Why Information Systems?

Until recently, Information was not

considered an important asset for a
firm. The management process was
considered
a fact-to-face, personal art and
not a far-flung, global coordination
process – involving customers, suppliers
and business partners as well.
But today few managers can afford to
ignore how information is handled by
Computers are the core component of
Information Systems.
Over the past decade, more powerful and
easy-to-use computers with graphical user
interfaces are emerging while their prices
continue to drop significantly.
This has had a major impact on all kinds of
organizations or businesses.
◦ On-line course registration
◦ e-mail communication
◦ mobile phones use
One fact about the Information and
Communications Technology (ICT) industry
is its fast changing nature.
There have been three major
worldwide changes that has brought
about a number of new challenges as
well as opportunities to business
firms and their management.
These changes have made the need
for appropriate Information Systems
even more critical.
The changes are:
Globalization of the World’s industrial
Economies
◦ how successful firms are today and will be in the
future depends on their ability to operate globally
and this is only possible using Information
Systems (IS) that provide the communication and
analytical power that is needed for conducting
trade and managing business on a global scale.

To operate globally, one needs to

◦ Communicate with its distributors and suppliers
◦ Operate 24 hrs a day in different national
environments
◦ Service local and international reporting needs.
using powerful Information Systems.
Globalizationand Information Technology (IT)
also bring new threats to domestic business.

Customers now can shop in a worldwide

marketplace, obtaining price and quality
information reliably, 24 hours a day,
heightening competition and forcing firms to
play in open, unprotected worldwide markets.
To become effective and profitable participants
in international markets, firms need powerful
Information and Communication systems.
Powerful Information and Communication
systems are needed by firms to become
effective and profitable participants in
international markets
The Creation of Knowledge-and-
information-based Economies.
◦ The major industrial powers are experiencing a third
economic revolution - a knowledge-and-information-
based service economy, where jobs primarily involve
working with, distributing, or creating new knowledge
and information.

1. The US for example transformed itself from a colonial

backwater to an agrarian powerhouse by the end of the
nineteenth century.

2. By 1920, the US transformed itself from an agrarian

nineteenth-century society to a first-class industrial power.

3. In the third revolution, which is now in progress, the U S

and the major industrial powers are transforming
themselves into a knowledge-and-information-based
◦ In a knowledge-and-information-based economy,
IT and Information Systems take on great
importance.
◦ Management’s decisions about IT are critically
important to the prosperity and survival of a firm
because the productivity of its employees will
depend on the quality of the information systems
serving them.
◦ Also, new services of great economic value such
as the use of credit and ATM cards, and
worldwide reservation systems are made possible
as a result of the growing power of IT.

◦ Information and the technology that delivers it

have therefore become critical, strategic assets
for organizations and their managers.
Transformation Of The Business
Enterprise.
◦ Traditionally, business firms were, and still
are to a large extent, a hierarchical,
centralized structured arrangement of
specialists that typically relies on a fixed
set of standard operating procedures to
deliver a mass-produced product (or
service).

◦ The new style of business firms is a

flattened (less hierarchical), decentralized,
flexible arrangement of generalist who rely
on nearly instant information to deliver
mass-customized products and services
uniquely suited to specific markets or
 What is an Information
System?
In its simplest form, a system is a set of
interrelated components, with a clearly
defined boundary, working together to
achieve a common set of objectives.
An information system (IS) can be any
organized combination of people,
hardware, software, communications
networks, data resources, and policies and
procedures that stores, retrieves,
transforms, and disseminates information
in an organization.
People have relied on information
systems to communicate with each
other using a variety of physical devices
(hardware), information processing
instructions and procedures (software),
communications channels (networks),
and stored data (data resources) since
the dawn of civilization.
Even today we make regular use of
information systems that have nothing
to do with a computer.
Consider some of the following examples
of information systems:
Smoke signals for communication were
used as early as recorded history and can
account for the human discovery of fire.
The pattern of smoke transmitted
valuable information to others who were
too far to see or hear the sender.

