foundation of information systems in business

Foundation Of Information Systems In Business

Understand the concept of a system and how it relates to information systems.

What Is An Information System? An Information System can be any organized

combination Of: - people, - hardware, - software, - communications networks, - policies.

What Is An Information System? (continued) People rely on modern information systems to

communicate using a variable: - physical devices (hardware). - information processing instruction and procedures (software). - communications channels (network). - stored data (data resources).

How Information Systems Are How Information Systems Are Transforming Business Transforming Business

Increase in cell phone usage, Increase in Internet usage, Internet shoping, Online payment, Advertisement on the Internet, Awareness of prices, Etc.

• Businesses invest in IT to achieve six important business objectives

1. Operational excellence

2. New products, services, and business models

3. Customer and supplier intimacy

4. Improved decision making

5. Competitive advantage

6. Survival

Business Drivers of Information SystemsBusiness Drivers of Information Systems

The Role of Information Systems in Business Today

Operational Excellence:Operational Excellence:

Improved efficiency results in higher profits

Information systems and technologies help improve efficiency and productivity

Efficiency: It is the using resources in such a way as to maximize the production of goods and services.

The Role of Information Systems in Business Today

• Information systems and technologies enable firms to create new products, services, and business models

• Business model: How a company produces, delivers, and sells its products and services

• Product: Any commercial good.

• Service: Non-material equivalent of a good in economics and marketing.

New products, services, and business New products, services, and business models:models:

The Role of Information Systems in Business Today

New products, services, and business New products, services, and business models:models:

The Role of Information Systems in Business Today

With its stunning multitouchdisplay, full Internet browsing, digital camera, and portablemusic player, Apple’s iPhone set a new standard for mobile phones. Other Apple products have transformed the music and entertainment industries.

• Customers who are served well become repeat customers who purchase more

• Mandarin Oriental hotel

• Uses IT to foster an intimate relationship with its customers, keeping track of preferences, etc.

• Close relationships with suppliers result in lower costs

• JCPenney

• IT to enhance relationship with supplier in Hong Kong

Customer and supplier intimacy:Customer and supplier intimacy:

The Role of Information Systems in Business Today

• Real-time data improves ability of managers to make decisions.

• Data may be about:• Production,

• Selling,

• Customer complain,

• problems,

• Etc.

Improved decision making:Improved decision making:

The Role of Information Systems in Business Today

The Role of Information Systems in Business Today

Information Builders’ digital dashboard delivers comprehensive and accurate information for decision making. The graphical overview of key performance indicators helps managers quickly spot areas that need attention.

• Often results from achieving previous business objectives

• Advantages over competitors:

• Charging less for superior products,

• Better performance, and

• Better response to suppliers and customers

Competitive advantage:Competitive advantage:

The Role of Information Systems in Business Today

The Role of Information Systems in Business Today

In a Toyota factory, the assembly line produces a superior product in less time, using less inventory, and having fewer defects than the competition. Toyota uses information systems to monitor inventory levels and manage production scheduling.

• Businesses may need to invest in information systems out of necessity; simply the cost of doing business• Keeping up with competitors

• Citibank’s introduction of ATMs• Federal and state regulations and

reporting requirements• Toxic Substances Control Act and the

Sarbanes-Oxley Act

Survival:Survival:

The Role of Information Systems in Business Today

Perspectives on Information Systems and Information Technology

• Information technology: The hardware and software a business uses to achieve objectives

• Information system: Interrelated components that manage information to:

• Support decision making and control

• Help with analysis, visualization, and product creation

• Data: Streams of raw facts

• Information: Data shaped into meaningful, useful form

What Is an Information System? What Is an Information System?

The Fundamental Roles Of Information System In BusinessThere are three fundamental reasons:1. Support of its business processes and

operations.( like keeping inventories record or payment details etc.)

2. Support of decision making by its employees and managers.

3. Support of its strategies for competitive advantage.

Trends In Information Systems:1. Data processing: 1950s – 1960s - electronic data processing systems -- transaction processing, record

keeping, and traditional accounting applications.

2. Management reporting: 1960s – 1970s - management information systems -- management reports of pre specified information to support decision

making.

Cont.

