foundations of information systems in business
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Chapter 1 Foundations of Information Systems
in Business
James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8th ed. Boston, MA: McGraw-Hill, Inc., 2007. ISBN: 13 9780073323091
Chapter 1 Foundations of Information Systems in Business 2
1. Understand the concept of a system and how it relates to IS2. Explain why knowledge of IS is important for business
professionals; Identify five areas of Is knowledge needed3. Give examples to illustrate how business applications of IS
can support a firm’s business processes, managerial decision making, and strategies for competitive advantage
4. Provide examples of IS from your experiences with business organizations in the real world
5. Identify challenges that a business manager might face in managing the successful, ethical development and use of information technology
6. Provide examples of the components of real world IS7. Become familiar with the myriad of career opportunities in IS
Learning Objectives
Chapter 1 Foundations of Information Systems in Business 3
Foundation Concepts Why study information systems and information
technology?Vital component of successful businessesHelps businesses expand and compete Improves efficiency and effectiveness of
business processesFacilitates managerial decision making and
workgroup collaboration
Chapter 1 Foundations of Information Systems in Business 4
Case 1 Heidelberg, Honeywell, Eaton Smart services, smart products
Using information technology to monitor, intervene, assist
Machines relay information via the Internet and wireless systemsOptimized performanceMinimized maintenance and repair costsLess unanticipated downtime
Increased value justifies premium charge
Chapter 1 Foundations of Information Systems in Business 5
Case Study Questions1. Why should manufacturing companies build smart products
and provide smart services? What business benefits can be gained? Provide examples beyond those discussed in this case
2. What information technologies are used by the companies in this case to build smart products and provide smart services?
What other IT components might be used? Give examples of the capabilities they would provide
3. What are some limitations of a smart products and smart services strategy?
Give several examples that a business might encounter Explain how it might overcome them
Chapter 1 Foundations of Information Systems in Business 6
What is a System? A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives
Chapter 1 Foundations of Information Systems in Business 7
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
Chapter 1 Foundations of Information Systems in Business 8
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)
Chapter 1 Foundations of Information Systems in Business 9
What Should Business Professionals Know?
Chapter 1 Foundations of Information Systems in Business 10
Fundamental Roles of IS in Business
Chapter 1 Foundations of Information Systems in Business 11
Trends in Information Systems
Chapter 1 Foundations of Information Systems in Business 12
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
Chapter 1 Foundations of Information Systems in Business 13
How E-Business is Being Used
Chapter 1 Foundations of Information Systems in Business 14
E-Business Use Reengineering
Internal business processes Enterprise collaboration systems
Support communications, coordination and coordination among teams and work groups
Electronic commerceBuying, selling, marketing, and servicing of
products and services over networks
Chapter 1 Foundations of Information Systems in Business 15
Types of Information Systems Operations Support Systems
Efficiently 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
Chapter 1 Foundations of Information Systems in Business 17
Operations Support Systems What do they do?
Efficiently process business transactionsControl industrial processesSupport communications and collaborationUpdate corporate databases
Chapter 1 Foundations of Information Systems in Business 18
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
Chapter 1 Foundations of Information Systems in Business 19
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 ProcessingProcess transactions immediatelyExample: a bank processes an ATM
withdrawal immediately
Chapter 1 Foundations of Information Systems in Business 20
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
Chapter 1 Foundations of Information Systems in Business 21
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
Chapter 1 Foundations of Information Systems in Business 22
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
Strategic Information Systems - help get a strategic advantage over customer Example: shipment tracking, e-commerce Web
systems Functional Business Systems - focus on operational and
managerial applications of basic business functions Example: accounting, finance, or marketing
Chapter 1 Foundations of Information Systems in Business 23
IT Challenges and Opportunities
Chapter 1 Foundations of Information Systems in Business 24
Measuring IT Success Efficiency
Minimize 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
Chapter 1 Foundations of Information Systems in Business 27
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?
Chapter 1 Foundations of Information Systems in Business 28
IT Careers Economic downturns have affected all job
sectors, including IT Rising labor costs are pushing jobs to India, the
Middle East, and Asia-Pacific countries However, IT employment opportunities are
strong, with new jobs emerging daily Shortages of IT personnel are frequent The long-term job outlook is positive and
exciting Figure
Chapter 1 Foundations of Information Systems in Business 29
IT Careers
Chapter 1 Foundations of Information Systems in Business 30
IT Careers Job increases will be driven by…
Rapid growth in computer system design and related services
The need to backfill positions Information sharing and client/server
environmentsThe need for those with problem-solving skillsFalling hardware and software prices, which
will fuel expanded computerization of operations
Chapter 1 Foundations of Information Systems in Business 31
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
Chapter 1 Foundations of Information Systems in Business 32
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
Chapter 1 Foundations of Information Systems in Business 33
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
Chapter 1 Foundations of Information Systems in Business 34
Case Study Questions Are many of Lufthansa’s challenges identified in
the case similar to those being experienced by other businesses in today’s global economy?
What other tangible and intangible benefits, beyond those identified by Lufthansa, might a mobile workforce enjoy as a result of deploying mobile technologies?
Lufthansa was clearly taking a big risk with their decision to deploy notebook computers to their pilots. What steps did they take to manage the risk, and what others might be needed in today’s business environment?
Chapter 1 Foundations of Information Systems in Business 35
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 Business 36
Basic Functions of a System Input
Capturing and assembling elements that enter the system to be processed
ProcessingTransformation process that converts input
into output Output
Transferring transformed elements to their ultimate destination
Chapter 1 Foundations of Information Systems in Business 37
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
Chapter 1 Foundations of Information Systems in Business 38
A Business as a System
Chapter 1 Foundations of Information Systems in Business 39
Other System Characteristics If a system is one of the components of a larger
system, it is a subsystemThe larger system is an environment
Several systems may share the same environmentSome may be connected via a shared
boundary, or interface Types of systems…
OpenAdaptive
Chapter 1 Foundations of Information Systems in Business 40
Components of an IS
Chapter 1 Foundations of Information Systems in Business 41
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
Chapter 1 Foundations of Information Systems in Business 42
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
Chapter 1 Foundations of Information Systems in Business 43
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
Chapter 1 Foundations of Information Systems in Business 44
Recognizing IS Business professionals should be able to look at
an information system and identify…The people, hardware, software, data, and
network resources they useThe type of information products they produceThe way they perform input, processing,
output, storage, and control activities
Chapter 1 Foundations of Information Systems in Business 45
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
Chapter 1 Foundations of Information Systems in Business 46
Case Study Questions Why do you think that Aviall failed in their
implementation of an airplane parts and components inventory control system?
How has information technology brought new business success to Aviall? How did IT change Aviall’s business model?
How could other companies use Aviall’s approach to the use of IT to improve their business success?
Chapter 1 Foundations of Information Systems in Business 47
Case 4 Continental Airlines Building customer loyalty has become crucial for
success in the airline industry Continental employs CallMinder systems to…
Monitor calls and keystrokesData mine keystrokes and voice calls
This technology resulted in…Fewer calls going to the help deskHigher customer satisfactionReduction of flight confirmation callsCost savings in excess of $1 million
Chapter 1 Foundations of Information Systems in Business 48
Case Questions What are the business benefits of the CallMiner
system? How can new technologies like CallMiner help
companies improve their customer service and gain a competitive edge in the marketplace?
Andre Harris refers to calls to reconfirm a flight as “quite frankly, low-value calls.” Why are they classified as low value? Why do you think so many customers are placing such calls?
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