1

Introduction to Information Systems

Essentials for the Internetworked E-Business Enterprise

Eleventh Edition

James A. O’Brien

Chapter
1
Foundations
of Information Systems
in Business
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 James A. O’Brien Introduction to Information Systems Eleventh Edition 2

Chapter Objectives
• Provide foundation of why information
systems are important

• Identify major types of information

systems

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 3

An IS Framework for Business Professionals

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 4

An IS Framework for Business Professionals

Five areas of knowledge are important to end users in order to understand
information systems:

1. 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).

2. 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

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 5

An IS Framework for Business Professionals

3. 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.

4. 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.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 6

An IS Framework for Business Professionals

5. 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

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 7

Components of an Information System

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

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 8

Components of an Information System

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.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 9

Components of an Information System

People

Information
Systems
Resources

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 10

Components of an Information System

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 11

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
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 James A. O’Brien Introduction to Information Systems Eleventh Edition 12

What is a System?
System concepts underlie the field of information systems. From
the end user perspective, it is necessary to understand the
fundamentals of systems theory:
System. A system is a group of interrelated components working
together toward a common goal by accepting inputs and
producing outputs in an organized transformation process.
Systems have the following three basic interacting functions.
Input. Input involves capturing and assembling elements that
enter the system to be processed.
Processing. Processing involves the transformation of input into
output.
Output. Output is the end result of the transformation process.
Output involves transferring elements that have been produced
by a transformation process to their ultimate destination.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 14

Data versus Information

Monthly Sales Report

for West Region

Sales Rep: Charles Mann

Emp No. 79154
Item Qty Sold Price
TM Shoes 1200 $100

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 15

Data versus Information

Data:
•Data is the plural of datum, though data commonly represents both
singular and plural forms.

•Data are raw facts or observations, typically about physical

phenomena or business transactions.

•Data should be viewed as raw material resources that are processed

into finished information products.

•Data are usually subjected to a value-added process (data

processing or information processing) where
•Its form is aggregated, manipulated, and organized
•Its content is analyzed and evaluated
•It is placed in a proper context for a human user
•.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 16

Data versus Information

Information:
• Information can be defined as data that have been converted into
a meaningful and useful context for specific end users.

•Information should be viewed as processed data which has been

placed in a context that gives it value for specific end users

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 17

Attributes of Information Quality

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 18

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.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 19

• Content Dimension:
• Accuracy Information should be free from errors
• Relevance Information should be related to the information
needs of a specific recipient or 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.
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 James A. O’Brien Introduction to Information Systems Eleventh Edition 20

• 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.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 21

Major Roles of Information Systems

Support
Strategies for
Competitive Advantage

Support
Business Decision Making

Support
Business Processes and Operations

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 22

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
For example,
Point of sale system
Payroll system
Stock control system
Airline ticket management system
Ordering system

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 23

• 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. E.g.
• Sales management systems – they get input from the point of sale system
• Budgeting systems – gives an overview of how much money is spent within the organization for
the short and long terms.
• Human resource management system – overall welfare of the employees, staff turnover, etc.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 24

• Support Strategic Advantage. Information

systems designed around the strategic objectives
of the company help create competitive
advantages in the marketplace.For example,
Bank loan management systems – it is used to
verify the credit of the loan applicant and predict
the likelihood of the loan being recovered
Wal-Mart stores can provide lower prices in part
due to the lower costs incurred by their state-of-the
art computerized inventory, tracking, and
distribution system.
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 James A. O’Brien Introduction to Information Systems Eleventh Edition 25

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

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 26

History of the role of Information Systems

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.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 27

History of the role of Information Systems

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.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 28

Management Challenges of the E-business Enterprise

•Business Strategies
•Business Processes
•IS Human Resources •Business Needs
•IS Development

•Customer Relationships
•Business Partners
•IT Infrastructure
•Suppliers
•IS Performance
•Business Customers

•Organization Structure Ethical Considerations

•and Culture Potential Risks?
•User Acceptance Potential Laws?
Possible Responses?

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