1/16: Information Systems in Business• What is IS?

• How can we use IS?

What is IS? Information vs. Data

• Information can be defined as:– Data that have been processed into a form that is

meaningful and useful to human beings.

• Data can be defined as:– Raw facts representing events in

organizations or the environmentbefore they are processed into a useful form.

What is an IS? Information System

• An Information System can be defined as:– Interrelated components working together to collect,

process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization.

What is IS? Input, Process, Output

• Input: collection of raw data for processing.

• Processing: conversion of data into information.

• Output: distribution of information to people or places that will use it.

• Feedback: output returned to modify inputs.

INPUT OUTPUTPROCESS

FEEDBACK

What is IS? Business Perspective• An organizational and management solution,

based on information technology, to a challenge posed by the environment.

• NOT JUST COMPUTER TECHNOLOGY

ORGANIZATIONSORGANIZATIONS TECHNOLOGYTECHNOLOGY

MANAGEMENTMANAGEMENT

INFORMATIONINFORMATION

SYSTEMSSYSTEMS

How can we use IS?

• Scope of IS grows constantly– 1950s: affect automation of clerical activities– 1970s: affect managerial control & monitoring– 1990s: affect core activities

Using IS: Networking Work

• Flattening organizations

• Telecommuting

• Virtual organizations

• Internet– A network of networks – World Wide Web, Email, FTP, eCommerce, etc.

• Intranet– Private network based on Internet & WWW standards

Using IS: Increasing Efficiency

• Improving work flows

• Increasing organizational flexibility– Mass customization– Micromarketing

• Increasing communication

• Expanding organizational boundaries

Using IS: eCommerce

• Electronic market: an IS that links buyers and sellers to exchange products, services, information, and payments.

• Electronic commerce: buying & selling goods & services using the Internet, networks, and other digital technologies.

• Electronic business: includes eCommerce & other business functions.

IS Parts: IT Infrastructure

• Hardware: physical equipment

• Software: programs & instructions that guide the computer

• Storage: Media & software governing it

• Communications: physical devices & software

Image courtesy of Tiger Direct

IS Parts: Organizations

• Made of different functions working together for a common goal

• Business functions:– Sales & marketing– Production – Finance– Accounting– Human resources

IS Parts: Organizations

• In these functional areas, we find different kinds of workers:– Knowledge workers– Data workers– Production (or service) workers

IS Parts: Management

• Senior managers: create long-range plans

• Middle managers: carry out plans

• Operational managers: day-to-day

Key System Apps in Orgs: Groups

Strategic Level: Senior Managers

Management Level: Middle Managers

Knowledge Level: Knowledge & Data Workers

Operational Level: Operational Managers

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Six Major Types of Systems

• ESS: Executive Support System

• MIS: Management Information System

• DSS: Decision Support System

• KWS: Knowledge Work Systems

• OAS: Office Automation Systems

• TPS: Transaction Processing Systems

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: TPS

• Transaction Processing Systems

• Processing routine activities of the organization– Hotel reservations– Grade submissions– Employee records

• Operational level

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: OAS

• Office Automation Systems

• Knowledge Level– Scheduling meetings– Desktop publishing – Document imaging systems– Presentation graphics development

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: KWS

• Knowledge Work Systems

• Knowledge Level– CAD: Computer Aided Design– Modeling– Graphics development

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: MIS

• Management Information Systems

• Provides reports

• Provides access to current performance

• Aids planning, controlling, & decision making

• Usually inflexible, predefined reports

• Management level

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: DSS

• Decision Support Systems

• Combine data & modeling tools to aid non-routine decision-making

• Interactive, flexible

• “What if” analysis

• Management level

Sales & Manufacturing Finance Accounting HumanMarketing Resources

Major Types of Systems: ESS

• Executive Support Systems

• Incorporates external data with internal data

• Creates projections

• Designed to help answer questions like, “What business should we be in? Which business units should we sell off?”

• Strategic Level

How the systems relate to each other

ESS

DSSMIS

TPSKWS & OAS

Organizations & IS

• What is an organization?

• How can IS affect an organization?

• Features of organizations– SOPs– Politics– Culture– Organizational Type– Environment– Goals– Business Processes -- cross-functional

How IS Affects Organizations

• Economic theory– microeconomic model of the firm: IT as factor of

production• As price of IT falls, IT use goes up, decreasing labor or

capital costs.

• Behavioral Theory– decision-making hierarchy

• IT increases flow of information, thereby encouraging self-managed workers

Strategic Role of IS

• What makes an IS strategic?– An IS is strategic if it changes goals, operations,

products, services, or environmental relationships to help the organization gain a competitive advantage.

– A strategic IS keeps an organization ahead of the competition.

Role of Managers in Organizations

• Behavioral Model: Managerial Roles– Interpersonal roles:

• motivate, counsel, support, liaison, act as figureheads

– Informational roles:• act as nerve center, distribute information, act as

spokespersons

– Decisional roles:• initiate new activities, handle disturbances, allocate

resources, negotiate & mediate conflicts.

IS Helps Managers in their Roles

• Interpersonal:– Liaison -- electronic communication

systems

• Informational:– Nerve center -- Management Information Systems

Disseminator -- Mail, office systemsSpokesperson -- Office & professional systems,

workstations

• Decisional:– Resource allocator – Decision Support Systems

IS Systems for Decision MakingOperational Knowledge Management Strategic

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TPS

ESS

DSS

MISOfficeSystems

KWS

IS? IT? MIS? ITS? Department

• New department: IS– responsible for maintaining hardware, software, data

storage, and networks that make up the IT infrastructure

– programmers, system analysts, IS managers– Other individuals: CIO, end users

IS Membership

• Programmers– Highly trained technical specialists

who write computer software instructions

• Systems Analysts– Specialists who translate business problems and

requirements into information requirements and systems; they act as liaisons between the IS department and the rest of the firm

• IS Managers– Leaders of the IS specialists