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1. Lesson 5: Information Systems
Fundamentals of Information
Technology

2. Knowing the potential
impact of information
systems and having the
ability to put this knowledge
to work can result in
success in organizations
reaching their goals…

3. System users, business
managers, and
information systems
professionals must work
together to build a
successful information
system

4. Levels of Management in Organizations:
(Information Needs & Decision Making)
Source: Essentials of Management Information SystemsSource: Essentials of Management Information Systems
Need information to
make strategic (long
term) decisions
Need information to
make tactical(short
term) decisions
Need information to
make operational
(daily) decisions

5. What is an Information System?
1. …a set of interrelated components that collect, manipulate, and
disseminate data and information and provide feedback to meet
an objective…Businesses can use information systems to
increase revenues and reduce costs. (Star & Reynolds, 2011)
2. …an organized combination of people, hardware, software,
communication networks, data and procedures that stores,
retrieves, transforms, and disseminate information in an
organization.

6. Roles of Information Systems in
Business
Support business processes and operations for lower level management
Support decision making for middle management
Support strategies for competitive advantage for top level management

7. Categories of Information
Systems
Manual Information System Computer-based Information System
Example:
Using filing cabinets in
hospitals to store records
of patients is a manual
information system
Example:
 Using a school
management system to
register university
students and follow their
progress throughout each
term would be an
example of a
computerized
information system

8. Computer-Based Information Systems
-Technology Infrastructure
…all hardware, software,
databases, telecommunications,
people, and procedures configured
to collect, manipulate, store, and
process data into information

9. Source: Principles of Information Systems, Tenth Edition
Components of a Computer-Based
Information Systems

10. Computer-Based Information Systems
(CBIS)
Hardware:
Consists of computer
equipment used to
perform input, processing,
and output activities
Software:
Consists of the computer
programs that govern the
operation of the computer
Database:
Organized collection of
facts and information,
typically consisting of two
or more related data files
• Telecommunications
networks and the Internet
• The electronic transmission of
signals for communications
People:
The most important element
in most computer-based
information systems
Procedures:
Include strategies, policies,
methods, and rules for using
the CBIS

11. Types of Information Systems in Business
Transaction Processing Systems
Management Information Systems
Decision Support Systems
Office Automation Systems

12. Information Systems at Different Levels
of Management
• ESS:ESS: Helps address
strategic issues and long-
term trends, both in firm and
in external environment.
• MIS & DSS:MIS & DSS: Helps with
monitoring, controlling,
decision making, and
administrative activities.
• TPS:TPS: Keeps track of basic
activities and transactions of
organization (e.g., sales,
receipts, deposits,
withdrawals, payroll, flow of
materials in a factory).).

13. Transaction Processing Systems :
– Transaction:
Any business-related
exchange, such as payments
to employees and sales to
customers
– Transaction Processing
System (TPS): Organized
collection of people,
procedures, software, databases,
and devices used to record
completed business transactions
– Serve operational managers.
– Principal purpose is to answer routine
questions and to track the flow of
transactions through the organization.
– Example: inventory questions,
granting credit to customer,
performing deposits & withdrawals
– Monitor status of internal operations
and firm’s relationship with external
environment.
– Major producers of information for
other systems.
– Highly central to business operations
and functioning.

14. Two types of Transaction Processing
Systems (TPS)
BatchTPS:
Batch processing involves processing several transactions at the
same time, and the results are not immediately available when
the transaction is being entered. There is a time delay.
Transactions are accumulated over a period and processed in
groups at a date in the future. For example, IS used in payroll
systems
OnlineTPS (OLTP):
Processes data as soon as it becomes available. There is no time
delay. It processes transactions in real time. This is used for
systems in which time is critical. For example, IS used in an
airline reservation system

15. Source: Principles of Information Systems, Tenth Edition

16. Management information system
(MIS):
Organized collection of
people, procedures,
software, databases, and
devices that provides
routine information
to managers and
decision makers
• Provide middle managers with reports
on firm’s performance to monitor firm
and help predict future performance.
• Produces summaries and reports on
basic operations using data collected
from a TPS.
• Provide weekly, monthly, annual
results, but may enable drilling down
into daily or hourly data.
• Typically not very flexible systems
with little analytic capability.

