FOUNDATIONS OF
INFORMATION SYSTEMS
IN BUSINESS
Data vs. Information
n
Data: raw facts, observations or measurements
typically about physical phenomena or business
transactions
Data: stored representations of meaningful objects
and events
n
numbers, text, dates, images, video, documents
Information: data processed to increase
knowledge in the person using the data
What is Information?
n Information
is data that has been
organized and interpreted, and
possibly formatted, filtered, analyzed,
and summarized
n Data that have been converted into a
meaningful and useful context for
specific end users
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Role of Information In Organizations
n
Information As a Resource
n
Information is an input into the production of
goods and services.
Role of Information In Organizations
n
Information As an Asset
n
The property of a person or an organization
that contributes to a company's output
Role of Information In Organizations
n
Information As a Product
n
Companies can also sell information, the output of its production, as
a product or service or as an embedded component of a product.
Information Technology vs.
Information Systems
n
Information Technology (IT) various hardware
components necessary for the system to operate
IT Includes computer hardware, software,
database management systems, and data
communication systems
Information Systems (IS) Combines information
technology with data, procedures for processing
data, and people who collect and use the data
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What is an Information System?
Any organized combination of people, hardware,
software, communications networks, and data
resources that stores, collects (or retrieves),
process, and distribute (or transforms, and
disseminates) information to support decision
making and control in an organization.
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Why Study Information
Systems?
n
Information technology can help all kinds of
businesses improve the efficiency and
effectiveness of their business processes,
managerial decision making, and workgroup
collaboration, thus strengthening their
competitive positions in a rapidly changing
marketplace.
Internet-based systems have become a
necessary ingredient for business success in
todays dynamic global environment.
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Roles of IS in Business
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Types of Information
Technologies
n
Computer Hardware Technologies
including microcomputers, midsize servers, and large
mainframe systems, and the input, output, and storage
devices that support them
Computer Software Technologies
including operating system software, Web browsers,
software productivity suites, and software for business
applications like customer relationship management and
supply chain management
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Types of Information
Technologies
n
Telecommunications Network
Technologies
including the telecommunications media, processors, and
software needed to provide wire-based and wireless
access and support for the Internet and private Internetbased networks
Data Resource Management Technologies
including database management system software for the
development, access, and maintenance of the databases
of an organization
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IS Framework for Business
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Types of Information Systems
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Transaction Processing Systems
n
n
n
n
n
Basic business systems that serve the organizations
operational level
Process and record an organization's transactions
n A unit of business activity, such as purchasing a
product, making a banking deposit, or reserving an
airline seat
Input: Transactions, events
Processing: Sorting, listing, merging, updating
Output: Detailed reports, lists, summaries
Users: Operations personnel, supervisors
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Typical applications of TPS
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Types of Information Systems
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Management Support Systems
n
Supply information that managers need to
make effective decisions and coordinate
their activities
n
Example
n A
human resources manager might use a
management support system to evaluate the
performance of an employee before deciding
whether or not to give him a raise
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Management Information Systems
(MIS)
n
n
n
n
provide information in the form of pre-specified reports and
displays to support business decision making.
Serve management level; provide reports and access to company
data
Supply information that managers need to make decisions and
coordinate their activities
Input: Summary transaction data, high-volume data, simple
models
Processing: Routine reports, simple models, low-level analysis
Output: Summary and exception reports
Users: Middle managers
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How management information systems obtain their data
from the organizations TPS
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A sample report that might be produced by the MIS
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Decision-Support Systems (DSS)
n
n
n
n
n
provide interactive ad hoc support for the decision
making processes of managers and other business
professionals.
Serve management level with data analysis for making
decisions
Input: Low-volume data or massive databases, analytic
models, and data analysis tools
Processing: Interactive, simulations, analysis
Output: Special reports, decision analyses, responses
to queries
Users: Professionals, staff managers
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Executive Support Systems (ESS)
n
Provide critical information from MIS, DSS, and other
sources tailored to the information needs of executives.
