COM2001

Information Systems in Business

Chapter 1: Introduction to
Information System

Recommended Readings:
Laudon MIS: Chapter 1
Stair: Chapter 1
Learning Objectives
 At the end of this unit, you will be able to
 analyze business information systems
according to strategic business objectives
 explain the four activities of information
systems, namely, input, processing, output
and storage (IPOS), and understand the main
steps involved in each activity
 identify and explain the characteristics of
valuable information

I.S. in Business 2
Road Map
 Information systems and strategic
business objectives
 Basic information system concepts
 Information vs Data
 IPOS
 Characteristics of valuable
information

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What are Information Systems?
 Information systems (IS) are computer systems
that collect and process data and provide
information for users in organizations

 Why are information systems so essential in

business today?
 Let us consider Walmart (a US-company)
 world's largest company by revenue US$514 (2019)

[1] Fortune. Global 500. Retrieved July 22, 2019.

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Video Case Study: Walmart
Video: Walmart’s information systems
In the video, is Walmart using computer systems to
achieve the following objectives? Briefly explain your
answer.
1. Improving internal operational efficiency?
2. Creating new products or services for
customers?
3. Enhancing relationships with
a. Customers?
b. Suppliers?
4. Making better decision?

I.S. in Business 5
Strategic Business Objectives of

Information Systems
Invest in information systems to achieve the
following strategic business objectives:
1.Achieving operational excellence for
efficiency
2.Creating new product, service and/or
business model
3.Improving customer and supplier intimacy
4.Improving decision-making

Achieving the previous four business objectives can

increase one’s competitive advantage

I.S. in Business 6
1. Achieving Operational
Excellence for Efficiency
 Achieving greater operational efficiency using
information technology
 Lowering cost
 Avoid operational mistakes
 Example: Walmart
 Walmart can lower their cost by
 More efficient communication between various
departments (e.g., storefront and warehouse)
 Using automated warehouse systems

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2. Creating New Products,
Services, and Business Models
 Create new products, services, business models1
to be enjoyed by the customers
 Examples: Taobao
 Online marketspace is a new business model
 Profit come from transaction fees or by selling
advertisement instead of from sales
 Other classic examples: Apple’s iTunes, Amazon

Notes:
[1] Business model: describes how company produces, delivers, and sells
product or service to create wealth

I.S. in Business 8
3. Improving Customer and
Supplier Intimacy
 Serving customers well leads to customers returning
 Example: Mandarin Oriental Hotel1
 Use IT to track customer preferences and to provide
customized services
 Intimacy with suppliers allows them to provide vital
inputs (of the company) with lowered costs
 Examples
1.Walmart and its suppliers
2.J.C.Penney’s and TAL group2
 Information system links sales records to contract
manufacturer (the supplier)
 Helping both the retailers and the suppliers to reduce their
costs.
[1] https://www.youtube.com/watch?v=aP5MF0zrRE0
[2] http://www-07.ibm.com/hk/e-business/case_studies/manufacturing/tal.html

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4. Improving Decision Making

 Information systems support decision making by

providing summarized real-time information,
suggestions, or tools for visualizing complex data
 Examples:
 Walmart identify and stock the best-selling items before a
hurricane comes
 Web-based digital dashboard provides managers with real-
time data to facilitate instant decisions

Digital dashboard provides summarized Tools for data visualization

real-time information

10
I.S. in Business
Road Map
 Information system and strategic
business objectives
 Basic information system concepts
 Information vs Data
 IPOS
 Characteristics of valuable
information

I.S. in Business 11
IPOS: The Four Activities of
Information Systems

Processing
Input e.g.: Classifies Output
(Data)
Data Arranges (Information)
Information
Calculates

Storage
e.g.: Database

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Information vs Data
 Data are streams of raw facts that are to be
processed
 Example: The score of each student for each
question in an exam
 Information is data that are processed into
meaningful form
 Examples: The average score of all students,
grade distribution report

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Data and Information
 A collection of daily temperature readings from
all major cities in the world from the past 100
years is data .
A chart showing the rising trend of global
temperature during the last 100 years conveys
is information .

 The number of visitors to a website by country

is an example of data .
A chart showing visitor traffic from U.S. and
Australia are both increasing is information.