Card catalogues in a library are designed

to store data about the books in an
organized manner that allows readers to
locate a particular book by its title, author
name, subject, or a variety of other
approaches.
Apaper-based accounting ledger as
used before the advent of computer-
based accounting systems is an iconic
example of an information system
 The Fundamental Role of IS in Business
There are three fundamental reasons for all
business applications of information
technology. They are found in the three vital
roles that information systems can perform
for a business enterprise.
1. Support of its business processes and
operations.

2. Support of decision making by its employees

and managers.

3. Support of its strategies for competitive

advantage.
 Support
Strategies for
Competitive Advantage

Support
Business Decision Making

Support
Business Processes and Operations
 Support for Business Processes.
For example, most retail stores now
use computer-based information
systems to help them
◦record customer purchases,
◦keep track of inventory,
◦pay employees,
◦buy new merchandise, and
◦evaluate sales trends.
Store operations would grind to a halt
without the support of such information
systems.
 Support Decision Making.
Information systems also help store
managers and other business professionals
make better decisions.
For example, decisions on
◦ what lines of merchandise need to be added or
discontinued, or on
◦ what kind of investment they require,
are typically made after an analysis provided
by computer-based information systems.
This not only supports the decision making of
store managers, buyers, and others, but also
helps them look for ways to gain an
advantage over other retailers in the
competition for customers.
 Support Competitive Advantage.
Gaining a strategic advantage over competitors
requires innovative use of information
technology. For example, store management
might make a decision
◦ to install touch-screen kiosks in all of their stores,
with links to their e-commerce website for online
shopping.
This might attract new customers and build
customer loyalty because of the ease of
shopping and buying merchandise provided by
such information systems.
Thus, strategic information systems can
help provide products and services that give a
business a comparative advantage over its
competitors.
 Trends in Information Systems
The business applications of
information systems have expanded
significantly
1950-1960 1960-1970
over the years.
1970-1980 1980-1990 1990-2000

Data Management Decision Strategic & Electronic

Processing Reporting Support End User Commerce

Electronic
Data Management
Processing Information
- TPS Decision
Systems Support
Systems End User
- Ad hoc Computing
Reports Exec Info Sys Electronic
Expert Systems Business &
SIS Commerce
-Internetworked
E-Business &
Commerce
Untilthe 1960s, the role of most
information systems was simple:
transaction processing, record-keeping,
accounting, and other electronic data
processing (EDP) applications. Then
another role was added, the concept of
management information systems.

(MIS) was conceived. This new role focused

on developing business applications that
provided managerial end users with
predefined management reports that would
give managers the information they needed
for decision-making purposes.
By the 1970s, it was evident that the pre-
specified information products produced by
such management information systems were
not adequately meeting many of the
decision-making needs of management.

So the concept of decision support

systems (DSS) was born. The new role for
information systems was to provide
managerial end users with ad hoc and
interactive support of their decision-
making processes. This support would be
tailored to the unique decision-making styles
of managers as they confronted specific
types of problems in the real world.
In the 1980s, several new roles for
information systems appeared.
◦ First, the
 rapid development of microcomputer processing
power,
 application software packages, and
 telecommunications networks
◦ gave birth to the phenomenon of end user
computing.
◦ End users could now use their own
computing resources to support their job
requirements instead of waiting for the
indirect support of centralized corporate
information services departments.
Second, it became evident that most top
corporate executives did not directly use
either the reports of management
information systems or the analytical
modeling capabilities of decision support
systems, so the concept of executive
information systems (EIS) was developed.

These information systems were created

to give top executives an easy way to get
the critical information they want, when
they want it, tailored to the formats they
prefer.
Third, breakthroughs occurred in the
development and application of
artificial intelligence (AI) techniques
to business information systems.

Expert systems (ES) and other

knowledge-based systems forged a
new role for information systems.

Today, expert systems can serve as

consultants to users by providing
expert advice in limited subject areas.
An important new role for information
systems appeared in the 1980s and
continued through the 1990s.

