Introduction to InformationSystems

Lecture 01Foundations of IS in Business

Jaeki Song

Learning Objectives1. Understand the concept of a system and how it

relates to information systems.

2. Explain why knowledge of information systems is important for business professionals and identify five areas of information systems knowledge they need.

3. Identify several challenges that a business manager might face in managing the successful and ethical development and use of information technology in a business.

4. Become familiar with the myriad of career opportunities in information systems.

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Why study Information Systems and Information 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 an Information System?

• A system • Is a set of interrelated components• With a clearly defined boundary• Working together to achieve a common set of

objectives

• IS can be any organized combination of • People, hardware, software, communications

networks, data resources, and policies and procedures

• That stores, retrieves, transforms, and disseminates 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 to the organization

• IT is hardware, software, networking and data management

• In theory, IS could be paper based • We will focus on Computer-Based Information

Systems (CBIS)

Key Questions

• How does the management of IT differ in scope and complexity from the other business functions?

• Why does the view of IT by IT executives differ form the views of other business executives?

• What has to be done to better manage the IT resource?

• What are some of the key issues in the management of IT organizations?

• Why is the successful management of IT important?

Primary Purpose of IT

• IT is important and necessary for a successful organization

• As will be argued throughout the course/semester, successful management of IT is necessary for competitive advantage

Management of IT

• Strategic• Pertinent to long-term attainment of goals and business as a

whole

• Tactical• Needed to achieve strategic plans and goals to produce

changes for success

• Operational• Process and actions that must be performed on a day-to-day

basis to maintain performance level

Role of IT

• Traditional view• Supporting function

• No longer just serves a business

• Emerging views• Integral in business strategy

• Impacts every area of business

• Complexity increases• How does IT function vis-à-vis the entire organization

• Responsible for the integration of information

E-Biz and Globalization Enabler

• E-Biz• All aspects of IT are more externally visible

• Serve as mediator among various functions

• Disintermediation, Reintermediation (Insurance, banking), Hypermediation (Internet service provider), Infomediation

• Globalization• Expands business presence beyond borders

• IT maintenance of Infrastructure and Technologies

Gap Between IT and Business

• IT/Business alignment critical

• Alignment• Application of IT in an appropriate and timely manner, in

harmony with business goals, strategies, and needs

IT vs. Other Functions

• Encompasses entire enterprise

• Affects all business functions

• Extends beyond business boundaries

• Affects every level of management

• Impact affects entire value chain, including suppliers and customers

• Creates synergy between departments

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IS Knowledge Framework for Business Professionals

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What should a Business Professional know about IS?

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

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

• Business Applications: Major uses of the IS in the organization

• Development Processes: How to plan, develop and implement IS to meet business opportunities

• Management Challenges: The challenges of effectively and ethically managing IT

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What does IS do for a business?

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Business Applications expanding role over time

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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,

and other 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 and collaboration among teams and work groups, e.g., virtual teams

• Electronic commerce: buying, selling, marketing and servicing of products 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

• Process Control Systems• Monitor and control physical processes• Example: in a petroleum refinery use sensors to

monitor chemical processes

• Enterprise Collaboration Systems• Enhance team and work group communications• Examples: e-mail, videoconferencing

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Two ways to process transactions

• Batch Processing:• Accumulate transactions over time and process

periodically• Example: a bank processes all checks received in a

batch at night

• 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 Support Systems

• 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

spend advertising dollars

• 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• 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

• Cross-functional information systems

• Systems that are combinations of several types of information systems

• 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

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Developing IS Solutions

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Ethical challenges of IT applications

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Ethical responsibilities

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

• What is the proper business use of the Internet or a company’s IT resources?

• How can you protect yourself from computer crime?

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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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Career Opportunities in IS

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Job growth

• Among the fastest growing occupations through 2012• Systems Analyst,• Database administrators, • Other managerial-level positions• Network specialists• Information security

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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 an

organized transformation process

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Systems have three basic functions:

• Input involves capturing and assembling elements that enter the system to be processed

• Processing involves transformation process that convert input into output

• Output involves transferring elements that have been produced by the transformation process to their ultimate destination

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A business as a system

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Information systems model

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Components of an IS• People

• End users: the people who use the IS or the information from the IS

• IS specialists: the people who develop and operate IS

• Hardware Resources• All physical devices used in information processing• Machines, data media, peripherals

• Software Resources• All 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 into meaningful 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 able to look at an IS and identify• The people, hardware, software, data and network

resources they use• The type of information products they produce• The way they perform input, processing, output,

storage and control activities

Management Concerns

• Rankings1. IT and business alignment2. IT strategic planning3. Security and privacy4. Retaining IT professionals5. Measuring the value of IT investment6. Measuring the performance of IT7. Creating an information architecture8. Complexity reductions9. Speed and agility10.IT governance

Management Concerns

• Rankings11.BPR12.Introducing rapid business solutions13.Evolving CIO leadership role14.IT asset management15.Managing outsourcing readership16.Leveraging the legacy investment17.…18.Globalization19.Offshore outsourcing20.Societal implication of IT