Unit 1: Foundations of Information Systems (IS) in Business LH 7
• The real world of information system
• Information system
• The fundamental Roles of IS in Business
• The role of e-business in business
• Types of Information Systems:
• Operations support systems
• Management support systems
• Other classifications of IS
• Managerial Challenges of Information Technology (IT)
• Success and Failure with IT
• Developing IS solutions
• Challenges and Ethics of IT
• Challenges of IT careers
• The IS function 1
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DATA
• Set of values of qualitative or quantitative variables
• It is a “given,” or fact; a number, a statement, or a picture
• It represents something in the real world
• It is the raw materials in the production of information
• Eg-Each student's test score is one piece of data.
Information
•
INFORMATION AND DATA
When data is processed, organized, structured or presented in a
given context so as to make it useful, it is called information.
• It is data that have meaning within a context
• It shows data in relationships
• It describes data after manipulation
• Eg-The average score of a class or of the entire school is
information that can be derived from the given data.
System
• A system can be define as set of interrelated components working
together to achieve a common set of objectives, by accepting inputs
and producing outputs in an organized transformation process.
• A system has three basic interacting components on function are
1. Input: Captures raw data from organization or external
environment
2. Processing: Converts raw data into meaningful form
3. Output: Transfers processed information to people or
activities that use it.
The system concept become more useful by including two
additional component as
– Feedback
– Control
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• Feedback:
– Output returned to appropriate members of organization to help
evaluate or correct input stage
• Control:
– It involves monitoring and evaluating feedback to determine
whether the system is moving toward the achievement of goals
A sytem with feedback and control component is sometime known
as cybernetic system i.e a self-monitoring or self-regulating
system (Autopilot)
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The real world of information system .
• Information systems have become as integrated into our daily
business activities as accounting, finance, operations management,
marketing, human resource management, or any other major
business function.
• Information technologies, including Internet-based information
systems, are playing vital and expanding roles in business.
• Information technology can help all kinds of businesses improve the
efficiency and effectiveness of their business processes, managerial
decision making, and workgroup collaboration, which strengthens
their competitive positions in rapidly changing marketplaces.
• Information technologies and systems are, quite simply, an essential
ingredient for business success in today’s dynamic global
environment.
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• Since Information and Communication Technologies dominate the
business world nowadays, we utilize these technologies in not only
businesses but daily lives as well. For example, use ATMs for money
transferring, cash withdrawal etc. Behind the simple process is a full
‘process’ that is working which involves connecting with the bank
central computers, verifying the card, checking the account for
money, transferring the amount. Also we have the Internet, with
which we connect with friends and family, search for information,
using it for both entertainment and educational purposes and using
cell phones for communicating. We send e-cards on SMS for
wishing Eid instead of sending paper cards.
• So having said that, basically our life styles are changing because of
the technologies we use. Similarly business dynamics are changing
in the face of emerging technologies and new software, thus
increasing the competition in businesses. That’s why businesses
students need to have an idea for the new technologies so as to
enable students to access the problems and opportunities when
using Information Technology in business. Also understand8
transformational changes within and outside the industry.
• Introducing MIS now, is to make the students able to better
understand the other course work. E.g. studying „Change
Management‟. Doing MIS now, you would know better why you
need to do the change management. What challenges come with
using and installing or converting to a new IS.
MIS Learning Outcome
• Have understanding of the Information Systems and its associated
concepts
• Able to recognize the importance and use of various Information
and Communication Technologies (ICTs)
• Able to analyse decision making process
• Have understanding of the various types of Information Systems
• Have knowledge of the system development
• Appreciate the social and ethical considerations of MIS within
organizations
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What is an 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
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Management Information Systems
Functions of an Perspectives on Information Systems
Information System
An information system
contains information about
an organization and its
surrounding environment.
Three basic activities—
input, processing, and
output—produce the
information organizations
need.
Feedback is output returned
to appropriate people or
activities in the organization
to evaluate and refine the
input. Environmental actors,
such as customers,
suppliers, competitors,
stockholders, and
regulatory agencies,
interact with the
organization and its
information systems.
11 © Prentice Hall 2011
What Should Business Professionals Know?
Fig: A framework that outlines the major areas of information
systems knowledge needed by business professionals
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• Foundation Concepts: Role of information system in management.
• Information Technologies: Technology used in IS that is,
hardware, software, networks, data management, and many Internet-
based technologies.
• Business Applications: Uses of Information for business operation.
• Development Processes: How business professionals and
information specialists plan, develop, and implement information
systems to meet business opportunities.
• Management Challenges: Challenges to manage information
technology to meet company objective and co-ordinate different
entity of business.
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Management Information Systems
Role of information system in Business
Learning Objectives
• Understanding the effects of information systems on business
and their relationship to globalization.
• Explain why information systems are so essential in business
today.
• Define an information system and describe its management,
organization, and technology components.
• Define complementary assets and explain how they ensure that
information systems provide genuine value to an organization.
• Describe the different academic disciplines used to study
information systems and explain how each contributes to our
understanding of them.
• Explain what is meant by a sociotechnical systems perspective.
14 © Prentice Hall 2011
Fundamental Roles of IS in Business
Fig: The three fundamental roles of the business applications of
information systems.
