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CHAPTER ONE

Foundations of Information
Systems in Business

Heru Wijayanto, MM. MBA. M.MT


Semester Ganjil, School Year 2010 – 2011
http://siheyu.info
INTRODUCTION

vName : Heru Wijayanto, MM. MBA. M.MT


vWeb : http://siheyu.info
vE-mail : heru@ieu.ac.id
vFB : Heru Wijayanto
vTwitter : @siheyu
COURSE DESCRIPTION

• Intended to provide the students with the


capabilities to understand information system
applied in operational activities in the organization
in modern business administration.
• Introduces the fundamental concept of information
technology and information systems that includes :
• Introduction to IT and IS
• IS Development
• The challenge of the IS strategies and
implementation
COURSE OBJECTIVE

• Understand and recognize the information


system and information technology concept and
operations.
• Understand the information technology
implementation is organization and business
processes.
REQUIRED TEXTBOOKS

vO’Brien and Marakas, Management Information


Systems (Seventh Edition), McGraw-Hill
International Edition.
vO’Brien and Marakas, Introduction to
Information Systems (Fourteenth Edition),
McGraw-Hill International Edition
Grading (Tentative)

vQuiz 1 : 10 %
vUTS : 30 %
vQuiz 2 : 10 %
vUAS : 40 %
vAssignment : 10 %
ACADEMIC NORMS

• The class will be started on time. The student lateness


will be allowed ?? minutes after starting the class.
• During the learning process, all the hand phones
must be off or silent.
• The assignment must be hand in on time.
• The plagiarism not allowed for all assignment and
examination.
• The attendance minimum 70 percent of the total
learning process. If the student attendance less than
70 percent, she / he will not allowed to joint FINAL
EXAM (UAS).
Why Study Information Systems?

vInformation 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.
Why Study Information Systems
vInternet-based systems have become a
necessary ingredient for business success in
today’s dynamic global environment.

vInformation technologies are playing an


expanding role in business.
Case #1: Athens Olympics Network

vWhat makes the Olympic Games a unique


project is that the athletes aren’t going to stop
running just because the server does.

vMajor Components:
§ Games Management System (GMS)
§ Information Diffusion System (IDS)
Case #1: Athens Olympics Network
GMS:
vManaged access accreditations for the games

IDS:
vCollected and distributed event results and
rankings to press agencies and certain websites
vLive feed for broadcasters commenting on
events
vResults, rankings, statistics and biographies
available to commentators .3 seconds after the
athletes crossed the line
Case #1: Athens Olympics Network

Goals & Constraints:


vReduce the amount of risk
v100% availability
vNon-negotiable deadline
Case #1: Athens Olympics
Network
Fail-Safe Plan:
vRedundancy
§ Constructed the network in such a way that
service could be provided even if one of the
routers was damaged.
§ Stored data in two physically distant data centers
(in different earthquake zones).

vTest. Test. Test. “We wanted to be sure that


every stupid thing that can happen was planned
for.”
What is an Information System?

vAny organized combination of people, hardware,


software, communications networks, and data
resources that stores, retrieves, transforms, and
disseminates information in an organization.

vPeople have relied on IS to communicate with


each other using a variety of physical devices
(hardware), information processing instructions
and procedures (software), communication
channels (networks) and stored data (data
resources).
Information Systems vs.
Information Technology

vInformation Systems (IS) – all components and


resources necessary to deliver information and
information processing functions to the
organization

vInformation Technology (IT) – various hardware


components necessary for the system to
operate
Types of Information
Technologies
vComputer Hardware Technologies
including microcomputers, midsize servers, and large
mainframe systems, and the input, output, and storage
devices that support them

vComputer Software Technologies


including operating system software, Web browsers,
software productivity suites, and software for business
applications like customer relationship management and
supply chain management
Types of Information
Technologies
vTelecommunications 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

vData Resource Management Technologies


including database management system software for the
development, access, and maintenance of the
databases of an organization
Conceptual Framework of IS
Knowledge
Conceptual Framework of IS
Knowledge
vFoundation Concepts. Fundamental
behavioral, technical, business and managerial
concepts about the components and roles of
information systems.
vInformation Technologies. Major concepts,
developments and management issues in IT
(hardware, software, networks, data
management and many Internet based
technologies).
Conceptual Framework of IS
Knowledge (2)
vBusiness Application. The major uses of
information systems for the operations,
management and competitive advantage of a
business.
vDevelopment Processes. How business
professionals and information specialist plan,
develop and implement IS to meet business
opportunities.
vManagement Challenge. The challenges of
effectively and ethically managing IT at the end
user, enterprise and global levels of a business.
Roles of IS in Business
Roles of IS in Business (2)

Store Manager make a decision


to install touch screen kiosk to
Attract new customer and build
Customer loyalty.

Decisions on what lines of


merchant need to be added or
discontinued, what kind of
investment they require.

Record customer purchases,


Keep track of inventory,
Pay employees
Trends in Information Systems
What is E-Business?

