MANAGEMENT

INFORMATION
SYSTEM
WHAT IS
INFORMATION
SYSTEM(IS)?

2
What is an Information System?
A set of interrelated components that collect,
manipulate, store, and disseminate data and
information and provide feedback to meet an
objective.

***This process could be manual or computerized.

CHAPTER 1 4
 There different types of
information system
Manual IS- use pencil and paper
Informal IS - word of mouth
Formal IS -written procedures
Computer based information system
Our focus is Computer based information system

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Components of a IS
Hardware - computer equipment used to perform input, processing, and output
activities.

Software - computer programs that govern the operation of the computer.

Database - an organized collection of facts and information, typically consisting of

two or more related data files.

Telecommunications - the electronic transmission of signals for communications

which enables organizations to carry out their processes and tasks.

People - the most important element in most computer-based information systems.

Procedures - include the strategies, policies, methods, and rules for using the CBIS.

CHAPTER 1 7
Information Systems
Information Systems are becoming the foundation of business models and processes
They allow for the distribution of knowledge

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 Major capabilities of Computerized
information systems
Perform high-speed high-volume, numerical computations (DSS)
Provide fast, accurate, reliable, and inexpensive communication within and between organizations,
anytime, anyplace.
Store huge amounts of information in an easy to access, yet small space (database management)
Allow quick and inexpensive access to vast amounts of information worldwide at any time
Enable collaboration any where anytime(Extranet)
Increase the effectiveness and efficiency of people working in groups in one place or in several locations
(ex. data exchange, video conferencing)
Vividly present information
Facilitate global trade (ex. thaigem.com)
Enable automation of routing decision making
Can be wireless, thus supporting unique applications

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IT and IS
What is Information Technology?
◦ Any form of technology used by people to handle information.

What are Information Systems?

◦ Integrated components processing, storing and disseminating information in an organisation.
◦ Interdisciplinary study of systems that provide information to users in organisations.

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Information and Data
Information
◦ Clusters of facts meaningful and useful to human beings in processes such as making decisions

Data
◦ Streams of raw facts representing events such as business transactions – meaningless without structure

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Experiences of IT and IS
Examples of IT
◦ Hardware (PC, UNIX server)
◦ Software (e-mail, Internet, Windows, Word)
◦ Consumer devices (mobiles, train times)

Examples of IS
◦ File systems, databases, e-mail servers / clients
◦ e-commerce
◦ student records

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 The Role of Information Systems in Business Today

• IS play vital role in business today

Information Technology Capital Investment

Information technology investment, defined as hardware, software, and

communications equipment, grew from 34% to 50% between 1980 and 2004.
Source: Based on data in U.S. Department of Commerce, Bureau of Economic
Analysis, National Income and Product Accounts, 2006.
 The Role of Information Systems
in Business Today

• How IS transforming business

• Increased technology investments
• IS provide economic value to business
• Increased responsiveness to customer demands
• Shifts in media and advertising and commerce
• New federal security and accounting laws required
Globalization opportunities

•Globalization opportunities
• Internet reduced costs of operating, on global scale
• Customers and firms
• Using foreign markets, easily replicate service
• E.g. Google and ebay
Digital Economy – “New” Economy
E-Business: The use of electronic technologies to transact
business

Collaboration: People and Organizations interact, communicate,

collaborate, and search for information

Information Exchange: Storing, processing and transmission of

information

CHAPTER 1 16
New Economy vs. Old Economy
Example #1: Registering for Classes

◦ Old Economy: You would go to the Registrar’s Office on campus with a paper registration document

◦ New Economy: You access your campus website, log into registration site, and electronically register for
classes from anywhere

CHAPTER 1 17
New Economy vs. Old Economy
Example #2: Buying and Selling Textbooks

◦ Old Economy: You go to the bookstore in person and buy new or sell used books

◦ New Economy: You go online to the Publisher’s Web site or to Web-based services such as Amazon.com
to buy or sell books

CHAPTER 1 18
New Economy vs. Old Economy
Example #3: Photography

◦ Old Economy: You use a camera with film, which you have to purchase and have developed; you mail
copies of pictures.

