Fundamentals of Information Systems Fourth Edition

1
Fundamentals of Information SystemsFourth Edition

• Chapter 1
• An Introduction to Information Systems in
  Organizations

2
Principles and Learning Objectives

• The value of information is directly linked to
  how it helps decision makers achieve the
  organizations goals
• Distinguish data from information and describe
  the characteristics used to evaluate the quality
  of data

3
Principles and Learning Objectives (continued)

• Knowing the potential impact of information
  systems and having the ability to put this
  knowledge to work can result in a successful
  personal career, organizations that reach their
  goals, and a society with a higher quality of
  life
• Identify the basic types of business information
  systems and discuss who uses them, how they are
  used, and what kinds of benefits they deliver

4
Principles and Learning Objectives (continued)

• System users, business managers, and information
  systems professionals must work together to build
  a successful information system
• Identify the major steps of the systems
  development process and state the goal of each

5
Principles and Learning Objectives (continued)

• The use of information systems to add value to
  the organization can also give an organization a
  competitive advantage
• Identify the value-added processes in the supply
  chain and describe the role of information
  systems within them
• Identify some of the strategies employed to lower
  costs or improve service
• Define the term competitive advantage and discuss
  how organizations are using information systems
  to gain such an advantage

6
Principles and Learning Objectives (continued)

• Information systems personnel are the key to
  unlocking the potential of any new or modified
  system
• Define the types of roles, functions, and careers
  available in information systems

7
Why Learn About Information Systems in
Organizations?

• Information systems (ISs) can cut costs and
  increase profits
• Students in most fields need to know ISs
• Management major might be hired to design a
  system to improve productivity
• Biochemistry major might be hired to conduct drug
  research using computer techniques

8
Introduction

• Information system (IS)
• Set of interrelated components collect,
  manipulate, store, and disseminate data and
  information
• Provides feedback to meet an objective
• Examples ATMs, airline reservation systems,
  course reservation systems

9
Information Concepts Data, Information, and
Knowledge

• Data raw facts
• Alphanumeric, image, audio, and video
• Information collection of facts organized in
  such a way that they have additional value beyond
  the value of the facts themselves

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Data, Information, and Knowledge (continued)
Table 1.1 Types of Data
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Data, Information, and Knowledge(continued)
Figure 1.1 Defining and Organizing
Relationships Among Data Creates
Information
12

Data, Information, and Knowledge (continued)
Figure 1.2 The Process of Transforming Data into
Information
13
The Characteristics of Valuable Information
Table 1.2 Characteristics of Valuable Information
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The Characteristics of Valuable Information
(continued)
Table 1.2 Characteristics of Valuable
Information (continued)
15
The Value of Information

• Value of information is directly linked to how it
  helps decision makers achieve their
  organizations goals
• For example, value of information might be
  measured in
• Time required to make a decision
• Increased profits to the company

16
What Is an Information System?
Figure 1.3 The Components of an Information
System
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Input, Processing, Output, Feedback

• Input the activity of gathering and capturing
  raw data
• Processing converting or transforming data into
  useful outputs
• Output production of useful information, usually
  in the form of documents and reports
• Feedback output that is used to make changes to
  input or processing activities

18
Manual and Computerized Information Systems

• An information system can be
• Manual
• Example developing patterns and trends on graph
  paper for stock analysis
• Computerized
• Example using program trading to track the
  market and trade large blocks of stocks when
  discrepancies occur

19
Computer-Based Information Systems

• Computer-based information system (CBIS) single
  set of hardware, software, databases,
  telecommunications, people, and procedures
  configured to collect, manipulate, store, and
  process data into information

20
Computer-Based Information Systems (continued)
Figure 1.4 The Components of a Computer-Based
Information System
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Computer-Based Information Systems (continued)

• CBIS components
• Hardware computer equipment used to perform
  input, processing, and output activities
• Software computer programs that govern the
  operation of the computer
• Database organized collection of facts and
  information
• Telecommunications electronic transmission of
  signals for communications
• Networks connect computers and equipment in a
  building, around the country, and around the world

22
Computer-Based Information Systems (continued)

• CBIS components (continued)
• Internet worlds largest computer network
• People manage, run, program, and maintain the
  system
• Procedures strategies, policies, methods, and
  rules for using a CBIS

23
Business Information Systems

• Most common types of information systems used in
  business organizations
• Electronic and mobile commerce systems
• Transaction processing systems
• Management information systems
• Decision support systems
• Specialized business information systems

24
Business Information Systems (continued)
Figure 1.5 Business Information Systems
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Electronic and Mobile Commerce

• E-commerce any business transaction executed
  electronically between parties
• Companies (B2B)
• Companies and consumers (B2C)
• Consumers and other consumers (C2C)
• Companies and the public sector
• Consumers and the public sector

