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FOUNDATIONS OF INFORMATION SYSTEMS

IN BUSINESS

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Data vs. Information

n  Data: raw facts, observations or measurements typically about physical phenomena or business transactions

n  Data: stored representations of meaningful objects and events n  numbers, text, dates, images, video, documents

n  Information: data processed to increase knowledge in the person using the data

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What is Information?

n  Information is data that has been organized and interpreted, and possibly formatted, filtered, analyzed, and summarized

n Data that have been converted into a meaningful and useful context for specific end users

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Role of Information In Organizations

n  Information As a Resource n  Information is an input into the production of

goods and services.

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Role of Information In Organizations n  Information As an Asset

n  The property of a person or an organization that contributes to a company's output

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Role of Information In Organizations n  Information As a Product

n  Companies can also sell information, the output of its production, as a product or service or as an embedded component of a product.

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Information Technology vs. Information Systems

n  Information Technology (IT) – various hardware

components necessary for the system to operate

n  IT Includes computer hardware, software, database management systems, and data communication systems

n  Information Systems (IS) – Combines information technology with data, procedures for processing data, and people who collect and use the data

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What is an Information System?

Any organized combination of people, hardware, software, communications networks, and data resources that stores, collects (or retrieves), process, and distribute (or transforms, and disseminates) information to support decision making and control in an organization.

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Why Study Information Systems?

n  Information technology can help all kinds of businesses improve the efficiency and effectiveness of their business processes, managerial decision making, and workgroup collaboration, thus strengthening their competitive positions in a rapidly changing marketplace.

n  Internet-based systems have become a necessary ingredient for business success in today’s dynamic global environment.

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Roles of IS in Business

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Types of Information Technologies

n  Computer Hardware Technologies including microcomputers, midsize servers, and large mainframe systems, and the input, output, and storage devices that support them

n  Computer Software Technologies including operating system software, Web browsers, software productivity suites, and software for business applications like customer relationship management and supply chain management

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Types of Information Technologies

n  Telecommunications Network Technologies including the telecommunications media, processors, and software needed to provide wire-based and wireless access and support for the Internet and private Internet-based networks

n  Data Resource Management Technologies including database management system software for the development, access, and maintenance of the databases of an organization

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IS Framework for Business

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Types of Information Systems

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Transaction Processing Systems n  Basic business systems that serve the organization’s

operational level n  Process and record an organization's transactions

n  A unit of business activity, such as purchasing a product, making a banking deposit, or reserving an airline seat

n  Input: Transactions, events n  Processing: Sorting, listing, merging, updating n  Output: Detailed reports, lists, summaries n  Users: Operations personnel, supervisors

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Typical applications of TPS

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Types of Information Systems

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Management Support Systems

n  Supply information that managers need to make effective decisions and coordinate their activities n  Example

n A human resources manager might use a management support system to evaluate the performance of an employee before deciding whether or not to give him a raise

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n  provide information in the form of pre-specified reports and

displays to support business decision making. n  Serve management level; provide reports and access to company

data n  Supply information that managers need to make decisions and

coordinate their activities

n  Input: Summary transaction data, high-volume data, simple models

n  Processing: Routine reports, simple models, low-level analysis n  Output: Summary and exception reports n  Users: Middle managers

Management Information Systems (MIS)

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How management information systems obtain their data from the organization’s TPS

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A sample report that might be produced by the MIS

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n  provide interactive ad hoc support for the decision making processes of managers and other business professionals.

n  Serve management level with data analysis for making decisions

n  Input: Low-volume data or massive databases, analytic models, and data analysis tools

n  Processing: Interactive, simulations, analysis n  Output: Special reports, decision analyses, responses

to queries n  Users: Professionals, staff managers

Decision-Support Systems (DSS)

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n  Provide critical information from MIS, DSS, and other sources tailored to the information needs of executives.

