Chapter 1

Foundations of Information Systems in Business

McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Foundation Concepts

Vital component of successful businesses

Improves efficiency and effectiveness of business processes

Why study information systems and information technology? Strengthens competitive position in rapidly changing marketplaces Facilitates managerial decision making & workgroup collaboration
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What is an Information System?

Communication networks Policies and procedures

People

Any organized combination of

Data resources Hardware and software
Stores, retrieves, transforms, and disseminates information in an organization
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What Should Business Professionals Know?

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Fundamental Roles of IS in Business

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Trends in Information Systems

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What is E-Business?

Using Internet technologies to empower Business processes Electronic commerce Collaboration within a company Collaboration with customers, suppliers, other business stakeholders

In essence, an online exchange of value

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How E-Business is Being Used

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E-Business Use

Reengineering Internal business processes

Enterprise collaboration Support communication, coordination, coordination among teams and work groups

Electronic commerce Buying, selling, marketing, and servicing of products and services over networks

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Types of Information Systems

Transaction processing

Operations

Process control

Enterprise collaboration
Updating of corporate databases

Decision support systems Management Executive information systems

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Types of Operations Support Systems

Transaction Processing Systems
Record and process business transactions

Sales, inventory, and accounting

Process Control Systems Monitor and control physical processes Using sensors to monitor refinery processes Enterprise Collaboration Systems Enhance team/workgroup communication Email, video conferencing
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Two Ways to Process Transactions

Batch Processing
Accumulate transactions over time and then process periodically
Ex: Banks process all checks in a batch at night

Online Processing
Process all transactions immediately

Ex: A bank processes ATM withdrawals immediately

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Management Support Systems

What do they do?

Provide information and support for effective decision making by managers

Management information systems

Decision support systems

Executive information systems

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Types of Management Support Systems

Management Information Systems (MIS)

Reports and displays

Example: daily sales analysis reports

Decision Support Systems (DSS)

Interactive and ad hoc support

Example: a what-if analysis to determine where to spend advertising dollars

Executive Information Systems (EIS)

Critical information for executives and managers Example: easy access to actions of competitors
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Measuring IT Success

Efficiency
Minimizes cost, time, use of information resources

Effectiveness
Supports business strategies Enables business processes Enhances organizational structure and culture Increases customer and business value
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Developing IS Solutions

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Ethical Responsibilities

What uses of IT might be considered improper or harmful to other individuals or society?

What is the proper business use of the Internet or a companys IT resources?

How can you protect yourself from computer crime?
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IT Careers
Economic downturns affecting all job sectors, including IT
Negative

Rising labor costs are pushing jobs to India, the Middle East, Asia-Pacific
IT employment opportunities strong, with new jobs emerging daily Positive Frequent shortages of IT personnel Long-term job outlook is positive and exciting
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IT Careers

Job increases will be driven by

Rapid growth in computer system design and related services
The need to backfill positions Information sharing and client/server environments Need for those with problem-solving skills Falling hardware and software prices, which fuel expanded computerization of operations
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What is a System?
A system is
A set of interrelated components
With a clearly defined boundary

Working together
To achieve a common set of objectives By accepting inputs and producing outputs In an organized transformation process
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Basic Functions of a System

Input

Processing Transformation process converts input into output

Output

Capturing and assembling elements that enter the system to be processed

Transferring transformed elements to their ultimate destination

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Cybernetic System

All systems have input, processing, output

A cybernetic system, a self-monitoring, selfregulating system, adds
Feedback system performance data
Control monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal

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Other System Characteristics

A system that is a component of a larger system is a subsystem

The larger system is an environment

Several systems may share one environment Connected via a shared boundary (interface)

Types of systems
Open and Adaptive

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Components of an IS

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Information System Resources

People Information System Resources

Information

Hardware Software

Networks

Data

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Data Versus Information

Data are raw facts, typically about physical phenomena or business transactions
Specifically, objective measurements of the attributes of entities

Information is data that was converted into meaningful and useful context for end users
Aggregated, manipulated, and organized Analyzed and evaluated Placed in proper context for a human user
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Basic IS Activities

Input
Processing Output Storage

Control

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Recognizing Information Systems

Business professionals should be able to look at an information system and identify

The people, hardware, software, data, and network resources they use The type of information products they produce The way they perform input, processing, output, storage, and control activities

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