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Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Foundations of Information Systems in
Business
Chapter 1
1-2
Learning Objectives
Understand the concept of a system and how it relates to information systems
Explain why knowledge of information systems is important for business professionals– Identify five areas of information systems
knowledge they need
1-3
Learning Objectives
Give examples to illustrate how information systems can support a firm’s– Business processes
– Managerial decision making
– Strategies for competitive advantage
Provide examples of information systems from your experiences with business organizations in the real world
1-4
Learning Objectives
Identify challenges that managers might face in managing successful, ethical development and use of information technology
Provide examples of the components of real world information systems
Become familiar with the myriad of career opportunities in information systems
1-5
Foundation Concepts
Improves efficiency and effectiveness of
business processes
Improves efficiency and effectiveness of
business processes
Facilitates managerialdecision making
& workgroup collaboration
Facilitates managerialdecision making
& workgroup collaboration
Strengthens competitive position in
rapidly changing marketplaces
Strengthens competitive position in
rapidly changing marketplaces
Vital component of successful businesses
Vital component of successful businesses
Why studyinformation systems and information technology?
1-6
Case 1: Value Through Business Intelligence
eCourier
– Tracks customersatisfaction in real time
– Immediate attention to complaints, problems
– Allows GPS tracking of couriers and orders
– Books 95% of deliveriesonline
– Uses SeeWhy softwareto spot trends and anomalies
– Optimizes system on an ongoing basis
1-7
Case 1: Value Through Business Intelligence
Cablecom– Uses online surveys to retain customers
– Responds to complaints and problems within 24 hours
Bryan Cave– Optimizes resources while delivering highest
customer value
– Allows lawyers to track budgets in real time
– Provides diversity dashboard
– Enables firm to monitor client needs
– Allows quick response to demands
1-8
Case Study Questions
How do information technologies contribute to the business success of the companies depicted in the case?
– Provide an example from each company, explaining how the technology implemented led to improved performance
1-9
Case Study Questions
The Bryan Cave law firm used BI technology to improve the availability, access, and presentation of existing information; this allowed them to provide tailored, innovative services to customers
– What other professions could benefit from a similar use of these technologies, and how?
1-10
Case Study Questions
Cablecom developed a prediction model to better identify customers at risk of switching to another company
– In addition to those noted in the case, what other actions could be taken if that information were available?
– Would you consider letting some customers leave anyway?
1-11
What is an Information System?
Any organizedcombination of…
Policies andprocedures
Data resources
Communicationnetworks
Hardware andsoftware
Stores, retrieves, transforms, and disseminates information
in an organization
People
1-12
Early Information Systems
They weren’t computerized– Smoke signals– Library card catalogs– Book bag, day planner, and notebooks– Cash registers– Accounting ledger
1-13
What Should Business Professionals Know?
1-14
Fundamental Roles of IS in Business
1-15
Trends in Information Systems
1-16
What is E-Business?
Using Internet technologies to empower…
Business processes
Electronic commerce
Collaboration within a company
Collaboration with customers, suppliers,other business stakeholders
In essence, an online exchange of value
1-17
How E-Business is Being Used
1-18
E-Business Use
Internal business
processes
Reengineering
Support communication,
coordination, coordination
among teams and work groups
Enterprise collaboration
Buying, selling,
marketing, and servicing of products
and services over networks
Electronic commerce
1-19
Types of Information Systems
Operations
Transaction processing
Process control
Enterprise collaboration
Updating of corporate databases
Management
Decision support systems
Executive information systems
1-20
Purposes of Information Systems
1-21
Types of Operations Support Systems
Transaction Processing Systems
Record and process business transactions
Sales, inventory, and accounting
Process Control Systems
Monitor and control physical processes
Using sensors to monitor refinery processes
Enterprise Collaboration Systems
Enhance team/workgroup communication
Email, video conferencing
1-22
Two Ways to Process Transactions
Batch Processing
Accumulate transactions over time
and then process periodically
Ex: Banks process all checks in a batch at night
Online Processing
Process all transactions immediately
Ex: A bank processes ATM withdrawals immediately
1-23
Management Support Systems
What do they do?
Provide information and support foreffective decision making by managers
Management information systems
Decision support systems
Executive information
systems
1-24
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
1-25
Other Information Systems
Provides expert advice
Credit application advisor
Expert SystemsExpert
Systems
Creation, organization, dissemination of knowledge throughout company
Intranet access to best business practices
Knowledge Management
Systems
Knowledge Management
Systems
1-26
Other Information Systems
Helps get strategic advantage
Shipment tracking, e-commerce
Strategic Information
Systems
Strategic Information
Systems
Focus on operational and managerial application of basic business functions
Accounting, finance, marketing
Functional Business Systems
Functional Business Systems
1-27
IT Challenges and Opportunities
1-28
Measuring IT Success
Efficiency– Minimizes cost, time,
use of informationresources
Effectiveness– Supports business strategies
– Enables business processes
– Enhances organizational structure and culture
– Increases customer and business value
1-29
Developing IS Solutions
1-30
Challenges and Ethics of IT
Application of IT
Business intelligence
systems
Customer relationship
management
Human resource
management
Potential Harm
CollusionPrivacy
infringementInaccurate information
1-31
Challenges and Ethics of IT
Work stoppagesPotential
Risks
Government intervention
Consumer boycotts
IncentivesPossible
Responses
Certification
Codes of ethics
1-32
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?