3. Decision support: 1970s – 1980s - decision support systems

4. Strategic and User Support: 1980s – 1990s

- end user computing systems - executive information systems - expert systems - strategic information systems

Electronic Business and Commerce: 1990s – 2000s

- internet based e business and e commerce systems Many business today are using internet

technologies to Web enable business process and to create innovative e business application.

Types Of Information Systems

Operations Support Systems

Specialized Processing Systems

Transaction Processing Systems

Process Control Systems

Enterprise Collaboration Systems

Management

Support Systems

Management Information

Systems

Decision Support Systems

Executive

Information

Systems

Specialized Processing Systems

Types of IS

Different kinds of systemsDifferent kinds of systems Operational-level systems

Knowledge-level systems

• Information systems that monitor the elementary activities and transactions of the organization .(like TPS)

• Information systems that support knowledge and data workers in an organization. (KWS, OAS)

Management-level systems

Strategic-level systems

• Information systems that support the monitoring, controlling, decision making, and administrative activities of middle managers. (DSS, MIS)

• Information systems that support the long-range planning activities of senior management . (EIS)

Major Types of Systems Executive Support Systems (ESS)Executive Support Systems (ESS) Decision Support Systems (DSS)Decision Support Systems (DSS) Management Information Systems (MIS)Management Information Systems (MIS) Knowledge Work Systems (KWS)Knowledge Work Systems (KWS) Office Automation Systems (OAS)Office Automation Systems (OAS) Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

• Basic business systems that serve the Basic business systems that serve the operational leveloperational level

• A computerized system that performs and A computerized system that performs and records the daily routine transactions records the daily routine transactions necessary to the conduct of the businessnecessary to the conduct of the business

• EXAMPLE:EXAMPLE: payroll, accounts payable payroll, accounts payable

TYPICAL TPS APPLICATIONSSales & Marketing Systems

MAJOR FUNCTIONS OF SYSTEMS: Sales Management ; Market Research ; Promotion ; Pricing ; New Products

MAJOR APPLICATION SYSTEMS: Sales Order Info System ; Market Research System ; Pricing System

TPS Manufacturing Plant scheduling Material movement control Machine control

Finance Securities trading Cash management

Accounting Payroll Account payable Account receivable

Human Resources Compensation Training & development Employee record keeping

KWS – knowledge work systems

Information systems that aid knowledge workers in the creation and integration of new knowledge in the organization .

Example: Engineering work station

OAS – office automation systems

Computer systems, such as word processing, electronic mail systems, and scheduling systems, that are designed to increase the productivity of data workers in the office .

MIS – Management Information Systems

Information systems at the management level of organization that serve the functions of planning, controlling, and decision making by providing routine summary and exception reports.

Example: Annual budgetingExample: Annual budgeting

MIS• Structured and semi-structured decisionsStructured and semi-structured decisions

• Report control orientedReport control oriented

• Past and present dataPast and present data

• Internal orientationInternal orientation

DSS – Decision Support Systems

Information systems at the management level of an organization that combine data and sophisticated analytical models to support non-routine decision making.

Example:Example: Contract cost analysisContract cost analysis

MIS & DSSMIS & DSS Sales and marketing

Sales management Sales region analysis

Manufacturing Inventory control Production scheduling

Finance Annual budgeting Cost analysis

Accounting Capital investment analysis Pricing / profitability analysis

Human Resource Relocation analysis Contract cost analysis

ESS – Executive Support Systems

Information system at the organization’s strategic level designed to address unstructured decision making through advanced graphics and communications

Example: 5-year operating planExample: 5-year operating plan

ESSESS Sales and marketing Sales trend

forecasting

Manufacturing Operating plan

Finance Budget forecasting

Accounting Profit planning

Human Resource Personnel planning

Characteristics of Different Types of Characteristics of Different Types of Information SystemsInformation Systems

Information inputs Processing Information outputs Users

Systems from a Functional PerspectiveSystems from a Functional Perspective

SALES & MARKETING SYSTEMS

MANUFACTURING & PRODUCTION SYSTEMS

FINANCE & ACCOUNTING SYSTEMS

HUMAN RESOURCES SYSTEMS

43

Sales and MarketingSales and Marketing Systems Systems

44

Manufacturing and ProductionManufacturing and Production Systems Systems

45

Financing and AccountingFinancing and Accounting Systems Systems

46

Human ResourceHuman Resource Systems Systems