1. An information system is a set of interrelated components that collect, process, store, and distribute information to support decision making and control in an organization. It includes hardware, software, data, people, processes, and technologies. 2. Information systems have three main components - input, processing, and output. They also involve feedback and control to monitor performance. Common examples of information systems include transaction processing systems, decision support systems, and executive information systems. 3. Managing information systems effectively presents challenges related to business processes, technology development, goals and ethics. Developing successful information system solutions involves analyzing needs, designing, implementing, and maintaining systems through continuous improvement.

1. Unit 1 : #1 Section I.1. Foundations of Information Systems in
Business
Foundation Concepts : Information System in Business
Information has become as integrated into our daily business activities as
accounting, finance, Operations management, marketing, human resource
management , etc.
Information technologies, including internet based information systems are
playing vital role in business.
The Real World of Information Systems
• A system is a set of interrelated components, with a clearly defined boundary,
working together to achieve a common set of objectives.
• One system can be made up of other systems.
What is an Information System(IS)?
• An IS can be any organized combination of people, hardware, software,
communications networks, data resources, & policies & procedures that stores,
retrieves, transforms and disseminates info. in an organization.
• Communicate with one another using variety of physical devices(h/w), info
processing instructions & procedures(s/w), communication channels(n/w’s), &
stored data(data resources).

2. Examples of IS :
• Smoke signals for communication were used as early as recorded history
and can account for the human discovery of fire . The pattern of smoke
transmitted valuable information to others who were too far to see or hear
the sender.
• Card Catalogs in a library are designed to store data about the books in
an organized manner that allows readers to locate a particular book by its
title, author name, subject etc
• Your book bag, day planner, notebooks, & file folders are all part of an
info system . The i/p’s provided to you via handouts, lectures, presentations
& discussions.
• The cash register at your favorite fast-food restaurant is a part of large
IS that tracks the product sold, the time of a sale, inventory levels, & the
amount of money in the cash drawer.
• A paper-based accounting ledger businesses used this type of system for
centuries to record the daily transactions & to keep a record of the balances
in their various business & customer accounts.

3. Conceptual framework
Information
Systems
Management
Challenges
Information
Technologies
Foundation
Concepts
Development
Processes
Business
Applications

4. • Foundation Concepts : Fundamental behavioral, technical, business, &
managerial concepts & roles of IS. Eg : include basic IS concepts derived
from general systems theory to develop business applications of info
technology for competative advantage.
• Information Technologies : Major concepts, developments, &
management issues in info technology- i.e h/w, s/w, n/w’s, data
management and many Internet-based technologies.
• Business Applications : The major uses of info systems for the operations,
management, and competitive advantage of a business.
• Development Processes : How business professionals & info specialists
plan, develop, & implement info systems to meet business opportunities.
• Management Challenges : The challenges of effectively & ethically
managing info technology at the end-user, enterprise, & global levels of a
business.

5. The Fundamental Roles of IS in Business
 Three fundamental reasons for all business applications of Information
Technology.
1. Support of business processes & operations.
2. Support of decision making by employees and managers.
3. Support of strategies for competitive advantage.

6. Fig : The three fundamental roles of the business applications of
information systems
Support
Stratergies for
Competative
Advantage
Support Business
Decision Making
Support Business
Processes and
Operations

7. • Support of business processes & operations : Retail stores now use
computer-based information systems to help their employees record customer
purchases, keep track of inventory, pay employees, buy new merchandise &
evaluate sales trends.
• Support of Business Decision Making : Decisions about what lines of
merchandise need to be added or discontinued & what kind of investments they
require made after an analysis provided by info system.
• Support of strategies for competitive advantage : Strategic advantage over
competitors requires the innovative application of information technologies.
For eg: Store management might make a decision to install touch-screen kiosks
in all stores with links to the e-commerce Web site for online shopping.

8.  Banking with IT
• Founded in 1906, Bank of India today has more than 2600 branches across
India in both urban & rural areas.
• It also has 24 branches abroad.
• In 2002, Bank of India decided to implement a core banking solution. The
project was budgeted at more than Rs. 500 crore including the setting-up of data
centre at the head office, networking of branches, enabling computerization at
all branches, training of employees, maintenance, networking management.
• The IT implementation was started in 2003.
• Transaction volumes have increased while the manpower has been reduced.
• Products & services provided to the customer have improved according to
customer satisfaction.

