Module 1: Overview of the
Information System in
Organizations
Chapter 1: Introduction to
Information Systems
Learning Objectives
• Discuss why is it important to study and
understand information systems
• Distinguish between data, information and
importance of valuable information
• Discuss why organizations use Information
Systems
• Identify the dimensions of Information Systems
Management Information System
• What is Management Information Systems?
– In a management information system, modern, computerized systems
continuously gather relevant data, both from inside and outside an
organization. This data is then processed, integrated, and stored in a
centralized database (or data warehouse) where it is constantly updated
and made available to all who have the authority to access it, in a form
that suits their purpose.
MIS
• Why do business students need to study MIS?
– Information and Communication Technologies dominate the business
world
– Business dynamics changing in the face of emerging technologies and
new software
– Competition is increasing
– Enable students to access the problems and opportunities when using
Information Technology in business
– Also understand transformational changes within and outside the
industry
MIS
• Careers in MIS
– Offered as Computer Science subject to business students
– Completing Masters degree in MIS has benefits
– Companies: Insurance, telecommunications, financial services,
education, medical, non profit organizations
– Rise in demand for IS personnel
– Profile: data communication analysts, system analyst, consultants,
quality assurance managers, database administrators, system security
analyst, IS auditor
– Skills: technical skills, written verbal communication, understanding of
organizations, ability to work with people/ in groups
Information Concepts
• Data: raw facts, such as employee number, number of
hours worked in a week, inventory part numbers etc.
• Alphanumeric data, Image data, Audio data, Video data
• Information: collection of facts organized so that they
have additional value beyond the value of facts
themselves
• Process: set of logically related tasks performed to
achieve a defined outcome, or simply turning data into
information
Information Concepts
• However, certain rules and regulations can be
set up to organize data into useful and
valuable information
• Knowledge: is the awareness and
understanding of a set of information and the
ways that information can be made useful to
support a specific task or reach a decision
Information Concepts
• Characteristics of valuable information
– Accessible
– Accurate
– Complete
– Economical
– Flexible
– Relevant
– Reliable
– Secure
– Simple
– Timely
– Verifiable
• The value of information is directly linked to how it helps decision
makers achieve their organization’s goals
System Concepts
• System: is a set of elements or components
that interact to accomplish goals
• The relationships among the elements
determine how the system works
Information System(IS)
• Why is Information System important?
– We interact with IS personally and professionally
– Transforming businesses
– Globalization and Opportunities
• IS effects all areas of the businesses
– Manufacturing
– Accounting
– Human Resources
– Marketing
– Top Management
Information System
• Set of interrelated components
• Collect, process, store, and distribute information
By computers and software as a tool
• Support decision making, coordination, control, problem
analysis and create new product
• Provide solutions to changes/challenges in business
environment
• Another definition
– IT is an integrated Human-Machine system that combines
hardware, software, databases and telecommunications
networks. It collects data and processes it into information used
for decision making at all levels of the organization.
Functions of an 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.
Why Firms Use IS
• To achieve 6 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
Why Firms Use IS
• Operational Excellence
– Achieving higher levels of efficiency and productivity in business
operations, plus changes in management behaviour
– Example: Wal-Mart’s Retail Link system links suppliers to stores
for in-time replacements
• New Products/ Services/ Business Model
– 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
• E.g. Apple’s iPod, iTunes online music business
Why Firms Use IS
• Customer and Supplier Intimacy
– Serving customers well leads to customers returning, which raises
revenues and profits
– Intimacy with suppliers allows them to provide vital inputs, which
lowers costs
• E.g. Mac D . They provide quick service of billing to their customers.
Including all tax
• Improved decision making
– Managers need right information at right time
– IS provide real-time data for making decisions
– E.g. Verizon’s Web-based digital dashboard to provide managers
with real-time data on customer complaints, network
performance, line outages, etc.