Provide the information that top executives need to
quickly identify problems, scan data for trends,
communicate with employees, and set strategic
objectives
Input: External and internal aggregate data
Processing: Graphics, simulations, interactive
Output: Projections, responses to queries
Users: Senior Managers
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Model of a typical executive support system
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Interrelationships among systems
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Examples of Sales and Marketing Information
Systems
System
Description
Organizational
Level
Order
processing
Enter, process, and
track orders
Operational
Pricing analysis
Determine prices
for products and
services
Management
Sales trend
forecasting
Prepare 5-year
sales forecasts
Strategic
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Examples of Manufacturing and Production
Information Systems
System
Description
Organizational
Level
Machine control Control the actions Operational
of machines and
equipment
Production
planning
Decide when and how
many products should
be produced
Management
Facilities
location
Decide where to
Strategic
locate new facilities
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Examples of Finance and Accounting Information
Systems
System
Description
Organizational
Level
Accounts
receivable
Track money owed
the firm
Operational
Budgeting
Prepare short-term Management
budgets
Profit planning
Plan long-term
profits
Strategic
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Examples of Human Resources Information Systems
System
Description
Organizational
Level
Training and
development
Track employee
Operational
training, skills, and
performance
Compensation
analysis
Monitor wages,
salaries, benefits
Management
Human
resources
planning
Plan long-term
labor force needs
Strategic
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Enterprise Applications
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Enterprise Applications
n
n
Enterprise resource planning (ERP)
Provides single information system for
organization-wide coordination and integration
of key business processes
Models and automates many business
processes
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Enterprise Applications
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Enterprise Applications
n
Supply Chain Management Systems (SCM): Automate
flow of information between firm and suppliers to
optimize production and delivery
Supply Chain Management: Close linkage of activities
involved in buying, making, moving a product
Supply Chain: Network of organizations and business
processes for production and distribution of products
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Enterprise Applications
A supply chain
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Information Systems Can Help Supply
Chain Participants
n
n
n
n
n
n
n
n
Decide when and what to produce, store, and move
Rapidly communicate orders
Track status of orders
Check and monitor inventory
Reduce inventory, transportation, warehousing costs
Track shipments
Plan production based on actual customer demand
Rapidly communicate changes in product design
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Customer Relationship Management
(CRM)
n
n
n
Manages ways used to deal with existing and
potential customers
Uses information systems to coordinate all
customer interaction processes in sales,
marketing, and service.
Track all customer interactions
Analyze data to optimize revenue, profitability,
customer satisfaction, customer retention
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Customer Relationship Management
(CRM)
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Knowledge Management Systems (KMS)
Collect relevant knowledge and
experience in firm to support business
processes and management decisions
Manage and distribute documents and
other digital knowledge objects
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Role of Knowledge Management
Systems
n
n
n
n
Acquire knowledge
Store knowledge
Distribute knowledge
Apply knowledge
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Strategic View of Information
Systems
n
Information systems are vital competitive
networks. IT can change the way businesses
compete.
Information systems are a means of
organizational renewal.
IS are a necessary investment in technologies
that help a company adopt strategies and
business processes that enable it to reengineer
or reinvent itself in order to survive and succeed
in todays dynamic business environment.
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Competitive Strategies
Cost Leadership
Differentiation
n Innovation
n Growth
n Alliance
n
n
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Cost Leadership Strategy
n
Becoming a low-cost producer of products
and services
Finding ways to help suppliers and
customers reduce their costs
Increase costs of competitors
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Differentiation Strategy
n
Developing ways to differentiate a firms
products and services from its competitors
Reduce the differentiation advantages of
competitors
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Innovation Strategy
n
Development of unique products and services
Entry into unique markets or market niches
Making radical changes to the business
processes for producing or distributing products
and services that are so different from the way a
business has been conducted that they alter the
fundamental structure of an industry
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Growth Strategy
n
Significantly expanding a companys capacity to
produce goods and services
Expanding into global markets
Diversifying into new products and services
Integrating into related products and services
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Alliance Strategy
n
Establishing new business linkages and
alliances with customers, suppliers,
competitors, consultants, and other
companies
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Competitive Strategy Examples
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