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McGraw-Hill/Irwin
 Chapter
1

Foundations of Information Systems in

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 Foundation Concepts
• Why study information systems and
information technology?
– Vital component of successful businesses
– Helps businesses expand and compete
– Improves efficiency and effectiveness of
business processes
– Facilitates managerial decision making and
workgroup collaboration

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 Basic Questions
• What is information?
• What is a system?
• What is an information system?

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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
• 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 vs. Information

DATA INFO
Raw Facts Useful, valuable
•Hours Worked and arranged
Facts:
•Pay Scale
Applying •Total Paycheck
•Overtime def Knowledge
•Overtime Scale Base

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 INFORMATION AS A KEY RESOURCE
• Data – raw facts
– 06/01/1999 – a date
• Information – data that have a particular
meaning within a specific context
– 06/01/1999 the date an automobile was sold

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 What is a System?
• 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 Management
Information System?
• An organized combination of…
– People
– Hardware and software
– Communication networks
– Data resources
– Policies and procedures
• This system…
– Stores, retrieves, transforms, and disseminates
information in an organization

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 What is an Management
Information System?
• A management information system (MIS)
provides information that organizations require
to manage themselves efficiently and effectively
– 1. Hardware
– 2. Software
– 3. Data (information for decision making),
– 4. Procedures (design, development and
documentation),
– 5. People (individuals, groups, or organizations).

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What Should Business Professionals Know?

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Fundamental Roles of IS in
Business

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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 and
coordination among teams and work groups
• Electronic commerce
– Buying, selling, marketing, and servicing of
products and services over networks

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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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 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

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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 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

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A Cybernetic System

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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
• Types of systems…
– Open
– Adaptive

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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
• Management Support Systems
– Provide information as reports and displays
– Give direct computer support to managers during
decision-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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 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

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 Types of Management Support
Systems
• Management Information Systems (MIS)
– Reports and displays
– An IS used in for day to day working.
– 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 business
practices

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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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IT Challenges and Opportunities

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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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 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 competitive products and
services in the global marketplace
– A dynamic and challenging career opportunity
– A key component of today’s networked business

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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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 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 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

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