Chapter 1: Business Information Systems.

1 WHY AND WHAT?

WHAT are business information systems ?

2

What is a business information system" ?

What is "information" What is a "system" What is an "information system"

Types of information systems

Raw data with no meaning.

Bron: Russell Ackoff

Wisdom calls upon all the previous levels of consciousness. It is a uniquely human state; wisdom requires one to have a soul.

Information is data that has been given meaning by way of relational connection.

Knowledge is the appropriate collection of information, such that its intent is to be useful. Knowhow!
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The difference between understanding and knowledge is the difference between learning and memorizing! 2*2 = 4 1224*45=?

Data versus Information

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Data

raw observed facts of events like business transactions: symbolic representation of facts. e.g. raw facts, symbols, numbers, documents processed data useful for the decision making process; data are the building blocks of information; provides answers to who, what, where, and when questions.

Information

Knowledge

ability to perform certain tasks by combining data with own information and experience.

Knowledge and information are personal, one persons

information is merely data for another unless a meaning is put on it!

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Data versus Information

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Data: raw observed facts of events like business

transactions Information: processed data useful for the decision making process
Data
331 Soap1.29 863 Coffee 4.69 173 Milk 79 331 Soap 1.29 663 Ham 3.29 524 Mustard 1.49 113 Beer .85

Information
Sales Region: North west Store: Store #122

Item No. Description 331 Soap

Items sold 7156

Turnover 9231,24

Data versus Information

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Data: 50109

Information: 5/01/09 Date of exam 50,109 The wage of an employee of KUL? 50109 Zip code of Granger, Iowa, USA 50109 Zip code of Alpartir, Spanje Etc

Data versus Information

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Data

6.34 6.45 6.39 6.62 6.80 6.85 6.71 7.10 7.12 7.28

Information
Google INC
$7.40 $7.20

$7.00
Stock Price

$6.80 $6.60 $6.40 $6.20 $6.00 $5.80 1 2 3 4 5 6 7 8 9 10

Last 10 Days

Types of information
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Hard versus soft information

Hard information: quantitative, objective, verifiable, e.g. a student with 75% on Business Information Systems Soft information: qualitative, subjective, difficult to verify, e.g. a student with a ready pen, culture, Internal information: exists within the company External information: acquired from external sources Data about the data, like the data format, the value range, the owner of the data

Internal versus External information

Meta(data) information

Operational/tactical/strategic information (cfr.

infra)

Example meta information

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Data prodnr, data about this data: The fact that prodnr is numerical; The fact that the values of prodnr have a range between 1 and 9999; The fact that the production department assigns the product numbers; Etc

Metadata/Meta information
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Dublin Core standard developed to describe electronic sources to improve the traceability of documents. Title, author, subject, description, publisher Date, format, source, language, etc.

Meta information in XML

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meta information is useful to search more efficiently

(cfr. course 1st bach)

<?xml version="1.0"?> </Book> <Title>My Life and Times</Title> <Author>Paul McCartney</Author> <Date>1998</Date> Data: content <ISBN>1-56592-235-2</ISBN> <Publisher>McMillin Publishing</Publisher> </Book>

Metadata: tags

Metadata of a banana
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Why is metadata so important?

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Metadata Making information more comprehensible to humans and computers!

Find documents of the author Manu De Backer Improve efficiency of search instructions

Increasing value of information People can still use/understand information, also after the owner of the information leaves the company. Improves sharing of information between peoples/companies Improves data security, the origin of information/data is captured.

WHAT are business information systems ?

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What is a business information system" ? What is "information" What is a "system Why do we consider something as a system? What is an "information system" Types of information systems

What is a system: Definition

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A system is a set of elements. These elements are related to each other and, possibly, to elements from the universe of discourse and are joined for a specific purpose.