n  Provide the information that top executives need to quickly identify problems, scan data for trends, communicate with employees, and set strategic objectives

n  Input: External and internal aggregate data

n  Processing: Graphics, simulations, interactive

n  Output: Projections, responses to queries

n  Users: Senior Managers

Executive Support Systems (ESS)

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Model of a typical executive support system

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Interrelationships among systems

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Examples of Sales and Marketing Information Systems

System Description Organizational Level

Order processing

Enter, process, and track orders

Operational

Pricing analysis Determine prices for products and services

Management

Sales trend forecasting

Prepare 5-year sales forecasts

Strategic

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Examples of Manufacturing and Production Information Systems

System Description Organizational Level

Machine control Control the actions of machines and equipment

Operational

Production planning

Decide when and how many products should be produced

Management

Facilities location

Decide where to locate new facilities

Strategic

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Examples of Finance and Accounting Information Systems

System Description Organizational Level

Accounts receivable

Track money owed the firm

Operational

Budgeting Prepare short-term budgets

Management

Profit planning Plan long-term profits

Strategic

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Examples of Human Resources Information Systems

System Description Organizational Level

Training and development

Track employee training, skills, and performance

Operational

Compensation analysis

Monitor wages, salaries, benefits

Management

Human resources planning

Plan long-term labor force needs

Strategic

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Enterprise Applications

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Enterprise Applications

n  Enterprise resource planning (ERP) n  Provides single information system for

organization-wide coordination and integration of key business processes

n  Models and automates many business processes

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Enterprise Applications

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Enterprise Applications

n  Supply Chain Management Systems (SCM): Automate flow of information between firm and suppliers to optimize production and delivery

n  Supply Chain Management: Close linkage of activities

involved in buying, making, moving a product

n  Supply Chain: Network of organizations and business processes for production and distribution of products

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Enterprise Applications A supply chain

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Information Systems Can Help Supply Chain Participants

n  Decide when and what to produce, store, and move n  Rapidly communicate orders n  Track status of orders n  Check and monitor inventory n  Reduce inventory, transportation, warehousing costs n  Track shipments n  Plan production based on actual customer demand n  Rapidly communicate changes in product design

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n  Manages ways used to deal with existing and potential customers

n  Uses information systems to coordinate all customer interaction processes in sales, marketing, and service.

n  Track all customer interactions n  Analyze data to optimize revenue, profitability,

customer satisfaction, customer retention

Customer Relationship Management (CRM)

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Customer Relationship Management (CRM)

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Knowledge Management Systems (KMS)

n  Collect relevant knowledge and experience in firm to support business processes and management decisions

n  Manage and distribute documents and other digital knowledge objects

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n  Acquire knowledge n  Store knowledge n  Distribute knowledge n  Apply knowledge

Role of Knowledge Management Systems

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Strategic View of Information Systems

n  Information systems are vital competitive networks. IT can change the way businesses compete.

n  Information systems are a means of organizational renewal.

n  IS are a necessary investment in technologies that help a company adopt strategies and business processes that enable it to reengineer or reinvent itself in order to survive and succeed in today’s dynamic business environment.

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Competitive Strategies

n  Cost Leadership n  Differentiation n  Innovation n  Growth n  Alliance

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Cost Leadership Strategy

n  Becoming a low-cost producer of products and services

n  Finding ways to help suppliers and customers reduce their costs

n  Increase costs of competitors

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Differentiation Strategy

n  Developing ways to differentiate a firm’s products and services from its competitors’

n  Reduce the differentiation advantages of competitors

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Innovation Strategy

n  Development of unique products and services

n  Entry into unique markets or market niches

n  Making radical changes to the business processes for producing or distributing products and services that are so different from the way a business has been conducted that they alter the fundamental structure of an industry

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Growth Strategy

n  Significantly expanding a company’s capacity to produce goods and services

n  Expanding into global markets

n  Diversifying into new products and services

n  Integrating into related products and services

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Alliance Strategy

n  Establishing new business linkages and alliances with customers, suppliers, competitors, consultants, and other companies

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Competitive Strategy Examples