Chapter 1 Foundations of Information Systems in Business
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Chapter 1 Foundations of Information Systems
in Business
Chapter 1 Foundations of Information Systems in Business2
What is a System?
A system is…A set of interrelated componentsWith a clearly defined boundaryWorking togetherTo achieve a common set of objectivesBy accepting inputs and producing outputs In an organized transformation process
Chapter 1 Foundations of Information Systems in Business3
Basic Functions of a System
InputCapturing and assembling elements that enter
the system to be processed Processing
Transformation process that converts input into output
OutputTransferring transformed elements to their
ultimate destination
Chapter 1 Foundations of Information Systems in Business4
What is an Information System? An organized combination of…
PeopleHardware and softwareCommunication networksData resourcesPolicies and procedures
This system…Stores, retrieves, transforms, and
disseminates information in an organization
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Information Technologies Information Systems
All the components and resources necessary to deliver information and functions to the organization
Could be paper based Information Technologies
Hardware, software, networking, data management
Our focus will be on computer-based information systems (CBIS)
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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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Information System Resources People Resources
Specialists End users
Hardware Resources Machines Media
Software Resources Programs Procedures
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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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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What Should Business Professionals Know?
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Fundamental Roles of IS in Business
Chapter 1 Foundations of Information Systems in Business12
Trends in Information Systems
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What is E-Business? Using Internet technologies to empower…
Business processesElectronic commerceCollaboration within a companyCollaboration 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 systemsSupport 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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Types of Information Systems
Operations Support SystemsEfficiently process business transactionsControl industrial processesSupport communication and collaborationUpdate corporate databases
Management Support SystemsProvide information as reports and displaysGive 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 transactionsControl industrial processesSupport communications and collaborationUpdate corporate databases
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Types of OSS Transaction Processing Systems
Record and process business transactionsExample: sales processing, inventory systems,
accounting systems Process Control Systems
Monitor and control physical processesExample: using sensors to monitor chemical
processes in a petroleum refinery Enterprise Collaboration Systems
Enhance team and workgroup communicationExample: email, video conferencing
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Two Ways to Process Transactions
Batch ProcessingAccumulate transactions over time and
process periodicallyExample: a bank processes all checks
received in a batch at night
Online ProcessingProcess transactions immediatelyExample: 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 Example: daily sales analysis reports
Decision Support Systems (DSS) Interactive and ad hoc supportExample: 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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IT Challenges and Opportunities
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Measuring IT Success
EfficiencyMinimize cost, time, and use of information
resources
EffectivenessSupport business strategiesEnable business processesEnhance organizational structure and culture Increase customer and business value
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Developing IS Solutions
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Challenges and Ethics of IT Application of IT
Customer relationship management Human resources management Business intelligence systems
Potential Harm Infringements on privacy Inaccurate information Collusion
Potential Risks Consumer boycotts Work stoppages Government intervention
Possible Responses Codes of ethics Incentives Certification
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IT Careers
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A Business as a System
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Components of an IS
Case 1 Heidelberg, Honeywell, EatonSmart services, smart products
Using information technology to monitor, intervene, assist
Machines relay information via the Internet and wireless systems
Optimized performance
Minimized maintenance and repair costs
Less unanticipated downtime
Increased value justifies premium charge
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Case 3 Aviall, Inc.
Supplier of airplane parts and components Had lost track of its inventory
Price-tracking software didn’t work with inventory control or purchasing forecasting
Sent wrong parts to wrong customersSales falling
Needed a middleware visionGet all the software to work together
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Real World Case: Lufthansa
Lufthansa wants to…Keep 3,500 pilots
Trained on the latest technology and procedures
Plugged into the corporate infrastructure Informed about schedules, weather events,
and other facts that affect their jobsControl costsProvide Internet access to passengers
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