Chap01 Foundations of Information Systems in Business

Chapter 1 Foundations
of Information Systems
in Business
James A. O'Brien, and George Marakas.
Management Information Systems with MISource
2007, 8th
ed. Boston, MA: McGraw-Hill, Inc.,
2007. ISBN: 13 9780073323091

Chapter 1 Foundations of Information Systems in Business
2
Foundation Concepts
 Why study information systems and information
technology?
Vital component of successful businesses
Helps businesses expand and compete
Improves efficiency and effectiveness of
business processes
Facilitates managerial decision making and
workgroup collaboration

3
What is a System?
 A set of interrelated components
 With a clearly defined boundary
 Working together
 To achieve a common set of objectives

4
What is an Information System?
 An organized combination of…
People
Hardware and software
Communication networks
Data resources
Policies and procedures
 This system…
Stores, retrieves, transforms, and
disseminates information in an organization

5
Information Technologies
 Information Systems
All the components and resources necessary
to deliver information and functions to the
organization
Could be paper based
 Information Technologies
Hardware, software, networking, data
management
 Our focus will be on computer-based information
systems (CBIS)

6
What Should Business
Professionals Know?

7
Fundamental Roles of IS in
Business

8
Trends in Information Systems

9
What is E-Business?
 Using Internet technologies to empower…
Business processes
Electronic commerce
Collaboration within a company
Collaboration with customers, suppliers, and
other business stakeholders
 In essence, an online exchange of value

10
How E-Business is Being Used

11
E-Business Use
 Reengineering
Internal business processes
 Enterprise collaboration systems
Support communications, coordination and
coordination among teams and work groups
 Electronic commerce
Buying, selling, marketing, and servicing of
products and services over networks

12
Types of Information Systems
 Operations Support Systems
Efficiently process business transactions
Control industrial processes
Support communication and collaboration
Update corporate databases
 Management Support Systems
Provide information as reports and displays
Give direct computer support to managers
during decision-making

13
Purposes of Information Systems

14
Operations Support Systems
 What do they do?
Efficiently process business transactions
Control industrial processes
Support communications and collaboration
Update corporate databases

15
Types of OSS
 Transaction Processing Systems
Record and process business transactions
Example: sales processing, inventory systems,
accounting systems
 Process Control Systems
Monitor and control physical processes
Example: using sensors to monitor chemical
processes in a petroleum refinery
 Enterprise Collaboration Systems
Enhance team and workgroup communication
Example: email, video conferencing

16
Two Ways to Process Transactions
 Batch Processing
Accumulate transactions over time and
process periodically
Example: a bank processes all checks
received in a batch at night
 Online Processing
Process transactions immediately
Example: a bank processes an ATM
withdrawal immediately

17
Management Support Systems
 What do they do?
Provide information and support for effective
decision making by managers
 Management information systems
 Decision support systems
 Executive information systems

18
Types of Management Support Systems
 Management Information Systems (MIS)
Reports and displays
Example: daily sales analysis reports
 Decision Support Systems (DSS)
Interactive and ad hoc support
Example: a what-if analysis to determine where
to spend advertising dollars
 Executive Information Systems (EIS)
Critical information for executives and
managers
Example: easy access to actions of competitors

19
Other Information Systems
 Expert Systems - provide expert advice
 Example: credit application advisor
 Knowledge Management Systems - support creation,
organization, and dissemination of business knowledge
throughout company
 Example: intranet access to best business practices
 Strategic Information Systems - help get a strategic
advantage over customer
 Example: shipment tracking, e-commerce Web
systems
 Functional Business Systems - focus on operational and
managerial applications of basic business functions
 Example: accounting, finance, or marketing

20
IT Challenges and Opportunities

21
Measuring IT Success
 Efficiency
Minimize cost, time, and use of information
resources
 Effectiveness
Support business strategies
Enable business processes
Enhance organizational structure and culture
Increase customer and business value

22
Developing IS Solutions

23
Challenges and Ethics of IT
 Application of IT
 Customer relationship management
 Human resources management
 Business intelligence systems
 Potential Harm
 Infringements on privacy
 Inaccurate information
 Collusion
 Potential Risks
 Consumer boycotts
 Work stoppages
 Government intervention
 Possible Responses
 Codes of ethics
 Incentives
 Certification

24
Ethical Responsibilities
 What uses of IT might be considered improper
or harmful to other individuals or society?
 What is the proper business use of the Internet
or a company’s IT resources?
 How can you protect yourself from computer
crime?