This is the concept of a strategic role for

information systems, sometimes called
strategic information systems (SIS).
In this concept, information technology
becomes an integral component of
business processes, products, and
services that help a company gain a
competitive advantage in the global
marketplace.
Finally, the rapid growth of the Internet,
intranets, extranets, and other
interconnected global networks in the
1990s dramatically changed the
capabilities of information systems in
business at the beginning of the twenty-
first century.

Internet-based and Web-enabled

enterprise and global electronic business
and commerce systems are becoming
commonplace in the operations and
management of today's business
enterprises.
 Components of an Information
System
We have noted that an information
system is a system that accepts data
resources as input and processes
them into information products as
output.
How does an information system
accomplish this task?
What system components and
activities are involved?
This is an information system model that
expresses a fundamental conceptual
framework for the major components and
activities of information systems.
Aninformation system depends on
the resources of
◦ people (end users and IS specialists),
◦ hardware (machines and media),
◦ software (programs and procedures),
◦ data (data and knowledge bases), and
◦ networks (communications media and
network support)
to perform input, processing, output,
storage, and control activities that
transform data resources into
information products
This information system model
highlights the relationships among
the components and activities of
information systems.
It also provides a framework that
emphasizes four major concepts that
can be applied to all types of
information systems:
 Information System Resources
You should be able to recognize
these five components at work in any
type of information system you
encounter in the real world.
People Resources
People are the essential ingredient
for the successful operation of all
information systems.
These people resources include
◦ end users and
◦ IS specialists.
• End users (also called users or clients)
are people who use an information
system or the information it produces.
◦ E.g. customers, salespersons, engineers,
clerks, accountants, or managers found
at all levels of an organization.
 Most end users in business are
knowledge workers, that is, people
who spend most of their time
communicating and collaborating in
teams and workgroups and creating,
using, and distributing information.
• IS specialists - people who develop
and operate information systems.
◦ E.g. systems analysts, software
developers, system operators, and other
managerial, technical, and clerical IS
personnel.
 Hardware Resources
The concept of hardware resources includes
all physical devices and materials used in
information processing.
◦ E.g. computers and other equipment,
◦ all data media, that is, tangible objects on which
data are recorded, from sheets of paper to
magnetic or optical disks.
Computer systems, which consist of central
processing units containing micro-processors
and a variety of interconnected peripheral
devices such as
◦ printers, scanners, monitors, and so on.
◦ Examples are handheld, laptop, tablet, or desktop
microcomputer systems, midrange computer
systems, and large mainframe computer systems
 Software Resources
The concept of software resources
includes all sets of information
processing instructions.
◦ programs, which direct and control
computer hardware,
◦ procedures - the sets of information
processing instructions that people need.
The following are examples of
software resources:
System software, such as an operating
system program, which controls and supports
the operations of a computer system.
Microsoft Windows and Unix are two
examples of popular computer operating
systems.
Application software, which are programs that
direct processing for a particular use of
computers by end users. Examples are sales
analysis, payroll, and word processing
programs.
Procedures, which are operating instructions
for the people who will use an information
system. Examples are instructions for filling
out a paper form or using a software package.
 Data Resources
Data are more than the raw material of
information systems. The concept of data
resources has been broadened by
managers and information systems
professionals.
They realize that data constitute valuable
organizational resources. Thus, you should
view data just as you would any
organizational resource that must be
managed effectively to benefit all
stakeholders in an organization. The
concept of data as an organizational
resource has resulted in a variety of
changes in the modern organization.
Data that previously were captured as a
result of a common transaction are now
stored, processed, and analyzed using
sophisticated software applications that can
reveal complex relationships among sales,
customers, competitors, and markets.
In today’s wired world, the data to create a
simple list of an organization’s customers
are protected with the same energy as the
cash in a bank vault.
Data are the lifeblood of today’s
organizations, and the effective and
efficient management of data is considered
an integral part of organizational strategy.
Data can take many forms, including
◦ traditional alphanumeric data, composed
of numbers, letters, and other characters
that describe business transactions and
other events and entities;
◦ text data, consisting of sentences and
paragraphs used in written
communications;
◦ image data, such as graphic shapes and
figures or photographic and video
images; and
◦ audio data, including the human voice
and other sounds.
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. E.g. data about sales
transactions
◦ Knowledge bases that hold knowledge in a
variety of forms, such as facts, rules, and
case examples about successful business
practices used by knowledge management
systems and expert systems to share
knowledge or give expert advice on specific
subjects.
 Data versus Information.
The word data is the plural of datum,
though data commonly represents both
singular and plural forms.
Data are raw facts or observations,
typically about physical phenomena or
business transactions.
◦ For example, a spacecraft launch or the sale
of an automobile would generate a lot of data
describing those events.
More specifically, data are objective
measurements of the attributes (the
characteristics) of entities (e.g., people,
places, things, events).
However, it is better to view data as raw material
resources that are processed into finished
information products.
Then we can define information as data that have
been converted into a meaningful and useful
context for specific end users.
Thus, data are usually subjected to a value-added
process (data processing or information
processing) during which
1. their form is aggregated, manipulated, and organized;
2. their content is analyzed and evaluated; and
3. they are placed in a proper context for a human user.
 The issue of context is really at the heart of
understanding the difference between
information and data.
 Data can be thought of as context independent:
A list of numbers or names, by itself, does not
provide any understanding of the context in
which it was recorded.
In fact, the same list could be recorded in a
variety of contexts.
In contrast, for data to become information,
both the context of the data and the
perspective of the person accessing the data
become essential.
The same data may be considered valuable
information to one person and completely
irrelevant to the next.