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Support of Business Processes and Operations:
• Involves dealing with information system that support the business process
and operation in a business.
• 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.
Store operations would grind to a halt without the support of such
information systems.
Support of Business Decision Making:
• Help decisions maker to make better decision and attempt to gain a
competitive advantage.
• 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 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. 16
Support of Strategies for Competitive Advantage:
• Helps to gain 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 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.
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The role of e-business in business.
What is E-Business?
• Using Internet technologies to empower…
– Business processes
– Electronic commerce
– Collaboration within a company
– Collaboration with customers, suppliers, and other business
stakeholders
• In essence, an online exchange of value
• The Internet and Internet-like networks - those inside the enterprise
(intranet) and between an enterprise and its trading partners
(extranet) - have become the primary information technology
infrastructure that supports the e-business applications of many
companies.
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How E-Business is Being Used
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- These companies rely on e-business applications to:
• Reengineering
– Internal business processes
– Helps to achieve scalabity, Trackability
• Enterprise collaboration systems
– Support communications, coordination and coordination among
teams and work groups
• Electronic commerce
– Buying, selling, marketing, and servicing of products and
services over networks
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Types of Information Systems:
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Types of Information Systems
• Operations Support Systems
– Efficiently process business transactions
– Control industrial processes
– Support communication and collaboration
– Update corporate databases
– however, they do not emphasize the specific information
products that can best be used by managers.
• Management Support Systems
– Provide information as reports and displays
– Give direct computer support to managers during decision-
making
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Types of OSS (Operation Support System)
• Transaction Processing Systems
– Record and process business transactions
– Example: sales processing, inventory systems, accounting systems
• Process Control Systems
– Monitor and control industrial processes
– Example: using sensors to monitor chemical processes in a
petroleum refinery
• Enterprise Collaboration Systems
– Enhance team and workgroup communication
– Example: email, video conferencing
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Two Ways to Process Transactions
• Batch Processing
– Accumulate transactions over time and process periodically
– Example: a bank processes all checks received in a batch at night
• Online Processing
– Process transactions immediately
– Example: a bank processes an ATM withdrawal immediately
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Management Support Systems
• What do they do?
– Provide information and support for effective decision making
by managers
• Management information systems
• Decision support systems
• Executive information systems
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Types of Management Support Systems
• Management Information Systems (MIS)
– Reports and displays
– Example: daily sales analysis reports
• Decision Support Systems (DSS)
– Interactive and ad hoc support
– Example: a what-if analysis to determine where to spend
advertising dollars
• Executive Information Systems (EIS)
– Critical information for executives and managers
– Example: easy access to actions of competitors
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Other Information Systems
• Expert Systems - provide expert advice (Best Result)
– Example: credit application advisor. Kubero App
• Knowledge Management Systems
– support creation, organization, and dissemination of business
knowledge throughout company
– Advise within insight.
– It will feed data to expert system.
– Example: intranet access to best business practices, tableau
knowledge.
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Strategic Information Systems
- help get a strategic advantage over customer
– Example: shipment tracking, e-commerce Web systems
Functional Business Systems
• - focus on operational and managerial applications of basic business
functions
– Example: accounting, finance, or marketing
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Managerial Challenges of Information Technology (IT)
• Success and Failure with IT
• Developing IS solutions
• Challenges and Ethics of IT
• Challenges of IT careers
• The IS function
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IT Challenges and Opportunities
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Measuring IT Success
• Efficiency
– Minimize cost, time, and use of information resources.
• Effectiveness
– Support business strategies
– Enable business processes
– Enhance organizational structure and culture
– Increase customer and business value
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Challenges and Ethics of IT
• Application of IT
– Customer relationship management
– Human resources management
– Business intelligence systems
• Potential Harm
– Infringements on privacy
– Inaccurate information
– Collusion
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• Potential Risks
– Consumer boycotts
– Work stoppages
– Government intervention
• Possible Responses
– Codes of ethics
– Incentives
– Certification
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Success and Failure with IT
• The success of 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.
• It is important to realize, however, that information technology and
information systems can be mismanaged and misapplied in such a
way that IS performance problems create both technological and
business failures.
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Developing IS Solutions
Investigate (Plan) – Recognize the
problem exists.
Analyze – Investigate The current
system
Design – Designing the new system
Implement – Put the new system
into effect
Maintain (Use) – Use Monitor and
Maintain the new System
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• Most computer-based information systems are designed, and
implemented using some form of systematic development process.
• 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.
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• Challenges and Ethics of IT
Fig : Ethical Challenge in business with implementation of IT
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Challenges of IT careers:
• If you are not in an IT career, you will work regularly with IS
professionals
• Employment opportunities in IS are strong.
• Business Technologist – a professional competent in both
business and IT.
• U.S. Department of Labor – IS positions expected to be among
fastest growing for years to come.
• Dynamic developments in business and information
technologies cause constantly changing job requirements in
information systems, which will ensure that the long-term job
outlook in IT remains both positive and exciting
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The IS function:
– A major functional area of business
– An important contributor to operational efficiency,
employee productivity, morale, customer service and
satisfaction
– A major source of information and support for decision
making
– A vital ingredient in developing competitive products and
services in the global marketplace
– A dynamic and challenging career opportunity
– A key component of today’s networked business
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