CHAPTER 1:

FOUNDATIONS OF
INFORMATION SYSTEMS IN
BUSINESS
 THE REAL WORLD OF
INFORMATION SYSTEMS
➢ Information Systems are an essential field
in the study of business administration and
management.
➢ Improve the effectiveness and efficiency of
business processes, managerial
decision making, and workgroup
collaboration.

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 The Role of Information Systems in Business Today

 How information systems are transforming

business
 Emerging mobile digital platform
 Growing business use of “big data”
 Growth in cloud computing
 Globalization opportunities
 Internethas drastically reduced costs of operating
on global scale
 Increases in foreign trade, outsourcing
 Presents both challenges and opportunities

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 The Role of Information Systems in Business Today

 In the emerging, fully digital firm:

 Significantbusiness relationships are digitally
enabled and mediated.
 Core business processes are accomplished through
digital networks.
 Key corporate assets are managed digitally.

 Digital firms
offer greater flexibility in
organization and management.
 Time shifting, space shifting

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 The Role of Information Systems in Business Today

Growing interdependence
between:
Ability to use information technology
and
Ability to implement corporate
strategies and achieve corporate goals

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 The Role of Information Systems in Business Today

Firms investheavily in information

systems to achieve six strategic business
objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival

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 The Role of Information Systems in Business Today

 Operational excellence:
 Improvement of efficiency to attain higher
profitability
 Information systems, technology an important
tool in achieving greater efficiency and
productivity
 Walmart’s Retail Link system links suppliers to
stores for superior replenishment system

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 The Role of Information Systems in Business Today

 New products, services, and business models:

 Business model: describes how company
produces, delivers, and sells product or service to
create wealth
 Information systems and technology a major
enabling tool for new products, services,
business models
Examples: Apple’s iPad, Google’s Android OS,
and Netflix

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 The Role of Information Systems in Business Today

 Customer and supplier intimacy:

 Serving customers well leads to customers returning,
which raises revenues and profits.
Example: High-end hotels that use computers to track
customer preferences and used to monitor and
customize environment
 Intimacy with suppliers allows them to provide vital
inputs, which lowers costs.
Example: JCPenney’s information system which links
sales records to contract manufacturer

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 The Role of Information Systems in Business Today

 Improved decision making

 Without accurate information:
Managers must use forecasts, best guesses, luck
Results in:
 Overproduction, underproduction
 Misallocationof resources
 Poor response times

Poor outcomes raise costs, lose customers

 Example: Verizon’sWeb-based digital dashboard to
provide managers with real-time data on customer
complaints, network performance, line outages, and
so on
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 The Role of Information Systems in Business Today

Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and suppliers in
real time
Examples: Apple, Walmart, UPS

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 The Role of Information Systems in Business Today

Survival
 Information technologies as necessity of business
Industry-level changes
Example: Citibank’s introduction of ATMs
Governmental regulations requiring record-
keeping
Examples: Toxic Substances Control Act,
Sarbanes-Oxley Act
Dodd-Frank Act

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WHAT DO THESE PICTURES HAVE
IN COMMON?

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 INFORMATION SYSTEMS

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.

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 THE REAL WORLD OF
INFORMATION SYSTEMS
➢ An Information System (IS)may be
computerized or not
▪ Smoke signals for communication
▪ Card catalogs in a library
▪ Your book bag, day planner, notebooks, and
file folders
▪ The cash register at your
favorite fast-food shop/
restaurant
▪ A paper-based accounting
ledger 15
THE FUNDAMENTAL ROLES OF IS
IN BUSINESS
➢ Support of Strategies for Competitive
Advantage
➢ Support of Business Decision Making
➢ Support of Business Processes and
Operations

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 AREAS OF IS KNOWLEDGE
➢ Framework of major areas:
▪ Foundation Concepts – fundamental
behavioral, technical, business, and
managerial concepts about information
systems
▪ Information Technologies – major concepts,
developments, and management issues in IT
▪ Business Applications – major uses of IS for
operations, management, and competitive
advantage
▪ Development Process – how an IS is planned,
developed, and implemented to meet
business opportunities. 17
 AREAS OF IS KNOWLEDGE
➢ Framework of major areas:
▪ Management Challenges – effectively and
ethically managing IT at the end-user,
enterprise, and global levels of a business

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MANAGERIAL CHALLENGES OF
INFORMATION TECHNOLOGY

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 MANAGERIAL CHALLENGES OF
INFORMATION TECHNOLOGY
➢ Challenges and Opportunities
▪ Business/IT Challenges
▪ Business/IT Developments
▪ Business/IT Goals

➢ Success and Failure with IT

▪ Effectiveness – does it work?
▪ Efficiency – how well does it work?

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 RESPONSIBILITY AND
ACCOUNTABILITY FOR PROJECT
SUCCESS (AND FAILURE)
➢ If a project involving IT fails, who gets
blamed? Why? Who should be
accountable?
➢ If the project is successful, who gets credit?
➢ How can you go about changing mindsets
about these projects?

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 MANAGERIAL CHALLENGES OF
INFORMATION TECHNOLOGY
➢ Developing IS Solutions – An Information
Systems is a Solution to a Business Problem
▪ 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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MANAGERIAL CHALLENGES OF
INFORMATION TECHNOLOGY

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MODERNIZE (DON’T REPLACE!) YOUR
LEGACY APPLICATIONS
❖ What is a legacy system?
❖ Why is it a problem?
❖ What solutions are available?

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 MANAGERIAL CHALLENGES OF
INFORMATION TECHNOLOGY
❖ Challenges and Ethics of IT – what is
improper, irresponsible, or harmful?

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 MANAGERIAL CHALLENGES OF
INFORMATION TECHNOLOGY
➢ The IS Function
▪ IS is a major functional area of business, just
as important as any business function
▪ IS is an important contributor to operational
efficiency, employee productivity and morale,
and customer services and satisfaction
▪ IS is an important strategic resource

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THE FOUNDATION FOR BUSINESS
PROCESSES

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COMPONENTS OF INFORMATION
SYSTEMS

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 INFORMATION SYSTEM
RESOURCES
❖ People Resources
❖ ISSpecialists
❖ End Users

❖ Hardware Resources
❖ Machines – the computing devices
themselves
❖ Media – where data is stored

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 INFORMATION SYSTEM
RESOURCES
❖ Software Resources
❖ Programs– instructions that tell the
computer what to do
❖ System Software – runs the computer
❖ Application Software – a particular use by
end users

❖ Procedures – instructions on how to

use the system

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 INFORMATION SYSTEM
RESOURCES
❖ Data Resources
❖ Data – unorganized facts and figures
❖ Information – data organized so that it has
value to the organization

❖ Network Resources
❖ Communications Media- the physical
pathways over which signals travel
❖ Network Infrastructure – hardware,
software, and data technologies needed to
support communications networks
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 INFORMATION SYSTEM
ACTIVITIES
❖ Input of Data Resources
❖ Processing of Data into Information – organize,
analyze, and manipulate data
❖ Output of Information Products – dissemination
of information products to appropriate end users
❖ Storage of Data Resources
❖ Control of System Resources – monitoring
feedback to assure the system meets its
performance standards
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 RECOGNIZING INFORMATION
SYSTEMS
❖ People, Hardware, Software, Data, and
Network Resources
❖ Types of Information Products Used
❖ Performance of Input, Processing,
Output, Storage and Control Activities

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