01062011

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BY

Prof. RAMA SATISH K.V.

M. Tech. (IT), (Ph.D.)

Visiting Professor

International Academy of Management

and Entrepreneurship

BANGALORE.

[email protected]

Foundations of Information Systems in Business

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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

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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

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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

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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?

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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

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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

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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

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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?

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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?

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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

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Early Information Systems

They weren’t computerized– Smoke signals– Library card catalogs– Book bag, day planner, and notebooks– Cash registers– Accounting ledger

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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,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

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

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Types of Information Systems

Operations

Transaction processing

Process control

Enterprise collaboration

Updating of corporate databases

Management

Decision support systems

Executive information systems

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Purposes of Information Systems

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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

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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

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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

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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

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

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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

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IT Challenges and Opportunities

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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

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Developing IS Solutions

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Challenges and Ethics of IT

Application of IT

Business intelligence

systems

Customer relationship

management

Human resource

management

Potential Harm

CollusionPrivacy

infringementInaccurate information

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Challenges and Ethics of IT

Work stoppagesPotential

Risks

Government intervention

Consumer boycotts

IncentivesPossible

Responses

Certification

Codes of ethics

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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 company’s IT resources?

How can you protect yourself from computer crime?

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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

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IT Careers

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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…

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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

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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

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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

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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?

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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?

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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?

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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

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

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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

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A Cybernetic System

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A Business as a System

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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

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Components of an IS

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Information System Resources

InformationSystem Resources

People Information

Hardware Networks

Software Data

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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

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Basic IS Activities

Output

Input

Processing

Storage

Control

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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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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

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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

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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

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How could the use of information technology help a small business you know be more successful?

– Provide examples to support your answer

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Documents

case study

information

management

information

information

information

business professionals

cybernetic