◦ New Economy: You can scan photos, make copies and e-mail them. Digital cameras require no film or
processing. Digital photography and video integrated into cell phones for immediate viewing

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New Economy vs. Old Economy
Example #4: Paying for Transportation

◦ Old Economy: Use tokens for bus and subway transportation

◦ New Economy: Bus and subway riders now use MetroCards; contactless cards that have a small radio
transmitter that transmit account information to a reader

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New Economy vs. Old Economy
Example #5: Paying for Goods, Checkout

◦ Old-old Economy: Customer selects goods, waits in line for the cashier to key in price of items, and then
pays in cash

◦ Old Economy: The clerk swipes the barcode of each item and customer pays in cash, credit, or debit.
Information scanned is available for immediate analysis known as source-data automation (inventory
levels are updated, Walmart, POS)

CHAPTER 1 21
New Economy vs. Old
Example #6: Paying for Goods, Checkout continued
Economy
◦ Old Economy: Shoppers take their items to a self-service kiosk and swipe
the barcodes themselves

◦ New Economy: Wireless technology affixed to each item. Allows you to

select items that pass through a scanner, which reads wireless signal,
generates a bill, automatically debits your designated account for
payment and you leave (RFID – Japanese Bank)

Example #7: Netflix

CHAPTER 1 22
 The Role of Information Systems in
Business Today

Emerging digital firm

A digital firm is one where nearly all of the organization’s significant business
relationships with customers, suppliers and employees are digitally enabled
and mediated.
Core business processes are accomplished through digital network spanning
entire organization or linking multiple organizations
◦ It’s significant business relationships are digitally enabled and mediated
◦ It’s 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
business process

Business process : tasks, rules, behaviors that been developed to produce business results.
eg.
◦ Developing new product
◦ Creating market plan
◦ Hiring an employee
• Considered source of competitive strength
• IS automate many business process
 The Role of Information Systems in Business Today

Business firms invest heavily in IS to achieve six strategic

business objectives:

◦ Operational excellence
◦ New products, services, and business models
◦ Customer and supplier intimacy
◦ Improved decision making
◦ Competitive advantage
◦ Survival
 The Role of Information Systems in Business Today

Operational excellence:
◦ Improvement of efficiency of operation to attain higher profitability
◦ Information technology tool to achieving greater efficiency and productivity
>Practice business and management behavior based on IT.
 The Role of Information Systems in Business Today

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
◦ E.g. Apple’s iPod, iTunes and Netflix’s Internet-based DVD rentals
 The Role of Information Systems in Business Today

Customer and supplier intimacy:

◦ Serving customers well leads to customers returning, which raises revenues
and profits
◦ E.g. 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
 The Role of Information Systems in Business Today

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
◦ IS provide real-time data for making decisions
 The Role of Information Systems in Business Today

Competitive advantage
◦ Achieve higher sales and profit through using IS by:
◦ Doing things better
◦ Charging less for superior products
◦ real time Responding
◦ Using the internet is competitive advantage
◦ E.g. Dell: Consistent profitability over 25 years; Dell remains one of the most efficient producer
of PCs in world.
◦ But Dell has lost some of its advantages to fast followers-- HP
 The Role of Information Systems in Business Today

Survival
◦ Information technologies are necessity of doing business
◦ May be:
◦ Industry-level changes, e.g. Citibank’s introduction of ATMs
◦ Governmental regulations requiring record-keeping
◦ E.g. Toxic Substances Control Act, Sarbannes-Oxley Act
 The Role of Information Systems in Business Today

The Interdependence Between Organizations and Information

Technology

There is a growing interdependence between a firm’s information systems and its

business capabilities. Changes in strategy, rules, and business processes increasingly
require changes in hardware, software, databases, and telecommunications. Often, what
the organization would like to do depends on what its systems will permit it to do.
 Perspectives on Information Systems

Information system:
◦ Set of interrelated components
◦ Collect, process, store, and distribute information
By computers and software as a tool
◦ Support decision making, coordination, control, problem analysis and
create new product
◦ Provide solutions to challenges in business Env.

Information vs. data

◦ Data are streams of raw facts
◦ Information is data shaped into meaningful form
 Perspectives on Information Systems

Data and Information

Figure 1-3

Raw data from a supermarket checkout counter can be processed and

organized to produce meaningful information, such as the total unit sales
of dish detergent or the total sales revenue from dish detergent for a
specific store or sales territory.
 Perspectives on Information Systems

Information system: activities produce required information

◦ Input: Captures raw data from organization or external environment
◦ Processing: Converts data into meaningful form
◦ Output: Transfers processed information to people or activities that use it
◦ Feedback: Output returned to appropriate members of organization to
help evaluate or correct input stage
 Perspectives 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.

