Foundations of Information

Systems in Business Week 1

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 Learning Objectives

1. Understand the concept of a system and how it

relates to information systems.
2. Explain why knowledge of information systems
is important for business professionals and
identify five areas of information systems
knowledge they need.
3. Give examples to illustrate how the business
applications of information systems can
support a firm’s business processes,
managerial decision making, and strategies for
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 Learning Objectives

4. Provide examples of several major types of

information systems from your experiences
with business organizations in the real world.
5. Identify several challenges that a business
manager might face in managing the
successful and ethical development and use of
information technology in a business.

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 Why study Information Systems and
Information Technology?
• Vital component of successful businesses
• Helps businesses expand and compete
• Businesses use IS and IT
– To improve efficiency and effectiveness of business
processes
– For managerial decision making
– For workgroup collaboration

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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

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 What is an Information System?

• An organized combination of
– People
– Hardware
– Software
– Communications networks
– Data resources
– Policies and procedures
• That stores, retrieves, transforms, and
disseminates information in an organization

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 Information System (IS) versus Information
Technology (IT)

• IS is all the components and resources

necessary to deliver information and functions to
the organization
• IT is hardware, software, networking and data
management

• In theory, IS could be paper based

• But we will focus on Computer-Based
Information Systems (CBIS)

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IS Knowledge Framework for
Business Professionals

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 What should a Business Professional
know about IS?
• Foundation Concepts: fundamental behavioral,
technical, business and managerial concepts
• Information Technology: Hardware, software,
networks, data management and Internet-based
technology
• Business Applications: Major uses of the IS in
the organization
• Development Processes: How to plan, develop
and implement IS to meet business opportunities
• Management Challenges: The challenges of
effectively and ethically managing IT
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 Fundamental Roles of IS in Business

• Support of business processes and operations.

• Support of decision making by employees and
managers.
• Support of strategies for competitive advantage.

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What does IS do for a business?

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Trends in Information Systems

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 What is E-business?

• The use of Internet technologies

– to work and empower business processes, electronic
commerce, and enterprise collaboration
– within a company and with its customers, suppliers, and
other business stakeholders.
• An online exchange of value.

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How e-business is being used

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 E-business use

• Reengineer internal business processes

• Enterprise collaboration systems: support
communications, coordination and collaboration
among teams and work groups, e.g., virtual
teams
• Electronic commerce: buying, selling, marketing
and servicing of products and services over
computer networks

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Types of IS

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 Operations support systems

• What are they?

– 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 data from business transactions
– Examples: sales processing, inventory systems,
accounting systems
• Process Control Systems
– Monitor and control physical processes
– Example: in a petroleum refinery use sensors to
monitor chemical processes
• Enterprise Collaboration Systems
– Enhance team and work group communications
– Examples: e-mail, videoconferencing

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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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 Management Support Systems

• What are they?

– Provide information and support for effective decision
making by managers

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 Types of Management Support
Systems
• Management Information Systems (MIS)
– Provide reports and displays to managers
– Example: daily sales analysis reports
• Decision Support Systems (DSS)
– Provide interactive ad hoc support for decision making
– Example: A what-if-analysis to determine where to
spend advertising dollars
• Executive Information Systems (EIS)
– Provide critical information for executives and
managers
– Example: easy access to actions of competitors

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 Operational or Management 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

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 Classifications of IS by scope
• Functional business systems
– Focus on operational and managerial applications of basic
business functions
– Examples: support accounting, finance or marketing
• Strategic information systems
– Help get a strategic advantage over its customers
– Examples: shipment tracking, e-commerce web systems
• Cross-functional information systems
– Systems that are combinations of several types of information
systems
– Provide support for many functions

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Challenges and Opportunities of IT

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 Measuring success of an IS

• Efficiency
– Minimize cost, time and use of information resources
• Effectiveness
– Support business strategies
– Enable business processes
– Enhance organizational structure and culture
– Increase the customer and business value
• What’s the difference between Efficiency and
Effectiveness?

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Developing IS Solutions

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 IS Function represents

• Major functional area of business

• Important contributor to operational efficiency,
employee productivity, morale, customer service
and satisfaction
• Major source of information and support for
effective decision making
• Vital ingredient in developing competitive
products and services in the global marketplace
• Dynamic and challenging career opportunity
• Key component of today’s networked business
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 Real World Group Activity

1. Search the Internet for examples of problems

that companies have had with manufacturing
systems.
– Discuss your findings and what solutions you can
propose to help companies avoid the problems you
discovered.

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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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 Systems have three basic functions:

• Input involves capturing and assembling

elements that enter the system to be
processed
• Processing involves transformation process
that convert input into output
• Output involves transferring elements that
have been produced by the transformation
process to their ultimate destination

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 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 towards the
achievement of its goal

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A Cybernetic system

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A business as a system

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Information systems model

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 Components of an IS

• People Resources
– End users: the people who use the IS or the
information from the IS
– IS specialists: the people who develop and operate IS
• Hardware Resources
– All physical devices used in information processing
– Machines, data media, peripherals
• Software Resources
– All information processing instructions including
programs and procedures
– System software, application software and procedures

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 Components of an IS (cont.)

• Data Resources
– Facts about the business transactions
– Processed and organized information
– Databases of organized data
• Network Resources
– Communications media
– Network infrastructure: hardware and software
– The Internet, intranets and extranets

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 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

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 IS Activities

• Input of data resources

– Data entry activities
• Processing of data into information
– E.g., calculate, compare, sort, classify, summarize
• Output of information products
– Messages, reports, forms and graphic images
• Storage of data resources
– Data elements and databases
• Control of system performance
– Monitoring and evaluating feedback
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 Recognizing IS

• As a business professional, you should be able

to look at an IS 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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