Management Information Systems, Sixth Edition Chapter 1 Business Information Systems: An Overview.

Management Information Systems, Sixth Edition

Chapter 1Business Information Systems:

An Overview

Management Information Systems, Sixth Edition 2

Objectives

• Explain why information technology matters• Define digital information and explain why digital

systems are so powerful and useful• Explain why information systems are essential to

business• Describe how computers process data into

useful information for problem solving and decision making

• Identify the functions of different types of information systems in business

Objectives (continued)

• Describe careers in information technology• Identify major ethical and societal concerns

created by widespread use of information technology


Does Information Technology Matter?

• Hackett Group study: “Does IT Matter? Hackett Concludes the Answer is Yes”– World’s best performing companies spent 7%

more per employee on IT than typical companies

– They recouped the investment fivefold in lower operational costs

• Today’s business professionals must know how to develop and use IT


The Power of Digital Systems

• Binary counting system uses only two digits: 0 and 1

• Digital systems: – Computers and devices that use the binary

system

– Can represent any information as a combination of zeros and ones

• Information can be represented, stored, communicated, and processed digitally


The Power of Digital Systems (continued)

• Digital information is stored and communicated by means of electromagnetic signals– Extremely fast

– Digital copy is an exact copy of the original

• Accuracy and speed make digital systems powerful, useful, and important



The Purpose of Information Systems

• Businesses use information systems– To make sound decisions

– To solve problems

• Problem: any undesirable situation• Decision: arises when more than one solution to

problem exists• Both problem solving and decision making

require information


The Purpose of Information Systems (continued)

• Keys to success in business:– Gathering correct information efficiently

– Storing information

– Using information

• Purpose of information systems is to support these activities


Data, Information, and Information Systems

• “Data,” “information,” and “system” are commonly used terms

• Important to understand their similarities and differences


Data vs. Information

• Data: a given or fact– Can be number, statement, or picture

– Is the raw material in the production of information

• Information: facts or conclusions that have meaning within context– Composed of data that has been manipulated


Data Manipulation

• Data is manipulated to make useful information– New information can be generated from data,

such as averages, trends, etc.

• Survey is common method of collecting data• Raw data is hard to read• Information is more useful to business than data


Generating Information

• Process: the manipulation of data– Usually produces information

– May produce more data

• A piece of information (output of a process) in one context may be considered data (input to a process) in another context


Generating Information (continued)


Information in Context

• Not all information is useful• To be useful, information must be:

– Relevant

– Complete

– Accurate

• In business, information must also be:– Current

– Obtained in a cost-effective manner


Information in Context (continued)


What Is a System?

• System: array of components that work together to achieve goal or goals

• System– Accepts input

– Processes input

– Produces output


What is a System? (continued)

• System may have multiple goals• System may contain subsystems• Subsystem: component of a larger system• Subsystems have subgoals that contribute to

main goal• Subsystems can receive input from and transfer

output to other subsystems





• Closed system: has no connections with other systems

• Open system: interfaces and interacts with other systems– Often a subsystem of a bigger system

– Subsystems by definition are always open

• Information system (IS): components that work together to process data and produce information


Information and Managers

• Systems thinking: thinking of an organization in terms of subsystems – Powerful management approach that creates a

framework for problem solving and decision making

– Helps keep managers focused on overall goals• Database: collection of electronic records• Information systems automate exchange of

information among subsystems


Information and Managers (continued)

• Information map: description of data and information flow within an organization– Shows a network of information subsystems that

exchange information with each other and with the outside world

• Information technology: technologies that facilitate construction and maintenance of information systems


The Benefits of Human-Computer Synergy

• Humans are relatively slow and make mistakes• Computers cannot make decisions unless

programmed to do so• Synergy: combining resources to produce

output that exceeds the sum of outputs of the separate resources by themselves

• Human-computer combination allows human thought to be translated into efficient processing of data


The Benefits of Human-Computer Synergy (continued)


Information Systems in Organizations

• Information system consists of data, hardware, software, telecommunications, people, and procedures

• Computer-based Information system: system with one or more computers at center

• Organizations lag behind and lose competitiveness if they do not use information systems

Information Systems in Organizations (continued)

• Trends that have made information systems important in business:– Growing power and decreasing cost of computers– Growing capacity and decreasing costs of data storage

devices– Increasing variety and ingenuity of computer programs– Available, reliable, affordable, and fast communications

links to the Internet– Growth of the Internet– Increasing computer literacy of the workforce



Information Systems in Organizations (continued)


The Four Stages of Processing

• Input: collect and introduce data to system– Transaction: a business event, usually entered

as input

– Transaction processing system (TPS): a system that records transactions

– Input devices include keyboards, bar code readers, voice recognition systems, touch screens

• Data processing: perform calculations on input


The Four Stages of Processing (continued)

• Output: what is produced by the information system– Output devices include printers and speakers

• Storage: maintaining vast amounts of data– Storage devices include optical discs


Computer Equipment for Information Systems

• Different technologies are used to support the four data processing functions: – Input devices: receive input– Computers: process data– Output devices: display information– Storage devices: store data– Network devices: transfer data

• Telecommunications: communication that takes place between computers over great distances


Computer Equipment for Information Systems (continued)


From Recording Transactions to Providing Expertise:

Types of Information Systems• Different types of information systems serve

different functions• Capabilities of applications have been combined

and merged• Management Information System: a system

that supports planning, control, and making decisions


Transaction Processing Systems

• Transaction processing system (TPS): most widely used type of system– Records data collected at point where

organization transacts business with other parties

• Point-of-sale machines: record sales– Include cash registers, ATMs, and purchase order

systems


Supply Chain Management Systems

• Supply chain: sequence of activities involved in producing and selling products or services– For products, activities include marketing,

purchasing raw materials, manufacturing and assembly, packing and shipping, billing, collection, and after-sale services

