Fundamentals of

Information Systems

An Introduction to Information Systems

in Organizations

1
 Principles and Learning
Objectives
• The value of information is directly linked to
how it helps decision makers achieve the
organization’s goals
– Distinguish data from information and
describe the characteristics used to
evaluate the value of data

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 Principles and Learning
Objectives
• (continued)
Knowing the potential impact of information
systems and having the ability to put this
knowledge to work can result in a
successful personal career and
organizations that reach their goals
– Identify the basic types of business
information systems and discuss who uses
them, how they are used, and what kinds of
benefits they deliver

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 Principles and Learning
Objectives
• (continued)
System users, business managers, and
information systems professionals must work
together to build a successful information
system
– Identify the major steps of the systems
development process and state the goal of
each

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 Principles and Learning
Objectives
• (continued)
The use of information systems to add value
to the organization can also give an
organization a competitive advantage
– Identify the value-added processes in the
supply chain and describe the role of
information systems within them
– Identify some of the strategies employed
to lower costs or improve service
– Define the term competitive advantage and
discuss how organizations are using
information systems to gain such an
advantage
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 Principles and Learning
Objectives
• (continued)
Cooperation between business managers
and IS personnel is the key to
unlocking the potential of any new or
modified system
– Define the types of roles, functions, and
careers available in information systems

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 Information Concepts

• Data, information, and knowledge

– Data: Raw facts
– Information: Collection of facts organized in
such a way that they have additional
value beyond the value of the facts
themselves
– Process: Set of logically related tasks
performed to achieve a defined outcome
– Knowledge: Awareness and understanding of
a set of information

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 Data, Information, and
Knowledge

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 Data, Information, and
Knowledge
(continued)

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 Data, Information, and
Knowledge
(continued)

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 The Characteristics of Valuable
Information
• If information is not accurate or complete
– People can make poor decisions, costing
thousands, or even millions, of dollars
• Information can be of little value to the
organization
– If information is not relevant, not delivered
to decision makers in a timely fashion, or
too complex to understand

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 The Value of Information
• Valuable information
– Can help people and their organizations
perform tasks more efficiently and
effectively
– Can help managers decide whether to
invest in additional information
systems and technology

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 What Is an Information
System?
• Feedback mechanism
– The component that helps organizations
achieve their goals, such as increasing
profits or improving customer service

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 What Is an Information
System? (continued)

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 Input, Processing, Output,
Feedback
• Input
– Gathering and capturing raw data
• Processing
– Converting or transforming data into useful
outputs
• Output
– Production of useful information, usually in
the form of documents and reports
• Feedback
– Output that is used to make changes to
input or processing activities
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Manual and Computerized
Information Systems
• An information system can be:
– Manual
• Example: Developing patterns and trends on
graph paper for stock analysis
– Computerized
• Example: Using program trading to track the
market and trade large blocks of stocks when
discrepancies occur

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Computer-Based Information
Systems
• Single set of hardware, software,
databases, telecommunications,
people, and procedures configured to
collect, manipulate, store, and process
data into information
• Information technology (IT)
– Hardware, software, databases,
and telecommunications

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Computer-Based Information
Systems (continued)

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Computer-Based Information
Systems (continued)
• CBIS components
– Hardware: Computer equipment used to
perform input, processing, and output
activities
– Software: Computer programs that
govern the operation of the computer
– Database: Organized collection of facts
and information
– Telecommunications: Electronic
transmission of signals for
communications
– Networks: Connect computers and
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Computer-Based Information
Systems (continued)
• CBIS components (continued)
– Internet: World’s largest computer network
– People: Manage, run, program, and
maintain the system
– Procedures: Strategies, policies, methods,
and rules for using a CBIS

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 Business Information Systems
• Most common types of information
systems used are those designed for:
– Electronic and mobile commerce
– Transaction processing
– Management information
– Decision support

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 Business Information Systems
(continued)

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 Business Information Systems
(continued)

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 Electronic and Mobile
Commerce
• E-commerce
– Any business transaction executed
electronically between:
• Companies (B2B)
• Companies and consumers (B2C)
• Consumers and other consumers (C2C)
• Business and the public sector
• Consumers and the public sector

