Information system

© 2001 Business & Information Systems 2/e 1
Chapter 1
Information Systems in Business

Our Agenda
 Basic Information Systems Concepts
 Types of Information Systems
 Information Systems Users
 Connecting Users to Information
Technology
 Benefits of Information Systems
 An Approach to the Study of Information
Systems

Basic Information System
Concepts

What is an Information
System?
 An Information System is a collection of
components that work together to provide
information to help in the operations and
management of an organization.
 Information Technology is the integration of
computers, communications equipment, and
other technology used in information systems.

Components of an
Information System?
 Components
 Hardware - Equipment such as computers
 Software - Instructions for the equipment
 Stored Data - Facts stored in the system
 Personnel - People who operate the system
 Procedures for the people to follow

Examples of Information
Systems
 An inventory control system
 An order entry system
 A production scheduling system

Information Systems
Functions
 Input Function accepts the input data from
outside the system.
 Storage Function retains input data and retrieves
stored data.
 Processing Function calculates and in other ways
manipulates the input and stored data.
 Output Function produces results of processing
for use outside the system.

Data versus Information
 Data is a representation of a fact, a
number, a word, an image, a picture or a
sound.
 Information is data that is meaningful or
useful to someone.

Types of Information
Systems

Types of Information Systems
 Personal information systems
 Word Processing
 Spreadsheet or financial analysis
 Database
 Graphics or presentation software
 Workgroup information systems
 Electronic mail (e-mail)
 Local area network (LAN)

Types of Information Systems
(cont’d.)
 Organizational information systems
 Mainframe computers
 Wide area network (WAN)
 Interorganizational information systems
 Electronic Data Interchange (EDI)
 Electronic Funds Transfer (EFT)
 Global information systems
 Production scheduling system

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Figure 2-2
Management Information Systems 8/e
Chapter 2 Information Systems in the Enterprise

 Transaction processing systems
 Perform and record daily routine transactions
necessary to conduct business
 Examples: sales order entry, payroll, shipping
 Allow managers to monitor status of operations
and relations with external environment
 Serve operational levels
 Serve predefined, structured goals and decision
making
Types of Business Information
Systems

A Payroll TPS
Figure 2-2
A TPS for payroll processing captures employee payment transaction data (such as a time card).
System outputs include online and hard-copy reports for management and employee paychecks.

Knowledge Work Systems (KWS):
Knowledge level
 Inputs: Design specs
 Processing: Modeling
 Outputs: Designs, graphics
 Users: Technical staff and professionals
Example: Engineering work station

Management Information System (MIS):
Management level
 Inputs: High volume data
 Processing: Simple models
 Outputs: Summary reports
 Users: Middle managers
Example: Annual budgeting

Decision Support System (DSS):
Management level
 Inputs: Low volume data
 Processing: Interactive
 Outputs: Decision analysis
 Users: Professionals, staff
Example: Contract cost analysis

Executive Support System (ESS):
Strategic level
 Inputs: Aggregate data
 Processing: Interactive
 Outputs: Projections
 Users: Senior managers
Example: 5-year operating plan

 Management information systems
 Serve middle management
 Provide reports on firm’s current
performance, based on data from TPS
 Provide answers to routine questions with
predefined procedure for answering them
 Typically have little analytic capability

 Decision support systems
 Serve middle management
 Support non routine decision making
 Example: What is impact on production schedule if
December sales doubled?
 Often use external information as well from TPS
and MIS
 Model driven DSS
 Voyage-estimating systems
 Data driven DSS
 Intrawest’s marketing analysis systems

How Management Information Systems Obtain Their
Data from the Organization’s TPS
Figure 2-3
In the system illustrated by this diagram, three TPS supply summarized transaction
data to the MIS reporting system at the end of the time period. Managers gain access to
the organizational data through the MIS, which provides them with the appropriate
reports.

Sample MIS Report
Figure 2-4
This report, showing summarized annual sales data, was produced by the MIS in Figure
2-3.

Voyage-Estimating Decision Support System
Figure 2-5
This DSS operates on a powerful PC. It is used daily by managers who must develop bids on
shipping contracts.

Model of an Executive Support System
Figure 2-6
This system pools data from diverse internal and external sources and makes them available to
executives in easy-to-use form.

