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    McGraw-Hill/Irwin 2008,The McGraw-Hill Companies, All Rights Reserved

    Foundations ofInformation Systemsin Business

    Chapter One

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    Learning Objectives

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

    .

    Explain why knowledge of information systemsis important for business professionals andidentify five areas of information systemsknowledge they need.

    .

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    Learning Objectives

    Give examples to illustrate how the businessapplications of information systems can supporta firms business processes, managerial

    decision making, and strategies for competitiveadvantage.

    .

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    Learning Objectives

    Provide examples of several major types ofinformation systems from your experiences withbusiness organizations in the real world.

    . Identify several challenges that a business

    manager might face in managing the successfuland ethical development and use of informationtechnology in a business.

    .

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    Learning Objectives

    Provide examples of the components of real worldinformation systems. Illustrate that in aninformation system, people use hardware,

    software, data and networks as resources toperform input, processing, output, storage, andcontrol activities that transform data resourcesinto information products.

    .

    .

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    Learning Objectives

    Demonstrate familiarity with the myriad ofcareer opportunities in information systems.

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    Case 1: Sew What? Inc.: The Role of IT inSmall Business Success

    Sew What? provides custom theatrical draperies and

    fabrics for stages, concerts, fashion shows, and specialevents worldwide.

    .

    After launching the company web site, they acquiredclients from all over the world and their revenue has beengrowing more than 45% per year.

    45 .

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    Case 1: Sew What? Inc.: The Roleof IT in Small Business Success

    . Sew What? runs most of its business with Intuits Quick-Books Enterprise Solutions & Dell PowerEdge servers

    Recently, the National Federation of IndependentBusinesses (NFIB) and Dell Inc. presented Sew What?Small Business Excellence Award in recognition of itsinnovative use of technology to improve its customersexperience.

    ) NFIB) Dell

    " " .

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    Case Study Questions

    How do information technologies contribute to thebusiness success of Sew What? Give several examplesfrom the case regarding the business value ofinformation technology that demonstrate this conclusion.

    .

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    Case Study Questions

    If you were a management consultant to Sew What?Inc., what would you advise Megan Duckett to do at thispoint to be even more successful in her business? Whatrole would information technology play in yourproposals? Provide several specific recommendations.

    .

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    Case Study Questions

    1. How could the use of information technology help asmall business you know be more successful? Provide

    several examples to support your answer.2. .

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    Real World Internet Activity

    Search the Internet to help you evaluate the businessperformance of Sew What? Inc. and its competitors atthe present time.

    . What conclusions can you draw from your research about

    Sew What?s prospects for the future?

    " s

    Report your findings and recommendations for Sew

    What?s continued business success to the class.

    "

    s .

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    Real World Internet Activity

    Small businesses have been slower to integrateinformation technology into their operations than largercompanies.

    . Discuss the reasons for this state of affairs, identifying

    several possible IT solutions and their business benefitsthat could help small businesses be more successful.

    .

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    Why study Information Systems andInformation Technology?

    Vital component of successful businesses

    Helps businesses expand and compete

    Businesses use IS and IT To improve efficiency and effectiveness of business

    processes

    For managerial decision making

    For workgroup collaboration

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    What is a system?

    A system Is a set of interrelated components

    With a clearly defined boundary

    Working together to achieve a common set ofobjectives

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    What is an Information System?

    An organized combination of People

    Hardware

    Software Communications networks

    Data resources

    Policies and procedures

    That stores, retrieves, transforms, anddisseminates information in an organization

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    Information System (IS) versus Information

    Technology (IT)

    IS is all the components and resources

    necessary to deliver information and functions tothe organization

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    Information System (IS) versus InformationTechnology (IT)

    IT is hardware, software, networking and datamanagement

    In theory, IS could be paper based

    But we will focus on Computer-Based

    Information Systems (CBIS)

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    IS Knowledge Framework for Business

    Professionals

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    What should a Business Professional knowabout IS? " "

    Foundation Concepts: fundamental behavioral,technical, business and managerial concepts

    :

    Information Technology: Hardware, software,networks, data management and Internet-based

    technology :

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    What should a Business Professionalknow about IS?

    Business Applications: Major uses of the IS in the organization

    Development Processes: How to plan, developand implement IS to meet business opportunities

    Management Challenges: The challenges of effectively and ethically

    managing IT

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    Fundamental Roles of IS in Business

    Support of business processes and operations

    Support of decision making by employees andmanagers. .

    Support of strategies for competitive advantage.

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    What does IS do for a business?

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    Trends in Information Systems

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    What is E-business?

    The use of Internet technologies

    to work and empower business processes, electronic

    commerce, and enterprise collaboration

    within a company and with its customers, suppliers, andother business stakeholders.

