Fundamentals of Information Systems, Fifth Edition

Chapter 1 An Introduction to Information Systems in Organizations

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Principles and Learning Objectives

The value of information is directly linked to how it helps decision makers achieve the organizations goals
Distinguish data from information and describe the characteristics used to evaluate the value of data

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Principles and Learning Objectives (continued)

Knowing the potential impact of information systems and having the ability to put this knowledge to work can result in a successful personal career and organizations that reach their goals
Identify the basic types of business information systems and discuss who uses them, how they are used, and what kinds of benefits they deliver

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Principles and Learning Objectives (continued)

System users, business managers, and information systems professionals must work together to build a successful information system
Identify the major steps of the systems development process and state the goal of each

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Principles and Learning Objectives (continued)

The use of information systems to add value to the organization can also give an organization a competitive advantage
Identify the value-added processes in the supply chain and describe the role of information systems within them Identify some of the strategies employed to lower costs or improve service Define the term competitive advantage and discuss how organizations are using information systems to gain such an advantage
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Principles and Learning Objectives (continued)

Cooperation between business managers and IS personnel is the key to unlocking the potential of any new or modified system
Define the types of roles, functions, and careers available in information systems

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Information Concepts
Data, information, and knowledge
Data: Raw facts Information: Collection of facts organized in such a way that they have additional value beyond the value of the facts themselves Process: Set of logically related tasks performed to achieve a defined outcome Knowledge: Awareness and understanding of a set of information

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Data, Information, and Knowledge

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Data, Information, and Knowledge (continued)

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Data, Information, and Knowledge (continued)

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The Characteristics of Valuable Information

If information is not accurate or complete
People can make poor decisions, costing thousands, or even millions, of dollars

Information can be of little value to the organization

If information is not relevant, not delivered to decision makers in a timely fashion, or too complex to understand

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The Value of Information

Valuable information
Can help people and their organizations perform tasks more efficiently and effectively Can help managers decide whether to invest in additional information systems and technology

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What Is an Information System?

Feedback mechanism
The component that helps organizations achieve their goals, such as increasing profits or improving customer service

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What Is an Information System? (continued)

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Input, Processing, Output, Feedback

Input
Gathering and capturing raw data

Processing
Converting or transforming data into useful outputs

Output
Production of useful information, usually in the form of documents and reports

Feedback
Output that is used to make changes to input or processing activities
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Manual and Computerized Information Systems

An information system can be:
Manual
Example: Developing patterns and trends on graph paper for stock analysis

Computerized
Example: Using program trading to track the market and trade large blocks of stocks when discrepancies occur

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Computer-Based Information Systems

Single set of hardware, software, databases, telecommunications, people, and procedures configured to collect, manipulate, store, and process data into information Information technology (IT)
Hardware, software, databases, and telecommunications

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Computer-Based Information Systems (continued)

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Computer-Based Information Systems (continued)

CBIS components
Hardware: Computer equipment used to perform input, processing, and output activities Software: Computer programs that govern the operation of the computer Database: Organized collection of facts and information Telecommunications: Electronic transmission of signals for communications Networks: Connect computers and equipment in a building, around the country, and around the world
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Computer-Based Information Systems (continued)

CBIS components (continued)
Internet: Worlds largest computer network People: Manage, run, program, and maintain the system Procedures: Strategies, policies, methods, and rules for using a CBIS

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Business Information Systems

Most common types of information systems used are those designed for:
Electronic and mobile commerce Transaction processing Management information Decision support

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Business Information Systems (continued)

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Business Information Systems (continued)

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Electronic and Mobile Commerce

E-commerce
Any business transaction executed electronically between:
Companies (B2B) Companies and consumers (B2C) Consumers and other consumers (C2C) Business and the public sector Consumers and the public sector

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Electronic and Mobile Commerce (continued)

Mobile commerce (m-commerce)
Transactions conducted anywhere, anytime

Electronic business (e-business)

Uses information systems and the Internet to perform all business-related tasks and functions

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Electronic and Mobile Commerce (continued)

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Electronic and Mobile Commerce (continued)

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Enterprise Systems: Transaction Processing Systems and Enterprise Resource Planning

Transaction
Any business-related exchange

Transaction processing system (TPS)

Organized collection of people, procedures, software, databases, and devices used to record completed business transactions

Enterprise resource planning

Programs that manage the vital business operations for an entire multisite, global organization
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Enterprise Systems: Transaction Processing Systems and Enterprise Resource Planning (continued)

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Information and Decision Support Systems

Management information systems
Organized collection of people, procedures, software, databases, and devices Provides routine information to managers/decision makers

Decision support systems

Organized collection of people, procedures, software, databases, and devices that support problem-specific decision making

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Information and Decision Support Systems (continued)

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Information and Decision Support Systems (continued)

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Specialized Business Information Systems: Knowledge Management, Artificial Intelligence, Expert Systems, and Virtual Reality
Knowledge management systems (KMSs)
Organized collection of people, procedures, software, databases, and devices

Artificial intelligence (AI)

Field in which the computer system takes on the characteristics of human intelligence Robotics, vision systems, and natural language processing
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Specialized Business Information Systems: Knowledge Management, Artificial Intelligence, Expert Systems, and Virtual Reality (continued)

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Specialized Business Information Systems: Knowledge Management, Artificial Intelligence, Expert Systems, and Virtual Reality (continued)
Expert systems
Give the computer the ability to make suggestions and act like an expert in a particular field

Virtual reality
The simulation of a real or imagined environment that can be experienced visually in three dimensions

