Chapter one

Foundation Concepts in Business Information Systems

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 Introduction
Business: Business refers to any organization or entity engaged in the production,
distribution, or sale of goods and services with the primary goal of generating profit.
Businesses aim to meet customer needs, improve their market position, and
contribute to economic growth. Business activities encompass various functions,
including finance, marketing, production, and customer service.
Information System: is a structured combination of technology, data, processes,
and people designed to collect, process, store, and manage information.
 Information systems enable organizations to make informed decisions, streamline
operations, improve productivity, and achieve strategic goals.

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Cont..
Business Information Systems (BIS) are structured sets of technologies,
processes, and people designed to collect, process, and distribute critical
information within a business.
Business Information Systems (BIS) are critical components that support
organizations in managing and analyzing information. These systems bridge the
gap between business processes and technology, ensuring that organizations are
well-informed and can make effective decisions.
They support functions such as customer relationship management (CRM),
enterprise resource planning (ERP), and supply chain management (SCM), all of
which are essential to maintaining operational efficiency and gaining a competitive
advantage.

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Components of information system

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 Cont..
An information system is built on a set of components that work together to collect, process, store,
and distribute information, aiding in decision-making and improving organizational efficiency. The
primary components of an information system are:
[Link]: This includes the physical devices and equipment used in the system, such as
computers, servers, storage devices, and network devices. Hardware serves as the foundation for
data processing, data storage, and communication within the information system.
[Link]: Software consists of programs and applications that enable users to process
information, execute tasks, and perform analyses. Software can be divided into two categories:
1. System Software: Such as operating systems, which manage the hardware and provide a platform for
applications.
2. Application Software: Such as database programs, enterprise applications, and productivity software,
which directly help users achieve business objectives.

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Cont..
3. Data(Database): Data is the core of any information system. It consists of raw facts and
figures that are collected, processed, and transformed into useful information. Data management
is essential as accurate and timely data is crucial for decision-making.
4. People: People are the users and administrators of an information system. They include end-
users who interact with the system daily and IT professionals responsible for system maintenance
and support.
5. Processes(procedure): These methods and workflows define how data is collected, processed,
and disseminated within the system. Processes ensure that information flows smoothly across the
organization, supporting the timely execution of tasks and decisions.
6. Networks: Networks, including the internet and intranets, connect different parts of the
information system, allowing data to be transferred, accessed, and shared between users and
devices. Networks ensure communication and data exchange across different locations.

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Business and Management Functions
Every organization operates with core business functions such as finance, marketing, human
resources, and operations. Each function has unique needs and processes that contribute to the
overall success of the organization:
•Finance focuses on managing the organization's finances, budgeting, and investments.
•Marketing handles market analysis, customer engagement, and promotional strategies.
•Human Resources (HR) manages employee relations, recruitment, and training.
•Operations involves the management of day-to-day business activities, production, and
logistics.
Business Information Systems play a role in streamlining and optimizing these functions by
providing access to real-time data, which supports decision-making and helps organizations
achieve their strategic objectives.

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 Managers and Decision Making
Managers at various levels within an organization are tasked with making decisions that impact
daily operations, long-term strategies, and everything in between. Decision-making in management
can be classified into three levels:
•Operational Decision-Making: These are short-term decisions made by lower-level management to
handle daily tasks and routine operations.
•Tactical Decision-Making: Mid-level managers focus on implementing strategies to improve
performance and meet short-term goals.
•Strategic Decision-Making: Top-level executives make long-term decisions related to the direction
of the organization and its overall goals.
Each level of management requires information systems to support decision-making by providing
accurate and timely data, aiding in analyzing trends, forecasting, and ultimately improving efficiency.

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 Implications of Decision Making for Information Systems
Information systems must align with decision-making requirements at different levels.
The quality of information impacts decisions, which means that systems need to be
reliable, accessible, and aligned with business objectives.
As decisions become more complex, organizations need sophisticated tools like
Decision Support Systems (DSS) and Executive Information Systems (EIS) to aid
managers.
The speed of decision-making, especially in a competitive environment, can directly
impact an organization's success.
 Information systems improve decision-making efficiency by automating processes,
reducing information retrieval times, and providing tools for predictive analysis.

