FOUNDATION

CONCEPTS

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 FUNDAMENTALS OF
INFORMATION
SYSTEMS

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Information Systems Framework

Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011

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 IS Framework (cont’d)
• Foundation Concepts
– Fundamental concepts about the
components and roles of information
systems
• Information Technologies
– Major concepts, developments, and
management issues in information
technology

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 IS Framework (cont’d)
• Business Applications
– The major uses of information systems for
operations, management, and competitive
advantage
• Development Processes
– How business professionals and information
specialists plan, develop, and implement
information systems
• Management Challenges
– The challenge of managing effectively and
ethically
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 System Concepts
 What is a system?
 A System can be simply defined as a group of
interrelated or interacting elements forming a
unified whole.
e.g.:
- Physical system of the sun and its planets
- Biological system of the human body
- Technological system of an oil refinery
- Socioeconomic system of a business
organization
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  More appropriate
framework for describing IS:
→A system is a group of interrelated
components working together
toward a common goal by accepting
inputs and producing outputs in an
organized transformation process.

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 Some System Characteristics
• A system exists and functions in an
environment containing other systems.
• Subsystem – a component of a larger
system.
• Systems that share the same
environment may be connected to one
another through a shared boundary, or
interface.
• Open versus closed system
• Adaptive system
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 Information Systems Defined
• IS can be defined as an organized combination of
resources and activities that collect, process,
store and disseminate information.

• Resources include people, hardware, software,

communications networks and data resources

• Activities consist of input, processing, output,

storage, and control activities

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 Components of an Information
System

Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011

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IS Resources

 People
 Hardware
 Software
 Communications Networks
 Data

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 People

- IS Specialists → Systems Analysts,

Programmers, Computer Operators
- End Users → Anyone else who uses IS

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 Hardware
- Machines → Computers, Monitors,
Printers, Scanners
- Media → CD, Flash, Hard disc,
Paper forms

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 Software
- Programs → Operating systems,
Spreadsheet, Word processing
- Procedures → Data entry procedures,
Error correction procedures

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 Communications Networks
- Comm. Media → Twisted-pair wire,
Coaxial cable, Fiber optics
- Comm. Processor → Modems,
Multiplexers, Internetwork processors
- Network SW → Novell, Windows NT

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 Data Resources

- Product descriptions
- Customer records
- Inventory databases

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 IS Activities
 Input
 Process
 Output
 Storage
 Control

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 Input
→ Recording
→ Editing

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 Processing
→ Data Manipulation
- Calculating
- Comparing
- Sorting
- Classifying
- Summarizing

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 Output
→ Goal of IS is the production of
appropriate information products for end
users

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 Storage
→ Data and information are retained in an
organized manner for later use

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 Control
→ An IS should produce feedback about
its input, processing and storage
activities
 Monitor and evaluate the feedback

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 A Business Perspective on
Information Systems
• Information systems are more than just
technology.

• Information systems are an organizational

and management solution to business
challenges that arise from the business
environment.

• Businesses invest in IS in order to create

value and increase profitability.

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 A Business Perspective on
IS (Cont’d)

• Creating business value requires also

significant investment in
organizational and management
changes and innovations.

• IS create value primarily by changing

business processes and management
decision making.
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Dimensions of Information Systems

You will need to

understand and
balance these
dimensions of
information
systems in
order to create
business value.

Source: Laudon, K.; Laudon, J.: Management Information Systems, 2019

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 Dimensions of Information
Systems (Cont’d)
The Organizational Dimension of IS
• People

• Structure

• Business processes

• Culture

• Politics

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 Dimensions of Information
Systems (Cont’d)
The Management Dimension of IS
Managers are:
• Sense makers
• Decision makers
• Planners
• Innovators of new processes
• Leaders: set agendas

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 Dimensions of Information
Systems (Cont’d)
The Management Dimension of IS (Cont’d)

Managers who can understand the role of IS

in creating business value are the key
ingredient to success with systems, and
cannot easily be replicated by your
competitors.