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 Electronic and Mobile
Commerce
• (continued)
Mobile commerce (m-commerce)
– Transactions conducted anywhere,
anytime
• Electronic business (e-business)
– Uses information systems and the
Internet to perform all business-related
tasks and functions

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 Electronic and Mobile
Commerce
(continued)

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 Electronic and Mobile
Commerce
(continued)

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 Enterprise Systems:
Transaction Processing
Systems and Enterprise
• Resource
Transaction
Planning
– Any business-related exchange
• Transaction processing system (TPS)
– Organized collection of people,
procedures, software, databases,
and devices used to record completed
business transactions
• Enterprise resource planning
– Programs that manage the vital business
operations for an entire multisite, global
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 Enterprise Systems:
Transaction Processing
Systems and Enterprise
Resource Planning (continued)

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 Information and Decision
Support Systems
• Management information systems
– Organized collection of people,
procedures, software,
databases, and devices
– Provides routine information to
managers/decision makers
• Decision support systems
– Organized collection of people,
procedures, software, databases,
and devices that support problem-
specific decision making
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 Information and Decision
Support Systems
(continued)

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 Information and Decision
Support Systems
(continued)

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 Specialized Business Information
Systems: Knowledge
Management, Artificial
Intelligence, Expert Systems,
and
• Knowledge Virtual Reality
management systems (KMSs)
– Organized collection of people,
procedures, software,
databases, and devices
• Artificial intelligence (AI)
– Field in which the computer system takes
on the characteristics of human
intelligence
– Robotics, vision systems, and natural
language
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 Specialized Business Information
Systems: Knowledge
Management, Artificial
Intelligence, Expert Systems,
and Virtual Reality (continued)

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 Specialized Business Information
Systems: Knowledge
Management, Artificial
Intelligence, Expert Systems,
• and systems
Expert Virtual Reality (continued)
– Give the computer the ability to make
suggestions and act like an expert in a
particular field
• Virtual reality
– The simulation of a real or imagined
environment that can be experienced
visually in three dimensions

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 Systems
•
Development
Creating or modifying existing business
systems
• Systems development failures can be a
result of:
– Poor planning and scheduling
– Insufficient management of risk
– Poor requirements determination
– Lack of user involvement
• Outsourcing
– Allows a company to focus on what it does
best and delegate other functions
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 Systems Development
(continued)

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 Systems Investigation and
Analysis
• Systems investigation
– Goal is to gain understanding of the
problem to be solved or opportunity to
be addressed
• Systems analysis
– Defines problems and opportunities of the
existing system

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 Systems Design,
Implementation, and
Maintenance
• Systems design and Review
– Determines how the new system will work to
meet the business needs defined during
systems analysis
• Systems implementation
– Creating or acquiring the system
components defined in the design
step, assembling them, and putting the
new system into operation
• Systems maintenance and review
– Checking and modifying the system so
that it continues to meet
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 Organizations and Information
Systems
• Organization
– Collection of people and other resources
established to accomplish a set of goals
– Has inputs, processing mechanisms,
outputs, and feedback

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 Organizations and Information
Systems (continued)

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 Organizations and Information
Systems (continued)
• Value chain
– Series of activities that includes inbound
logistics, warehouse and storage, and
production
• Supply chain management (SCM)
– Helps determine what supplies are required
for the value chain and what quantities
are needed to meet customer demand
• Customer relationship management (CRM)
– Helps companies manage all aspects of
customer encounters, including
marketing
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 Organizations and Information
Systems (continued)

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 Organizational Culture and
Change
• Organizational culture
– Major understandings and assumptions
– The understandings are often not
stated or documented as goals or
formal policies
• Organizational change
– How organizations plan for, implement, and
handle change
– Can be sustaining or disruptive

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 User Satisfaction and
Technology
Acceptance
• Technology acceptance model (TAM)
– Specifies factors that can lead to higher
acceptance and usage of technology
• Technology diffusion
– Measure of widespread use of technology
• Technology infusion
– Extent to which technology permeates a
department

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 Competitive Advantage

• Significant, long-term benefit to a company

over its competition
• An organization often uses its information
system to help achieve a competitive
advantage