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Classification of Information Systems

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 Cont..
1. Transaction Processing Systems (TPS) Computerized system that performs and records the
daily routine transactions necessary to conduct the business.
These systems handle routine, day-to-day transactions like order processing, payroll, and inventory
management
these systems serve the operational level of the organization
◦ TYPE: Operational-level
◦ INPUTS: transactions, events
◦ PROCESSING: updating
◦ OUTPUTS: detailed reports
◦ USERS: operations personnel, supervisors
◦ DECISION-MAKING: highly structured

EXAMPLE: payroll, accounts payable

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Cont.. TPS

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Cont.. TPS

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Key Features of TPS
Rapid response –
fast performance with rapid results

Reliability
 well-designed backup and recovery with a low failure rate

 Inflexibility
treat every transaction equally. It may be used many times each day which means it has to
be precise and inflexible
 Controlled processing
maintain specific requirements for the roles and responsibilities of different employees.

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OBJECTIVES OF TPS

Efficient and effective operation of the organization

Provide timely documents and reports
Increases the competitive advantage
Provides necessary data for tactical and strategic systems
such as DSS
Provide a framework for analyzing an organization’s activities

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Cont..
2. Office Automation Systems (OAS):- Computer system, such as word
processing, electronic mail system, and scheduling system, that is designed to
increase the productivity of data workers in the office.
◦ TYPE: Knowledge-level
◦ INPUTS: documents, schedules
◦ PROCESSING: document management, scheduling, communication
◦ OUTPUTS: documents; schedules
◦ USERS: clerical workers
EXAMPLE: document imaging system

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Cont..
3. Decision Support Systems (DSS) :- Information system at the management level of an
organization that combines data and sophisticated analytical models or data analysis tools to support
semi-structured and unstructured decision-making.
DSS assists managers with complex decision-making processes. These systems support data
analysis and include tools for what-if scenarios, optimization, and statistical analysis.
◦ TYPE: Management-level
◦ INPUTS: low-volume data
◦ PROCESSING: simulations, analysis
◦ OUTPUTS: decision analysis
◦ USERS: professionals, staff managers
◦ DECISION-MAKING: semi-structured

EXAMPLE: sales region analysis

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Cont..
Characteristics of Decision-Support Systems
◦ DSS offer users flexibility, adaptability, and a quick response.
◦ DSS operate with little or no assistance from professional programmers.
◦ DSS provide support for decisions and problems whose solutions cannot be
specified in advance.
◦ DSS use sophisticated data analysis and modeling tools.

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Cont...DSS

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Cont..
4. Management Information Systems (MIS):- Information system at the management level of an
organization that serves the functions of planning, controlling, and decision-making by providing
routine summary and exception reports.
MIS provides structured information for middle management to monitor and control organizational
activities. It consolidates data from various TPS and provides reports to assist in tactical decision-
making.
◦ TYPE: Management-level
◦ INPUTS: high-volume data
◦ PROCESSING: simple models
◦ OUTPUTS: summary reports
◦ USERS: middle managers
◦ DECISION-MAKING: structured to semi-structured

EXAMPLE: annual budgeting

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Cont..
Characteristics of Management information Systems
◦ MIS support structured decisions at the operational and management control levels. However, they are
also useful for planning purposes of senior management staff.
◦ MIS are generally reporting and control oriented. They are designed to report on existing operations and
therefore to help provide day-to-day control of operations.
◦ MIS rely an existing corporate data-and data flows.
◦ MIS have little analytical capability.
◦ MIS generally aid in decision making using past and present data.
◦ MIS are relatively inflexible.
◦ MIS have an internal rather than an external orientation.

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How MIS functions

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Cont…MIS

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OBJECTIVES OF MIS
Provide summary information of organizational activity at
periodical intervals
Operational control and efficiency
Focus on internal information
Useful to structured decisions

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Cont..
5. Executive Support Systems (ESS):- Information system at the strategic level of an
organization that address unstructured decision making through advanced graphics and
communications.
EIS offer top-level executives access to summarized information, focusing on long-term strategic
decision-making. They provide dashboards and tools for high-level analysis.
◦ TYPE: Strategic level
◦ INPUTS: aggregate data; internal and external
◦ PROCESSING: interactive
◦ OUTPUTS: projections
◦ USERS: senior managers
◦ DECISION-MAKING: highly unstructured

EXAMPLE: 5-year operating plan

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Cont..EIS
Role of EIS
Are concerned with ease of use
Are concerned with predicting the future
Are effectiveness oriented
Are highly flexible
Support unstructured decisions
Use internal and external data sources
Used only at the most senior management levels
Some examples:
Executive Information Systems tend to be highly individualized and are often custom made for
a particular client group;
however, a number of off-the- shelf EIS packages do exist and many enterprise level systems
offer a customizable EIS module

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 Thank You !!!! For Your
Attention and Commitment !!

If any!!

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