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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
What is a System? A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives
Chapter 1 Foundations of Information Systems in Business 3
What is an Information System? An organized combination of…
PeopleHardware and softwareCommunication networksData resourcesPolicies and procedures
This system…Stores, retrieves, transforms, and
disseminates information in an organization
Chapter 1 Foundations of Information Systems in Business 4
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)
Chapter 1 Foundations of Information Systems in Business 5
What Should Business Professionals Know?
Chapter 1 Foundations of Information Systems in Business 6
Fundamental Roles of IS in Business
Chapter 1 Foundations of Information Systems in Business 7
Trends in Information Systems
Data Processing
ManagementReporting
DecisionSupport
Strategic &End User
Electronic Commerce
1950-1960 1960-1970 1970-1980 1980-1990 1990-2000
ElectronicData Processing- TPS
ManagementInformationSystems Decision
SupportSystems- Ad hoc Reports
End UserComputingExec Info SysExpert SystemsSIS
ElectronicBusiness & Commerce-InternetworkedE-Business &Commerce
Chapter 1 Foundations of Information Systems in Business 8
What is E-Business? Using Internet technologies to empower…
Business processesElectronic commerceCollaboration within a companyCollaboration with customers, suppliers, and
other business stakeholders In essence, an online exchange of value
Chapter 1 Foundations of Information Systems in Business 9
How E-Business is Being Used
Chapter 1 Foundations of Information Systems in Business 10
E-Business Use Reengineering
Internal business processes Enterprise collaboration systems
Support communications, coordination and coordination among teams and work groups
Electronic commerceBuying, selling, marketing, and servicing of
products and services over networks
Chapter 1 Foundations of Information Systems in Business 11
Types of Information Systems Operations Support Systems
Efficiently process business transactionsControl industrial processesSupport communication and collaborationUpdate corporate databases
Management Support SystemsProvide information as reports and displaysGive direct computer support to managers
during decision-making
Chapter 1 Foundations of Information Systems in Business 12
Purposes of Information Systems
Chapter 1 Foundations of Information Systems in Business 13
Operations Support Systems What do they do?
Efficiently process business transactionsControl industrial processesSupport communications and collaborationUpdate corporate databases
Chapter 1 Foundations of Information Systems in Business 14
Types of OSS Transaction Processing Systems
Record and process business transactionsExample: sales processing, inventory systems,
accounting systems Process Control Systems
Monitor and control physical processesExample: using sensors to monitor chemical
processes in a petroleum refinery Enterprise Collaboration Systems
Enhance team and workgroup communicationExample: email, video conferencing
Chapter 1 Foundations of Information Systems in Business 15
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 ProcessingProcess transactions immediatelyExample: a bank processes an ATM
withdrawal immediately
Chapter 1 Foundations of Information Systems in Business 16
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
Chapter 1 Foundations of Information Systems in Business 17
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 supportExample: 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
Chapter 1 Foundations of Information Systems in Business 18
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
Chapter 1 Foundations of Information Systems in Business 19
IT Challenges and Opportunities
Chapter 1 Foundations of Information Systems in Business 20
Measuring IT Success Efficiency
Minimize cost, time, and use of information resources
EffectivenessSupport business strategiesEnable business processesEnhance organizational structure and culture Increase customer and business value
Chapter 1 Foundations of Information Systems in Business 21
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
Chapter 1 Foundations of Information Systems in Business 22
What is a System? A system is…
A set of interrelated componentsWith a clearly defined boundaryWorking togetherTo achieve a common set of objectivesBy accepting inputs and producing outputs In an organized transformation process
Chapter 1 Foundations of Information Systems in Business 23
Basic Functions of a System Input
Capturing and assembling elements that enter the system to be processed
ProcessingTransformation process that converts input
into output Output
Transferring transformed elements to their ultimate destination
Chapter 1 Foundations of Information Systems in Business 24
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
Chapter 1 Foundations of Information Systems in Business 25
A Business as a System
Chapter 1 Foundations of Information Systems in Business 26
Other System Characteristics If a system is one of the components of a larger
system, it is a subsystemThe larger system is an environment
Several systems may share the same environmentSome may be connected via a shared
boundary, or interface Types of systems…
OpenAdaptive
Chapter 1 Foundations of Information Systems in Business 27
Components of an IS
Chapter 1 Foundations of Information Systems in Business 28
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
Chapter 1 Foundations of Information Systems in Business 29
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
Chapter 1 Foundations of Information Systems in Business 30
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
Chapter 1 Foundations of Information Systems in Business 31
Recognizing IS Business professionals should be able to look at
an information system and identify…The people, hardware, software, data, and
network resources they useThe type of information products they produceThe way they perform input, processing,
output, storage, and control activities