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 Dimensions of Information
Systems (Cont’d)
The Technology Dimension of IS

Information technology is one of the tools managers

use to cope with change.
IT is defined as a combination of hardware, software,
communications networks, and data management techniques
that processes data into information for a specific purpose.

Managers need to know enough about IT to make

intelligent decisions about how to use it for creating
business value.

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 Data Versus Information
•
Monthly Sales Report
for West Region

Sales Rep: Charles Mann

Emp No. 79154
Item Qty Sold Price
TM Shoes 1200 $100

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 Data versus Information
(Cont’d)
• Data: Streams of raw facts
representing events such as
business transactions

• Information: Clusters of facts

meaningful and useful to
human beings in the processes
such as making decisions
 Data
• Raw facts
• Simply exists and has no significance
beyond its existence
• A mere collection of data for which there
is no relation between the pieces of
data is not information.

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 Information
• Data that has been given meaning by way
of relational connection
• Understanding of the relationships
between pieces of data, or between
pieces of data and other information
• Reduces uncertainty, reveals additional
alternatives or helps eliminate irrelevant or
poor ones

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 Attributes of Information Quality
(Information Dimensions)

Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011

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Attributes of Information Quality
(Information Dimensions)
• Content -- information should be
accurate, meaningful, flexible, reliable,
verifiable, complete, accessible, and
secure
• Time -- information should be timely and
current
• Form -- information should be provided
at the appropriate level of detail and in
the most appropriate form

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Information Dimensions (Content)
• Accurate information is correct information.
Inaccurate information often is worse than no
information.
• Meaningful information is relevant to the
person who receives it.
• Reliable information is dependable
information.
• Verifiable information means that the
information can be confirmed by the user.
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 Information Dimensions
(Content)
• Complete information presents the overall
picture and the required details.
• Flexible information presents different
views of data to different people.
• Accessible and Secure: Information should
be easily accessible to authorized persons.
At the same time, it should be secure from
unauthorized users.

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 THE ROLE OF
INFORMATION
SYSTEMS

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 The Fundamental Roles of IS

Support of
Competitive
Advantage

Support of
Business
Decision Making

Support of
Business Operations

Source: O'Brien, J. A.; Marakas, G. M: Management Information Systems, 2011

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Support of Business Operations
e.g. Retail store operations:
– Record customer purchase
– Keep track of inventory
– Pay employees
– Buy new merchandise
– Evaluate sales trends
 Store operation would grid to halt
with out the support of such IS

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Support of Business Decision
Making
e.g. Retail store management:
- Decisions on what line merchandise
to be added or discontinued
 Analysis provided by IS

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 Support of Competitive
Advantages
e.g. Retail store competitive advantage:
- Home computer shopping network might
lure customers away from other stores

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 INFORMATION
SYSTEMS IN
ORGANIZATIONS

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 How Information Systems Impact
Organizations
Economic Impacts
• Information systems technology is a factor of
production, like capital and labor.

• Transaction cost theory

• Firms seek to economize on the cost of
participating in markets (transaction costs).

• IT lowers market transaction costs for firms,

making it worthwhile to transact with other firms
rather than grow the number of employees.

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 How Information Systems Impact
Organizations (Cont’d)

• Agency theory
• Firms experience agency costs (the cost of
managing and supervising).

• IT can reduce agency costs, making it

possible for firms to grow without adding to
the costs of supervising, and without adding
employees.

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 How Information Systems Impact
Organizations (Cont’d)
Organizational and Behavioral Impacts
IT Flattens Organizations:
• Facilitates flattening of hierarchies
• Broadens the distribution of timely information
• Increases the speed of decision making
• Empowers lower-level employees to make decisions
without supervision and increase management
efficiency
• Management span of control (the number of employees
supervised by each manager) will also grow

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 How Information Systems Impact
Organizations (Cont’d)
Flattening Organizations

Source: Laudon, K.; Laudon, J.: Management Information Systems, 2019

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