MIS Laudon Chapter 1 - Foundations of is in Business

8/13/2019 MIS Laudon Chapter 1 - Foundations of is in Business

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Instructor: Mark Onte, BSIT, MIS

Chapter 1

Foundations ofInformation Systems in

Business


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What is an Information System?

An information system can be any organized combination

of people, hardware, software, communications networks,

and data resources that stores and retrieves, transforms,

and disseminates information in an organization.

People have relied on information systems to

communicate with each other using a variety of physical

devices (hardware), information processing instructions

and procedures (software), communications channels

(networks), and stored data (data resources)since the

dawn of civilization.


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Why study Information Systems and Information

Technology? (benefits of IT in business)

Thats the same way of asking why anyone should studyaccounting, finance, operations management, marketing,

human resource management, or any other major business

functions.

1. Vital to success. Information systems and technologies area vital component of successful businesses and

organizations.

2. Used extensively in business administration and

management. IS constitutes an essential field of study inthese areas.

3. Fosters growth in business. Information technologies,

including Internet-based information systems, are vital in

expanding role in business.


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3. Improves business effectiveness and efficiency. IT helps all

kinds of businesses improve the efficiency and effectiveness

of their business processes, managerial decision making,

and workgroup collaboration, thus strengthening theircompetitive positions in a rapidly changing marketplace.

4. Necessary to be competitive. Information technologies and

systems have become a necessary ingredient for business

success in todaysdynamic global environment.

Why study Information Systems and Information

Technology? (benefits of IT in business)


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Information Technologies vs. Information Systems

The terms information systems and information technologyare sometimes used interchangeably, they are two distinct

concepts.

As defined above, the term information system describes

all of the components and resources necessary to deliver itsinformation and functions to the organization.

In contrast, the term information technology refers to the

various hardware components necessary for the system to

operate.

In theory, an information system could use simple

hardware components such as pencil and paper or file

folders to capture and store its data.


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Information Systems

For our purposes, we will concentrate on computer-basedinformation systems and their use of the following

information technologies:

1. Computer hardware technologies, including

microcomputers, midsize servers, and large mainframesystems and the input, output, and storage devices that

support them.

2. Computer software technologies, including operatingsystem software, Web browsers, software productivity

suites, and software for business applications like

customer relationship management and supply chain

management.


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3. Telecommunications network technologies, including thetelecommunications media, processors, and software

needed to provide wire-based and wireless access and

support for the Internet and private Internet-based

networks such as intranets and extranets.4. Data resource management technologies, including

database management system software for the

development, access, and maintenance of the databases of

an organization.

Information Systems


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What Should Business Professionals Know?


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An IS Framework for Business Professionals

The field of information systems encompasses many complextechnologies, abstract behavioral concepts, and specialized

applications in countless business and non-business areas. As a

manager or business professional you do not have to absorb all

of this knowledge. These are the following five areas of IS

knowledge:

1. Foundation Concepts

Fundamental behavioral, technical, business, and managerial

concepts about the components and roles of information

systems. Examples include basic information system concepts derived

from general systems theory, or competitive strategy concepts

used to develop business applications of information

technology for competitive advantage.


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2. Information Technologies

Major concepts, developments, and management issues in

information technologythat is, hardware, software, networks,

data management, and many Internet-based technologies.

3. Business Applications

The major uses of information systems for the operations,

management, and competitive advantage of a business. Thus

supporting areas of business like marketing, manufacturing, and

accounting.

Cross-functional enterprise applications like customer relationshipmanagement focuses on electronic commerce applications that

most companies are using to buy and sell products on the

Internet.

Information systems and technologies to support decision making

in business.



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4. Development Processes

How business professionals and information specialist

plan, develop, and implement information systems to

meet business opportunities.

5. Management Challenges

The challenges of effectively and ethically managing

information technology at the end user, enterprise, and

global levels of a business.



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The Fundamental Roles of IS in Business


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The Fundamental Roles of IS in Business

There are three fundamental reasons for all business

applications of information technology. They are found in

the three vital roles that information systems can perform

for a business enterprise.

Support of its business processes and operations. Support of decision making by its employees and

managers.

Support of its strategies for competitive advantage.