1-33
IT Careers
Economic downturns affecting all job sectors, including IT
Rising labor costs are pushing jobs to India, the Middle East, Asia-Pacific
NegativeNegative
IT employment opportunities strong, with new jobs emerging daily
Frequent shortages of IT personnel
Long-term job outlook is positiveand exciting
PositivePositive
1-34
IT Careers
1-35
IT Careers
The need to backfill positions
Information sharing andclient/server environments
Rapid growth in computer system design and related services
Need for those with problem-solving skills
Falling hardware and software prices, which fuel expanded computerization of operations
Job increases will be driven by…
1-36
The IS Function
Major functional area of business
Important contributor to operational efficiency, employee productivity,
morale, customer service/satisfaction
Vital ingredient in developing competitive
products and services in global marketplace
Major source of information and support
for decision making
Dynamic and challenging career opportunity
Key component of today’s networked
business
1-37
System Concepts: A Foundation
Hardware, software, data management, telecommunications
networks
To support inter-connected information systems
Finding ways to use information technology; includes designing basic
information system components
Emphasizes the quality, strategic business value, and security of an organization’s information systems
Technology
Applications
Development
Management
1-38
Case 2: JetBlue & the VA
Good IT processes are as important as hardware and software when it comes to creating business value– Even smaller, less-critical processes can have
ramifications of a large magnitude in the interconnected world in which we live
The IS developed by JetBlue in 24 hours, implemented during a crisis in 2007, is now a full-time system
An unscheduled system failure took down key applications in 17 VA medical facilities for a day
1-39
Case Study Questions
Eric Brinker of JetBlue noted that the database developed during the crisis had not been needed before; the company had never experienced a meltdown
– What are the risks and benefits associated with this approach to IT planning?
1-40
Case Study Questions
With hindsight, we know that the decision made by Eric Raffin of the VA to not fail over to the Denver site was the correct one. But, it involved ignoring established backup procedures
– With the information he had at the time, what other alternatives could he have considered?
1-41
Case Study Questions
A small, undocumented change resulted in the collapse of the VA system, largely due to the high interrelationship between its applications
– What is the positive side of this high degree of interconnection, and how does this benefit patients?
1-42
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
1-43
Basic Functions of a System
InputInput
Capturing and
assembling elements that enter
the system to be
processed
ProcessingProcessing
Transforma-tion process
converts input into
output
OutputOutput
Transferring transformed elements to
their ultimate
destination
1-44
Cybernetic System
All systems have input, processing, output
A cybernetic system, a self-monitoring, self-regulating system, adds …
– Feedback… system performance data
– Control… monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal
1-45
A Cybernetic System
1-46
A Business as a System
1-47
Other System Characteristics
A system that is a component of a larger system is a subsystem
The larger system is an environment
– Several systems may share one environment
– Connected via a shared boundary (interface)
Types of systems…– Open and Adaptive
1-48
Components of an IS
1-49
Information System Resources
InformationSystem Resources
People Information
Hardware Networks
Software Data
1-50
Data Versus Information
Data are raw facts, typically about physical phenomena or business transactions
– Specifically, objective measurements of the attributes of entities
Information is data that was converted into meaningful and useful context for end users
– Aggregated, manipulated, and organized– Analyzed and evaluated– Placed in proper context for a human user
1-51
Basic IS Activities
Output
Input
Processing
Storage
Control
1-52
Recognizing Information Systems
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
1-53
Case 3: Sew What? Inc.
Provides custom theatrical draperies and fabrics for stages, concerts, fashion shows, and special events worldwide
– Launched web site and acquired clients from all over the world; revenue grew more than 45% per year
– Runs its business with Intuit’s Quick-Books Enterprise Solutions & Dell PowerEdge servers
– Awarded “Small Business Excellence Award” for its innovative use of technology to improve customers’ experience
1-54
Case Study Questions
How do information technologies contribute to the business success of Sew What? Inc.?
– Give examples from the case regarding the business value of information technology that demonstrate this conclusion
1-55
Case Study Questions
If you were a management consultant to Sew What? Inc., what would you advise Megan Duckett to do at this point to be even more successful in her business?
– What role would information technology play in your proposals? Provide specific recommendations
1-56
Case Study Questions
How could the use of information technology help a small business you know be more successful?
– Provide examples to support your answer