Learning Objectives

1. Understand the concept of a system and how it relates to information systems. 2. Explain why knowledge of information systems is important for business professionals and identify five areas of information systems knowledge they need. 3. Give examples to illustrate how the business applications of information systems can support a firms business processes, managerial decision making, and strategies for competitive advantage. 1- 1

Learning Objectives
4. Provide examples of several major types of information systems from your experiences with business organizations in the real world. 5. Identify several challenges that a business manager might face in managing the successful and ethical development and use of information technology in a business.

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Learning Objectives
6. Provide examples of the components of real world information systems. Illustrate that in an information system, people use hardware, software, data and networks as resources to perform input, processing, output, storage, and control activities that transform data resources into information products. 7. Demonstrate familiarity with the myriad of career opportunities in information systems.
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What does IS do for a business?

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The Nature and Types of Information Systems For most businesses, there are a variety of requirements for information. Senior managers need information to help with their business planning. Middle management needs more detailed information to help them monitor and control business activities. Employees with operational roles need information to help them carry out their duties. As a result, businesses tend to have several "information systems" operating at the same time.
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Classification of Information Systems It is useful to classify information systems into groups that share similar characteristics. Such a classification may help in identifying systems, analysing them, planning new systems, planning integration of systems, and making decisions such as the possible outsourcing of systems. Information systems are classified in this section by organizational levels and by the type of support provided.

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Organizational Levels
Organizations are made up of components such as divisions, departments, and work units, organized in hierarchical levels. For example, most organizations have functional departments, such as production and accounting, which report to plant management, which report to a division head. Thus, we can find information systems built for headquarters, for divisions, for the functional departments, for operating units, and even for individual employees

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Typical information systems that follow the organizational structure are functional (departmental), enterprisewide, and interorganizational. FUNCTIONAL (DEPARTMENTAL) INFORMATION SYSTEMS: The major functional information systems are organized around the traditional departments functionsin a company: manufacturing (operations/production), accounting, finance, marketing, and human resources.

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ENTERPRISE INFORMATION SYSTEMS: While a departmental information system is usually related to a functional area, other information systems serve several departments or the entire enterprise.
These information systems together with the departmental applications comprise the enterprisewide information system (EIS). One of the most popular enterprise applications is enterprise resources planning (ERP).
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A special enterprise system that crosses several departments is the transaction processing system (TPS). The TPS automates routine and repetitive tasks that are critical to the operation of the organization, such as preparing a payroll or billing customers. INTERORGANIZATIONAL SYSTEMS: Some information systems connect two or more organizations. They are referred to as interorganizational information systems (IOSs). For example, the worldwide airline reservation system is composed of several systems belonging to different airlines. Of these, American Airlines SABRE system is the largest; thousands of travel agents and hundreds of airlines are connected to it.
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Departmental, corporate, and interorganizational information systems

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Classification by the Type of Support Provided Another way to classify information systems is according to the type of support they provide, regardless of the functional area. For example, an information system can support office workers in almost any functional area.

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System Transaction processing system (TPS) Management information system (MIS) Office automation system (OAS) Word processing system CAD/CAM Communication and collaboration systems (e.g., e-mail, voice mail, call centres, others) Desktop publishing System Document management system (DMS) Decision support system (DSS) Executive support system (ESS) Group support system (GSS) Expert system (ES) Knowledge work system (KWS) Neural networks, casebased reasoning Data warehouse

Employees Supported All employees

All employees Office workers Office workers Engineers, draftspeople

All employees

Description Processes an organizations basic business transactions (e.g., purchasing, billing, payroll). Provides routine information for planning, organizing, and controlling operations in functional areas. Increases productivity of office workers; includes word processing. Helps create, edit, format, distribute, and print documents. Allows engineers to design and test prototypes; transfers specifications to manufacturing facilities. Enable employees and customers to interact and work together more efficiently. Combines text, photos, graphics to produce professional-quality documents. Automates flow of electronic documents. Combines models and data to solve semi-structured problems with extensive user involvement. Supports decisions of top managers. Supports working processes of groups of people (including those in different locations). Provides stored knowledge of experts to nonexperts and decision recommendations based on built-in expertise. Supports the gathering, organizing, and use of an organizations knowledge. Learn from historical cases, even with vague or incomplete information. Stores huge amounts of data that can be easily accessed and manipulated for decision support. Gathers and uses large amounts of data for analysis by DSS, ESS and intelligent systems. Support employees who work with customers or business partners outside the physical boundaries of the organization.