    .An online exchange of value. .

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    How e-business is being used

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    E-business use

    Reengineer internal business processes

    Enterprise collaboration systems:

    support communications, coordination andcollaboration among teams and work groups,e.g., virtual teams

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    E-business use

    Electronic commerce:

    buying, selling, marketing and servicing ofproducts and services over computer networks

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    Types of IS

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    Operations support systems

    What are they? Efficiently process business transactions

    Control industrial processes

    Support communications and collaboration

    Update corporate databases

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    Types of Operations Support Systems

    Transaction Processing Systems

    Record and process data from business transactions Examples: sales processing, inventory systems,

    accounting systems

    :

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    Types of Operations Support Systems

    Process Control Systems Monitor and control physical processes

    Example: in a petroleum refinery use sensors tomonitor chemical processes :

    Enterprise Collaboration Systems Enhance team and work group communications

    Examples: e-mail, videoconferencing :

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    Twoways to process transactions

    Batch Processing:Accumulate transactions over time and process

    periodically

    Example: a bank processes all checks received in a

    batch at night

    :

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    Two ways to process transactions

    Online Processing:

    Process transactions immediately

    Example: a bank processes an ATM withdrawal

    immediately

    :

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    Management Support Systems

    What are they?

    Provide information and support for effective decision

    making by managers

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    Types of Management SupportSystems

    Management Information Systems (MIS)

    Provide reports and displays to managers

    Example: daily sales analysis reports:

    Decision Support Systems (DSS)

    Provide interactive ad hoc support for decision making

    Example: A what-if-analysis to determine where to spendadvertising dollars

    :--

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    Types of Management SupportSystems

    Executive Information Systems (EIS)

    Provide critical information for executives and

    managers Example: easy access to actions of competitors :

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    Operational or Management Systems

    Expert Systems Provide expert advice

    Example: credit application advisor

    : Knowledge Management Systems

    Support creation, organization and dissemination of

    business knowledge throughout company

    Example: Intranet access to best business practices

    :

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    Classifications of IS by scope

    is Functional business systems Focus on operational and managerial applications of basic

    business functions

    Examples: support accounting, finance or marketing

    :

    Strategic information systems Help get a strategic advantage over its customers

    Examples: shipment tracking, e-commerce web systems

    :

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    Classifications of IS by scope

    Cross-functional information systems

    Systems that are combinations of several types of informationsystems

    Provide support for many functions

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    Challenges and Opportunities of IT

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    Measuring success of an IS

    Efficiency Minimize cost, time and use of information resources

    Effectiveness

    Support business strategies Enable business processes

    Enhance organizational structure and culture

    Increase the customer and business value

    Whats the difference between Efficiency andEffectiveness?

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    Developing IS Solutions

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    Ethical responsibilities

    What uses of IT might be considered improper orharmful to other individuals or society?

    What is the proper business use of the Internet or acompanys IT resources?

    How can you protect yourself from computer crime?

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    Challenges of IT Careers

    Outsourcing of basic programming to India, the Middle-East and Asia-Pacific countries

    Strong employment opportunities in other areas in IS

    Shortage of qualified IS personnel

    Long-term job outlook positive and exciting

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    Job growth

    Among the fastest growing occupations through2012 Systems Analyst,

    Database administrators, Other managerial-level positions

    Network specialists

    Information security

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    IS Function represents

    Major functional area of business

    Important contributor to operational efficiency,

    employee productivity, morale, customer serviceand satisfaction

    Major source of information and support foreffective decision making

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    IS Function represents

    Vital ingredient in developing competitiveproducts and services in the global marketplace

    Dynamic and challenging career opportunity

    Key component of todays networked business

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    Case 2: Autosystems: The Business Value of aSuccessful IT System for a small Manufacturer

    " "

    Autosystems is an automotive lighting designer and

    manufacturer located in Belleville, Ontario. .

    A few years ago it installed the ActivEntry shop floorreporting system to move shop floor information into the

    manufacturing planning and control system.

    .

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    Case 2: Autosystems: The Business Value of aSuccessful IT System for a small Manufacturer

    They now have the ability to capture labor, efficiency,production, scrap, etc., on time and by work center, forevery cell, and are able to talk about that every day in theirteam meetings.

    .

    Production managers can review information from all three

    plants. .

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    Case Study Questions

    Why did Autosystems decide to install theActivEntry system? Why did the company feelit was necessary to integrate it with itsTRANS4M system?

    TRANS4M Which three business benefits, of the many

    that resulted from the use of ActivEntry, gavethe company the most business value? Defendyour choices.

    .