Justthink of data as potentially valuable to all

and information as valuable relative to its user.
 Network Resources
Telecommunications technologies and
networks like the Internet, intranets, and
extranets are essential to the successful
e-business and e-commerce operations
of all types of organizations and their
computer-based information systems.
Telecommunications networks consist of
◦ computers,
◦ communications processors, and other
devices
interconnected by communications
media and controlled by
communications software.
Network resources include:
◦ Communications media. E.g.
 twisted-pair wire, coaxial and fiber-optic cables,
and microwave, cellular, and satellite wireless
technologies.
◦ Network infrastructure.
 This generic category emphasizes that many
hardware, software, and data technologies are
needed to support the operation and use of a
communications network.

 E.g. communications processors, such as modems

and internetwork processors, and

 communications control software, such as network

operating systems and Internet browser packages.
 Information Systems Activities
Regardless of the type of information
system, the same basic information
system activities occur.
You should be able to recognize
◦ input,
◦ processing,
◦ output,
◦ storage, and
◦ control activities
taking place in any information system
you are studying
 Input of Data Resources
Data about business transactions and other
events must be captured and prepared for
processing by the input activity.

Input typically takes the form of data entry

activities such as recording and editing. End
users usually enter data directly into a
computer system or record data about
transactions on some type of physical medium
such as a paper form.

Once entered, data may be transferred onto a

machine-readable medium, such as a magnetic
disk, until needed for processing.
For example, data about sales
transactions may be recorded on source
documents such as paper order forms.
Alternatively, salespersons might
capture sales data using computer key-
boards or optical scanning devices; they
are visually prompted to enter data
correctly by video displays.

