AN OVERVIEW LEARNING OBJECTIVES

It is likely that you are carrying or using an information system. This is so if you have an advanced mobile phone, a handheld electronic device, or a laptop computer. Information systems pervade almost every aspect of our lives. Whether you are withdrawing money from a bank’s automatic teller machine or surfing the Web on your cell phone, hardly a day goes by without our feeding data into, or using information generated by, an information system. In business especially, digital information systems generate most of the information we use. These systems have become essential to successful business operations.

When you finish this chapter, you will be able to:

Explain why information technology matters.

Define digital information and explain why digital systems are so powerful and useful.

Explain why information systems are essential to business.

Describe how computers process data into useful information for problem solving and decision making.

Identify the functions of different types of information systems in business.

Describe careers in information technology.

Identify major ethical and societal concerns created by widespread use of information technology.

GARDENERS+: Business Systems and Information

Mary, Amanda, and Ed could not believe what they

Generating Business Information

accomplished in the three months since they Mary distributed the flyers to several hundred obtained their small business loan for their garden-

houses in the surrounding area. She also placed ing business, Gardeners+. They had made many

ads in three local newspapers and magazines. decisions and solved many problems. Julian passed out a few dozen business cards to

friends and acquaintances.

Solving Problems and Making Decisions Amanda made some additional adjustments to the software configuration, and Mary continued to

Mary and Ed set up a small office in Ed’s garage, with a telephone and a personal computer equip-

use the business suite’s word processing program to create ads, basic forms, and the business

ped with a software suite for office use. Marketing to residential clients would primarily consist of fly-

stationery. Ed prepared a few spreadsheets to help ers left in the doors of houses in their targeted

him keep track of sales, revenues, expenses, taxes, area, but they also planned to run ads in the local

and profit. One critical piece of software was newspapers. Gardeners would be approached by

Amanda’s system, which processed the business means of relationship marketing: Julian would dis-

transactions and tracked clients’ subscriptions and tribute business cards to the gardeners that he

gardeners’ contracts.

knew, and then as new gardeners joined the asso- Amanda tested the system with mock data. She ciation, they would in turn distribute cards to their

then tweaked some of it, and retested the system. own acquaintances. All worked well. The system was now ready.

Amanda purchased a relatively small software

package to handle their information processing

Managing Data

needs: it would record information about gardeners, clients, and service requests; match service

After a month of operations, the cash flow was as

requests and gardener’s skills and availability; and expected. The contract and subscription systems generate and track contracts. The system was very

operated by Mary and Amanda were functioning simple but scalable, in case business boomed. well, and Ed’s spreadsheet was sufficient for their

The first clients were a small group of near needs. However, data transcription was starting to neighbors, and the first gardeners were close

take a toll. Client, subscription, and contract data friends of Julian. Mary handled all the first transac-

were first entered into Amanda’s system by Mary tions personally and took very detailed notes of all

or Amanda. Then, Ed had to manually transcribe a client and gardener feedback: what they liked and

large part of the data sets from the printed con- disliked, what was missing, and their ideas on how

tracts and receipts into his spreadsheet program. to manage service arrangements. Soon they realized that they were falling behind After a week of pilot testing, the partners met to

on their paperwork. The business was running fine, evaluate the results. They decided to add a new

but the back office could not keep up. It was ineffi- type of service: a single-job contract for a service

cient to input the transactions into Amanda’s sys- that would be performed once rather than on a

tem and later transcribe them into Ed’s accounting rolling basis. They also decided to add a free con-

and financial spreadsheets. As the daily transac- firmation call the day before scheduled work to

tions and client backlog grew, Ed had to spend remind the client but also to ask if there was any- thing else the client wanted.

PART 1 THE INFORMATION AGE PART 1 THE INFORMATION AGE

improve the

“matching” between clients and

Gathering Useful Information from Customers

gardeners. They would also use the models to deter- Mary noticed that the one-time service sold well,

mine if the occasional failures to properly match cli- but the rolling monthly contract did not sell as well

ents and gardeners were the result of startup

as expected. She also noticed that they had a problems, system problems, or structural business much higher than expected number of commis-

problems. They could not allow the current percent- sions for referrals from gardeners. And with sum-

age of matching failures to extend over the summer mer nearing they wanted to consider adding or

season. Dissatisfied customers not only meant lost modifying seasonal services. Mary, Amanda, and

sales and fewer profits but, more importantly, bad Ed had to consider the costs and potential benefits

word-of-mouth. Therefore they needed to generate of adding, modifying, dropping, and repricing

reports that analyzed “matching”; reports that would services. To do this, they went back to their initial

show which types of services, areas, and gardeners business models and fed them with real historical

had larger or smaller failure rates.

rather than projected data. They revised the mod-

AN OVERVIEW LEARNING OBJECTIVES