9.  Information Technology Keeps the Boston Red Sox in the Game
• An info storage system from EMC Corp. is scoring big points with the Boston
Red Sox. The team is using high-density storage technologies. Gain an edge in the
highly competitive world of professional baseball.
• Theo Epstein, Red Sox general manager. He believes that info is key to
maintaining a competitive edge. Epstein adds that he only has to be right 51% of
the time in base ball.
• You can use that information to get the smallest advantage & in the end you will
have a real competitive edge.
• Steve Conley the director of IT for the Red Sox describes the organization's two
large storage arrays are services including online editing of video for broadcast &
news media & digital video system for home games & another is team’s road
games which stores video.
• EMC’s storage management software also has helped designated hitter David
Ortiz improve his batting average, claims Epstein.

10.  Trends In Information Systems
• Data Processing : 1950s - 1960s
- Electronic data processing systems(EDP)
-Transaction processing, record-keeping & traditional accounting
applications.
• Management Reporting : 1960s - 1970s
- Management Information Systems(MIS)
-Management reports of prespecified information to support decision
making.
• Decision Support : 1970s – 1980s
- Decision Support Systems(DSS)
- Interactive ad-hoc support of the managerial decision-making process.

11. • Strategic & End-User Support : 1980s – 1990s
- End-User computing systems
- Direct computing support for end-user productivity & workgroup
collaboration.
- Executive Information Systems(EIS)
- Critical information for top management
- Expert systems
- Knowledge-based expert advice for end users
- Strategic Information Systems(SIS)
- Strategic products & services for competitive advantage
• Electronic Business & Commerce : 1990s – 2000s
- Internet-based e-business & e-commerce systems
- Web enabled enterprise & global e-business operations & electronic
commerce on the Internet, intranets, extranets & other networks.
• Enterprise Resource Planning & Business Intelligence : 2000s – 2010s
- Enterprise wide common-interface applications data mining & data
visualization, customer relationship management, supply-chain
management. (ERP)

12.  The Role of E-Business in Business :
Suppliers & Other
Business Partners
Extranets
Extranets Consumers & Business Customers
Accounting &
Finance
Manufacturing &
Production
Engineering &
Research
Customer relationship management :
Marketing Sales Customer service
Supply chain Management :
Procurement, distribution, & logistics
Intranets
Intranets
The Internet
Company
Boundary

13. • E-Business as the use of Internet technologies to work & empower business
processes, e-commerce & enterprise collaboration within a company & with its
customers, suppliers.
• It is generally considered as an online exchange of value.
• E-Business of many companies has applications
1) Reengineer internal business processes.
2) Implement e-commerce systems with their customers & suppliers
3) Promote enterprise collaboration among business teams & workgroups.
• Enterprise collaboration systems involve the use of s/w tools to support
communication, coordination, & collaboration among the members of n/w
teams & workgroups.
• E-commerce is the buying, selling, marketing & servicing of products, services,
& information over computer n/w’s.
• E.g. : e-commerce systems include Internet websites for online sales, extranet
access to inventory databases by large customers etc.

14. Types of Information System
IS
Operations
support systems
Management Support
systems
Specialized
Processing
Systems(PS)
Transactio-
ns Ps
Process
Control
Systems
ECS MIS DSS
Executive
Information
Systems
Expert
Systems
Specialized
Processing
Systems(PS
Knowledge
MS
Strategic IS
Functional
Business Systems

15.  Operations Support System : Produce a variety of information products
for internal & external use.
• Transaction Processing Systems Process data resulting from business
transactions, update operational databases & produce business documents.
Process transaction in 2 basic ways Batch processing, Real-time processing.
E.g. sales & inventory processing &accounting systems.
• Process Control Systems Monitor & control industrial processes. E.g.
petroleum refining, power generation, & steel production systems.
• Enterprise collaboration systems Sometimes it is called as Office Automation
Systems. Support team, workgroup, & enterprise communications &
collaborations. E.g. e-mail, chat, & video-conferencing groupware systems.

