Introduction to Information Systems

BUS 782

David Chao

What is an Information System?• An organized combination of…

– People– Hardware and software– Communication networks– Data resources– Policies and procedures

• This system…– Stores, retrieves, transforms, and disseminates

information in an organization

• An organizational solution, based on information technology, to challenges posed by the environment.

Fundamental Roles of IS in Business

Types of Information Systems

• Operations Support Systems– Efficiently support day-to-day operations

• Management Support Systems– Provide information and support for effective

decision making by managers

• Strategic Information Systems– Help get a strategic advantage over customer

• Transaction Processing Systems, TPS– Record and process business transactions

• Any exchange of money or other benefits between two or more parties

• Order processing, purchasing

• General ledger, accounts payable, accounts receivable

– Large amount of data, high processing speed, high reliability, accuracy, and security (fault tolerant)

– Data: internal, historical, detailed

Operations Support Systems

Current Trend in Operations Support Systems

• Enterprise Resources Planning ERP– for the internal world of a company

• Customer Relationship Management CRM– for the external world of a company.

Enterprise Resources Planning, ERP

• ERP software is multi-module application software that integrates activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking. ERP software may include application modules for the finance, accounting and human resources aspects of a business.– Integrated– Cross-functional– Shared database

• Major vendors:– SAP, Oracle, Microsoft

Customer Relationship Management, CRM

• Front office operations:• Direct interaction with customers, e.g. phone calls,

e-mail, online services etc.• Call Center

• Sales Force Automation• tracks all contact that has been made with a given

customer, the purpose of the contact, and any follow up that might be required.

• Sales Intelligence• Cross-selling/Up-selling/Switch-selling

• Example: SalesForce.Com

SaaS and CRM• http://www.crmlandmark.com/saasmarket.htm

• CRM Software as a Service Compared to all CRM Software– Analyst firm Gartner predicted that by 2011,

25 percent of new business software will be delivered by SaaS.

– On-Demand CRM growth projected at 17.4% from 2007 through 2013.

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

Management Information Systems

• Facilitate management control by producing summarized reports that compare actual performance against planned performance on a regular and recurring basis.– Management control: Ensuring that

performance meets established standards.

• Serve middle management

• Provide reports on firm’s current performance, based on data from TPS

Sample MIS ReportSample MIS Report

Sample MIS Report

Other Examples:

• Budget control:– http://www.olemiss.edu/projects/sap/REPORT

S_II_Budget_Control_System.pdf

• LYTD VS YTD Sales comparison

Budget Control Report

Sales Comparison

– Serve middle management

– Support nonroutine decision making• E.g. What is impact on production schedule if December

sales doubled?

– Often use external information as well from TPS and MIS

Decision support systems

Information and Management Decisions

• A decision is a selection between several courses of action:– Penalty for bad decision

• Information helps reduce uncertainty:– Incomplete information

• Information systems improve decision-making effectiveness by providing decision makers with information related to the decisions for which they are responsible.

Structured Decision

– The information requirements are known precisely.

– The criteria for making decision are known.

– The quality of a decision can be measured precisely.

Manager + Computer(DSS)

Solution

ComputerSolution

ManagerSolution

Structured Semistructured Unstructured

DEGREE OF PROBLEM STRUCTUREDEGREE OF PROBLEM STRUCTURE

The DSS Focuses on Semistructured ProblemsThe DSS Focuses on Semistructured Problems

Components of DSS

• Database: Current & Historical Data from Many Sources. – Internal and external data

• Model base: Collection of Mathematical & Analytical Building Blocks

• Interface for analysis: What - If Questions; visual dashboard

Using Decision Support Systems• What-IF Analysis:Observing how changes to

selected variables affect other variables.• Sensitivity Analysis: Observing how

repeated changes to a single variable affect other variables.

• Goal-Seeking Analysis:Set a target value for a variable, and then repeatedly changes other variables until the target is achieved.– Example: Benefit.Xls

• Optimization Analysis• Simulation: IBM Innov8 2.0

– http://www-01.ibm.com/software/solutions/soa/innov8/index.html

– Support senior management– Address nonroutine decisions requiring judgment,

evaluation, and insight– Incorporate data about external events (e.g. new

tax laws or competitors) as well as summarized information from internal MIS and DSS

Executive support systems

Components of an Information System

• Information technology

• People

• Database

• Procedure

People

• Information specialists– programmer, system analyst, database

administrator, etc.

• End-user:– Menu-level end users– Command-level end users– End-user programmer

• End-user computing and management

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 company’s IT resources?

• How can you protect yourself from computer crime?

Do you think it is wrong to

• Copy company’s software for use at home?• 35 % say no.

• Use company equipment like computers to search for a new job?

• 34% say no.• Blame your own personal errors on

technological glitches?• 39% say no.

• Use office computers to do personal shopping on the Internet?

• 46% say no.

Workplace PCs May Not Be Very Private

• Don’t be fooled: It may be personal, but it is not private.

• Cyber-surveillance: The person most likely to be spying on you is your boss. 27% of businesses surveyed by the American Management Association said they review employee email.

• Reasons:– Productivity– Liability– Network performance

Detroit Mayor Kwame KilpatrickScandal and Privacy

• Use city-issued pager• Communications are stored for legal

reasons.• "There's absolutely no expectation of privacy

with phones, e-mails, text messages or computers," expert said.

• Comment: HOW IN THE WORLD DIDTHE PRESS DIG UP TEXT MESSAGES FROM 2001? AND IF THEY CAN DO THAT FOR HIM... THEN WHAT ABOUT OUR PRIVACY RIGHTS AS WELL.. BECAUSE THAT SHOULD BE PROTECTED..IF WE ARE TALKING ON OUR PHONES OR TEXTING..OMG!!!!!!!!

Database

• A group of related files– Support business operations– Provide information

An example of database application

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Major Functions of Database Management

• Creating a database– Analysis: Entity-Relationship Diagram– Design: Design file structure– Implementation

• Accessing a database

• Updating a database

Database Security

• Logical protection:– Illegal access– Illegal update– Virus

• Physical protection

Internet firms flocks to store data in blast-proof bunker

• Some biggest companies are running their Internet operations on systems installed in a 300-foot-deep nuclear blast-proof bunker.

Procedures• Procedure: A step-by-step process or a

set of instructions for accomplishing specific results.– Operations– Backup and Recovery– Security– Development

• Operations Procedure: A procedure that describes how a computer system or application is used, how often it can be used, who is authorized to use it, and where the results of processing should go.

• Backup Procedure: A procedure that describes how and when to make extra copies of information or software to protect against losses.– http://www.tldp.org/LDP/lame/LAME/linux-

admin-made-easy/server-backup.html• Recovery Procedure: An action taken when

information or software must be restored.• Security Procedure: A procedure designed to

safeguard data centers, communications networks, computers, and other IT components from accidental intrusion or intentional damage.

• Development Procedure: A procedure that explains how IT professionals should describe user needs and develop applications to meet those needs.