Definition:
vThe use of Internet technologies to work and
empower business processes, electronic
commerce, and enterprise collaboration within a
company and with its customers, suppliers, and
other business stakeholders.

vAn online exchange of value.


E-Business Information Technology
Infrastructure
E-Business Information
Technology Infrastructure

vThe Internet and Internet – like networks- inside


the enterprise (intranets) and between an
enterprise and its trading partners (extranets) –
have become the primary information
technology infrastructure that supports the e-
business applications of many companies.
Enterprise Collaboration
Systems
Definition:
vInvolve the use of software tools to support
communication, coordination, and collaboration
among the members of networked teams and
workgroups.
What is E-Commerce?

Definition:
The buying and selling, and marketing and
servicing of products, services, and information
over a variety of computer networks.
Types of Information Systems
Operation Support Systems

Definition:
vInformation systems that process data
generated by and used in business operations
vGoal is to efficiently process business
transactions, control industrial processes,
support enterprise communications and
collaboration, and update corporate databases
Examples of Operations
Support Systems
vTransaction Processing Systems (TPS) –
process data resulting from business
transactions, update operational databases, and
produce business documents.

vProcess Control Systems (PCS) – monitor and


control industrial processes.

vEnterprise Collaboration Systems – support


team, workgroup, and enterprise
communications an collaboration.
A Transaction Processing
System Example
Management Support Systems

Definition:
vInformation systems that focus on providing
information and support for effective decision
making by managers
Management Support Systems
vManagement Information Systems (MIS) –
provide information in the form of pre-specified
reports and displays to support business
decision making.

vDecision Support Systems (DSS) – provide


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

vExecutive Information Systems (EIS) – provide


critical information from MIS, DSS, and other
sources tailored to the information needs of
executives.
A Decision Support System
Example
Operational & Managerial IS

vExpert Systems – provide expert advice for


operational chores or managerial decisions

vKnowledge Management Systems – support the


creation, organization, and dissemination of
business knowledge to employees and
managers
IS Classifications by Scope

vFunctional Business Systems – support basic


business functions

vStrategic Information Systems – support


processes that provide a firm with strategic
products, services, and capabilities for
competitive advantage

vCross-functional Information Systems –


integrated combinations of information systems
Management Challenges &
Opportunities
Measures of Success
vEfficiency
§ Minimize costs
§ Minimize time
§ Minimize the use of information resources

vEffectiveness
§ Support an organization’s business strategies
§ Enable its business processes
§ Enhance its organizational structure and culture
§ Increase the customer business value of the
enterprise
Developing IS Solutions
The Systems Development
Lifecycle
Ethical Challenges of IT
IT Career Trends
v Rising labor costs have resulting in large-scale
movement to outsource programming functions to India,
the Middle East and Asia-Pacific countries.

v More new and exciting jobs emerge each day as


organizations continue to expand their wide-scale use of
IT.

v Frequent shortages of qualified information systems


personnel.

v Constantly changing job requirements due to dynamic


developments in business and IT ensure long-term job
outlook in IT remains positive and exciting.
The IS Function represents…

vA major functional area of business equally as


important to business success as the functions
of accounting, finance, operations management,
marketing, and human resource management.

vAn important contributor to operational


efficiency, employee productivity and morale,
and customer service and satisfaction.
The IS Function represents…

vA major source of information and support


needed to promote effective decision making by
managers and business professionals.

vA vital ingredient in developing competitive


products and services that give an organization
a strategic advantage in global marketplace.
The IS Function represents…

vA dynamic, rewarding, and challenging career


opportunity for millions of men and women.

vA key component of the resources,


infrastructure, and capabilities of today’s
networked business enterprise.
Case #2: Connecting the
Mobile Workforce
Goals:
vKeep 3,500 highly mobile airline pilots:
§ Trained on the latest technology and procedures
§ Plugged into the corporate infrastructure
§ Informed about schedules, weather events, and
other facts that affect their jobs

vControl costs
Case #2: Connecting the
Mobile Workforce
Productivity and Efficiency Improvements:
vPilots can access updated data electronically.

vPilots can work in a variety of locations including


airplanes, airports, hotels, and other remote
locations.

vPilots appreciate the convenience of not having


to carry heavy manuals and documentation to
multiple locations.

vPilots can take their required training on their


laptops during downtime in any airport.
Case #2: Connecting the
Mobile Workforce
1. Are many of Lufthansa’s challenges identified
in the case similar to those being experienced
by other businesses in today’s global
economy? Explain and provide some
examples.

2. What other tangible and intangible benefits,


beyond those identified by Lufthansa, might a
mobile workforce enjoy as a result of
deploying mobile technologies? Explain.
Case #2: Connecting the
Mobile Workforce
3. Lufthansa was clearly taking a big risk with
their decision to deploy notebook computers to
their pilots. What steps did they take to
manage that risk and what others might be
needed in today’s business environment?
Provide some examples.

4. How might mobile computing improve your


productivity and efficiency? Provide some
examples.
Case #2: Connecting the
Mobile Workforce
5. What challenges in pilot morale, performance,
and management might arise with the use of
mobile computing devices in the field and in
the cockpit? What preventive actions or
solutions to these potential problem areas
could you suggest?
What is a System?