16.  Management Support System : When info system applications focus on
providing info & support for effective decision making by managers they are
called Management Support System.
• Management Information Systems Provide info in the form of prespecified
reports & displays to support business decision making. E.g. sales analysis,
production performance, & cost trend reporting systems.
• Decision Support Systems Provide interactive ad-hoc support for the decision
making processes of managers & other business professionals. E.g. product
pricing, profitability forecasting & risk analysis systems.
• Executive Information System Provide critical info from MIS,DSS & other
sources. E.g. systems for easy access to analyses of business performance,
actions of competitors, & economic developments to support strategic planning.

17.  Other Classifications of IS
• Expert Systems Knowledge-based systems that provide expert advice & act as
expert consultants to users. E.g. credit application advisor, process monitor, &
diagnostic maintenance systems.
• Knowledge management systems It support the creation, organization, &
dissemination of business knowledge within the enterprise. E.g. intranet access
to best business practices, sales proposal strategies & customer problem
resolution systems.
• Strategic information systems Support operations that provide a firm with
products, services & capabilities for competitive advantage. E.g. online stock
trading , shipment(batch) tracking & e-commerce web systems
• Functional business systems. E.g. IS that support applications in accounting,
finance, marketing, operations management & human resource management.

18.  Managerial Challenges of Information Technology
 Business / IT Challenges
• Speed & flexibility requirements of product development, manufacturing &
delivery cycles.
• Reengineering & cross-functional integration of business processes using
internet technologies.
• Integration of e-business & e-commerce into the organization’s strategies,
processes, structure, & culture.
The Business Enterprise
Strategies/Processes/Str
ucture/Culture
Information
Technology Customer value
Business value

19.  Business / IT Developments
• Use of Internet, intranets, extranets, & the Web as the primary IT infrastructure.
• Diffusion of Web technology to internetwork employees, customers, &
suppliers.
• Global networked computing, collaboration, & DSS.
 Business / IT Goals
• Give customers what they want, when & how they want it, at the lowest cost.
• Coordination of manufacturing & business processes with suppliers &
customers.
• Marketing channel partnerships with suppliers & distributors.
 Success & Failure with IT
• IS should not be measured only by its efficiency in terms of minimizing costs,
time, & the use of info resources.
• Success should also be measured by the effectiveness of the IT.
• IT & IS can be mismanaged & misapplied in such a way that IS performance
problems create both technological & business failures.

20.  Developing IS Solutions
• Developing successful information system solutions to business problems is a
major challenge for business managers & professionals.
• As a business manager he/she should frequently manage the development efforts
of information systems
Developing Information
System Solutions
Analyze
Design
Implement
Maintain
Investigate
Fig : Developing Information System Solutions to business problems can be
implemented & managed as a cycle

21.  Challenges & Ethics of IT
• Customer
Relationship
Management
•Human
Resources
Management
•Business
Intelligence
Systems
•Infringements on
privacy
•Inaccurate
information
•Collusion
•Consumer
boycotts
•Work
stoppages
•Government
intervention
•Codes of Ethics
•Incentives
•Certification
Applications of IT
Potential Harms
Potential Risks
Possible Responses
Fig : Examples of Ethical Challenges

22.  The IS Function
• A major functional area of business equally as imp. to business success as the
functions of accounting, finance, operations management, marketing, & human
resource management.
• An imp. contributor to operational efficiency, employee productivity &
customer service & satisfaction.
• A recognized source of value to the firm.
• A major source of info. & support needed to promote effective decision making
by managers & business professionals.
• A vital ingredient in developing competitive products & services that give an
organization a strategic advantage in the global marketplace.
• A dynamic, rewarding, & challenging career opportunity for millions of men &
women.
• A key component of the resources, infrastructure, & capabilities of today’s
networked business enterprises.
• A strategic resource.

23. Section II. Foundation Concepts : The Components of Information Systems
 System Concepts : A Foundation
• Technology : Computer networks are system of information processing
components that use a variety of h/w, s/w, data management, &
telecommunications n/w technologies.
• Applications : E-business & e-commerce applications involve interconnected
business information systems.
• Development : Developing ways to use information technology in business
includes designing the basic components of information systems.
• Management : Managing information technology emphasizes the quality,
strategic business value, & security of an organization’s information systems.

