Foundations of Information

Systems in Business
Foundation Concepts
◼ Why study information systems and information
technology?
 Vital component of successful businesses
 Helps businesses expand and compete
 Improves efficiency and effectiveness of
business processes
 Facilitates managerial decision making and
workgroup collaboration

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What is a System?
◼ A system is…
 A set of interrelated components
 With a clearly defined boundary
 Working together
 To achieve a common set of objectives
 By accepting inputs and producing outputs
 In an organized transformation process

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Basic Functions of a System
◼ Input
 Capturing and assembling elements that enter
the system to be processed
◼ Processing
 Transformation process that converts input
into output
◼ Output
 Transferring transformed elements to their
ultimate destination

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Other System Characteristics
◼ If a system is one of the components of a larger
system, it is a subsystem
 The larger system is an environment

◼ Several systems may share the same

environment
 Some may be connected via a shared
boundary, or interface

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What is an Information System?
◼ An organized combination of…
 People
 Hardware and software
 Communication networks
 Data resources
 Policies and procedures
◼ This system…
 Stores, retrieves, transforms, and
disseminates information in an organization

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Information Technologies
◼ Information Systems
 All the components and resources necessary
to deliver information and functions to the
organization
 Could be paper based

◼ Information Technologies
 Hardware, software, networking, data
management

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The IS Function
◼ The IS function is…
A major functional area of business
 An important contributor to operational efficiency,
employee productivity, morale, customer service
and satisfaction
 A major source of information and support for
decision making
 A vital ingredient in developing competitive
products and services in the global marketplace
 A dynamic and challenging career opportunity
 A key component of today’s networked business

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A Business as a System

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Components of an IS

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Information System Resources
◼ People Resources
 Specialists
 End users
◼ Hardware Resources
 Machines
 Media
◼ Software Resources
 Programs
 Procedures
◼ Data Resources
 Product descriptions, customer records, employee files,
inventory databases
◼ Network Resources
 Communications media, communications processors, network
access and control software
◼ Information Resources
 Management reports and business documents using text and
graphics displays, audio responses, and paper forms
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Data Versus Information
◼ Data are raw facts about physical phenomena or
business transactions
◼ Information is data that has been converted into
meaningful and useful context for end users
◼ Example:
 Sales data is names, quantities, and dollar
amounts
 Sales information is amount of sales by
product type, sales territory, or salesperson

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IS Activities
◼ Input of data resources
 Data entry activities
◼ Processing of data into information
 Calculations, comparisons, sorting, and so on
◼ Output of information products
 Messages, reports, forms, graphic images
◼ Storage of data resources
 Data elements and databases
◼ Control of system performance
 Monitoring and evaluating feedback

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Fundamental Roles of IS in
Business

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Types of Information Systems
◼ Operations Support Systems
 Efficiently process business transactions
 Control industrial processes
 Support communication and collaboration
 Update corporate databases
◼ Management Support Systems
 Provide information as reports and displays
 Give direct computer support to managers
during decision-making

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Purposes of Information Systems

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Operations Support Systems
◼ What do they do?
 Efficiently process business transactions
 Control industrial processes
 Support communications and collaboration
 Update corporate databases

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Types of OSS
◼ Transaction Processing Systems
 Record and process business transactions
 Example: sales processing, inventory systems,
accounting systems
◼ Process Control Systems
 Monitor and control physical processes
 Example: using sensors to monitor chemical
processes in a petroleum refinery
◼ Enterprise Collaboration Systems
 Enhance team and workgroup communication
 Example: email, video conferencing

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Two Ways to Process Transactions
◼ Batch Processing
 Accumulate transactions over time and
process periodically
 Example: a bank processes all checks
received in a batch at night
◼ Online Processing
 Process transactions immediately
 Example: a bank processes an ATM
withdrawal immediately

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Management Support Systems
◼ What do they do?
 Provide information and support for effective
decision making by managers
◼ Management information systems
◼ Decision support systems
◼ Executive information systems

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Types of Management Support Systems
◼ Management Information Systems (MIS)
 Reports and displays
 Example: daily sales analysis reports
◼ Decision Support Systems (DSS)
 Interactive and ad hoc support
 Example: a what-if analysis to determine where
to spend advertising dollars
◼ Executive Information Systems (EIS)
 Critical information for executives and
managers
 Example: easy access to actions of competitors

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Other Information Systems
◼ Expert Systems - provide expert advice
 Example: credit application advisor
◼ Knowledge Management Systems - support creation,
organization, and dissemination of business knowledge
throughout company
 Example: intranet access to best business practices
◼ Strategic Information Systems - help get a strategic
advantage over customer
 Example: shipment tracking, e-commerce Web
systems
◼ Functional Business Systems - focus on operational and
managerial applications of basic business functions
 Example: accounting, finance, or marketing
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Case Study Activity
Form a group of 5 students. Take notes on the
discussion of the following issues.

◼ Identify different Information Systems that you

have interacted in your respective organizations.
◼ Scratch at least two prospective Information
System solutions in your domain of work that you
feel could be used to improve the performance of
the system.

In both case you have to focus on the input,

processing and the output of the information system.

(20 Minutes)
Why IS is necessary?

Following worldwide changes have altered

the business environment:

▪ Emergence of the global economy

▪ Transformation of the business enterprise
▪ Emergence of virtual organization and Digital
Firms
Transformation of the Business Enterprise

◼ Flattening
◼ Decentralization
◼ Flexibility
◼ Location independence
◼ Low transaction and coordination costs
◼ Empowerment
◼ Collaborative work and teamwork
A Business Perspective on Information
Systems

◼ An organizational and management solution

◼ Based on information technology

◼ Address the challenge posed by the environment

The Digital Firm
◼ Electronic commerce

◼ Electronic business

◼ Electronic marketplace: Information systems

links, buyers and sellers to exchange information,
products, services, payments
The Digital Firm
◼ Internet links buyers, sellers

◼ Lower transaction costs

◼ Goods and services advertised, bought,

exchanged worldwide

◼ Business-to-business transactions increasing

What Should Business
Professionals Know?

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Information Systems

ORGANIZATIONS TECHNOLOGY

INFORMATION
SYSTEMS

MANAGEMENT
Developing IS Solutions

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Summary
◼ Functions and Components of an
Information System
◼ Different categories of Information System
◼ Necessity of an Information System in
present Business Organization
◼ Major domains of an Information System
◼ Major steps in Information System
Development

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Questions?