Information System in

Business
Chapter Objectives

• Provide foundation of why information systems are

important
• Identify major types of information systems

• Identify major types of information systems

Chapter Objectives
• Define construct of an information system – people, hardware,
software, data, and networks

• The above resources perform input, processing, output, storage, and

control activities that transform data resources into information
products.

• Identify challenges and ethical issues that a business manager might

face
An IS Framework for Business
Professionals
Five areas of knowledge are important to end users in order to
understand information systems:

Foundation Concepts. End users must be familiar with the basic

components and types of information systems there are. But they also
need to be familiar with general systems theory and theories of
information processing (machine and human).
Information Technology. End users should understand
technology, more precisely, the information technology of
hardware, software, telecommunications, database
management, and how all these elements interaction in a
dynamic process of very rapid change, development, and new
ways of doing business
Business Applications. How information systems are applied to business
problems is more complex than it might seem. The informed end users seeks to
learn both about how to use information systems to solve existing problems and
to begin using IS as a new way of defining problems and meeting business
opportunities. End users should gain a basic understanding in the areas of user
needs, office automation, transaction processing, the functional areas of business,
management reporting, decision support, executive support, competitive
advantage, and artificial intelligence
Development Processes. End users of IS need to know the
fundamental concepts of problem-solving and development.
Here you should become familiar with methodologies such as
the systems approach, the systems development life cycle, and
prototyping
Management Challenges. How managers make use of IS resources is a key
concern for end users. More than ever, a knowledge of management methods
is required by each end users, as IT demands that end users make more
independent decisions that support the company's overall objectives. Key
issues such as information resource management, global IT management, and
information systems planning, implementation, and control
What is a System?

Environment

Feedback Feedback
Signals Signals
Control Control by Control
Signals Management Signals

Input of Manufacturing Output of

Raw Materials Process Finished Products
System Boundary
Other Systems
Components of an Information System
People
are

Softw
Information
Hardw

Systems

are
Resources

Ne
tw a
or a t
k s D
An Information System is an organized combination of
people, hardware, software, communications networks, and
data resources that collects, transforms, and disseminates
information in an organization.

Key concepts of the text include:

Information Technology (IT). The dynamic interaction of
computer-based information systems with telecommunications
forms the backbone of IT.
End User Perspective. An end user is anyone who uses an information system or the
information it produces. As a perspective on management information systems, the end
user focuses designers, developers, and all information systems personnel on how the
system does and should function in use. Information systems are powerful tools -- and all
the more powerful when made to fit the needs of those who use them everyday. This
involves adapting the system to the user, not the other way around.
An Enterprise Perspective. Information technology can provide the information a
business needs for efficient operations. It can even be the foundation of a company's
competitive advantage. But to function properly, an information system must be
developed in support of the strategic objectives, business operations, and management
needs of the enterprise.
Components of an Information System
The information system model shown on the slide highlights the relationships
among the components and activities of information systems:

People Resources. People are required for operation of all ISs. People
resources include:
• End Users. As mentioned, these people use the IS or the information it
produces.
• IS Specialists. These people develop and operate the IS.
Hardware Resources. These include all the physical devices and materials used in information
processing, including all machines and data media. Key components include:
• Computer Systems. These are the CPUs and their related peripherals, such as terminals and
networked PCs.
• Computer Peripherals. These are input and output devices like keyboards, monitors, and secondary
storage.
• Telecommunications Networks. These are the computer systems interconnected by various
telecommunications media such as modems.
Software Resources. These include all sets of information processing
instructions. Software resources include:
• System Software. This controls the computer.

• Application Software. These are for a specific end user task, such as word-
processing.
• Procedures. These are the operating instructions for the people who use the
IS.
Data Resources. Data is both the raw material of and among the most valuable
organizational resources in the IS. Data can be in alphanumeric, text, image
and/or audio form. Data are typically organized into either Databases - which
hold processed and organized data; or Knowledge bases - which hold
knowledge in a variety of forms such as facts and rules of inference about a
given subject.
Data versus Information

Monthly Sales Report

for West Region

Sales Rep: Charles Mann

Emp No. 79154
Item Qty Sold Price
TM Shoes 1200 $100
Attributes of Information Quality
Time Dimension:
Timeliness Information should be provided when it is needed
Currency Information should be up-to-date when it is provided
Frequency Information should be provided as often as needed
Time Period Information can be provided about past, present, and future
time periods.
Content Dimension:
Accuracy Information should be free from errors
Relevance Information should be related to the information needs of a specific
recipient for a specific situation
Completeness All the information that is needed should be provided
Conciseness Only the information that is needed should be provided
Scope Information can have a broad or narrow scope, or an internal or external focus
Performance Information can reveal performance by measuring activities
accomplished, progress made, or resources accumulated.
Form Dimension:
Clarity Information should be provided in a form that is easy to understand
Detail Information can be provided in detail or summary form
Order Information can be arranged in a predetermined sequence
Presentation Information can be presented in narrative, numeric, graphic, or other
forms.
Media Information can be provided in the form of printed paper documents, video
displays, or other media.
Major Roles of Information Systems

Support
Strategies for
Competitive Advantage

Support
Business Decision Making

Support
Business Processes and Operations
Information Technology is increasingly important in the competitive marketplace.
Managers need all the help they can get. Information systems perform three vital roles
in business:

Support Business Operations. From accounting to tracking customers' orders,

information systems provide management with support in day-to-day business
operations. As quick response becomes more important, the ability of information
systems to gather and integrate information across business functions is become
crucial.
Support Managerial Decision Making. Just as information systems can
combine information to help run the business better, the same information can
help managers identify trends and to evaluate the outcome of previous
decisions. IS helps managers make better, quicker, and more informed
decisions.