26
Electronic and Mobile Commerce (continued)
Figure 1.8 Electronic Business
27
Enterprise Systems Transaction Processing
Systems and Enterprise Resource Planning

• Transaction business-related exchange
• Payments to employees
• Sales to customers
• Payments to suppliers
• Transaction processing system (TPS) organized
  collection of people, procedures, software,
  databases, and devices used to record completed
  business transactions

28
Transaction Processing Systems (continued)
Figure 1.9 A Payroll Transaction Processing
System
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Enterprise Resource Planning

• Integrated programs capable of managing a
  companys vital business operations for an entire
  multisite organization
• Coordinate planning, inventory control,
  production, and ordering

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Information and Decision Support Systems

• An effective TPS provides a number of benefits to
  a company
• A TPS can speed business activities and reduce
  clerical costs
• Data stored in TPSs is used to help managers make
  better decisions

31
Management Information Systems

• Management information system (MIS)
• Organized collection of people, procedures,
  software, databases, and devices
• Provides routine information to managers/decision
  makers
• Primary focus is operational efficiency

32
Management Information Systems (continued)
Figure 1.10 Management Information System
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Decision Support Systems

• Decision support system (DSS)
• Organized collection of people, procedures,
  software, databases, and devices
• Supports problem-specific decision making
• Focus is on decision-making effectiveness

34
Decision Support Systems (continued)
Figure 1.11 Essential DSS Elements
35
Specialized Business Information Systems
Knowledge Management, Artificial Intelligence,
Expert Systems, and Virtual Reality

• Knowledge management systems (KMSs) an organized
  collection of people, procedures, software,
  databases, and devices to create, store, share,
  and use the organizations knowledge and
  experience
• Artificial intelligence (AI) field in which the
  computer system takes on the characteristics of
  human intelligence

36
Artificial Intelligence
Figure 1.12 The Major Elements of Artificial
Intelligence
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Expert Systems

• Give the computer the ability to make suggestions
  and act like an expert in a particular field
• Allow organizations to capture and use the wisdom
  of experts and specialists
• The knowledge base contains the collection of
  data, rules, procedures, and relationships that
  must be followed to achieve value or the proper
  outcome

38
Virtual Reality

• Simulation of a real or imagined environment that
  can be experienced visually in three dimensions
• Immersive virtual reality
• Applications that are not fully immersive
• Can be a powerful medium for communication,
  entertainment, and learning

39
Systems Development

• Systems development creating or modifying
  existing business systems
• Systems development can be
• Performed in-house
• Outsourced
• To improve results of a systems development
  project, it is divided into several steps

40
Systems Development (continued)
Figure 1.14 An Overview of Systems Development
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Systems Investigation and Analysis

• Systems investigation gain understanding of the
  problem to be solved or opportunity to be
  addressed
• Systems analysis defines problems and
  opportunities of the existing system

42
Systems Design, Implementation, Maintenance, and
Review

• Systems design how the new system will work to
  meet the business needs defined during systems
  analysis
• Systems implementation creating or acquiring the
  various system components defined in the design
  step, assembling them, and putting the new system
  into operation
• Systems maintenance and review check and modify
  the system so that it continues to meet changing
  business needs

43
Organizations and Information Systems

• Organization collection of people and other
  resources established to accomplish a set of
  goals
• An organization is a system
• Inputs resources (materials, people, money)
• Outputs goods or services

44
Organizations and Information Systems (continued)
Figure 1.15 A General Model of an Organization
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Organizations and Information Systems (continued)

• Value chain series (chain) of activities that
  includes inbound logistics, warehouse and
  storage, production, finished product storage,
  outbound logistics, marketing and sales, and
  customer service
• Upstream management management of raw materials,
  inbound logistics, and warehouse and storage
  facilities
• Downstream management management of finished
  product storage, outbound logistics, marketing
  and sales, and customer service

46
Organizations and Information Systems (continued)
Figure 1.16 The Value Chain of a Manufacturing
Company
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Organizations and Information Systems (continued)

• Supply chain management (SCM)
• Determines required supplies, needed quantities,
  processing, and shipment
• Customer relationship management (CRM)
• Helps company manage all aspects of customer
  encounters, including marketing, advertisement,
  sales, service, and maintaining loyalty

48
Organizational Culture and Change

• Organizational culture
• Major understandings and assumptions
• Influences information systems
• Organizational change
• How organizations plan for, implement, and handle
  change
• Can be sustaining or disruptive

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User Satisfaction and Technology Acceptance

• Technology Acceptance Model (TAM) specifies
  factors that can lead to higher acceptance and
  usage of technology
• Technology diffusion measure of widespread use
  of technology
• Technology infusion extent to which technology
  permeates a department