I.S. in Business 14
Data Types
 An information system takes data as input
 Data can be of many types:
 Text and numeric data
 numeric data
 alphanumeric data
 characters
 Multi-media data, e.g.,
 image data
 video data
 audio data

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IPOS: The Four Activities of
Information Systems

Processing
Input e.g.: Classifies Output
(Data)
Data Arranges (Information)
Information
Calculates

Storage
e.g.: Database

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IPOS: The Four Activities of
Information Systems
 Activities of information systems produce
information organizations need
i. Input: Captures data from the organization or from
external environment
ii. Processing: Converts data into more meaningful form
iii. Output: Transfers processed information to people or
other IS
iv. Storage: Stores processed data in the system (e.g., in
databases)

I.S. in Business 17
i. Input: Data Sources
 Data can be entered into the system from
various sources
 Data entered by users
 e.g., by keyboard, mouse action, touch screen, barcode
scanner, smart card readers
 Data captured by the system automatically
 e.g., the current date and time, temperature (through
temperature sensor), camera images
 Data from other information systems (through data
files or database)
Note: we call a single piece of data (e.g., a date) in the input a “data item”, or,
more technically, an “input field”.

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i. Input: Data Checking
 Data items entering a computer system
must be checked
 Inaccurate data generate inaccurate
information:
 commonly known as Garbage in,
Garbage out (GIGO)
 2 common data checking approaches
 Data validation
 Data verification

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Data Checking (1): Validation
 Data validation: is an automatic computer
check to ensure that the data follow certain
rules
 Range/limit check: whether data fall within
an acceptable range/limit
 E.g., value of a “month” must be between 1
and 12
 Format check: correct format, data type and
length
 E.g., email address: [email protected]
 HSUHK student number
 Hong Kong phone numbers (must be 8
digits)
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Data Checking (1): Validation
 Presence check: whether required data fields
have been entered (not blank)
 Cross-field check: related fields (entered by
user) are compared
 E.g., date for returning a book in a library
system must not be earlier than the date of
borrowing
 Check digit: an extra digit is computed from
the rest of a data item for error checking
 A valid check digit must match the rest of the
data item
 E.g., the last digit of Hong Kong ID card numbers
and credit card numbers

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 Data Checking (2): Verification
 Data verification: check by confirmation

 Double keying: enter the data twice to check

for the correctness
 E.g., the users are usually asked to re-enter the
password
 User confirmation
 E.g., after you fill in your information in an online form,
you are presented with the entire application before
you submit it

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Data Checking (2): Verification

 Control total: calculate the sum of the

values of numeric data and compare
against a known total
 Example: The total salary in the previous
month can be used to check if all records of
employees are retrieved in the current month
 Verification by email/SMS:
 An activation code or hyperlink is sent to the
entered email/phone to see if it is the real
email/phone of the user

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ii. Processing

 Data are processed by the computer

system and converted into information
2 major approaches to processing:
 Real-time processing - data are processed as
soon as they are entered
 E.g., balance updating during an ATM transaction

 Batch processing - collected data are placed

into groups (or batches) so that they can be
processed as a single job later on
 E.g., printing of monthly statements for customers

I.S. in Business 24
Real-time vs Batch Processing

 Real-time processing
 Provides immediate output, information is up-
to-date
 Higher processing cost
 Batch processing
 Lower processing cost
 Output is delayed

I.S. in Business 25
iii. Output
 Printed reports or digital outputs for users
 E.g., operational reports, management reports,
customer statements, receipts, real-time outputs on
computer screens
 Data files for other systems
 Passing data from one system to another
 Serving as input for other information systems (either
batch or real-time)

I.S. in Business 26
 iv. Storage
 Processed data are stored in computer systems
 In many business IS, data are stored in databases
 A database is an organized collection of data in
table format
 Many database systems are available (e.g., MS Access)
(see chapter 4)

 Other storage methods

 Data files
A database table

I.S. in Business 27
Road Map
 Information systems and strategic
business objectives
 Basic information system concepts
 Information vs Data
 IPOS
 Common characteristics of valuable
information

I.S. in Business 28
of Valuable Information (1)
1. Accurate
 Information must be correct
 How IS can help: avoid human error by automated
data processing, data checking

2. Complete
 No missing information
 Example: A student’s transcript should show the
record of all modules that he/she has taken.
 How IS can help: automated processing avoids
incomplete output, data checking minimizes the
chance of missing input data (presence check).

I.S. in Business 29
of Valuable Information (2)
3. Timely
 Up-to-date information
 Example: In stock market analysis, do you want to
know the current price of the stock or just the price
half an hour ago?
 How IS can help: more efficient processing.

4. Flexible
 Can be used for different analyses to increase its
value
 How IS can help: data stored in the system can be
used to fulfill additional purposes and provide useful
analyses.
I.S. in Business 30
of Valuable Information (3)
5. Relevant
 Only related information is presented by the IS
 How IS can help: the inputs and outputs are
predetermined by the system according to the
application’s requirement.

6. Secure access
 Information is accessible by authorized users only
 How IS can help: identification and authentication
mechanisms (e.g., login check)

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