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Systems Development
Creating or modifying existing business systems Systems development failures can be a result of:
Poor planning and scheduling Insufficient management of risk Poor requirements determination Lack of user involvement

Outsourcing
Allows a company to focus on what it does best and delegate other functions

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Systems Development (continued)

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Systems Investigation and Analysis

Systems investigation
Goal is to gain understanding of the problem to be solved or opportunity to be addressed

Systems analysis
Defines problems and opportunities of the existing system

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Systems Design, Implementation, and Maintenance and Review

Systems design
Determines how the new system will work to meet the business needs defined during systems analysis

Systems implementation
Creating or acquiring the system components defined in the design step, assembling them, and putting the new system into operation

Systems maintenance and review

Checking and modifying the system so that it continues to meet changing business needs
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Organizations and Information Systems

Organization
Collection of people and other resources established to accomplish a set of goals Has inputs, processing mechanisms, outputs, and feedback

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Organizations and Information Systems (continued)

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Organizations and Information Systems (continued)

Value chain
Series of activities that includes inbound logistics, warehouse and storage, and production

Supply chain management (SCM)

Helps determine what supplies are required for the value chain and what quantities are needed to meet customer demand

Customer relationship management (CRM)

Helps companies manage all aspects of customer encounters, including marketing and advertising
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Organizations and Information Systems (continued)

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Organizational Culture and Change

Organizational culture
Major understandings and assumptions The understandings are often not stated or documented as goals or formal policies

Organizational change
How organizations plan for, implement, and handle change Can be sustaining or disruptive

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User Satisfaction and Technology Acceptance

Technology acceptance model (TAM)
Specifies factors that can lead to higher acceptance and usage of technology

Technology diffusion
Measure of widespread use of technology

Technology infusion
Extent to which technology permeates a department

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Competitive Advantage
Significant, long-term benefit to a company over its competition An organization often uses its information system to help achieve a competitive advantage

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Factors That Lead Firms to Seek Competitive Advantage

Five-forces model identifies key factors
Rivalry among existing competitors Threat of new entrants Threat of substitute products and services Bargaining power of buyers Bargaining power of suppliers

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Strategic Planning for Competitive Advantage

Cost leadership
Deliver the lowest possible products and services

Differentiation
Deliver different products and services

Niche strategy
Deliver to a small, niche market

Altering the industry structure

Change the industry to become more favorable to organization
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Strategic Planning for Competitive Advantage (continued)

Creating new products and services
Introduce periodically or frequently

Improving existing product lines and service

Make real or perceived improvements

Other strategies
Growth in sales First to market Customizing products and services Hiring the best people
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Fundamentals of Information Systems, Fifth Edition

Performance-Based Information Systems

Three major stages
Organizations focused on using information systems to reduce costs and improve productivity Companies generally ignored revenue potential, not looking for opportunities to use information systems to increase sales Companies carefully consider both strategic advantage and costs

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Performance-Based Information Systems (continued)

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Productivity
Output achieved divided by input required Higher level of output for a given level of input means greater productivity Lower level of output for a given level of input means lower productivity

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Return on Investment and the Value of Information Systems

Earnings growth
Increase in profits

Market share
Percentage of sales in relation to total market

Customer awareness and satisfaction

Based on feedback from internal and external users

Total cost of ownership

Sum of all costs over the life of the information system
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Risk
Managers must consider the risks of:
Designing, developing, and implementing new or modified information systems

Information systems can be costly failures Costs of development and implementation can be greater than the returns from the new system

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Careers In Information Systems

Knowledge workers (KWs)
People who create, use, and disseminate knowledge

Students are increasingly completing business degrees with a global or international orientation

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Roles, Functions, and Careers in IS

Primary responsibilities in information systems
Operations: Focuses on the efficiency of IS functions Systems development: Focuses on development projects and ongoing maintenance and review Support: Provides user assistance, data administration, user training, and Web administration Information service units: Miniature IS department attached and directly reporting to a functional area in a large organization
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Typical IS Titles and Functions

Chief Information Officer (CIO)
Employs IS departments equipment and personnel to help the organization attain its goals

LAN administrators
Set up and manage the network hardware, software, and security processes

Internet careers
Opportunities are found in both traditional companies and those that specialize in the Internet

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Other IS Careers
New and exciting careers have developed in security and fraud detection and prevention
Chief information security officer Chief privacy officer

IS career opportunities include being employed by:

Microsoft (www.microsoft.com), Google (www.google.com), and Dell (www.dell.com)

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Finding a Job in IS
Sources
On-campus visits from recruiters and referrals from professors, friends, and family members The Internet

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Global Challenges in Information Systems

Cultural challenges Language challenges Time and distance challenges Infrastructure challenges Currency challenges

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Global Challenges in Information Systems (continued)

Product and service challenges Technology transfer issues State, regional, and national laws Trade agreements

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Summary
Data consists of raw facts Information
Data transformed into a meaningful form

Types of systems include:

E-commerce and m-commerce TPS and ERP MIS and DSS Specialized business information systems

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Summary (continued)
Systems development
Creating or modifying existing business systems

Organization
Formal collection of people and various other resources established to accomplish a set of goals

Supply chain management (SCM) helps determine:

What supplies are required What quantities are needed to meet customer demand How the supplies are to be processed
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Summary (continued)
Five-forces model covers:
Rivalry among existing competitors Threat of new market entrants Threat of substitute products and services Bargaining power of buyers and suppliers

Information systems personnel typically work in an IS department that employs:

A chief information officer Systems analysts Computer programmers and operators
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