24.  What Is a System?
• As a set interrelated components, with a clearly defined boundary, working
together to achieve a common set of objectives by accepting inputs & producing
outputs in an organized transformation process.
• E.g. Physical(sun & its planets) & biological sciences(human body), in modern
technology(oil refinery), & in human society(business organization).
Systems have three basic functions
• Input : involves capturing & assembling elements that enter the system to be
processed. For e.g. raw materials, energy, data & human effort must be secured
& organized for processing.
• Processing : involves transformation processes that convert i/p into o/p. E.g.
manufacturing processes, the human breathing process or mathematical
calculations.
• Output : involves transferring elements that have been produced by a
transformation process to their destination. E.g. finished products, human
services.

25.  Feedback and Control
• Sometimes it is called Cybernetic system i.e self-monitoring, self-regulating
system.
• Feedback : is data about the performance of a system. E.g. data about sales
performance are feedback to a sales manager. Data about the speed, altitude,
attitude, & direction of an aircraft are feedback to the aircraft’s pilot.
• Control : involves monitoring & evaluating feedback to determine whether a
system is moving toward the achievement of its goal. E.g. a sales manager
exercises control when reassigning salespersons to new sales territories after
evaluating feedback about their sales performance.

26. A common Cybernetic system is a home temperature control system
• Another e.g. is the human body such as temperature, heartbeat & breathing.
• In business – computers may monitor & control manufacturing processes,
accounting procedures help control financial systems, etc.
Thermostat Gas valve Furnace Room
Heat Loss
-
+
Desired
Room
Temperature Voltage Gas
Fuel
Actual Room
Temperature
Temperature
Feedback

27.  Other System Characteristics
Management
Goods & Services :
Products
Services
Payments
Contributions
Information
Other Effects
Economic Resources :
People
Money
Material
Machines
Land
Facilities
Energy
Information
Information Systems
Business Processes :
Market, Develop,
Produce & Deliver
Products & Services
Support Customers
Other Processes
Input Processing Output
Control
Feedback
Stakeholders in the
Business Environment
The Community
Competitors
Customers
Stockholders
Labor Unions
Financial Institutions
Suppliers
Government Agencies

28. • The above fig illustrates the concept of an open system. i.e the system interacts
with other systems in its environment.
• IS are made up of interrelated components : People, h/w, s/w, peripherals &
networks.
• Boundaries : Functions, modules, type of application, department, or end-user
group.
• Interrelated components goal : Using raw materials, hiring new people ,
manufacturing products for sale & disseminating information to others.
• Feedback & Control to improve their effectiveness : Error messages, dialog
boxes, passwords, & user rights management.
• Designed to change in relation : Intelligent s/w agents, expert systems & highly
specialized decision support systems.

29.  Components of an Information System
Control of system performance
O/p of
info
Products
Processing
data into
info
I/p of
data
resources
Storage of data resources
Network Resources
System Activities

30.  Information System Resources
1. People Resources :
Specialists – System analysts, s/w developers, systems operators.
End Users – anyone else who uses IS
2. Hardware Resources :
Machines – computers, video monitors, magnetic disk drives, printers,
optical scanners.
Media – floppy disks, magnetic tape, optical disks, plastic cards, paper
forms.
• Computer Systems : which consists of CPU containing microprocessors &
interconnected peripheral devices, such as printers, scanners, monitors etc.
• Computer peripherals : which are devices such as keyboard, electronic
mouse, trackball.

31. 3. Software Resources :
Programs – OS programs, spreadsheet programs, word processing programs,
payroll programs.
Procedures – data entry procedures, error correction procedures, paycheck
distribution procedures.
• System Software : such as an OS program, which controls & supports the
operations of a computer system.
• Application Software : Programs that direct processing for a particular use of
computers by end user. E.g. sales analysis, payroll, & word processing
programs.
• Procedures : Sets of information processing instructions. E.g. s/w package.

32. 4. Data Resources :
Product descriptions, customer records, employee files, inventory databases.
• Databases that hold processed & organized data.
• Knowledge bases that hold knowledge in a variety of forms such as facts, rules.
Data versus Information :
• The word data is the plural of datum. Data are raw facts. Data are objective
measurements of the attributes of entities. Data converted into a meaningful
5. Network Resources :
• Communications media : E.g. twisted –pair wire, coaxial, & fiber optic cables,
& microwave, cellular, & satellite wireless technologies.
• Network Infrastructure : It includes h/w, s/w & data technologies. E.g.
communication processors - modems, & internetwork processors. &
communication control s/w – Internet browser packages.