Support Strategic Advantage. Information systems designed around the

strategic objectives of the company help create competitive advantages in the
marketplace.
History of the role of Information Systems
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000

Data Management Decision Strategic & Electronic

Processing Reporting Support End User Commerce

Electronic
Data Management
Processing Information
- TPS Decision
Systems
Support
Systems End User
- Ad hoc Computing
Reports Exec Info Sys Electronic
Expert Systems Business &
SIS Commerce
-Internetworked
E-Business &
Commerce
Data Processing: 1950s - 1960’s:
Electronic data processing systems. Transaction processing, record-keeping, and traditional accounting applications

Management Reporting: 1960s - 1970’s:

Management Information systems. Management reports of prespecified information to support decision making.

Decision Support: 1970s - 1980s:

Decision Support systems. Interactive ad hoc support of the managerial decision-making process.

Strategic and End User Support: 1980s - 1990’s:

End User computing systems. Direct computing support for end user productivity and work group collaboration.
Executive information systems. Critical information for top management
Expert systems: Knowledge-based expert advice for end users
Strategic Information Systems. Strategic products and services for competitive advantage

Electronic Business and Commerce: 1990’s - 2000’s:

Internetworked e-business and e-commerce Systems. Internetworked enterprise and global e-business operations and e-
commerce on the Internet, intranets, extranets, and other networks.
The e-Business Enterprise
The Internet
Suppliers and Other Business Partners Company
Boundary
Supply Chain Management
Procurement, Distribution, and Logistics
Extranets

Manufacturing
Engineering & Accounting,
and
Research and Finance
Production

Intranets
Customer Relationship Management
Marketing Sales Customer Service

Extranets

Consumer and Business Customers

The Internet and related technologies and applications is revolutionizing the way
businesses are operated and people work, and how information technology supports
business operations and end user work activities.

Businesses are quickly becoming e-business enterprises.

•The Internet and Internet-like networks - inside the enterprise (intranets), and between
an enterprise and its trading partners (extranets) - have become the primary information
technology infrastructure that supports the business operations of many companies.
E-business enterprises rely on such technologies as to:
1. Reengineer and revitalize internal business processes
2. Implement electronic commerce systems among businesses and their
customers and suppliers.
3. Promote enterprise collaboration among business teams and workgroups.
E-Business: is defined as the use of Internet technologies to
internetwork and empower business processes, electronic
commerce, and enterprise communication and collaboration
within a company and with its customers, suppliers, and other
business stakeholders
Types of Information
Systems
Why Organizations need Information Systems

• Meeting Global Challenges

• Capturing opportunities in the Market Place

• Supporting Corporate Strategy

• Linking Departments Whose Functions are different

• Enhancing Worker Productivity

• Increasing Quality of Goods and Services

 Types of Information Systems
Information Systems

Operations Management
Support Support
Systems Systems

Transaction Process Enterprise Management Decision Executive

Processing Control Collaboration Information Support Information
Systems Systems Systems Systems Systems Systems
Information Systems can be classified by the type of the support they provide an organization.

•Operations support systems process data generated by and used in business operations. They produce a variety of
information products for internal and external use. Operations support systems do not emphasize producing the specific
information products that can best be used by managers. Further processing by management information systems is usually
required. The role of a business firm’s operations support systems is to:

1. Effectively process business transactions

2. Control industrial processes

3. Support enterprise communications and collaboration

4. Update corporate databases.

Management support systems assist managers in decision making. Providing information and support for
decision making by all types of managers and business professionals is a complex task. Conceptually, several
major types of information systems support a variety of decision-making responsibilities.

1. Management information systems - provide information in the form of reports and displays to managers and
many business professionals.

2. Decision support systems - give direct computer support to managers during the decision-making process.

3. Executive information systems - provide critical information from a wide variety of internal and external
sources in easy-to-use displays to executives and managers.
Functional
Manufacturing
Business Information
Systems Systems
Human
Resources Quality Control
Systems Information
Systems

Customer

Geographic
Information Marketing
Systems Information
Systems
Financial
and Accounting
Systems 40
Other Categories of Information
Systems
Expert
ExpertSystems
Systems

Knowledge
KnowledgeManagement
ManagementSystems
Systems

Cross-Functional
Cross-FunctionalInformation
InformationSystems
Systems

Strategic
StrategicInformation
InformationSystems
Systems
 Expert Systems: Knowledge-based systems that provide expert advice and act as
expert consultants to users. Examples: credit application advisor, process monitor,
and diagnostic maintenance systems.

 Knowledge Management Systems: are knowledge-based information systems

that support the creation, organization, and dissemination of business knowledge to
employees and managers throughout a company. Examples: intranet access to
best business practices, sales proposal strategies, and customer problem resolution
systems.
 Functional Business Systems: Support a variety of operational and managerial
applications in support of basic business functions of a company. Examples:
information systems that support applications in accounting, finance, marketing,
operations management, and human resource management.

 Strategic Information Systems: are information systems that support operations or

management processes that provide a firm with strategic products, services, and
capabilities for competitive advantage. Examples: online stock trading, shipment
tracking, and e-commerce Web systems.
 Cross-Functional Information Systems: are information
systems that are integrated combinations of business information
systems, thus sharing information resources across the functional
units of an organization
Strategic Information Systems
(SIS)
• Creates applications that provide direct strategic advantage
• Differentiation
• Cost Leadership
• Supports strategic changes – like reengineering
• Provide business intelligence by collecting and analyzing information
• Improve internal efficiency
Strategic Information Systems
(SIS)
• Customer-oriented approaches

• Innovative

• Support or Shape a business unit

• Growth
• Alliances
The Information Systems Development Process