Methods such as optical scanning and

displays of menus, prompts, and fill-in-
the-blank formats make it easier for end
users to enter data correctly into an
information system.
 Processing of Data into
Information
Data are typically subjected to processing
activities, such as
◦ calculating,
◦ comparing,
◦ sorting,
◦ classifying, and
◦ summarizing.
These activities organize, analyze, and
manipulate data, thus converting them into
information for end users.
The quality of any data stored in an information
system also must be maintained by a continual
process of correcting and updating activities.
 Example. Data received about a
purchase can be
(1) added to a running total of sales results,
(2) compared to a standard to determine
eligibility for a sales discount,
(3) sorted in numerical order based on
product identification numbers,
(4) classified into product categories (e.g.,
food and non-food items),
(5) summarized to provide a sales manager
with information about various product
categories, and finally
(6) used to update sales records.
 Output of Information Products
 Information in various forms is transmitted to end
users and made available to them in the output
activity.
 Common information products include
◦ messages,
◦ reports,
◦ forms, and
◦ graphic images,
which may be provided by video displays, audio
responses, paper products, and multimedia.
 We routinely use the information provided by these
products as we work in organizations and live in
society.
 For example, a sales manager may view a video
display to check on the performance of a
salesperson, and receive a printout of monthly sales
results.
 Storage of Data Resources
Storage is the information system
activity in which data are retained in
an organized manner for later use.

Stored data are commonly organized

into a variety of data elements and
databases.

This organization facilitates their later

use in processing or retrieval as output
when needed by users of a system.
 Control of System Performance
An important information system activity
is the control of system performance.
An information system should produce
feedback about its input, processing,
output, and storage activities.
This feedback must be monitored and
evaluated to determine whether the
system is meeting established
performance standards.
Then appropriate system activities must
be adjusted so that proper information
products are produced for end users.
For example, a manager may
discover that subtotals of sales
amounts in a sales report do not add
up to total sales.
This conflict might mean that data
entry or processing procedures need
to be corrected.
Then changes would have to be
made to ensure that all sales
transactions would be properly
captured and processed by a sales
information system.
 A Business Perspective on Information
Systems
From a business perspective, an
Information System is an organizational
and management solution, based on IT,
to a challenge posed by the
environment
From the definition, it is important to
recognize the organizational,
management, and IT dimensions of
information systems
Organization - Information Systems are
part of organizations and all
organizations have a purpose. Key
Standard Operating procedures (SOPs) are
formal rules for accomplishing tasks that
have been developed over a long time

Organizations require many different kinds of

skills and people.
◦ Knowledge workers (such as engineers,
architects, or scientists) design products or
services and create new knowledge
◦ Data Workers (such as secretaries, bookkeepers,
or clerks) process the organization's paperwork.
◦ Production or service workers (such as
machinist, assemblers, or packers) actually
produce the products or services of the
organization.
Each organization has a unique culture – a
fundamental set of assumption, values, and
ways of doing things, that has been
accepted by most of its members. Part of an
organizations culture can always be found
embedded in its Information Systems.

Different levels and specialists in an

organization create different interest and
points of view that may often conflict.
Conflict is the basis of organizational politics.
Information Systems come out of this
cauldron of differing perspectives, conflicts,
compromises, and agreements that are a
natural part of all organizations.
Management - Managers
◦ perceive business challenges in the environment;
◦ they set the organizational strategy for responding,
◦ And they allocate the human and financial
resources to achieve the strategy and coordinate
the work. These are the managers’ conventional
responsibilities.

◦ Further they must also create new products and

services and even re-create the organization from
time to time
◦ This creative work is driven by new knowledge and
information and IT can play a powerful role in
redirecting and redesigning the organization
◦ Each level of management has different information
needs and Information Systems requirements.
Technology - Information System
technology is one of the many tools
available to mangers for coping with
change.
CBIS uses computer hardware,
software, storage and
telecommunications technologies.
There are many different types of
information systems:
◦ Transaction Processing Systems
◦ Enterprise Resource Planning Systems
◦ Knowledge Management Systems
◦ Management Information Systems
◦ Decision Support Systems
◦ Executive Support Systems
◦ Specialized Business Information Systems
(Artificial Intelligence, Expert Systems,
Virtual Reality)
IS is therefore not simply about computers -
it’s about how businesses can make the best
use of computer technology to provide the
information needed to achieve their goals.
In the same way as your own needs and
priorities are unique to you, each organisation
has different goals and requirements, and the
successful implementation of IS requires a
through understanding of the business issues
involved, as well as the different technologies
that are available.
Most of the time there is no single “correct
answer”, and you will need to draw on your
own knowledge and judgment when planning
or using an information system.
New options for organizational design