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    Case Study Questions

    What changes are already being planned toimprove the use of ActivEntry? What otherimprovements should the company consider?Why?

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    Real world activities

    Go to the Infor Global Solutions Web site,www.infor.com, to find other stories thatdescribe the business value of manufacturingplanning and control systems.

    " " www.infor.com . Discover any common reasons for the success

    of these companies with their systems?

    Present your findings to the class.

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    Real world activities

    Search the Internet for examples of problemsthat companies have had with manufacturingsystems.

    . Discuss your findings and what solutions youcan propose to help companies avoid theproblems you discovered.

    .

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    Real World Group Activity

    Search the Internet for examples of problemsthat companies have had with manufacturingsystems.

    .

    Discuss your findings and what solutions you canpropose to help companies avoid the problems youdiscovered.

    .

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    What is a system?

    A system Is a set of interrelated components

    With a clearly defined boundary Working together to achieve a common set of

    objectives

    By accepting inputs and producing outputs in anorganized transformation process

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    Systems have three basic functions:

    Input involves capturing and assembling elementsthat enter the system to be processed

    Processing involves transformation process thatconvert input into output

    Output involves transferring elements that have been

    produced by the transformation process to theirultimate destination

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    Cybernetic system

    All systems have input, processing and outputA cybernetic system, a self-monitoring, self-

    regulating system, adds feedback and control:

    Feedback is data about the performance of a system

    Control involves monitoring and evaluating feedback todetermine whether a system is moving towards the

    achievement of its goal

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    A Cybernetic system

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    Information systems model

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    Components of an IS

    People Resources End users: the people who use the IS or the

    information from the IS IS specialists: the people who develop and operate IS

    Hardware ResourcesAll physical devices used in information processing Machines, data media, peripherals

    Software ResourcesAll information processing instructions including

    programs and procedures System software, application software and procedures

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    Components of an IS (cont.)

    Data Resources Facts about the business transactions

    Processed and organized information

    Databases of organized data

    Network Resources Communications media

    Network infrastructure: hardware and software :

    The Internet, intranets and extranets

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    Data versus Information Data are raw facts about physical phenomena or

    business transactions

    Information is data that has been converted intomeaningful and useful context for end users

    Example: Sales data is names, quantities and dollar amounts

    Sales information is amount of sales by product type,

    sales territory or salesperson

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    IS Activities

    Input of data resources Data entry activities

    Processing of data into information

    E.g., calculate, compare, sort, classify, summarize Output of information products

    Messages, reports, forms and graphic images

    Storage of data resources Data elements and databases

    Control of system performance Monitoring and evaluating feedback

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    Recognizing IS

    As a business professional, you should be ableto look at an IS and identify

    The people, hardware, software, data and networkresources they use

    The type of information products they produce

    The way they perform input, processing, output, storageand control activities

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    Case 3: Heidelberg, Honeywell and Eaton: Using IT toBuild Smart Products and Services

    Today it will not be enough for a companies to offervaluable services for their products but they will have toprovide smart services.

    " ." To provide smart services, companies must use

    information technology to build smart products, productswith awareness and connectivity into the products

    themselves. "" .

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    Case 3: Heidelberg, Honeywell and Eaton: Using ITto Build Smart Products and Services

    Typically, smart products can detect that a part isapproaching failure and alert users, thus giving thecompany opportunity to provide maintenance services andenjoy the resulting benefits.

    .

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    Case Study Questions

    Why should manufacturing companies build smart products andprovide smart services? What business benefits can they gain?Provide several examples beyond those discussed in this case.

    . What information technologies are used by the companies in

    this case to build smart products and provide smart services?What other IT components might be used? Give examples ofthe capabilities they would provide.

    .

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    Case Study Questions

    What are some limitations of a smart products andsmart services strategy? Give several examples ofchallenges that a business might encounter, and explainhow it might overcome them.

    .

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    Real World Internet Activity

    Use the Internet to investigate how Heidelberg,Honeywell, and Eaton are proceeding in their use ofsmart products and services.

    . Discover if they are expanding this approach and what

    benefits they are claiming for this strategy.

    .

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    Real World Internet Activity

    Now expand your Internet investigation to othermanufacturing companies to find several that arebuilding smart products and offering smart services.

    What business value are they claiming for themselves and

    their customers?

    If this search is fruitless, select several companies fromyour Internet research and explain how and why they mightemploy a smart products and services strategy.

    .

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    Real World Group Activity

    What security and privacy concerns mightconsumers have about Eatons HomeHeartbeat service?

    " "

    Discuss the rationale for these concerns, andconsider what could be done to reduce any threats tosecurity and privacy posed by such services while

    also improving the value of this new use ofinformation technology.