MANAGEMENT INFORMATION SYSTEMS

MODULE I: MANAGEMENT INFORMATION SYSTEMS

CHAPTER I: INFORMATION SYSTEMS IN GLOBAL BUSINESS TODAY

I. OBJECTIVES
At the end of this chapter, the students should be able to:
 Understanding the effects of information systems on business and their relationship to
globalization.
 Explain why information systems are so essential in business today.
 Define an information system and describe its management, organization, and technology
components.
 Define complementary assets and explain how they ensure that information systems
provide genuine value to an organization.

II. SUBJECT MATTER

Topic: Information Systems in Global Business Today
Sub topic: - Data and Information
- Management Information Systems
- High-tech and Low-tech Information Systems
- Information Technology and Information Systems

III. PROCEDURE
A. Preliminaries
Pre- Assessment
1. Define and discuss the meaning and differences between Data and Information.
2. Explain Management Information Systems and the Development and Use of
Information Systems.
3. Discuss the Five-component Network.
4. Compare and contrast High-tech and Low-tech information systems.
5. Enumerate the differences between Information Technology and Information Systems.
6. Discuss and explore the role of information systems in Business today.

B. Lesson Proper
The sociotechnical systems perspective holds that optimal organizational performance is
achieved by jointly optimizing the social and technical systems used in production. This helps
to avoid the mistaken idea that information systems consist of computers or technology alone.
This module will help you become competent with Management Information Systems.

1. Data
 Data are raw facts or observations that are considered to have little or no value until they
have been processed and transformed into information.
 a series of non-random symbols, numbers, values or words;
 a series of facts obtained by observation or research and recorded;
 a collection of non-random facts;
 A record of an event or fact.

2. Information

 Information is data that have been processed so that they are meaningful.
 Data that have been processed so that they are meaningful;
 data that have been processed for a purpose;
 data that have been interpreted and understood by the recipient.
 Is produced in response to an information need and therefore serves a specific purpose.

Transforming data into information using data process:

Types of Information Processing

• Classification: This involves placing data into categories, for example, categorizing an
expense as either a fixed or a variable cost.
• Rearranging/sorting: This involves organizing data so that items are grouped together or
placed into a particular order. Employee data, for example, might be sorted according to
last name or payroll number.
• Aggregating: This involves summarizing data, for example, by calculating averages, totals
or subtotals.
• Performing calculations: An example might be calculating an employee’s gross pay by
multiplying the number of hours worked by the hourly rate of pay.
• Selection: This involves choosing or discarding items of data on the basis of a set of
selection criteria. A sales organization, for example, might create a list of potential
customers by selecting those with incomes above a certain level.

3. Management Information Systems (MIS)

  Development and use of information systems that help businesses achieve their goals
and objectives.
 Computer-based information system

Five Components of an Information System

 Hardware: desktops, laptops, PDAs

 Software: operating systems, application programs
 Data: facts and figures entered into computers
 Procedures: how the other four components are used
 People: users, technologists, IS support
Information system: an assembly of hardware, software, data, procedures, and people that
interact to produce information.

4. Development and Use of Information System

Development

 Information systems are built for business professionals (you) to use.

 You need to take an active role in specifying system requirements and in managing
development projects to ensure that the system meets your needs and the organization’s
needs.
Use

 You need to learn how to use to accomplish your goals.

 You have responsibilities for protecting security of system and data.
 You have responsibilities for backing up data.
 You will help in recover systems and data.
Achieving Business Goals and Objectives

 Businesses themselves do not “do” anything.

 People within a business sell, buy, design, produce, finance, market, account, and
manage.
 Information systems exist to help people in business achieve the goals and objectives of
that business.
How can you use the Five-Component Framework?
Five components interact with each other to create a complete system.

 Actors: hardware and people take actions

 Instructions: software and procedures provide instructions for actors
 Bridges: data bridges hardware/software and people/procedures

5. High-tech vs. Low-tech Information Systems

Low Tech IS

 Consists only of a file of email addresses and an email program.

