An Introduction to Information

Systems in Organizations
Chapter 1

Fundamentals of Information 1
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 Learning Objectives

– What is information?
– What are the differences between data
and information?
– How can you evaluate the quality of
data?
– When is information valuable?

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 Learning Objectives

– What is an information system?

– What are the basic types of business
information systems?
– Who uses them for which purposes?
– What are their benefits?

Fundamentals of Information 3
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 Learning Objectives

– How do you develop information

systems?
– What are the major steps?
– Who are involved in these steps?
– What does each step accomplish?

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 Learning Objectives

– What are the value-added processes in the

supply chain?
– How do information systems help these
processes?
– How can the costs of an organization be
lowered? How can an organization offer better
service?
– What is a competitive advantage?
– Can organizations that use information
systems to gain an advantage?

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 Learning Objectives

– What roles are involved in designing,

developing, and maintaining information
systems?
– What are the functions of each role?
– What careers are available in
information systems?

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Information Concepts

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 Information System

• A set of interrelated components that

– Collect data
– Manipulate data
– Disseminate data & information
– Provide feedback to meet an objective.

• Examples: ATMs; airline reservation systems;

course reservation systems

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 Data vs. Information

• Data: Raw facts

– Example: Name, last name, courses registered
• Information: Collection of facts organized in
such a way that they have value beyond the
facts themselves
– Example: Number of people that register for a course
is more than a the course quota.

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 The Process of Transforming Data into
Information

• Easy to come up with arbitrary transformations

(easy to generate information)
• Difficult to come up with a useful transformation
(difficult to generate valuable information)
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 Characteristics of Valuable Information
(1)

• Accurate: Does not contain errors

• Complete: Contains all related facts
• Economical: Time-wise and Cost-wise
• Flexible: Can be used for different purposes
• Reliable: The combined data is correct

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 Characteristics of Valuable Information
(2)

• Relevant: Can be used by the organization

• Simple: Easily understandable and usable
• Timely: Delivered when it can still be used
• Verifiable: Can be derived and confirmed again
• Accessible: Those that want to use the
information can locate and receive it
• Secure: Accessible only to authorized
individuals
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 The Components of an Information
System
• Wrong price
• Missing course

• Scan barcodes • Calculate price • Print receipt

• Type user name • Look up • Display schedule
schedule

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 Computer-Based
Information Systems (CBIS)

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Components of a CBIS

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 Components of a CBIS
• Hardware - computer equipment used to perform
input, processing, and output activities.
• Software - computer programs that govern the
operation of the computer.
• Database - an organized collection of facts and
information, typically consisting of two or more
related data files.
• People - the most important element in most
computer-based information systems.
• Procedures - include the strategies, policies,
methods, and rules for using the CBIS.

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 Telecommunications, Network, and the
Internet
• Telecommunications - the electronic
transmission of signals for communications.

• Networks - used to connect computers and

computer equipment in a building, around the
country, or around the world to enable electronic
communications.

• Internet - the world’s largest computer network,

actually consisting of thousands of
interconnected networks

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Business Information
Systems

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 Business Information Systems

• Electronic Commerce
• Transaction Processing Systems and Enterprise
Resource Planning (ERP)
• Information and Decision Support Systems
• Special-Purpose Business Information Systems:
Artificial Intelligence, Expert Systems, and
Virtual Reality

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 E-Commerce
• Business-to-consumer
– Example: Bookstore selling books to
customers (amazon.com)
• Business-to-business
– Example: A data processing company
handling data services for a company
(adp.com)
• Consumer-to-consumer
– Example: A customer selling goods to another
customer (e-bay.com)
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E-Commerce Greatly Simplifies the
Purchasing Process

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 Transaction Processing Systems
and ERP
• Transaction processing system (TPS) - an organized
collection of people, procedures, software, databases,
and devices used to record completed business
transactions.

• Enterprise Resource Planning (ERP) System - a set

of integrated programs capable of managing a
company’s vital business operations for an entire
multisite, global organization.

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A Payroll Transaction Processing
System

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Management Information System (MIS)
(Help do things right)

Report on number Report on number

of components that of components
need to be sold produced

Report on budget

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Decision Support Systems (DSS)
(Help do the right thing)

– Organizations often have to make

decisions.
– DSSs help making decisions for
particular problems.
– The focus of a DSS is on decision-
making effectiveness.

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Essential DSS Elements

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 Special-Purpose Business Information
Systems

• Artificial intelligence (AI) systems

• Virtual reality systems
– Improve personal experience
– Virtual tour of a real-estate
• Expert systems
– Improve business intelligence
– Suggest products
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The Major Elements of Artificial
Intelligence

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A Head-Mounted Display

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 Systems Development

The activity of creating or modifying existing

business systems.
– Systems Investigation
– Systems Analysis
– Systems Design
– Systems Implementation
– Systems Maintenance and Review

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 Organizations and
Information Systems

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 A General Model of an Organization

Material, Goods,
money services

• Organization - a formal
collection of people and
various other resources
established to accomplish
a set of goals
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The Value Chain of a Manufacturing
Company

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 Information Systems in
Supply Chain Management

Where does the information system

stand?
– Outside the process
–Supports monitoring, reporting, etc.
– Inside the process
–Participate actively by creating service

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 Technology Diffusion, Infusion, and
Acceptance

• Technology Diffusion - a measure of how widely

technology is spread throughout an organization.

• Technology Infusion - is the extent to which technology

permeates an area or department.

• Technology Acceptance Model (TAM) - specifies the

factors that can lead to higher acceptance and usage of
technology in an organization

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 Competitive Advantage

A significant and (ideally) long-term benefit to a

company over its competition.

• Factors That Lead Firms to Seek Competitive

Advantage
– Rivalry among Existing Competitors
– Threat of New Entrants
– Threat of Substitute Products and Services
– Bargaining Power of Customers and Suppliers

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 Strategic Planning for Competitive
Advantage

• Altering the Industry Structure

• Creating New Products and Services
• Improving Existing Product Lines and Services
• Using Information Systems for Strategic
Purposes

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Competitive Advantage Factors and Strategies

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Performance-Based Information Systems

• Productivity= Achieved Output/ Required Input

• Quality: Satisfy customers’ needs
• Return on Investment and the Value of
Information Systems
– Earnings Growth: Increase in Profit
– Market Share: Company Sales/Total Market
– Customer Awareness and Satisfaction: Measure by
surveys
– Total Cost of Ownership: Includes setting up, training,
maintaining, and so on
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Three Stages in the Business Use of IS

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 Roles, Functions, and Careers in the
Information Systems Department
• Operations
– Make sure IS works efficiently
– Start, stop, maintain hardware
– System & network operators, data-entry operators
• Systems Development
– Identify needs
– Produce programs
– System analyst, computer programmer
• Support
– Administration and assistance
– Train users; help maintain the system
– Web and database administrators; help-desk staff

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The Three Primary Responsibilities of Information
Systems

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 Typical IS Titles and Functions

• The Chief Information Officer

• LAN Administrators
• Internet Careers

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 Why Learn About Information
Systems?

• Advance in your career

• Solve problems
• Realize opportunities
• Meet your career goals

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