What is a system
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Elements physical objects, energetical units, biological units Relations relations with regard to distance and time, physical relations, logical relations, cause/effect relations, Purposes delivery of services, production of finished goods, obtaining profits, stimulating employment,

Traffic system Elements:road infrastructure, vehicles, person as driver or pedestrian or traffic agent, legislation, traffic signs, Relations: distances between cities, speed allowed in relation with a specific place, Purposes: optimizing traffic flow, maximizing security,

What is a system ?
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Traffic system Elements

road infrastructure, vehicles, person as driver or pedestrian or traffic agent, legislation, traffic signs, distances between cities, speed allowed in relation with a specific place, optimizing traffic flow, maximizing security,

Relations

Purposes

What is a system ?
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What is a system ?
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Supplier

Design

Production

Sales

Shipping

Service

Customer

A company

What is a system?
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Why do we consider something as a

system ?

to describe and study something the description of a system is dependent of the intended purpose

The skeleton Muscles Vascular system Blood Digestion Nutrients Respiration The skin Senses Nervous system Hormones

Description dependent to the intended purpose: what do you want to study?

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Company
As regarded by the environment Black Box Product Contract loan

Business Organization Corporate policy

Company as system of components Internal functioning White Box Operations Procedures to contract a loan Policy Interest rates Creditworthiness

Information systems
to support Operations Tactical & Strategic Policy

What is a system ?
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Hierarchy of systems Each system is a part of a more organization-wide system Systems can consist of elements that are systems

Traffic system: element: vehicle But vehicle is also a system, composed of a number of elements
To study a system: Importance of insights in the hierarchical structure of systems, the concept subsystem and system environment

Hierarchy of system
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What is a system ?
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Types of systems Physical systems and abstract systems

Car design of a house Chicken egg House Garden Legislation - networking & lobbying

Open and closed systems

Static and dynamic systems

Formal and informal systems

What is a system ?
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A system works, processes something to Management achieve a specific goal. component

Input component

Process component

Output component

Environment

Business systems
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The nature of business systems and the components of a business system.

Objectives Intentions Forecasts

Work Materials Finance Data

Production Purchase Distribution Sales Info processing

Products Services Information

Authority, consumers, customers, suppliers, subcontractors, employees, trade unions, stakeholders, competitors,

WHAT are business information systems ?

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What is a business information system" ? What is "information" What is a "system Why do we consider something as a system? What is an "information system" Types of information systems

Information systems
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A system is a set of elements. These elements are related

to each other and, possibly, to elements from the universe of discourse and are joined for a specific purpose.
A business information system is a set of related

components to collect, search, process, store and distribute information in order to support the coordination and control of the decision making process within an organization (company, government, non-profit organization)

Information systems
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The nature of information systems and the components of an information system.

Management component
Information management

Input component
Raw data

Process component
Data storage and processing

Output component Relevant information

Environment = Company

Examples of data processing

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Registration

Classification Reorder/Sort Aggregation

Storage of new employee records Classifying emails as SPAM Sorting employees based on last name Calculating aggregate sales per region Calculating wage of employee

Mathematical calculations Selection Reports

Selecting employees who live in Leuven Reporting monthly sales figure

Information systems
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Information?

Supplier

Design

Production

Sales

Shipping

Service

Customer

Information systems vs organization

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Information management

Raw data

Data storage and processing

Relevant Information

Environment
Input
Processing

Output

Management

Socio-technical perspective
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CASE: Daimler Chrysler group

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(L&L)

Mercedes Smart Commercial Vehicles 104 offices, 37 countries 14 000 suppliers, 13 000 points of sale in 200 countries Studied process: starting from car design until after sales service and repair: no silo approach !

Streamline & Integrate : Integrated Volume Planning

Sales records production planning suppliers Interactions with suppliers (6000 registered) Internal to pass information to business unit Quality control for components BEFORE production lines

Global Supplier Portal

Powerway

CASE: Daimler Chrysler group

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Production and supply processes redesign

Organization

Supporting Information systems:

Powerway Global Supplier Integrated Volume Planning

Technology

CASE: Daimler Chrysler groep

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Production and supply processes redesign

Organization

Supporting Information systems:

Powerway Global Supplier Integrated Volume Planning

Technology: Software database hardware network

Strong mutual Dependency: Design through Information systems

WHAT are business information systems ?

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What is a business information system" ? What is "information" What is a "system Why do we consider something as a system? What is an "information system" Types of information systems

Support Strategies
Support Business Decision Making
Support Business Processes & operations
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Types of business systems

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By functional domain: accountancy, personnel, production, logistics, .... By Management Level Operational Business system

Managing performance at detail level E.g. payment of wages, purchase of goods and materials Determining how the activities on operational level should be done, at which moment and with which resources Determining the order levels, the credit limits and creating the weekly planning Determining long term purposes of the company Launching a new product

Tactical Business system

Strategic Business system

As the Management level increases, the degree of complexity increases!