33.  Information System Activities
• Input : Optical scanning of bar-coded tags on merchandise .
• Processing : Calculating employee pay, taxes & other payroll deductions.
• Output : Producing reports & displays about sales performance.
• Storage : Maintaining records on customer, employees & products
• Control : Generating audible signals to indicate proper entry of sales of sales
data.
 Recognizing Information Systems
• The people, h/w, s/w, data & n/w resources they use.
• The types of information products they produce.
• The way they perform input, processing, output, storage & control activities.

34. CASE STUDY 3
 Inputs from Case Study : Heidelberg
• World leader in High end printing press for printers and print media producers.
 Use of smart product
- Built-in Sensors
- Networking Processors
- IT such as Monitoring and reporting capabilities
- Wireless mechanism
- e-Business (B2B)
 Use of Smart Services
- Detect faulty machines
- Report Heath(connect) status of the machines
- Using built-in sensors
- Self monitoring and Networking Capabilities
- Removal and Re-Sale of machines

35.  Advantages
- Low cost maintenance
- Ease of usage
- Effective Information Sharing
- Optimized printing performance of customers
- Lower repair cost
- Support the regional and global support technical specialists.
 Inputs from Case Study: Honeywell
• Global Conglomerate Petroleum and Refinery control and Automation Systems
 Use of Smart Services
- PKS (Process Knowledge Systems)
- System of operation and information technology to
- Monitor remotely via network connections on the refineries
- Perform variety of manufacturing support
- Optimization task by customers

36.  Advantages
- Fewer False alarm
- Less unanticipated downtime
- Lower Maintenance cost
- Lower Operating Cost
- Increased value for Premium Services which in turn increase the profit
opportunity
- Increase the scope of other services

37.  Inputs from Case Study: Eaton
• Axles and Truck part manufacturing. Later diversified with Residential Circuit
Breaker
 Use of Smart Product
- Home Heart Beat System
- Water Sensors and Water Shutoff Valve
- Open Close Sensors and Automatic Sensors
- Power Sensor
- Wireless network
- Key Fob Device Communicates only with limited range but captures
data about the status of your home.
- e-Business (B2C)

38.  Use of Smart Service
- Monitors the status of various home systems
- Alerts home owner when something is missing through cellphone,
emails, SMS
 Advantages
- When out of home or vacation you can remotely Control the devices
such as :Power outages, Bust Pipes, Unexpected Cold Front, Water
Heaters.
- Get Status of those devices through : Cellphone , Email, SMS
• Build awareness and connectivity to devices which is already selling turning
them into smart products
• Position itself into a Service provider apart from product vendor.
• No longer consigned to obscure corner of the industry
• New Business Integrator with new range of partners from Wireless carriers to
Insurance companies to Smart Services.

39. Q 1 - Why should manufacturing companies build smart products and provide
smart services?
 Manufacturing Industries are plagued by the following challenges
• High Maintenance cost and Operating cost
• Manual tracking efforts
• Inefficient resource allocation/Reliability
• Logistics difficulties
• No feedback systems
• Slower production cycles
• Less business expansion opportunities
• Competition from Rivals for market share

40.  In order to overcome and sustain the market share ,the manufacturing
industries must invest and improvise use of IT and so called Smart Services
and Products.
Smart products & Services leverages the following :
• Intelligent, electronic ,electrical and mechanical components
• Connectivity to customers for greater utility , trouble-free operation and
more customer satisfaction throughout the product lifecycle.
• Improved OEE (Overall Equipment Effectiveness)
• Increased awareness and offerings with the product

41.  Smart Products and Services provide the manufacturing industries with the
edge of technological innovation to carryout its operation in a streamlined
way . It also provides the manufacturing unit the following advantages :*
• Decrease of operating and maintenance cost
• Increase of Market Share and profits
• Increased Customer orientation of the products
Q 1 - What business benefits can they gain? Provide several examples beyond
those discussed in this case.
• Low Operating cost and maintenance cost
Eg AMD-Lean Processes in FAB Manufacturing
• Increase end-user productivity Eg Dell Customizable Software
• Increase convenience to end-user.

