BUSINESS INFORMATION

SYSTEMS
Julius Gichane
 Introduction: BUSINESS
Information Systems (BIS)
What is a system?:
• A system is a group of components
working together toward some objective.
• A system is an interrelated set of business
procedures used within one business unit
working together for a purpose
• A system exists within an environment
• A boundary separates a system from its
environment
 Introduction: Business Information
Systems (BIS)
Information system:
• An information system is a set of interrelated components
that collect (or retrieve), process, store, and distribute
information to support decision making and control in an
organization.
• An information system is essentially a group of
components working together to capture and deliver
information to users.
– Breaking this down… What are these “components”?
• People
• Processes
• Technology
– Hardware
– Software
• Data
– Data flows
 Introduction: Business Information
Systems (BIS)
• Information systems help managers and
other workers to
1. analyze problems,
2. visualize complex subjects
3. and/or create new products and services.
• Information systems contain information
about people, places, and things within
the organization or in the environment
surrounding it.
 Data and Information
Data
• Data are unprocessed raw facts. After data has
been gathered, it needs to be processed to
convert it to useful information.
• day-to-day transactions of the organization: For
example, the date, amount and other details of
an invoice.
• Data (singular, datum) are derived from both
internal and external sources.
 Data and Information
Information:
• Information is data that have been shaped into a
form that is meaningful and useful to human
beings.
• It is important to remember that information is a
message to the user. In communication it is said
that the meaning of the message is with the
receiver. Unless the message has meaning to
the recipient, then it is simply data.
• Producers of information must be aware of the
user requirements (or the needs of the
organization).
 Processing Information
• Three functions of the information system
produce the information that organizations
need in order to make decisions, control
operations, analyze problems, and create
new products and/or services.
• These functions are:
– input,
– processing
– and output.
Data is processed into information
processing

output
input
Information
System
Data Information
• Data is the input that is processed to
produce information as output.
• But feedback from processed information
is required, which becomes input for
further processing.
 ENVIRONMENT customers
suppliers

ORGANIZATION

Information System
Processing
Clarify
input Output
Arrange
Calculate

feedback

Regulatory Agencies competitors

stockholders
DIMENSIONS OF INFORMATION
SYSTEMS
• In this course, information systems means
information technology-based information
systems.
• It is important to note that a computer
system alone cannot create the
information required by management and
employees in the firm.
• We must therefore expand the concept of
information systems beyond the computer.
 DIMENSIONS OF INFORMATION
SYSTEMS
• The information systems have 3
dimensions
1. Organization
2. Management
3. Technology
 DIMENSIONS OF INFORMATION
SYSTEMS
• An information system creates value for the firm as an
organizational and management solution to
challenges posed by the environment.
• To fully understand Information systems, one must
understand the broader organization, management
and technology dimensions of systems.
• These dimensions provide solutions to challenges
and problems in the business environment.
• Understanding information systems in this broader
sense is information systems literacy. Computer
literacy focuses primarily on knowledge of information
technology.
DIMENSIONS OF INFORMATION
SYSTEMS

Organizations
Information Technology
Systems

Management
Organization Dimension
• An organization is an assembly of:
– People
– Equipment
– Data
– Policies and procedures
• These exist to provide a product or service
(often at a profit)
• Organizations have owners and sponsors
Organization
• The key elements in an organization are
its:
1. people,
2. structure,
3. business processes,
4. politics, and
5. culture.
 Organization structure

• Organizations have a structure that is

composed of different levels and
specialties.
• Their structures reveal a clear-cut division
of labour. Authority and responsibility in
business firm are organized as a
hierarchy, or a pyramid structure
 Organization structure

• Upper levels of the hierarchy: Consist of

managerial, professional, and technical
employees
• Lower levels: Consist of operational
personnel
Structure: Management Organization

1. Senior Management:
– Makes long range strategic decisions about products
and services
– Ensures financial performance of the firm
2. Middle level management:
– Executes the programs and plans of senior
management
They supervise
– Knowledge workers (Engineers, scientists, architects,
etc)
 Management organization

3. Operational (lower level) management

• Responsible for monitoring the daily activities of
the business
They supervise
– data workers (paper work, data entry)
– production or service workers (produce the product, deliver the
service)

4. Rank and file – These are the operational personnel.

They are not involved in management tasks
(data workers, production and service workers, etc)
• Carry out actual tasks/transactions on a day-to-day
basis
Management levels pyramid

Senior
management

Middle level
management

Operational (lower level)

management
 Organization Business processes
(functions) – Specialized tasks

• The organization is established around

business functions
• The four major business functions in an organization
are:
1. Sales and Marketing
2. Manufacturing and production
3. Finance and accounting
4. Human resources
 Organization Culture

• Each organization has a culture.

