Foundations of Information Systems in Business

Bacaoco, Shanna Jean T. Inovero, Mark Angelo V. Navarro, Michael Jerome O. CO-42 Engr. Cacho
McGraw-Hill/Irwin

1-1 Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
Understand the concept of a system and

how it relates to information systems Explain why knowledge of information systems is important for business professionals
Identify five areas of information systems knowledge they

need

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Learning Objectives
Give examples to illustrate how information systems can

support a firms
Business processes Managerial decision making Strategies for competitive advantage

Provide examples of information systems from your

experiences with business organizations in the real world

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Learning Objectives
Identify challenges that managers might face in managing

successful, ethical development and use of information technology Provide examples of the components of real world information systems Become familiar with the myriad of career opportunities in information systems

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Foundation Concepts
Vital component of successful businesses Improves efficiency and effectiveness of business processes

Why study information systems and information technology? Strengthens competitive position in rapidly changing marketplaces Facilitates managerial decision making & workgroup collaboration
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What is an Information System?

Communication networks
Policies and procedures

People

Any organized combination of

Data resources Hardware and software
Stores, retrieves, transforms, and disseminates information in an organization

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Early Information Systems

They werent computerized

Smoke signals
Library card catalogs Book bag, day planner, and notebooks Cash registers

Accounting ledger
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What Should Business Professionals Know?

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Fundamental Roles of IS in Business

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Trends in Information Systems

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What is E-Business?
Using Internet technologies to empower Business processes Electronic commerce Collaboration within a company Collaboration with customers, suppliers, other business stakeholders

In essence, an online exchange of value

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How E-Business is Being Used

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E-Business Use
Reengineering Internal business processes Enterprise collaboration Support communication, coordination, coordination among teams and work groups Electronic commerce Buying, selling, marketing, and servicing of products and services over networks

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Types of Information Systems

Transaction processing
Operations Process control

Enterprise collaboration
Updating of corporate databases

Decision support systems Management

Executive information systems

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Purposes of Information Systems

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Types of Operations Support Systems

Transaction Processing Systems
Record and process business transactions

Sales, inventory, and accounting

Process Control Systems Monitor and control physical processes Using sensors to monitor refinery processes Enterprise Collaboration Systems Enhance team/workgroup communication Email, video conferencing
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Two Ways to Process Transactions

Batch Processing
Accumulate transactions over time and then process periodically
Ex: Banks process all checks in a batch at night

Online Processing
Process all transactions immediately

Ex: A bank processes ATM withdrawals immediately

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Management Support Systems

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

Management information systems

Decision support systems

Executive information systems

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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
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Other Information Systems

Expert Systems Provides expert advice Credit application advisor

Knowledge Management Systems

Creation, organization, dissemination of knowledge throughout company Intranet access to best business practices

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Other Information Systems

Strategic Information Systems
Helps get strategic advantage Shipment tracking, e-commerce

Functional Business Systems

Focus on operational and managerial application of basic business functions

Accounting, finance, marketing

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IT Challenges and Opportunities

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Measuring IT Success
Efficiency
Minimizes cost, time,

use of information resources

Effectiveness
Supports business strategies

Enables business processes

Enhances organizational structure and culture Increases customer and business value

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Developing IS Solutions

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Challenges and Ethics of IT

Application of IT
Customer relationship management Human resource management Business intelligence systems

Potential Harm
Privacy infringement Inaccurate information Collusion

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Challenges and Ethics of IT

Consumer boycotts

Potential Risks

Work stoppages
Government intervention

Codes of ethics Possible Responses 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 affecting all job sectors, including IT
Negative Rising labor costs are pushing jobs to India, the Middle East, Asia-Pacific IT employment opportunities strong, with new jobs emerging daily Positive Frequent shortages of IT personnel 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 by
Rapid growth in computer system design and related services The need to backfill positions
Information sharing and client/server environments Need for those with problem-solving skills Falling hardware and software prices, which fuel expanded computerization of operations
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The IS Function
Major functional area of business Important contributor to operational efficiency, employee productivity, morale, customer service/satisfaction
Major source of information and support for decision making

Dynamic and challenging career opportunity

Vital ingredient in developing competitive products and services in global marketplace

Key component of todays networked business

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System Concepts: A Foundation

Technology
Hardware, software, data management, telecommunications networks To support inter-connected information systems Finding ways to use information technology; includes designing basic information system components Emphasizes the quality, strategic business value, and security of an organizations information systems
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Applications

Development

Management

What is a System?
A system is
A set of interrelated components
With a clearly defined boundary

Working together
To achieve a common set of objectives

By accepting inputs and producing outputs

In an organized transformation process
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Basic Functions of a System

Input Processing Transformation process converts input into output Output

Capturing and assembling elements that enter the system to be processed

Transferring transformed elements to their ultimate destination

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Cybernetic System
All systems have input, processing, output A cybernetic system, a self-monitoring, self-regulating

system, adds
Feedback system performance data Control monitoring and evaluating feedback to determine

whether a system is moving toward 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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Other System Characteristics

A system that is a component of a larger system is a

subsystem The larger system is an environment

Several systems may share one environment Connected via a shared boundary (interface)

Types of systems
Open and Adaptive

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Components of an IS

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Information System Resources

People Information System Resources Networks Information

Hardware Software

Data

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Data Versus Information

Data are raw facts, typically about physical phenomena or

business transactions
Specifically, objective measurements of the attributes of

entities

Information is data that was converted into meaningful

and useful context for end users

Aggregated, manipulated, and organized

Analyzed and evaluated

Placed in proper context for a human user

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Basic IS Activities
Input Processing

Output
Storage

Control
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Recognizing Information Systems

Business professionals should be able to look at an

information system and identify

The people, hardware, software, data, and network resources

they use
The type of information products they produce The way they perform input, processing, output, storage, and

control activities

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