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Examples of The Major Roles of IS

Support Business Processes

As a consumer, you regularly encounter information

systems that support the business processes and

operations at the many retail stores where you shop.

For example, most retail stores now use computers-

based information systems to help them record customer

purchases, keep track of inventory, pay employees, buy

new merchandise, and evaluate sales trends. Store

operations would grind to a halt without the support of

such information systems.


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Support Decision Making Information systems also help store managers and other

business professionals make better decisions.

For example, decisions on what lines of merchandise need

to be added or discontinued, or on what kind ofinvestment they require, are typically made after an

analysis provided by computer-based information

systems.

This not only supports the decision making of storemanagers, buyers, and others, but also helps them look

for ways to gain an advantage over other retailers in the

competition for customers.



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Support Competitive Advantage Gaining a strategic advantage over competitors requires

innovative application of information technologies.

For example, store management might make a decision to install

touch-screen kiosks in all of their stores, with links to their e-

commerce website for online shopping.

This might attract new customers and build customer loyalty

because of the ease of shopping and buying merchandise

provided by such information systems.

Thus, strategic information systems can help provide productsand services that give a business a comparative advantage over

its competitors.



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Trends in Information Systems


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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


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How E-Business is Being Used


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E-Business Use

Reengineering Internal business processes

Enterprise collaboration systems

Support communications, coordination andcoordination among teams and work groups

Electronic commerce

Buying, selling, marketing, and servicing of

products and services over networks


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Assignment

Give an example of a company using E-Business.Describe how they do E-business.

Research on:

Operation Support Systems

Management Support Systems

Describe each system.


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Types of Information Systems

Operations Support Systems Efficiently process business transactions

Control industrial processes

Support communication and collaboration

Update corporate databases


Provide information as reports and displays

Give direct computer support to managers duringdecision-making


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Purposes of Information Systems


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Operations Support Systems

What do they do?

Efficiently process business transactions

Control industrial processes

Support communications and collaboration

Update corporate databases


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Types of Operations Support Systems

Transaction Processing Systems

Record and process business transactions

Examples: 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

Examples: email, video conferencing


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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


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What do they do?

Provide information and support for effective

decision making by managers

Management information systems Decision support systems

Executive information systems


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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


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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 businesspractices


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Other Information Systems

Strategic Information Systems Help get a strategic advantage over customer

Examples: shipment tracking, e-commerce Web

systems

Functional Business Systems

Focus on operational and managerial applications

of basic business functions

Examples: accounting, finance, or marketing


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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


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Developing IS Solutions


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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

A secret agreement, especially for fraudulent or

treacherous purposes.

A secret understanding between two or more persons

to gain something illegal.


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Challenges and Ethics of IT

Potential Risks Consumer boycotts

Work stoppages

Government intervention

Possible Responses

Codes of ethics

Incentives

Certification


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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 companys IT resources?

How can you protect yourself from computer

crime?


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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 competitiveproducts and services in the global marketplace

A dynamic and challenging career opportunity

A key component of todays networked business


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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 organizations

information systems


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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


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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


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Cybernetic System

All systems have input,processing, and outputA cybernetic system, a self-monitoring, self-

regulating system, adds feedback and control:

Feedbackis data about the performance of a

system

Controlinvolves monitoring and evaluating

feedback to determine whether a system is moving

toward the achievement of its goal


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A Business as a System


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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


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Components of an IS


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Information System Resources

People Resources

Specialists

End users

Hardware Resources

Machines

Media

Software Resources

Programs

Procedures


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Information System Resources

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


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Data Versus Information

Data are raw facts about physical phenomena orbusiness transactions

Information is data that has been converted into

meaningful and useful context for end users

Examples:

Sales data is names, quantities, and dollar amounts

Sales information is amount of sales by product

type, sales territory, or salesperson


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DATA AND INFORMATION

Raw data from a supermarket checkout counter can be processed and organized

to produce meaningful information, such as the total unit sales of dish detergent

or the total sales revenue from dish detergent for a specific store or sales territory.


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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


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Recognizing Information Systems

Business professionals should be able to look at aninformation 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


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Case Study 1

MIS Book(Laudon), p.22

UPS COMPETES GLOBALLY WITH INFORMATION

TECHNOLOGY


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Documents

MIS Laudon Chapter 1 - Foundations of is in Business