seek
Competitive Advantage
•  Five-forces model identifies key factors
–  Rivalry among existing competitors
–  Threat of new entrants
–  Threat of substitute products and services
–  Bargaining power of buyers
–  Bargaining power of suppliers

Strategic Planning for Competitive
Advantage
•  Cost leadership
–  Deliver the lowest possible products and services
•  Differentiation
–  Deliver different products and services
•  Niche strategy
–  Deliver to a small, niche market
•  Altering the industry structure
–  Change the industry to become more favorable to
organization

Strategic Planning for Competitive
Advantage (continued)
•  Creating new products and services
–  Introduce periodically or frequently
•  Improving existing product lines and service
–  Make real or perceived improvements
•  Other strategies
–  Growth in sales
–  First to market
–  Customizing products and services
–  Hiring the best people

Performance-Based Information
Systems
•  Three major stages
–  Organizations focused on using information systems
to reduce costs and improve productivity
–  Companies generally ignored revenue potential, not
looking for opportunities to use information systems
to increase sales
–  Companies carefully consider both strategic
advantage and costs

Performance-Based Information
Systems (continued)

Productivity
•  Output achieved divided by input required
•  Higher level of output for a given level of input
means greater productivity
•  Lower level of output for a given level of input
means lower productivity

Return on Investment and the Value of
Information Systems
•  Earnings growth
–  Increase in profits
•  Market share
–  Percentage of sales in relation to total market
•  Customer awareness and satisfaction
–  Based on feedback from internal and external users
•  Total cost of ownership
–  Sum of all costs over the life of the information
system

Risk
•  Managers must consider the risks of:
–  Designing, developing, and implementing new or
modified information systems
•  Information systems can be costly failures
•  Costs of development and implementation can be
greater than the returns from the new system

Careers In Information Systems
•  Knowledge workers (KWs)
–  People who create, use, and disseminate knowledge
•  Students are increasingly completing business
degrees with a global or international orientation

Roles, Functions, and Careers in IS
•  Primary responsibilities in information systems
–  Operations: Focuses on the efficiency of IS
functions
–  Systems development: Focuses on development
projects and ongoing maintenance and review
–  Support: Provides user assistance, data
administration, user training, and Web administration
–  Information service units: Miniature IS department
attached and directly reporting to a functional area in
a large organization

Typical IS Titles and Functions
•  Chief Information Officer (CIO)
–  Employs IS department’s equipment and personnel to
help the organization attain its goals
•  LAN administrators
–  Set up and manage the network hardware, software,
and security processes
•  Internet careers
–  Opportunities are found in both traditional companies
and those that specialize in the Internet

Other IS Careers
•  New and exciting careers have developed in
security and fraud detection and prevention
–  Chief information security officer
–  Chief privacy officer
•  IS career opportunities include being employed by:
–  Microsoft (www.microsoft.com), Google
(www.google.com), and Dell (www.dell.com)

Finding a Job in IS
•  Sources
–  On-campus visits from recruiters and referrals from
professors, friends, and family members
–  The Internet

Global Challenges in Information
Systems
•  Cultural challenges
•  Language challenges
•  Time and distance challenges
•  Infrastructure challenges
•  Currency challenges

Global Challenges in Information
Systems (continued)
•  Product and service challenges
•  Technology transfer issues
•  State, regional, and national laws
•  Trade agreements

Summary
•  Data consists of raw facts
•  Information
–  Data transformed into a meaningful form
•  Types of systems include:
–  E-commerce and m-commerce
–  TPS and ERP
–  MIS and DSS
–  Specialized business information systems

Summary (continued)
•  Systems development
–  Creating or modifying existing business systems
•  Organization
–  Formal collection of people and various other
resources established to accomplish a set of goals
•  Supply chain management (SCM) helps determine:
–  What supplies are required
–  What quantities are needed to meet customer
demand
–  How the supplies are to be processed

Summary (continued)
•  Five-forces model covers:
–  Rivalry among existing competitors
–  Threat of new market entrants
–  Threat of substitute products and services
–  Bargaining power of buyers and suppliers
•  Information systems personnel typically work in an
IS department that employs:
–  A chief information officer
–  Systems analysts
–  Computer programmers and operators

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