50
User Satisfaction and Technology Acceptance
(continued)

• Competitive advantage significant, long-term
  benefit to a company over its competition
• Ability to establish and maintain a competitive
  advantage is vital to the companys success

51
Factors That Lead Firms to Seek Competitive
Advantage

• Five-forces model identifies key factors
• Rivalry among existing competitors
• Threat of new entrants
• Threat of substitute products and services
• Bargaining power of buyers
• Bargaining power of suppliers

52
Strategic Planning for Competitive Advantage

• Cost leadership
• Deliver the lowest possible products and services
• Differentiation
• Deliver different products and services
• Niche strategy
• Deliver to a small, niche market
• Altering the industry structure
• Change the industry to become more favorable to
  organization

53
Strategic Planning for Competitive Advantage
(continued)

• Creating new products and services
• Introduce periodically or frequently
• Improving existing product lines and service
• Make real or perceived improvements
• Other strategies
• Growth in sales
• First to market
• Customizing products and services
• Hiring the best people

54
Performance-Based Information Systems

• Considers both strategic advantage and costs
• Uses productivity, return on investment (ROI),
  net present value, and other measures of
  performance

55
Performance-Based Information Systems (continued)
Figure 1.18 Three Stages in the Business Use of
Information Systems
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Productivity

• Output achieved divided by input required
• Higher level of output for a given level of input
  means greater productivity

57
Return on Investment and the Value of Information
Systems

• Earnings growth
• Increase in profits
• Market share
• Percentage of sales in relation to total market
• Customer awareness and satisfaction
• Based on feedback from internal and external
  users
• Total cost of ownership
• Measurement of total cost of owning computer
  equipment

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Risk

• Managers must consider the risks of designing,
  developing, and implementing new or modified
  information systems
• Information system may be a failure
• Costs of development and implementation can be
  greater than the returns from the new system

59
Careers In Information Systems

• Degree programs
• Degrees in information systems
• Business degrees with a global or international
  orientation
• Computer systems are making IS professionals
  work easier
• Opportunities in information systems are not
  confined to single countries

60
Roles, Functions, and Careers in the IS Department

• Primary responsibilities in information systems
• Operations focuses on the efficiency of IS
  functions
• Systems development focuses on development
  projects and ongoing maintenance and review
• Support provides user assistance, data
  administration, user training, and Web
  administration

61
Roles, Functions, and Careers in the IS
Department (continued)
Figure 1.19 The Three Primary Responsibilities
of Information Systems
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Typical IS Titles and Functions

• Chief Information Officer (CIO)
• Employs IS departments equipment and personnel
  to help the organization attain its goals
• LAN administrators
• Set up and manage the network hardware, software,
  and security processes

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Typical IS Titles and Functions (continued)

• Internet careers
• Internet strategists and administrators
• Internet systems developers
• Internet programmers
• Internet or Web site operators
• Certification
• Examples Microsoft Certified Systems Engineer,
  Certified Information Systems Security
  Professional (CISSP), and Oracle Certified
  Professional

64
Other IS Careers

• New and exciting careers have developed in
  security and fraud detection and prevention
• Chief Information Security Officer
• Chief Security Officer
• Chief Privacy Officer
• Working for a large consulting firm such as
  Accenture, IBM, and EDS
• Developing or selling products for a hardware or
  software vendor
• Video game development

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Global Challenges in Information Systems

• Cultural challenges
• Language challenges
• Time and distance challenges
• Infrastructure challenges
• Currency challenges

66
Global Challenges in Information Systems
(continued)

• Product and service challenges
• Technology transfer issues
• State, regional, and national laws
• Trade agreements

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Summary

• Data raw facts
• Information organized collection of facts has
  additional value beyond the value of facts
  themselves
• System components input, processing, output, and
  feedback
• Computer-based information system (CBIS)
• Single set of hardware, software, databases,
  telecommunications, people, and procedures
• Collect, manipulate, store, and process data into
  information

68
Summary (continued)

• Transaction processing system (TPS) organized
  collection of people, procedures, software,
  databases, and devices used to record completed
  business transactions
• Management information system (MIS) organized
  collection of people, procedures, software,
  databases, and devices used to provide routine
  information to managers and decision makers

69
Summary (continued)

• Knowledge management system (KMS) an organized
  collection of people, procedures, software,
  databases, and devices to create, store, share,
  and use the organizations knowledge and
  experience
• Artificial intelligence (AI) field in which the
  computer system takes on the characteristics of
  human intelligence

70
Summary (continued)

• Decision support system (DSS) organized
  collection of people, procedures, software,
  databases, and devices used to support
  problem-specific decision making
• Systems development creating or modifying
  existing business systems
• Competitive advantage significant, long-term
  benefit to a company over its competition
• Primary responsibilities in information systems
  operations, systems development, and support