Why Firms Use IS
• Competitive Advantage
– Achieve higher sales and profit through using IS by:
• Doing things better
• real time responding
– Using the internet is competitive advantage
• Survival
– Information technologies are necessity of doing
business
• Industry-level changes, e.g. Citibank’s introduction of ATMs
Summary
• IS instrument for creating value to firms
• The value of information is directly linked
to how it helps decision makers achieve
the organization’s goals
• Information systems must be applied
thoughtfully and carefully so that society
and industry can reap maximum benefits
Dimensions of Information System (IS)
• Using IS effectively depends on the
understanding of organization , technology
and management
• Only computer literacy is not important,
rather broader IS literacy is important to
implement a productive IS and this field of
MIS is to achieve it
Information System Literacy
How and Why technology is
applied in business
Dimensions of Information System
• Organization
– Key elements : People, Structure, Business
Processes, Politics, Culture
– Organizational structure has different levels and
specialities
Dimensions of Information System (IS)
• Management
– Make decisions, formulate action plan and solve
organizational problem
– Managers set organizational strategy for
responding to business challenges
– In addition, managers must act creatively:
• Creation of new products and services
• Occasionally re-creating the organization
Dimensions of Information System (IS)
• Technology
– Hardware: physical equipment used for input, output, processing,
storage
• E.g. Event Data Readers (EDR) in vehicles
– Software: computer programs that control and coordinate the hardware
• E.g. Fab Lab – controls automatic cutter, milling machines
– Data management technology: deals with software that are used to
organize data on physical storage media
– Network and telecommunications technology: contains both
hardware and software that are used to link various computer devices
– Internet: worlds largest Network
– WWW: service provided by the internet
UPS Case Study
• Company: United Parcel Service (UPS)
– Package delivery
– Started in 1907, now has 408,000 employees and 96000
vehicles
• Process: automated package tracking system
– Scannable label attached to package
– Info from “smart” tag goes to central computer
– At centre traffic route made for drivers
– Delivery Information Acquisition Device (DIAD) access info
through wireless n/w
– Through bar code info at various points goes to central computer
– Info available on UPS website
UPS Case Study
• Inputs, Processing, Output of UPS PTS
– Info about sender, destination and time of arrival, progress data
– Info transmitted central computer to distribution centre, route
calculation
– Tracking status, printed label, driver’s route
• Technologies used and why
– Handheld computers, bar code scanners, wireless
communications, desktop commuters, UPS data storage
technology, UPS tracking software, Internet (Web site)
– Reason: high level service in low price
UPS Case Study
• Strategic Business Objectives Achieved
– Operational Excellence
• Customers and download and print labels
• Drivers traffic route
– Customer Intimacy
• Inform about estimated time
• Package status report
– New Service
• Point Sales Order Management System (OMS)
– Competitive Advantage
• Achieved by above mentioned implementations
Global Challenges
• Globalization has impact on organizations and its IS
• Individuals from all over the world compete with other
individuals, companies and countries through Internet
• Where there are International opportunities, there are
challenges and obstacles as well
– Cultural and language challenges
– Time and distance challenges
– Infrastructure challenges
– Currency challenges
Global Challenges
– Technology transfer issue
– Product and Services challenges
Contemporary Approaches to IS
• IS is a multidisciplinary field
The study of information system deals with issues and insights contributed from technical and
behavioural disciplines
Contemporary Approaches to IS
• Technical approach
– Emphasizes mathematically based models
• Computer science theories of commutation ,data storage
• management science: models of Data Management and practices
• operations research: optimizing selected parameters of org.
• Behavioural approach
– Behavioural issues like strategic business integration, design
implementation, management
• Psychology: how decision makers use formal information
• Economics: how IS change the control and cost structures
• Sociology: how system affect individuals and groups
Contemporary Approaches to IS
• The sociotechnical systems
– Use of computer-based information systems in business firms
– Combines work of CS, management, and operating research
toward developing system solutions to real word problems
– Concerned with behavioural issues of development, use and
impact of IS
• main actors
– Suppliers of hardware and software
– Business firms
– Managers and employees
– Firm’s environment (legal, social, cultural context)
Summary
• Technology usage, how it helps the business
• Globalization and it’s challenges
• Sociotechnical systems