42. • Effective Information Sharing / Tracking Eg Fedex Courier Tracking
Software
• Performance Optimization Eg Ti-Bicycles Demand Based Forecasting
• Proper utilization of available resources
• Less unanticipated downtime
• Increased value for Premium Services which in turn increase the profit
opportunity
• Increase the scope of other services
• Opportunity to expand into new areas of Business
• Increase OEE (Overall Equipment Effectiveness)
• Increased Brand Image

43. Q 2 - What information technologies are used by the companies in this case to
build smart products and provide smart services?
Q 2 - What other IT components might be used? Give example of the
capabilities they would provide.

 e-Commerce
• Buy and Sell without intermediaries.
• Refurbished products can also fetch profits.
 Database Management
• We can do Data Mining and implement
• Fuzzy logic to do Analysis and trending of Business Operation
 Customer Relationship Management
• Improve customer Behavior and Experiences
• Identify customer purchase / demand behavior trending
• Identify competitive Strategies for effective Decision Making

44.  Supply Chain Management
• Improvement of logistics
• Ease of part procurement
• VNC (Virtual Networking Control)
Q 3 - What are the some limitation of Smart Product and Smart services
strategies? Give several examples that a business might encounter and
explain how it might overcome them.

 Increased IT cost for implementers
• Any addition in product and services will add IT cost
 Monopolistic behavior / Market Trends
• CISCO Higher-end Routers -
• Only vendors that supply
 PMC Sierra
• Communication IC for Japanese, American, European Telecommunication
standards
• Dependency on specific IT components (as in case of Eaton it is Wireless
Network )

45.  Dependency on Specific vendor
• Apple depends on PowerPC Micro-Processor only
• Google (Android Mobiles) dependency is on HTC (High-Tech Computer
Corporation, is a Taiwanese manufacturer of smart phones and tablets
headquartered in New Taipei City, Taiwan.) as the only vendor
 Data Security
• A lot of Industry and Government compliances are concentrating on individual
privacy. Smart product and services may intrude into individual privacy.
• There is high risk of capturing individual / business sensitive data
• High Skill Manpower Requirements
• Loss of Employment due to automation
• Sustenance of complex system

46. CASE STUDY - 4
Sew what? Inc: the Role of information Technology in small Business
Success
• This case is about how a small business started from a kitchen became popular
around the globe due to use of information technology. It’s the success story of
sew what?
• This case shows that information technology has been necessity to every
business organization weather it is small or large, and every organization is using
it in some forms to enhance the performance of organization.
• At the very first, by the use of information technology business earned the
credibility and bigger client following. When she launched her website people
started noticing her firm and her business took the pace towards growth.
• Sew what? Inc wanted to provide really good costumer experience information
technology helped it to provide accurate information’s regarding the organization
through a very convenient way to its customers.
• Organization’s site in different languages helped the people speaking different
languages around the world to know and understand the business which helped
the business to grow worldwide.

47. • It was through Information Technology Duckett come to know about the
National Federation of Independent Small Business Award.
• Duckett’s personal experience of making innovative use of information
technology in her business made her win the award along with integrated and
much advance information technologies which helped her to make her business
more managed and effective.
• Sew what? Inc won several awards mostly because of use of information
technology in convenient and effective way for the development of the
business.
• Use of information technology has helped the organization to reduce the cost of
operation and enhance the performance and efficiency of the business.
• Suggestions and comments from costumer help business to grow. So as for the
more costumer oriented approach they could start blogging and make the
process more interactive.
• Social networking sites are very popular these days. So it would be profitable for
the business if they start promoting it through social networking sites like
facebook, Orkut, twitter etc.
• Here is an example of a travel agency

48. • Travel agency is one of the organizations whose success is totally based on the
way it manages information.
• They need to convince their costumers to travel through them from the way
they present information regarding their service.
• Here are some examples about how and where travel agency can use
information technology to be more successful,
• Developing informative and attractive website, travel agency can attract
customers. Descriptive information about their service and facilities makes
them more credible.
• Developing slides and movies of interesting places, culture and people they can
influence tourists to go for new destinations.
• They can use information technology to communicate with their agent
throughout the nation so that any alteration in plan can be managed and
everything goes as per the plan.
• Travel agencies can store the information regarding their costumers so that
they can know about their costumers and contact them in order to create
further business opportunities.