– For services, activities include marketing, document management, and monitoring customer portfolios

Supply Chain Management Systems (continued)

• Supply chain management (SCM) systems: systems that support these activities

• Also known as enterprise resource planning systems

• SCM systems eliminate the need to reenter data that was captured elsewhere in the organization

• An SCM is an enterprise application



Customer Relationship Management Systems

• Customer relationship management (CRM) systems: systems for managing relations with customers– Used in combination with telephones to provide

customer service

– Often linked to Web applications that track online transactions

• Retaining loyal customers is less expensive than acquiring new ones


Business Intelligence Systems

• Business intelligence (BI) systems: systems that glean relationships and trends from raw data to help organization compete– Often contain statistical models

– Access large pools of data

• Data warehouse: large database that usually store transactional records


Decision Support and Expert Systems

• Decision support system (DSS): supports decision making– Relies on models to produce tables

– Extrapolates data to predict outcomes

– Helps answer “What if?” questions

• Expert system (ES): supports knowledge-intensive decision making– Uses artificial intelligence techniques

– Can preserve the knowledge of retiring experts


Geographic Information Systems

• Geographic information system (GIS): ties data to physical locations

• Represents data on a map in different formats• May reflect demographic information in addition

to geographic information• May use information from global positioning

system (GPS) satellites– Examples: Google Earth, Mapquest


Geographic Information Systems (continued)


Information Systems in Business Functions

• Functional business area: services within a company that support main business– Includes accounting, finance, marketing, and

human resources

– Part of a larger enterprise system


Accounting

• Accounting information systems:– Help record transactions

– Produce periodic statements

– Create required reports for law

– Create supplemental reports for managers

– Contain controls to guarantee adherence to standards


Finance

• Finance systems: – Facilitate financial planning and business

transactions

• Tasks include organizing budgets, managing cash flow, analyzing investments, and making decisions


Marketing

• Marketing’s purpose is to pinpoint likely customers and promote products

• Marketing information systems:– Analyze demand for products in regions and

demographic groups

– Identify trends in demand for products/services

– Help analyze how advertising campaigns affect profit

• Web provides opportunity to collect marketing data as well as promote products and services


Human Resources

• Human resource management systems aid record-keeping– Must keep accurate records

– Aids recruiting, selection, placement, benefits analysis, requirement projections

• Performance evaluation systems provide grading utilities


Web-Empowered Enterprises

• E-commerce: buying and selling goods and services through Internet

• Internet is a vast network of computers connected globally

• Web has a profound impact on information systems– An emerging advertising medium

– A place to conduct e-commerce


Careers in Information Systems

• Information technology professionals are increasingly in demand

• Network administrator, system administrator, system analyst, software engineering, data communications analyst, and database administrator jobs are increasing in demand

Help Desk Technician

• Help desk technician:– Supports end users in their daily use of IT

– Often provides help via telephone

– May use software that gives them control of the user’s PC

– May need to have knowledge of a wide variety of PC applications



Systems Analyst

• Systems analyst: – Researches, plans, and recommends software

and systems choices

– Responsible for developing cost analyses, design considerations, implementation timelines, and feasibility studies

• Involves analyzing system requirements, documenting development efforts, and providing specifications for programmers

• Requires communication and presentation skills


Database Administrator

• Database administrator (DBA): responsible for databases and data warehouses– Develops and acquires database applications

– Must adhere to federal, state, and corporate regulations to protect privacy of customers and employees

– Responsible for securing the database


Network Administrator

• Network administrator: acquires, implements, manages, maintains, and troubleshoots networks

• Implements security– Firewalls

– Access codes

System Administrator

• System administrator: manages an organization’s computer operating systems– Must ensure that operating systems work

together, support business requirements, and function properly

– Responsible for backup and recovery, adding and deleting user accounts, performing system upgrades



Webmaster

• Webmaster: creates and maintains Web site– Must be familiar with Web transaction software,

payment-processing software, security software

– Manages both the intranet and extranet

• Demand for Webmasters grows as more businesses use Web


Chief Security Officer

• Chief security officer (CSO): supervises security of information system

• Position exists due to growing threat to information security

• Usually reports to chief information officer (CIO)


Chief Information Officer and Chief Technology Officer

• Chief information officer (CIO): responsible for all aspects of information system– Often a corporate vice president

– Must have technical understanding of information technologies as well as business knowledge

• Chief technology officer (CTO): has similar duties as CIO


Chief Information Officer and Chief Technology Officer (continued)


Summary

• Computer-based information systems pervade almost every aspect of our lives

• A system is a set of components that work together to achieve a common goal

• Subsystem: a system performs a limited task that produces an end result, which must be combined with other products from other systems to reach an ultimate goal

• Data processing has four stages


Summary (continued)

• Any IS that helps in management is a management information system (MIS)

• Many different types of MIS• Enterprise application systems (SCM or ERP) tie

together different functional areas of a business• ISs are used in many business functions,

including accounting, finance, marketing, and human resources


Summary (continued)

• The job prospects for IT professionals are bright• IT has created societal concerns regarding

privacy, identity theft, spam, and Web annoyances

Management Information Systems, Sixth Edition Chapter 1 Business Information Systems: An Overview.

Documents

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information slide

information systems

digital information

business information

correct information

ones information

information technology