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Chapter
1
Foundations of
Information Systems in Business
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
• Understand the concept of a system and
how it relates to information systems.
• Explain why knowledge of information
systems is important for business
professionals and identify five areas of
information systems knowledge they need.
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Learning Objectives
• Give examples to illustrate how business
applications of information systems can
support a firm’s business processes,
managerial decision making, and strategies
for competitive advantage.
• Provide examples of several major types of
information systems from your experiences
with business organizations in the real
world.
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Learning Objectives
• Identify several challenges that a business
manager might face in managing the
successful and ethical development and use
of information technology in a business.
• Provide examples of the components of real
world information systems
• Demonstrate familiarity with the myriad of
career opportunities in information systems.
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Competitive Advantage
• “Developing products, services, processes,
or capabilities that give a company a
superior business position relative to its
competitors and other competitive forces.”
Glossary, p. 637
• Attributed to a firm that is … “leading an
industry in some identifiable way, such as
sales, revenues or new products.” Ch. 2, p. 53
• “…when a firm sustains profits that exceed
the average for an industry …”
Ch. 2, p. 53
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Trends in Information Systems
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What is E-Business?
• An online exchange of value
– Conducting business on the Internet
• Using Internet technologies to empower…
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Business processes
Electronic commerce
Collaboration within a company
Collaboration with customers, suppliers, and
other business stakeholders
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How E-Business is Being Used
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E-Business Use
• Reengineering
– Internal business processes
• Enterprise collaboration systems
– Support teams and work groups
• Electronic commerce
– Buying, selling, marketing, and servicing of
products and services over networks
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Types of Information Systems
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Information systems combine:
• Operations Support Systems
(Figure 1.7)
– Transaction Processing systems
– Process Control Systems
– Enterprise Collaboration Systems
• Management Support Systems
(Figure 1.9)
– Management Information Systems
– Decision Support Systems
– Executive Information Systems
• Other Systems
(Figure 1.11)
– Expert Systems
– Knowledge Management Systems
– Strategic Information Systems
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Two Ways to Process Transactions
• Transaction Processing (batch)
– Accumulate transactions over time
– Process periodically
– Example: a bank receives checks during the day
and processes in a batch at night
• Online Processing (real-time)
– Process transactions immediately
– Example: a bank processes an ATM withdrawal
immediately
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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
– Example: credit application advisor
• Knowledge Management Systems
– Support creation, organization, and dissemination
of business knowledge Example: intranet access
to best business practices
• Strategic Information Systems
– Help get a strategic advantage over customer
– Examples: shipment tracking, e-commerce Web
systems
• Functional Business Systems
– Focus on operational and managerial applications
Examples: accounting, finance, or marketing
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IT Challenges and Opportunities
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Responsibility and Accountability
• IT plays an integral role in every facet of a
business
• Failure is often pinned on IT
• Cultivate a culture that embraces change
• Break projects into pieces
• Set realistic expectations
• There will always be problems
– “That’s life in IT”
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Agile Systems Development at Con-Way, Inc.
• Old system
– Months long design stage
– Months or years to develop
– Some projects never completed
• Agile System
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Small segments with one month deadlines
Interaction between staff and IT
Feedback from each segment drives the next
Faster overall completion and less waste
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Developing IS Solutions
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Challenges and Ethics of IT
• What are the ethical responsibilities?
• What are the risks?
• How can you protect yourself and your
company from computer crime?
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Hannaford – Securing Customer Data
• Security breach – millions of credit and debit
card numbers stolen
• Law suits argued inadequate security caused
risk for fraud
• Credit companies complained about expense
to issue new account numbers
• Securing sensitive data is a primary concern
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IT Careers
• IT employment opportunities are strong
• Shortages of IT personnel are frequent
• Long-term job outlook is positive and
exciting
• Starting salaries are high
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IT Careers
• Job increases will be driven by…
– Rapid growth
– Backfilling positions
– Information sharing environments
– Need for problem-solving skills
– Falling hardware and software prices
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IT Careers
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Business Analysts serve critical role
• CIO – broker between management and IT
• Business Analyst
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In the trenches
Analyzes business need and creates solution
Communicates solution to technicians
Balances IT resources with business needs
• Business Analyst credentials
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5-10 years experience
Technical undergraduate degree and MBA
Process driven through changes to finish
$45,000 to $100,000
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The IS Function
• Major functional area of business
• Important contributor to
– Efficiency, productivity, morale, customer service
and satisfaction
• Major source of information for decisions
• Vital ingredient in developing competitive
products and services
• Dynamic and challenging career opportunity
• Key component of networked business
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System Concepts help us understand…
• Technology
– Hardware, software, data management,
telecommunications networks
• Applications
– Programs to support inter-connected systems
• Development
– Developing ways to use information technology
• Management
– Emphasizes the quality, strategic business
value, and security of an organization’s
information systems
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What is a System?
• Interrelated components
• Defined boundary
• Working together
• Common objectives
• Accepting inputs and producing outputs
• Organized transformation process
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RWC 2: Innovating with IT
• New York Times
– Newspaper industry in trouble
– Elevated IT-enabled innovation
• BlackBerry applications
• On-screen reading system
• Boston Scientific
– Open sharing of engineering data
– Tighter control near patent application stage
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Basic Functions of a System
• Basic Functions
– Input
– Processing
– Output
• Cybernetic System
– Feedback
– Control
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A Cybernetic System
What are the components for feedback and control?
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A Business as a System
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Information System Resources
• People Resources
– Specialists
– End users
• Hardware Resources
– Machines
– Media
• Software Resources
– Programs
– Procedures
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Information System Resources
• Data Resources
– Product descriptions, customer records,
employee files, inventory databases
• Network Resources
– Communications media, communications
processors, network access and control
software
• Information Products
– Management reports and business documents
using text and graphics displays, audio
responses, and paper forms
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IS Activities
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•
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Input of data resources
Processing of data into information
Output of information products
Storage of data resources
Control of system performance
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RWC 3: Role of Information Technology
• Sew What?
– Provides custom theatrical draperies and fabrics
worldwide
– Revenue growing more than 45% per year
– Recognized for innovative use of technology to
improve its customers’ experience
• Intuit’s Quick-Books Enterprise Solutions
• Dell PowerEdge servers
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RWC 4: Critical Importance of IT Processes
• Jet Blue
– Good IT processes are as important as
hardware and software
– Smaller and less critical processes have large
ramifications
– Crisis in 2007
• Information system developed in 24 hours
• Implemented as a full-time system in the
company
• Veterans Administration
– System failure took down key applications
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