Chap 1

What is Information System?

An organized combination of people, hardware and software, communication networks,
data resources, policies and procedures which stores, retrieves, transforms and
disseminates information in an organization.

What are Fundamental Roles of IS in Business?

Support of Business Processes and Operations. As a consumer, you regularly encounter
information systems that support the business processes and operations at the many retail
stores where you shop. For example, most retail stores now use computer-based
information systems to help their employees record customer purchases, keep track of
inventory, pay employees, buy new merchandise, and evaluate sales trends.
Support of Business Decision Making. Information systems also help store managers and
other business professionals make better decisions. For example, decisions about what lines
of merchandise need to be added or discontinued and what kind of investments they
require are typically made after an analysis provided by computer-based information
systems. This function also helps them look for ways to gain an advantage over other
retailers in the competition for customers.
Support of Strategies for Competitive Advantage. Gaining a strategic advantage over
competitors requires the innovative application of information technologies.
For example, store management might make a decision to install touch-screen kiosks in all
stores, with links to the e-commerce Web site for online shopping. This offering might
attract new customers and build customer loyalty.

Define the Trends in IT/IS

Data Processing (1950-1960):
Simple tasks like transaction processing and record keeping and other electronic data
processing (EDP).
Management Reporting (1960-1970):
Birth of Management Information Systems (MIS) for providing predefined reports for
managerial decision-making. A concept of Decision Support Systems (DSS) was introduced
to provide interactive support for managerial decision-making.
Decision Support (1970-1980):
Executive Information Systems (EIS) was created for top executives, delivering critical
information in preferred formats. Then intelligent software agents such as artificial
intelligence (AI) was introduced. Expert systems (ES) and other knowledge-based systems
also forged a new role for information systems.
Strategic and End User Support (1980-1990):
Emergence of Strategic Information Systems (SIS) which is an IT integral for gaining a
competitive edge in the global marketplace. Enterprise Resource Planning (ERP) Systems
were used as a specific form of a strategic information system for promoting flexibility.
Business Intelligence (BI) era was started in late 90s focusing on gathering and analyzing
data for strategic business decisions.
Electronic Business and Commerce (1990-present):
Rapid growth of Internet, intranets, and extranets. Business information systems are now
identified by high use of functions, enhanced connectivity across diverse components, and
the ability to strategically reallocate critical tasks for maximum efficiency. Looking forward,
the emphasis will be on achieving greater speed, extended reach, and even tighter
integration to meet evolving business demands.

**An online exchange of value using internet technologies to empower business processes
is e-commerce.

What are Types of IS?

Operations Support Systems:

 Transaction processing systems. Process data resulting from business transactions,

update operational databases, and produce business documents.
 Process control systems. Monitor and control industrial processes.
 Enterprise collaboration systems. Support team, workgroup, and enterprise
communications and collaborations.
Management Support Systems:

 Management information systems. Provide information in the form of pre-specified

reports and displays to support business decision making.
 Decision support systems. Provide interactive ad hoc support for the decision-making
processes of managers and other business professionals.
 Executive information systems. Provide critical information from MIS, DSS, and other
sources tailored to the information needs of executives.

Other Categories of Information Systems:

 Expert systems. Knowledge-based systems that provide expert advice and act as expert
consultants to users.
 Knowledge management systems. Knowledge-based systems that support the creation,
organization, and dissemination of business knowledge within the enterprise.
 Strategic information systems. Support operations or management processes that
provide a firm with strategic products, services, and capabilities for competitive
advantage.
 Functional business systems. Support a variety of operational and managerial
applications of the basic business functions of a company.

What are Business IT challenges?

1. Meeting the fast-paced demands of product development, manufacturing, and delivery
cycles.
2. Restructuring and integrating business processes across different departments using
Internet technologies.
3. Incorporating e-business and e-commerce into the organization's strategies, processes,
structure, and culture.

How to measure IT success?

An information system should not be measured only by its efficiency in terms of minimizing
costs, time, and the use of information resources. Success should also be measured by the
effectiveness of the information technology in supporting an organization’s business
strategies, enabling its business processes, enhancing its organizational structures and
culture, and increasing the customer and business value of the enterprise.

How to develop IS solutions?

In this development process, end users and information specialists design information system
applications on the basis of an analysis of the business requirements of an organization.
Examples of other activities include investigating the economic or technical feasibility of a
proposed application, acquiring and learning how to use any software necessary to
implement the new system, and making improvements to maintain the business value of a
system.

Explain the Functions of IS

The successful management of information systems and technologies presents major
challenges to business managers and professionals. Thus, the information systems function
represents:

 A major functional area of business equally as important to business success as the

functions of accounting, finance, operations management, marketing, and human
resource management.
 An important contributor to operational efficiency, employee productivity and morale,
and customer service and satisfaction.
 A recognized source of value to the firm.
 A major source of information and support needed to promote effective decision making
by managers and business professionals.
 A vital ingredient in developing competitive products and services that give an
organization a strategic advantage in the global marketplace.
 A dynamic, rewarding, and challenging career opportunity for millions of men and
women.
 A key component of the resources, infrastructure, and capabilities of today’s networked
business enterprises.
 A strategic resource.

What is system and what are its basic functions?

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.
Systems have three basic functions:
Input involves capturing and assembling elements that enter the system to be processed. For
example, raw materials.
Processing involves transformation processes that convert input into output. Examples are
manufacturing processes.
Output involves transferring elements that have been produced. For example, finished
products.

**A system with feedback and control functions is sometimes called a cybernetic system, that
is, a self-monitoring, self-regulating system. Feedback is data about the performance of a
system. Control involves monitoring and evaluating feedback.

Describe Business Components/Resources of IS

An information system consists of five major resources:
1. People are the essential ingredient for the successful operation of all information systems.
These people resources include:
 End users are people who use an information system or the information it produces. They
can be customers, salespersons, engineers etc.
 IS specialists are people who develop and operate information systems. They include
systems analysts, software developers etc.
2. The concept of hardware resources includes all physical devices and materials used in
information processing.
 Machines—computers, video monitors, magnetic disk drives, printers, optical
scanners.
 Media—floppy disks, magnetic tape, optical disks, plastic cards, paper forms.

3. The concept of software resources includes all sets of information processing instructions.
 A program is a set of instructions for a computer, written in a programming language,
to perform a specific task or function when executed.
 A procedure is a defined set of ordered steps or actions to accomplish a particular
task.

4. The data resources of information systems are typically organized, stored, and accessed
by a variety of data resource management technologies into:
 Databases that hold processed and organized data.
 Knowledge bases that hold knowledge in a variety of forms, such as facts, rules, and case
examples about successful business practices.

5. The concept of network resources emphasizes that communications technologies and

networks are fundamental resource components of all information systems.
Network resources include:
 Communications Media. The channels used to transmit data, like cables or wireless
technologies.
 Network Infrastructure. The hardware and software framework that enables
communication and connectivity in a computer network.

What are 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)