Figure 1-4
 Perspectives on Information Systems

Computer/Computer program vs. information system

◦ Computers and software are technical foundation and tools to store and
process information
◦ similar to the material and tools used to build a house
◦ Cannot produce required information to a particular organization
 Perspectives on Information Systems

Dimensions (boarders) of IS
◦ Understanding of IS dimensions is IS literacy

◦ Where computer literacy is focus on primarily on knowledge of IT

◦ MIS try to achieve this boarders, deals with behavioral and technical
issues surrounding development, use and impact of IS in the firm.
 Perspectives on 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.

Figure 1-5
 Perspectives on Information Systems

Organizational dimension of IS
◦ structure: different levels and specialties
◦ hierarchy of authority, responsibility: Senior Middle Operational management, Knowledge
service Data workers
◦ business process: Organization coordinate its work through its
hierarchy and business process
◦ Culture : ways of doing things, part is embedded in IS.
 Perspectives on Information Systems

Levels in a Firm

Business organizations are hierarchies consisting of three principal levels: senior

management, middle management, and operational management. Information systems serve
each of these levels. Scientists and knowledge workers often work with middle management.

Figure 1-6
 Perspectives on Information Systems

Organizational dimension (cont.)

◦ Experts are employed and trained for different business functions
(tasks):

◦ Sales and marketing

◦ Human resources
◦ Finance and accounting
◦ Production and manufacturing)
 Perspectives on Information Systems

Management dimension
◦ Make decisions, formulate action plan and solve organizational
problem
◦ Managers set organizational strategy for responding to business
challenges
◦ In addition, managers must act creatively:
◦ Creation of new products and services
◦ Occasionally re-creating the organization
 Perspectives on Information Systems

Technology dimension
◦ Computer hardware
◦ Software: instructions that control H/W
◦ Data management technology: S/W governing data
◦ Networking and telecommunications technology
◦ H/W and S/W link pieces of H/W and transfer data: Network, Internet, intranets and
extranets, WWW
◦ IT infrastructure: platform that the firm can built on its IS
 Perspectives on Information Systems

Business perspective on IS:

◦ IS instrument for creating value to firms
◦ Investments in IS result in superior returns:
◦ Increases productivity and revenue
◦ IS provides information that helps managers making better decisions
and improve the execution of business process
◦ Value of IS
 Perspectives on Information Systems

Business information value chain

◦ Raw data acquired and transformed through stages that add value to
that information
◦ Value of information system determined by its ability to result in better
decisions, greater efficiency of business process, and higher profits

Business perspective: Calls attention to organizational and

managerial nature of information systems
 Perspectives on Information Systems

The Business Information Value Chain

From a business perspective, information systems are part of a series of value-adding

activities for acquiring, transforming, and distributing information that managers can use to
improve decision making, enhance organizational performance, and, ultimately, increase
firm profitability.

Figure 1-7
 Perspectives on Information Systems

Investing in information technology does not guarantee good

returns

Considerable variation in the returns firms receive from systems

investments

Factors:
◦ Adopting right business model according (suite) to new technology
◦ complementary investments (business processes, models,
management behavior and culture)
 Perspectives on Information Systems

Complementary assets:
◦ Assets required to derive value from a primary investment
◦ Firms supporting their technology investments with investment in
complementary assets receive superior returns
◦ E.g.: invest in technology and the people to make it work properly
 Perspectives on Information Systems

Complementary assets include:

◦ Organizational investments, e.g.
◦ Appropriate business model
◦ Efficient business processes
◦ Managerial investments, e.g.
◦ Incentives for management innovation
◦ Teamwork and collaborative work environments
◦ Social investments, e.g.
◦ The Internet and telecommunications infrastructure
◦ Technology standards
 Perspectives on Information Systems

Contemporary Approaches to Information Systems

The study of information systems deals with issues and insights contributed from technical
and behavioral disciplines.

Figure 1-9
 Contemporary Approaches to Information Systems

• Technical approach: Emphasizes

mathematically based models
• Computer science theories of commutation ,data storage
• management science: models of DM and practices
• operations research: optimizing selected parameters of
org.
• Behavioral approach: Behavioral issues such
strategic business integration, implementation...
• Psychology: how decision makers use formal information
• Economics: how IS change the control and cost structures
• Sociology: how system affect individuals and groups
 Contemporary Approaches to Information Systems

• Management Information Systems

• Use of computer-based information systems in
business firms
• Combines work of CS, management, and operating
research toward developing system solutions to real
word problems
• Concerned with behavioral issues of development,
use and impact of IS
• main actors : Suppliers of hardware and software,
Business firms, Managers and employees, Firm’s
environment (legal, social, cultural context)