• A culture consist of fundamental set of
assumptions, values, and ways of doing
things, that has been accepted by most of
its members.
• Part of the organization culture is
embedded in its information systems.
 Organization Politics

• Each organization also has organizational

politics.
• Politics develop from different interests
and points of view, which often are in
conflict.
• The conflict is the basis of organizational
politics.
Management dimension of IS

• The management’s job is to make decisions,

and formulate action plans to solve
organizational problems.
• Managers:
– Perceive business challenges in the environment
– Set the organizational strategy to respond to the
challenges
– Allocate human and financial resources to coordinate
the work and achieve success.
 Technology dimension of IS

• Information technology is one of the many tools

managers use to cope with change.
• Information technology (IT) consists of all the hardware
and software that a firm needs to use in order to achieve
its business objectives
 Technology dimension of IS

• Technology dimension of information systems consist of:

– Computer hardware (Physical components of the
computer, and peripheral devices. Peripheral devices
are other hardware components that are connected to
the computer externally: Keyboard, Computer
screen, mouse, printer, scanner, LCD projector, etc)
– Computer software (programs, or instructions that run
the computer)
Technology dimension of IS

– Data management technology (consists of the

software governing the organization of data on
physical storage media. Storage media are devices
like hard disks, CD’s, DVD’s, flash disks, etc)
– Networking and telecommunications technology
(network, internet, intranet, extranet, etc)
– The world wide web
 Technology dimension of IS

• All these components of the technology

dimension of information systems
constitute the IT infrastructure.
• IT infrastructure provides the foundation or
platform, on which the firm can build its
specific information systems
• 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:
1. Decision making
2. Improve organizational performance
3. Increase firm profitability.
• An information system is an organizational and
managerial solution based on information technology.
• Every business has an information value chain.
Information is systematically acquired and then
transformed through various stages that add value to
that information.
 Technology and its complimentary
assets
• Technology alone cannot drive the organization to attain
its business targets. There are complementary assets
that must be well incorporated.
• In this respect, complementary assets are those assets
required to derive value from investing in IT.
 Technology and its complimentary
assets

• These are:

1. Organizational assets
– Supportive organizational culture that
values efficiency and effectiveness
– Appropriate business model
– Efficient business processes
– Decentralized authority
– Distributed decision-making rights
– Strong IS development team
2. Managerial assets
– Strong senior management support for
technology investments and change
– Incentives for management innovation
– Teamwork and collaborative work
environments
– Training programs to enhance
management decision skills
– Management culture that values flexibility
and knowledge-based decision making
3. Social assets

– The internet and telecommunication infrastructure

– IT-enriched educational programs raising labor force
computer literacy
– Standards (both government and private sector)
– Laws and regulations creating fair, stable market
environments
– Technology and service firms in adjacent markets to
assist implementation
• Without these complementary assets, the organization
will not derive much value for their investments in IT.
• The diagram on next slide describe possible scenarios in
firms.
• As can be deduced, quadrant 4 (next slide) represent
firms that are investing heavily in I.T. infrastructure but
are not getting matching profitability.
IT INVESTMENTS VS FIRM PRODUCTIVITY

HIGH

P 1 2
R
O
D
U
C
T
I 3 4
V
I
T
Y

00 HIGH
IT CAPITAL STOCK
 CONTEPORARY APPROACHES TO
INFORMATION SYSTEMS
• The study of information systems is a multidisciplinary
field. Several major disciplines contribute problems,
issues and solutions in the study of information
systems.
• These disciplines include:
• Management Science,
• Computer science,
• Operations research,
• Sociology,
• Economics,
• Psychology
0
 CONTEPORARY APPROACHES TO
INFORMATION SYSTEMS
• These disciplines give us two major
approaches to the study of information
systems
1. Technical approaches: Which emphasize on
mathematically based models and physical
technology (management science, computer
science, operations research)
2. Behavioral approaches: Concentrates on changes
in attitudes, management and organizational policy
and behavior. Groups and organizations shape the
development of systems. Systems also affect
individuals, groups and organizations
0
 CONTEPORARY APPROACHES TO
INFORMATION SYSTEMS
THE SOCIOTECHNICAL APPROACH
• This course will instead pursue a socio-technical
approach
• Optimal organizational performance is achieved by
jointly optimizing both the social and technical systems
used in production.

0
 INFORMATION SYSTEMS AND
BUSINESS
• Many businesses have moved in to
capitalize on the advantages of using
information systems in business.
• Many are investing heavily on information
technology
• But as we saw earlier, the investments in
information systems must be well thought-
out to make sure that there is business
value.
STRATEGIC BUSINESS OBJECTIVES
OF INFORMATION SYSTEMS
Business firms invest in information systems to
achieve six major strategic objectives:
1. Operational excellence
2. New Products, service and Business models
3. Customer and supplier Intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
1. because the systems are necessities for doing business for
certain firms
2. Because it enables them fulfill certain legal requirements (e.g.
requirement to store business data for a minimum duration of
time – For instance, Toxic Substances control [1976];
Sarbanes-Oxley Act [2002])
 INFORMATION SYSTEMS AND
BUSINESS
• Information technology and information systems are
introducing new ways of doing business
• Such new ways include:
1. Email and online conferencing over the internet (using
wireless devices and internet)
2. Online supply chain and customer intimacy (e.g. ebay,
amazon, software as a service concept, etc)
3. Online news readership (instead of newspapers and books)
4. Social networking sites (Facebook, Myspace, etc)
5. The concept of e-commerce ( use of web for business) and m-
commerce (use of mobile devices for business: iphones,
Blackberries, Netbooks).
6. Growth of cloud computing concept
 INFORMATION SYSTEMS AND
BUSINESS
• Two impacts of the information technology to
business management are:
1. The “Flattened World” concept:
– This concept was initiated in 2005 by a Journalist
named Thomas Friedman who declared that the
world is now “flat”. What this means is that the
internet and global communications have greatly
reduced the economic and cultural advantages of
the developed world.
– This globalization presents both challenges and
opportunities
 INFORMATION SYSTEMS AND
BUSINESS
2. The emerging Digital Firm
– A digital firm is one in which nearly all of the
organization’s significant business
relationships with customers, suppliers, and
employees are digitally enabled and
mediated.