25
IT Careers
 Economic downturns have affected all job
sectors, including IT
 Rising labor costs are pushing jobs to India, the
Middle East, and Asia-Pacific countries
 However, IT employment opportunities are
strong, with new jobs emerging daily
 Shortages of IT personnel are frequent
 The long-term job outlook is positive and exciting
 Figure

26
IT Careers

27
IT Careers
 Job increases will be driven by…
Rapid growth in computer system design and
related services
The need to backfill positions
Information sharing and client/server
environments
The need for those with problem-solving skills
Falling hardware and software prices, which
will fuel expanded computerization of
operations

28
The IS Function
 The IS function is…
 A major functional area of business
 An important contributor to operational efficiency,
employee productivity, morale, customer service
and satisfaction
 A major source of information and support for
decision making
 A vital ingredient in developing competitive
products and services in the global marketplace
 A dynamic and challenging career opportunity
 A key component of today’s networked business

29
System Concepts: A Foundation
 System concepts help us understand…
Technology: hardware, software, data
management, telecommunications networks
Applications: to support inter-connected
information systems
Development: developing ways to use
information technology includes designing the
basic components of information systems
Management: emphasizes the quality,
strategic business value, and security of an
organization’s information systems

30
What is a System?
 A system is…
A set of interrelated components
With a clearly defined boundary
Working together
To achieve a common set of objectives
By accepting inputs and producing outputs
In an organized transformation process

31
Basic Functions of a System
 Input
Capturing and assembling elements that enter
the system to be processed
 Processing
Transformation process that converts input
into output
 Output
Transferring transformed elements to their
ultimate destination

32
Cybernetic System
 All systems have input, processing, and output
 A cybernetic system, a self-monitoring, self-
regulating system, adds feedback and control:
 Feedback is data about the performance of a
system
 Control involves monitoring and evaluating
feedback to determine whether a system is moving
toward the achievement of its goal

33
A Business as a System

34
Other System Characteristics
 If a system is one of the components of a larger
system, it is a subsystem
The larger system is an environment
 Several systems may share the same
environment
Some may be connected via a shared
boundary, or interface
 Types of systems…
Open
Adaptive

35
Components of an IS

36
Information System Resources
 People Resources
 Specialists
 End users
 Hardware Resources
 Machines
 Media
 Software Resources
 Programs
 Procedures
 Data Resources
 Product descriptions, customer records, employee files,
inventory databases
 Network Resources
 Communications media, communications processors, network
access and control software
 Information Resources
 Management reports and business documents using text and
graphics displays, audio responses, and paper forms

37
Data Versus Information
 Data are raw facts about physical phenomena or
business transactions
 Information is data that has been converted into
meaningful and useful context for end users
 Example:
Sales data is names, quantities, and dollar
amounts
Sales information is amount of sales by
product type, sales territory, or salesperson

38
IS Activities
 Input of data resources
Data entry activities
 Processing of data into information
Calculations, comparisons, sorting, and so on
 Output of information products
Messages, reports, forms, graphic images
 Storage of data resources
Data elements and databases
 Control of system performance
Monitoring and evaluating feedback

39
Recognizing IS
 Business professionals should be able to look at
an information system and identify…
The people, hardware, software, data, and
network resources they use
The type of information products they produce
The way they perform input, processing,
output, storage, and control activities

Chap01 Foundations of Information Systems in Business

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