17. Source: Principles of Information Systems, Tenth Edition

18. Decision Support System (DSS):
Used to support problem-specific decision making
Used when problem is complex and information
needed to determine appropriate action is difficult
to obtain
For example, an IS that is used daily by managers to
develop bids contracts
This relies on both internal and external data to
make decisions.
It does not make the final decision but will operate
more as a guide to managers

19. Source: Principles of Information Systems, Tenth Edition

20. Expert systems:
Give computer ability
to make suggestions
and function like an
expert in a particular
field
Virtual reality:
Simulation of a real or
imagined environment
that can be experienced
visually in three
dimensions
• Tools that capture the
expertise of knowledge
workers and provide advice
to non-experts in a given
field.

21. Source: Principles of Information Systems, Tenth Edition

22. Executive Support Systems
(ESS):
• Serve senior managers information to make strategic decisions.
• Address strategic issues and long-term trends.
 E.g., Five years plan for product diversification?
• handles non-routine informational problems.
• Provide generalized computing capacity that can be applied to changing
array of problems.
• Draw summarized information from MIS, DSS, and data from external
events.
• Typically use portal withWeb interface to present content.

23. Table 1.5: Showing major components of an ESS
Source: Principles of Information Systems, Tenth Edition

24. Implications: Information Systems
(IS) in Society, Business, and Industry
Have been developed to meet the needs of all types of
organizations and people
Speed and widespread use opens users to a variety of threats
from unethical people

25. Security, Privacy, and Ethical Issues in
Information Systems and the Internet
Drawbacks of information systems:
Personal data, including Social Security and credit card
numbers, can be lost or stolen
To protect against threats to your privacy and data:
Install security and control measures
Use of information systems:
Raises work concerns, including job loss through increased
efficiency

26. Enterprise Systems for Functional
Areas in Organizations
Enterprise systems are used at all levels of management and
work across several functional areas in the organization.
Functional areas and operating divisions of business:
Finance and accounting
Sales and marketing
Manufacturing
Human resource management
Legal information systems
Distribution and Logistics

27. Enterprise Systems

28. Sales and Marketing
Major Function: Sales management, market research,
promotion, pricing, new products
Major Applications:
1. Point of SaleTerminals in supermarkets
2. Inventory systems for stock control
3. Sales Ordering systems
4. Marketing research system
5. Pricing System

29. IS in Sales and Marketing

30. Accounting and Finance
Major Function:Accounts Receivable (Credit Sales),Accounts
Payable (Credit Purchases), Budgeting, General Ledger, Billing,
Payroll
Major Applications:
General Ledger
Accounts Receivable
Accounts Payable
Budgeting

31. IS in Accounting and Finance

32. Human Resource
Major Function: Personnel records, Employee Benefits,
Compensation, Labor Relations, Professional Development
Training
Major Application:
Payroll,
Employee Records
Employee Benefit Systems
PersonnelTraining Systems

33. IS in Human Resource

34. Information Systems in Industry
Below is a list of industries in which IS can be used:
Airline industry
Investment firms
Banks
Transportation industry
Publishing companies
Healthcare maintenance organizations
Retail companies
Power management and utility companies
Professional services
Management consulting firms

35. Sources
Laudon, K. and Laudon, J. (2013). Essentials ofEssentials of
Management Information Systems. NewYorkManagement Information Systems. NewYork
University. PearsonUniversity. Pearson
Star, R. and Reynolds, G. (2011). Principles of
Information Systems,Tenth Edition. Cengage Learning,
USA