Business systems
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STRATEGIC

Long term decisions, on group level, often based on unstructured information, what if analysis

TACTICAL

Mid long term decisions, identify execution plans for group decisions, project management

OPERATIONAL Daily operations and decision, based on structured information, immediate results

Types of business systems

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STRATEGIC

planning
TACTICAL

control
OPERATIONAL

Types of Information systems

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Most important types of IS

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Types of Information systems

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By functional domain: Sales and Marketing

order processing pricing forecasts

Production & logistics

process control planning opening a new production unit

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Types of Information systems

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By Functional Domain Accountancy

registration financial transactions short term budgeting long term planning

Personnel
registration recruitments and dismissal distribution of pay scales planning personnel needs

...

If there is a separation between functional domains,

they are called isolated silos.

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Mutual relation ?
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Types of Information systems

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The operational information system provides information of the operational processes of a company. These processes are well structured, unambiguous and routinely. Operational decisions regard the short term, occur relatively often, and contain little uncertainties. The required information on this level is: easy to determine, independent of the individual, well structured, and occurs particularly within the organization.

Types of Information systems

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The operational information system input: transactions, events processing: register, search, improve, list, sort, output: detail records of 1 business object (customer, order, product, ), list, summary, planning, who: executive personnel Informatics: Transaction processing systems

( OLTP = On-line Transaction Processing)

ERP

Transaction processing Information system: example

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ERP Systems
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Enterprise Resource Planning (ERP) systems: Single information system for organisation-wide coordination and integration of many business processes Off-the-shelf modules based on best practices Plain vanilla ERP vs. customisation Vendors: SAP, Oracle/PeopleSoft, Sage Group (UK),

Types of Information systems

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Operating system/business system: provides information of operating processes of the company Information used on both tactical and strategic level

Tactical middle management and executives MIS DSS

Strategic upper level management ESS

Information systems on tactical level

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Decisions concerning mid long term, less often, less routinely, more uncertainties or risks.

Required information less easy to determine, dependent of individual and moment, less well structured, need for external information increases.
Informatics Information from operational level + Data warehouses Reporting and analysis tools

Management Information Systems

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Management Information Systems (MIS): Management level: reporting and access to business information input: transaction records, data warehouses, simple models processing: routine reporting, simple models, low-level analysis output: summary, exception reports users: Middle managers

MIS Example
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(Source: Laudon & Laudon, p.47)

MIS Example
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Example report:

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Decision Support Systems

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Decision Support Systems (DSS): Management level: data analysis for decision making input: data low volume and data warehouses, analytical models, data analysis tools processing: interactive, simulation output: special reports, decision analysis, answers to specific queries users: professionals, staff managers

DSS Example
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Voyage-estimating DSS:
Designed to support assignment of cargoes to freight ships in order to meet customer delivery schedule at minimum cost, optimise loading pattern,

Given c, how to set x to optimise y? What if problem params (e.g. price of fuel) change?

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Information systems on Strategic level

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Decisions concerning long term, rather incidental and irregular character, much uncertainty and/or risk.

Required information very hard to determine, strongly dependent of individual, highly less structured and occurs particularly in the companys environment. Informatics Data warehousing, OLAP, data mining, web mining, ...

Executive Support Systems

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Executive Support Systems (ESS): communication and calculations on strategic level input: external and internal aggregated data processing: graphical, simulation, interactive output: projections, answer to queries users: Senior managers

Model of a typical ESS

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(Source: Laudon & Laudon, p.49)

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Mutual relations between systems

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Other types of IS
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Additional types of IS
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Knowledge Work Systems (KWS) Office Automation Systems (OAS)

(Source: Laudon & Laudon, Management Information Systems 8, chapter 2)

Additional types of IS
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Office Automation Systems (OAS) Office automation text processing, voicemail, e-mail, video conferencing, scheduling systems, Knowledge Work Systems (KWS): specialized systems for scientists, engineers, financial analysts, and other knowledge workers to obtain new knowledge (e.g. creation or improvement of products) Computer-aided design (CAD), virtual reality systems, stability calculations, ...