Office workers Office workers Decision makers, Managers Executives, senior Managers People working in Groups Knowledge workers, nonexperts Managers, knowledge Workers Knowledge workers, Professionals Managers, knowledge workers Decision makers, managers Mobile employees

Business intelligence Mobile computing systems

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Strategic-Level Systems
Information systems that operate at this level support strategic managers to track and deal with strategic issues, assisting long-range planning. A principle area is tracking changes in the external conditions (market sector, employment levels, share prices, etc.) and matching these with the internal conditions of the organisation.

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Types of IS

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Operations support systems

What are they?
Efficiently process business transactions Control industrial processes Support communications and collaboration Update corporate databases

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Types of Operations Support Systems

Transaction Processing Systems
Record and process data from business transactions Examples: sales processing, inventory systems, accounting systems

Process Control Systems

Monitor and control physical processes Example: in a petroleum refinery use sensors to monitor chemical processes

Enterprise Collaboration Systems

Enhance team and work group communications Examples: e-mail, videoconferencing
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Two ways to process transactions

Batch Processing:
Accumulate transactions over time and process periodically Example: a bank processes all checks received in a batch at night

Online Processing:
Process transactions immediately Example: a bank processes an ATM withdrawal immediately.

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Management Support Systems

What are they?
Provide information and support for effective decision making by managers

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Types of Management Support Systems

Management Information Systems (MIS)
Provide reports and displays to managers Example: daily sales analysis reports

Decision Support Systems (DSS)

Provide interactive ad hoc support for decision making Example: A what-if-analysis to determine where to spend advertising dollars

Executive Information Systems (EIS)

Provide critical information for executives and managers Example: easy access to actions of competitors
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Operational or Management Systems

Expert Systems
Provide expert advice Example: credit application advisor

Knowledge Management Systems

Support creation, organization and dissemination of business knowledge throughout company Example: Intranet access to best business practices

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Classifications of IS by scope
Functional business systems
Focus on operational and managerial applications of basic business functions Examples: support accounting, finance or marketing

Strategic information systems

Help get a strategic advantage over its customers Examples: shipment tracking, e-commerce web systems

Cross-functional information systems

Systems that are combinations of several types of information systems Provide support for many functions
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Measuring success of an IS
Efficiency
Minimize cost, time and use of information resources

Effectiveness
Support business strategies Enable business processes Enhance organizational structure and culture Increase the customer and business value

Whats the difference between Efficiency and Effectiveness?

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Developing IS Solutions

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Ethical challenges of IT applications

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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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IS Function represents
Major functional area of business Important contributor to operational efficiency, employee productivity, morale, customer service and satisfaction Major source of information and support for effective decision making Vital ingredient in developing competitive products and services in the global marketplace Dynamic and challenging career opportunity Key component of todays networked business
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Cybernetic system
All systems have input, processing and output A cybernetic system, a self-monitoring, selfregulating system, adds feedback and control:
Feedback is data about the performance of a system Control involves monitoring and evaluating feedback to determine whether a system is moving towards the achievement of its goal

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A Cybernetic system

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A business as a system

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Information systems model

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Components of an IS
People Resources
End users: the people who use the IS or the information from the IS IS specialists: the people who develop and operate IS

Hardware Resources
All physical devices used in information processing Machines, data media, peripherals

Software Resources
All information processing instructions including programs and procedures System software, application software and procedures
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Components of an IS (cont.)
Data Resources
Facts about the business transactions Processed and organized information Databases of organized data

Network Resources
Communications media Network infrastructure: hardware and software The Internet, intranets and extranets

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Data versus Information

Data are raw facts about physical phenomena or business transactions Information is data that has been converted into meaningful and useful context for end users Example: Sales data is names, quantities and dollar amounts Sales information is amount of sales by product type, sales territory or salesperson
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IS Activities
Input of data resources
Data entry activities

Processing of data into information

E.g., calculate, compare, sort, classify, summarize

Output of information products

Messages, reports, forms and graphic images

Storage of data resources

Data elements and databases

Control of system performance

Monitoring and evaluating feedback
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