 Transaction processing systems:
supporting operational level employees
 Management information systems and
decision-support systems: supporting
managers
 Executive support systems: supporting
executives
Systems from a constituency
perspective

 TPS: Major source of data for other
systems
 ESS: Recipient of data from lower-level
systems
 Data may be exchanged between systems
 In reality, most businesses’ systems only
loosely integrated
Relationship of systems to
one another

• Enterprise applications
• Span functional areas
• Execute business processes across firm
• Include all levels of management
• Four major applications:
• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems
Systems That Span the
Enterprise

Enterprise Application Architecture
Figure 2-7
Enterprise applications automate processes
that span multiple business functions and
organizational levels and may extend
outside the organization.

• Enterprise systems
• Collects data from different firm functions and stores
data in single central data repository
• Resolves problem of fragmented, redundant data
sets and systems
• Enable:
• Coordination of daily activities
• Efficient response to customer orders (production,
inventory)
• Provide valuable information for improving
management decision making

Enterprise Systems
Figure 2-8
Enterprise systems integrate the key business processes of an entire firm into a single software system that enables
information to flow seamlessly throughout the organization. These systems focus primarily on internal processes but may
include transactions with customers and vendors.

• Supply chain management systems
• Manage firm’s relationships with suppliers
• Share information about
• Orders, production, inventory levels, delivery of
products and services
• Goal: Right amount of products to destination with
least amount of time and lowest cost

Example of a Supply Chain Management System
Figure 2-9
Customer orders, shipping notifications, optimized shipping plans, and other supply chain information flow
among Haworth’s Warehouse Management System (WMS), Transportation Management System (TMS), and
its back-end corporate systems.

Customer relationship management systems:
• Provide information to coordinate all of the business
processes that deal with customers in sales,
marketing, and service to optimize revenue,
customer satisfaction, and customer retention
• Integrate firm’s customer-related processes and
consolidate customer information from multiple
communication channels

Salesforce.com Executive Team Dashboard
Illustrated here are some of the capabilities of Salesforce.com, a market-leading provider of on-demand customer
relationship management (CRM) software. CRM systems integrate information from sales, marketing, and customer
service.

Knowledge management systems
• Support processes for acquiring, creating, storing,
distributing, applying, integrating knowledge
• Collect internal knowledge and link to external
knowledge
• Include enterprise-wide systems for:
• Managing documents, graphics and other digital
knowledge objects
• Directories of employees with expertise

Information Systems Users

How Users Use Information
Systems
 Users may use an information system directly
by pressing keys on a computer keyboard or
by operating a piece of equipment that sends
input data to a computer.
 A user may use an information system
indirectly by having someone else enter the
data and receive the output which is then
given to the user.

Ethical Use of Information
Systems
 Ethics has to do with the standards of
behavior that people follow: what is
right and what is wrong.

Ethical Use of Information
Systems (cont’d.)
 Ethical use of information systems
involves:
 Confidentiality of information
 Copying of software
 Use of someone else’s computer
 Ownership of information

Connecting Users to
Information Technology

Networks
 A network is a collection of computers and
related equipment connected using
communications equipment so that they can
communicate with each other.
 Local Area Networks (LAN) cover a small area
such as a building.
 Wide Area Networks (WAN) cover a large
area such as a city, region, country or several
countries.

The Internet and the World
Wide Web (WWW)
 The Internet is a worldwide collection of
interconnected networks.
 The World Wide Web (WWW) is a
service on the Internet that links
information stored on different
computers.

Electronic Commerce
(E-Commerce)
 E-Commerce allows businesses and
individuals to use networks, including
the Internet, to promote and sell
products and services.

Benefits of Information
Systems

Benefits of Information
Systems
 Better information
 Improved service
 Increased productivity
 Competitive advantage

Ten Commandments
1. Do not use a computer to harm other people.
2. Do not interfere with other people’s computer
work.
3. Do not look in other people’s computer files.
4. Do not use a computer to steal.
5. Do not use a computer to bear false witness.
6. Do not copy or use proprietary software for
which you have not paid.

Ten Commandments (cont’d.)
7. Do not use other people’s computer
resources.without authorization or proper
compensation.
8. Do not appropriate other people’s intellectual
property.
9. Think about the social consequences of the
program you are writing or the system you are
designing.
10.Always use a computer in ways that ensure
consideration and respect for your fellow man.

Information system

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