Definition:
A group of interrelated components, with a
clearly defined boundary, working together
toward a common goal by accepting inputs and
producing outputs in an organized
transformation process.
System Components
vInput – capturing and assembling elements that
enter the system to be processed

vProcessing – transformation steps that convert


input into output

vOutput – transferring elements that have been


produced by a transformation process to their
ultimate destination
Cybernetic Systems
Definition:
a self-monitoring, self-regulating system.

vFeedback – data about the performance of a


system

vControl – monitoring and evaluating feedback to


determine whether a system is moving toward
the achievement of its goal
Example of a Cybernetic
System
A Business System
IS Resources & Activities
Information System Resources
vPeople – end users and IS specialists

vHardware – physical devices and materials used


in information processing including computer
systems, peripherals, and media

vSoftware – sets of information processing


instructions including system software,
application software and procedures
Information Systems Resources
(con’t)
vData – facts or observations about physical
phenomena or business transactions

vNetwork – communications media and network


infrastructure
Data vs. Information

vData – raw facts or observations typically about


physical phenomena or business transactions

vInformation – data that have been converted into


a meaningful and useful context for specific end
users
Network Resources
vCommunications Media – examples include
twisted-pair wire, coaxial and fiber-optic cables,
microwave, cellular, and satellite wireless
technologies

vNetwork Infrastructure – examples include


communications processors such as modems
and internetwork processors, and
communications control software such as
network operating systems and Internet browser
packages.
Information Systems Activities

vInput of Data Resources


vProcessing of Data into Information
vOutput of Information Products
vStorage of Data Resources
vControl of System Performance
Recognizing Information Systems

Fundamental Components of IS
vPeople, hardware, software, data and network
resources used

vTypes of information products produced

vInput, processing, output, storage and control


activities performed
Case #3: Failure to Success
with IT
Aviall on the Ropes:
vA failed enterprise resource planning system
that had been designed to automate and
integrate the company’s order processing,
inventory control, financial accounting, and
human resources business systems

vCouldn’t properly order or ship items to


customers

vQuarterly sales dropping

vAirline industry shrinking


Case #3: Failure to Success
with IT
Goals:
vSave Aviall from financial disaster

vTurn Aviall from a catalog business into a full-


scale logistics business that hundreds of
aviation parts manufacturers and airlines could
depend on for ordering, inventory control, and
demand forecasting
Case #3: Failure to Success
with IT
Challenges:
vIntegrate five Web-enabled e-business software
systems from different software providers

vCustomized pricing for 17,000 customers who


receive various types of discounts

v380,000 different aerospace parts


Case #3: Failure to Success
with IT
Benefits of Aviall.com:
vCustomer order obtained via web costs only 39
cents compared with $9 for an order taken via
telephone

vSales force freed from routine order taking can


devote more time to developing relationships
with customers

vCustomers have the ability to transfer orders


from an Excel spreadsheet directly to website
Case #3: Failure to Success
with IT
Benefits of Aviall.com (con’t):
vCustomers can receive pricing and availability
information on parts within 5 seconds

vHelps build relationships with suppliers by


providing them with customer ordering data that
enables them to better match production with
demand
Case #3: Aviall Inc.
1. Why do you think that Aviall failed in their
implementation of an enterprise resource
planning system? What could they have done
differently?

2. How has information technology brought new


business success to Aviall? How did IT
change Aviall’s business model?

3. How could other companies use Aviall’s


approach to the use of IT to improve their
business success? Give several examples.
Case #4: This Call is Being
Monitored
Goals:
vIncrease customer loyalty
vReduce number of calls forwarded to internal
help desk
vImprove decision making
Case #4: This Call is Being
Monitored
Witness Systems Call-center Software &
CallMiner:
vRecords conversations
vCaptures keystrokes
vTracks caller choices
vTranscribes conversations into text
Case #4: This Call is Being
Monitored
Benefits:
vRevenues increased 60%
v20% fewer calls sent to help desk saving $1
million
vCustomer satisfaction rose 10%
vE-ticket sales increased 8%
vReduced staffing needs
Case #4: This Call is Being
Monitored
1. What are the business benefits of the CallMiner
system? Provide some additional examples beyond
those discussed in the case.

2. How can new technologies like CallMiner help


companies improve their customer service and gain a
competitive edge in the marketplace? Explain.

3. Andre Harris refers to calls to reconfirm a flight as


“quite frankly, low-value calls.” Why are they classified
as low value? Why do you think so many customers
are placing such calls?
Summary

vThere is no longer a distinction between an IT


project and a business initiative.

vInformation systems are an important contributor


to operational efficiency, employee productivity
and morale, and customer service and
satisfaction.
Summary

vInformation systems are a major source of


information and support needed to promote
effective decision making by managers and
business professionals.

vInformation systems can be categorized based


on their intended purpose.
Summary

vManaging and using information systems can


pose several challenges including the
development process and ethical
responsibilities.
End of Chapter 1

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