Information systems can become powerful

instruments for making organisations more
competitive and efficient
Flattening organizations
◦ Flatter organisations have few levels of
management, with lower-level employee being
given greater decision making authority. These
employees are empowered to make more decisions
than in the past, they no longer work standard
9am-to-5pm, and they no longer necessarily work
in offices. Moreover each employee may be
scattered geographically, sometimes, working half
a world away from the manager.
◦ Modern information systems have made
such changes possible.
◦ They can make more information available
to line workers so they can make it possible
for employees to work together as a team
◦ With the emergence of global networks like
the internet, team members can
collaborate closely even from distant
locations.
◦ These changes mean that the manager’s
span of control has been broadened,
allowing high level managers to manage
and control workers spread over distances.
Separating work from the location
◦ It is now possible to organise globally whiles
working locally: information technologies like
email, the internet, and video conferencing to
the desktop permit tight coordination of
geographically dispersed workers across time
zones and cultures.

◦ Modern telecommunication technology has

eliminated distance as a factor for many types
of work in many situations.

◦ Collaborative teamwork across thousands of

miles has become a reality as designers work on
the design of new products even if they are
located in different continents.
Companies are not limited to physical
location for providing products and services.
Networked information systems are allowing
companies to coordinate their geographically
distributed capabilities as virtual
corporations (or virtual organisations),
sometimes called networked organisations.
Virtual organisations use networks to link
people, assets, and ideas, allying with
suppliers and customers (and sometimes
even competitors) to create and distribute
new products and services without being
limited by traditional organisational
boundaries or physical location.
One company can take advantage of
the capabilities of another company
without actually physically linking to
that company.
Each company contributes its core
competencies, the capabilities that it
does the best. These networked
organisations last as long as the
opportunities remain profitable.
For example, one company might be
responsible for product design, another
for assembly and manufacturing, and
another for administration and sales
Increasing flexibility of organisations
◦ Modern telecommunications technology has
enabled many organisations to organise in more
flexible ways increasing the ability of those
organisations to respond to changes in the market
place and to take advantage of new opportunities.
◦ Information systems can give both large and small
organisations additional flexibility to overcome
some of the limitations posed by their size.
◦ Small organisations use information system to
acquire some of the muscle and reach of larger
organisations.
◦ Large organisations can use information
technology to achieve some of the agility and
responsiveness of small organisations.
Redefining organizational
boundaries and electronic
commerce
◦ Telecommunications-based information
systems enable transactions such as
payments and purchase orders to be
exchanged electronically among different
companies.
◦ Organisations can also share business
data, catalogues, or mail messages
through such systems.
◦ These networked information systems can
create new relationships between an
organisation, its customers and suppliers,
◦ Systems linking a company to its customers,
distributors, or suppliers are termed
interorganisational systems because they
automate the flow of information across
organisational boundaries
◦ Interorganisational systems that provide services
to multiple organisations by linking together many
buyers and sellers create an electronic market.
◦ Through computers and telecommunications,
these systems function like electronic middlemen,
with lowered cost for typical market transactions
such as selecting suppliers, establishing prices,
ordering goods and paying bills.
◦ Buyers and sellers can complete purchase and
sale transactions digitally regardless of their
location
The Internet is creating a global
electronic market place where a vast
array of goods and services are being
advertised, bought, and exchanged
worldwide.
Reorganizing work flows
◦ Since the first uses of information technology in
business in the early 1950’s, information systems
have been progressively replacing manual work
procedures with automated work procedures,
work flows, and work processes.
◦ Electronic work flows have reduced the cost of
operations in many companies by displacing
paper and the manual routines that accompany
it.
◦ Improved workflow management has enabled
many corporations not only to cut costs
significantly but also to improve customer
services at the same time.
◦ For instance, insurance companies can reduce
processing of applications for new insurance