Foundations of Information Systems in Business 1

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Foundations of

Information Systems inBusiness

James A. O'Brien, and George Marakas. ManagementInformation Systems with

MISource 2007, 8th ed. Boston, MA: McGraw-Hill, Inc., 2007. ISBN: 13 9780073323091


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Chapter 1 Foundations of Information Systems in Business2

1. Understand the concept of a system and how it relates to IS2. Explain why knowledge of IS is important for business

professionals; Identify five areas of Is knowledge needed

3. Give examples to illustrate how business applications of IS

can support a firms business processes, managerial

decision making, and strategies for competitive advantage4. Provide examples of IS from your experiences with

business organizations in the real world

5. Identify challenges that a business manager might face in

managing the successful, ethical development anduse of information technology

6. Provide examples of the components of real world IS

7. Become familiar with the myriad of career opportunities in IS

Learning Objectives


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Foundation Concepts

Why study information systems and information

technology?Vital component of successful businesses

Helps businesses expand and competeImproves efficiency and effectiveness of

business processesFacilitates managerial decision making and

workgroup collaboration


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What is a System?

A set of interrelated components With a clearly defined boundary Working together

To achieve a common set of objectives


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What is an Information System?

An organized combination ofPeopleHardware and software

Communication networksData resourcesPolicies and procedures

This systemStores, 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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E-Business Use

ReengineeringInternal business processes

Enterprise collaboration systems

Support communications, coordination andcoordination among teams and work groups

Electronic commerceBuying, selling, marketing, and servicing of

products and services over networks


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Types of Information Systems

Operations Support SystemsEfficiently process business transactionsControl industrial processes

Support communication and collaborationUpdate corporate databases

Management Support SystemsProvide information as reports and displaysGive direct computer support to managers

during decision-making


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Purposes of Information Systems


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Operations Support Systems

What do they do?Efficiently process business transactionsControl industrial processes

Support communications and collaborationUpdate corporate databases


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Types of OSS

Transaction Processing SystemsRecord and process business transactionsExample: sales processing, inventory systems,

accounting systems Process Control SystemsMonitor and control physical processesExample: using sensors to monitor chemical

processes in a petroleum refinery Enterprise Collaboration SystemsEnhance team and workgroup communicationExample: email, video conferencing


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Management Support Systems

What do they do?Provide information and support for effective

decision making by managers

Management information systemsDecision support systemsExecutive information systems


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Types of Management Support Systems

Management Information Systems (MIS)Reports and displaysExample: daily sales analysis reports

Decision Support Systems (DSS)Interactive and ad hoc supportExample: a what-if analysis to determine where

to spend advertising dollars Executive Information Systems (EIS)Critical information for executives and

managersExample: easy access to actions of competitors


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Other Information 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

Strategic Information Systems - help get a strategic

advantage over customer Example: shipment tracking, e-commerce Web

systems Functional Business Systems - focus on operational and

managerial applications of basic business functions Example: accounting, finance, or marketing


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IT Challenges and Opportunities


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Measuring IT Success

EfficiencyMinimize cost, time, and use of information

resources

EffectivenessSupport business strategiesEnable business processes

Enhance organizational structure and cultureIncrease customer and business value


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Challenges and Ethics of IT Application of IT

Customer relationship management Human resources management Business intelligence systems

Potential Harm Infringements on privacy

Inaccurate information Collusion

Potential Risks Consumer boycotts Work stoppages

Government intervention Possible Responses

Codes of ethics Incentives Certification


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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 have affected all jobsectors, including IT

Rising labor costs are pushing jobs to India, theMiddle East, and Asia-Pacific countries

However, IT employment opportunities arestrong, with new jobs emerging daily

Shortages of IT personnel are frequent The long-term job outlook is positive and exciting


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IT Careers


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IT Careers

Job increases will be driven byRapid growth in computer system design and

related services

The need to backfill positions

Information sharing and client/server

environments

The need for those with problem-solving skills

Falling hardware and software prices, whichwill fuel expanded computerization of

operations


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The IS Function

The IS function isA major functional area of businessAn important contributor to operational efficiency,

employee productivity, morale, customer service

and satisfactionA major source of information and support for

decision makingA vital ingredient in developing competitive

products and services in the global marketplaceA dynamic and challenging career opportunityA key component of todays networked business


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System Concepts: A Foundation

System concepts help us understandTechnology: hardware, software, data

management, telecommunications networksApplications: to support inter-connected

information systemsDevelopment: developing ways to use

information technology includes designing the

basic components of information systemsManagement: emphasizes the quality,strategic business value, and security of anorganizations information systems


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Chapter 1 Foundations of Information Systems in Business 31

What is a System?

A system isA set of interrelated componentsWith a clearly defined boundary

Working togetherTo achieve a common set of objectivesBy accepting inputs and producing outputsIn an organized transformation process


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Basic Functions of a System

InputCapturing and assembling elements that enter

the system to be processed

ProcessingTransformation process that converts input

into output Output

Transferring transformed elements to theirultimate destination


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Cybernetic System

All systems have input, processing, and output A cybernetic system, a self-monitoring, self-

regulating system, adds feedback and control:Feedback is data about the performance of a

systemControl involves monitoring and evaluating

feedback to determine whether a system is moving

toward the achievement of its goal


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A Business as a System


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Other System Characteristics

If a system is one of the components of a larger

system, it is a subsystemThe larger system is an environment

Several systems may share the sameenvironmentSome may be connected via a shared

boundary, orinterface


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Components of an IS


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Information System Resources People Resources

Specialists End users

Hardware Resources Machines Media

Software Resources Programs Procedures

Data Resources Product descriptions, customer records, employee files,

inventory databases

Network Resources Communications media, communications processors, networkaccess and control software

Information Resources Management reports and business documents using text and

graphics displays, audio responses, and paper forms


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IS Activities

Input of data resourcesData entry activities

Processing of data into informationCalculations, comparisons, sorting, and so on

Output of information productsMessages, reports, forms, graphic images

Storage of data resourcesData elements and databases

Control of system performanceMonitoring and evaluating feedback


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Ch t 1 F d ti f I f ti S t i B i

Recognizing IS

Business professionals should be able to look atan information system and identifyThe people, hardware, software, data, and

network resources they useThe type of information products they produceThe way they perform input, processing,

output, storage, and control activities

Foundations of Information Systems in Business 1

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