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 Factors That Lead Firms to
Seek Competitive
Advantage
• Five-forces model identifies key
factors
– Rivalry among existing competitors
– Threat of new entrants
– Threat of substitute products and
services
– Bargaining power of buyers
– Bargaining power of suppliers

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 Strategic Planning for
Competitive
Advantage
• Cost leadership
– Deliver the lowest possible products and
services
• Differentiation
– Deliver different products and services
• Niche strategy
– Deliver to a small, niche market
• Altering the industry structure
– Change the industry to become more
favorable to organization
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 Strategic Planning for
Competitive Advantage
(continued)
• Creating new products and services
– Introduce periodically or frequently
• Improving existing product lines and
service
– Make real or perceived improvements
• Other strategies
– Growth in sales
– First to market
– Customizing products and services
– Hiring the best people
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 Performance-Based
Information Systems
• Three major stages
– Organizations focused on using information
systems to reduce costs and improve
productivity
– Companies generally ignored revenue
potential, not looking for opportunities to
use information systems to increase
sales
– Companies carefully consider both
strategic advantage and costs

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 Performance-Based
Information Systems
(continued)

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 Productivity
• Output achieved divided by input
required
• Higher level of output for a given level
of input means greater productivity
• Lower level of output for a given level
of input means lower productivity

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Return on Investment and the
Value of Information
Systems
• Earnings growth
– Increase in profits
• Market share
– Percentage of sales in relation to total market
• Customer awareness and satisfaction
– Based on feedback from internal and external
users
• Total cost of ownership
– Sum of all costs over the life of the
information system
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 Risk
• Managers must consider the risks of:
– Designing, developing, and implementing
new or modified information systems
• Information systems can be costly failures
• Costs of development and implementation
can be greater than the returns from the
new system

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 Careers In Information
•
Systems
Knowledge workers (KWs)
– People who create, use, and disseminate
knowledge
• Students are increasingly completing
business degrees with a global or
international orientation

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 Roles, Functions, and Careers in
IS
• Primary responsibilities in information
systems
– Operations: Focuses on the efficiency
of IS functions
– Systems development: Focuses on
development projects and ongoing
maintenance and review
– Support: Provides user assistance, data
administration, user training, and Web
administration
– Information service units: Miniature IS
department
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 Typical IS Titles and Functions
• Chief Information Officer (CIO)
– Employs IS department’s equipment and
personnel to help the organization attain
its goals
• LAN administrators
– Set up and manage the network hardware,
software, and security processes
• Internet careers
– Opportunities are found in both traditional
companies and those that specialize in the
Internet
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 Other IS Careers
• New and exciting careers have
developed in security and fraud
detection and prevention
– Chief information security officer
– Chief privacy officer
• IS career opportunities include being
employed by:
– Microsoft (www.microsoft.com), Google
(www.google.com), and Dell
(www.dell.com)

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 Finding a Job in IS
• Sources
– On-campus visits from recruiters and
referrals from professors, friends, and
family members
– The Internet

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 Global Challenges in
Information
• Systems
Cultural challenges
• Language challenges
• Time and distance
challenges
• Infrastructure challenges
• Currency challenges

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 Global Challenges in
Information Systems
• (continued)
Product and service
challenges
• Technology transfer issues
• State, regional, and national
laws
• Trade agreements

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 Summar
• Data consists of y
raw facts
• Information
– Data transformed into a meaningful
form
• Types of systems include:
– E-commerce and m-commerce
– TPS and ERP
– MIS and DSS
– Specialized business information
systems

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 Summary
•
(continued)
Systems development
– Creating or modifying existing business
systems
• Organization
– Formal collection of people and various
other resources established to accomplish a
set of goals
• Supply chain management (SCM) helps
determine:
– What supplies are required
– What quantities are needed to meet
customer
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 Summary
•
(continued)
Five-forces model covers:
– Rivalry among existing competitors
– Threat of new market entrants
– Threat of substitute products and services
– Bargaining power of buyers and suppliers
• Information systems personnel typically
work in an IS department that employs:
– A chief information officer
– Systems analysts
– Computer programmers and operators

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