 Only small amount of work moved from the human side to computer side.
 Considerable human work is required to determine when to send which emails to which
customers.
 Using an email program and its addresses is low-tech because just a small amount of
work is being accomplished by a computer system.
High Tech IS

 Customer support system keeps track of equipment customers have, maintenance

schedules for equipment, and automatically generates email reminders to customers.
 More work has been moved from human side to computer side.
 Computer is providing more services on behalf of humans.
  Implementing a customer support system is high-tech because a large amount of work is
being accomplished by the computer system rather than humans.
6. Components Ordered by Difficulty and Disruption
Five IS components evaluated based on order of ease of change and amount of organizational
disruption.

 Hardware is simple to order and install.

 Obtaining or developing new programs is more difficult.
 Creating new databases or changing structure of existing databases is more difficult.
 Changing procedures, requiring people to work in new ways, is even more difficult.
 Changing personnel responsibilities and reporting relationships and hiring and terminating
employees are both very difficult and very disruptive.
7. Difference between Information Technology and Information Systems
Information technology (IT) pertains to things you buy:

 Hardware
 Software
 Data components
Things you can buy or lease:

 Products
 Methods
 Inventions
 Standards (obtain predesigned procedures)
Information technology drives the development of new information systems.
Information Systems (IS) include five components:

 Hardware
 Software
 Data
 Procedures
 People
New systems—always have training tasks (and costs), employees resistance to change to
overcome, and need to manage employees as they utilize the new system.
You can buy IT, you cannot buy IS.

8. The Role of Information Systems in Business Today

How information systems are transforming business
  Increase in wireless technology use, Web sites
 Increased business use of Web 2.0 technologies
 Cloud computing, mobile digital platform allow more distributed work, decision-making,
and collaboration
Globalization opportunities

 Internet has drastically reduced costs of operating on global scale

 Presents both challenges and opportunities
In the emerging, fully digital firm

 Significant business relationships are digitally enabled and mediated

 Core business processes are accomplished through digital networks
 Key corporate assets are managed digitally
Digital firms offer greater flexibility in organization and management

 Time shifting, space shifting

Growing interdependence between ability to use information technology and ability to
implement corporate strategies and achieve corporate goals
Business firms invest heavily in information systems to achieve six strategic business objectives:

 Operational excellence
 New products, services, and business models
 Customer and supplier intimacy
 Improved decision making
 Competitive advantage
 Survival
Operational excellence:

 Improvement of efficiency to attain higher profitability

 Information systems, technology an important tool in achieving greater efficiency and
productivity
 Walmart’s RetailLink system links suppliers to stores for superior replenishment system
New products, services, and business models:

 Business model: describes how company produces, delivers, and sells product or service
to create wealth
 Information systems and technology a major enabling tool for new products, services,
business models
 Examples: Apple’s iPod, iTunes, iPhone, iPad, Google’s Android OS.
Customer and supplier intimacy:
  Serving customers well leads to customers returning, which raises revenues and profits
Example: High-end hotels that use computers to track customer preferences and use to
monitor and customize environment
 Intimacy with suppliers allows them to provide vital inputs, which lowers costs
Example: J.C.Penney’s information system which links sales records to contract
manufacturer.
Improved decision making
Without accurate information:

 Managers must use forecasts, best guesses, luck

 Leads to: Overproduction, underproduction of goods and services; Misallocation of
resources; Poor response times
 Poor outcomes raise costs, lose customers
Example: Verizon’s Web-based digital dashboard to provide managers with real-time data
on customer complaints, network performance, line outages, etc.
Operational excellence:

 Improvement of efficiency to attain higher profitability

New products, services, and business models:

 Enabled by technology
Customer and supplier intimacy:

 Serving customers raises revenues and profits

 Better communication with suppliers lowers costs
Improved decision making

 More accurate data leads to better decisions

Competitive advantage

 Delivering better performance

 Charging less for superior products
 Responding to customers and suppliers in real time
 Examples: Apple, Walmart, UPS

Survival

 Information technologies as necessity of business

  May be:
- Industry-level changes, e.g. Citibank’s introduction of ATMs
- Governmental regulations requiring record-keeping
- Examples: Toxic Substances Control Act, Sarbanes-Oxley Act
9. Perspective on Information Systems

Functions of an Information System

An information system contains information about an organization and its surrounding

environment. Three basic activities—input, processing, and output—produce the information
organizations need. Feedback is output returned to appropriate people or activities in the
organization to evaluate and refine the input. Environmental actors, such as customers, suppliers,
competitors, stockholders, and regulatory agencies, interact with the organization and its
information systems.

Information Systems Are More than Computers

Using information systems effectively requires an understanding of the organization,
management, and information technology shaping the systems. An information system creates
value for the firm as an organizational and management solution to challenges posed by the
environment.
Organizational dimension of information systems

 Hierarchy of authority, responsibility

- Senior management
- Middle management
- Operational management
- Knowledge workers
- Data workers
- Production or service workers
 Separation of business functions
- Sales and marketing
- Human resources
- Finance and accounting
- Manufacturing and production
 Unique business processes
 Unique business culture
 Organizational politics
Management dimension of information systems

 Managers set organizational strategy for responding to business challenges

 In addition, managers must act creatively:
o Creation of new products and services
o Occasionally re-creating the organization

Technology dimension of information systems

 Computer hardware and software

 Data management technology
 Networking and telecommunications technology
o Networks, the Internet, intranets and extranets, World Wide Web
 IT infrastructure: provides platform that system is built on
Information technology is at the heart of information systems. While organization and
management are important too, it’s the technology that enables the systems and the
organizations and managers who use the technology.

The distinction between the Internet and intranets & extranets has to do with their scope.
Intranets are private networks used by corporations and extranets are similar except that they
are directed at external users (like customers and suppliers). In contrast, the Internet connects
millions of different networks across the globe.

 Investing in information technology does not guarantee good returns

 Considerable variation in the returns firms receive from systems investments
 Factors:
o Adopting the right business model
o Investing in complementary assets (organizational and management capital)

Complementary assets:

 Assets required to derive value from a primary investment

 Firms supporting technology investments with investment in complementary assets
receive superior returns
 E.g.: invest in technology and the people to make it work properly

ACTIVITY 1: IDENTIFICATION
Read each sentences carefully and identify the correct answer. Choose your answer on the box
below.

Business Processes Computer Literacy Digital Firm

Complementary Assets Computer Software Data Management Technology

Computer Hardware Culture Data

Information Systems

_____________1. A firm in which nearly all of the organization's significant business relations
with customers, suppliers, and employees are digitally enabled and mediated. Core business
processes are accomplished through digital networks spanning the entire organization or linking
multiple organizations.
_____________2. Software governing the organization of data on physical storage media.
_____________3. Streams of raw facts representing events occurring in organizations or the
physical environment before they have been organized and arranged into a form that people can
understand and use.
_____________4. The set of fundamental assumptions about what products the organization
should produce, how and where it should produce them, and for whom they should be produced.
_____________5. Detailed, pre-programmed instructions that control and coordinate the work of
computer hardware components in an information system.
_____________6. Knowledge about information technology, focusing on understanding of how
computer-based technologies work.
_____________7. Physical equipment used for input, processing, and output activities in an
information system.
_____________8. Additional assets required to derive value from a primary investment.
_____________9. Refer to the set of logically related tasks and behaviors that organizations
develop over time to produce specific business results and the unique manner in which these
activities are organized and coordinated.
_____________10. Includes Hardware, Software, Data, Procedures, People

ACTIVITY 2: ESSAY WRITING

Answer each question and / or statements briefly. Write on the spaces provided below.
1. How are information systems transforming business, and what is their relationship to
globalization?
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What is system software? What kinds of

programs are included in system
software?
What is system software? What kinds of
programs are included in system
software?
2. Why are information systems so essential for running and managing a business today?
________________________________________________________________________
________________________________________________________________________
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3. What are complementary assets? Why are complementary assets essential for ensuring
that information systems provide genuine value for an organization?
________________________________________________________________________
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________________________________________________________________________
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4. What exactly is an information system? How does it work? What are the management,
organization, and technology components of an information system?
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5. What academic disciplines are used to study information systems? How does each
academic discipline contribute to an understanding of information systems?
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