Foundations of Information Systems in Business

  Chapter

  Learning Objectives

  

1. 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

• – Identify five areas of information systems knowledge needed

  Learning Objectives

  3. Give examples to illustrate how business

  applications of information systems can support a firm’s

• – Business processes
• – Managerial decision making
• – Strategies for competitive advantage

  4. Provide examples of information systems

  from your experiences with business organizations in the real world

  Learning Objectives

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

  6. Provide examples of the components of real world information systems

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

  Case 1: Sew What? Inc.

• Sew What? provides custom theatrical draperies and fabrics for stages, concerts, fashion shows, and special events worldwide.
• After launching the company web site, they acquired clients from all over the world and their revenue has been growing more than 45% per year. Sew What? runs most of its business with Intuit’s
• Quick-Books Enterprise Solutions & Dell PowerEdge servers.
• Recently, the National Federation of Independent Businesses (NFIB) and Dell Inc. presented Sew What? “Small Business Excellence Award” in recognition of its innovative use of technology to improve its customers’ experience.

  Case Study Questions

  

contribute to the business success

of Sew What? Inc.? Give several

examples from the case regarding

the business value of information technology that demonstrate this conclusion.

  Case Study Questions

  

consultant to Sew What? Inc., what

would you advise Megan Duckett to do at this point to be even more successful in her business? What role would information technology play in your proposals? Provide

several specific recommendations.

  Case Study Questions

  technology help a small business you know be more successful? Provide several examples to support your answer.

  Foundation Concepts

• Why study information systems and information technology?
• – Vital component of successful businesses
• – Helps businesses expand and compete
• – Improves efficiency and effectiveness of business processes
• – Facilitates managerial decision making and workgroup collaboration

  What is an Information System?

• An organized combination of…
• – People
• – Hardware and software
• – Communication networks
• – Data resources
• – Policies and procedures
• This system…
• – Stores, retrieves, transforms, and disseminates information in an organization

  Information Technologies

• Information Systems
• – All the components and resources necessary to deliver information and functions to the organization
• – Could be paper based
• Information Technologies
• – Hardware, software, networking, data management

• Our focus will be on computer-based

  What Should Business Professionals Know?

  Fundamental Roles of IS in Business

  Trends in Information Systems

  What is E-Business?

• Using Internet technologies to empower…
• – Business processes
• – Electronic commerce
• – Collaboration within a company
• – Collaboration with customers, suppliers, and other business stakeholders
• In essence, an online exchange of value

  How E-Business is Being Used

  E-Business Use

• Reengineering
• – Internal business processes
• Enterprise collaboration systems
• – Support communications, coordination and coordination among teams and work groups
• Electronic commerce
• – Buying, selling, marketing, and servicing of products and services over networks

  Types of Information Systems

• Operations Support Systems
• – Efficiently process business transactions
• – Control industrial processes
• – Support communication and collaboration
• – Update corporate databases
• Management Support Systems
• – Provide information as reports and displays
• – Give direct computer support to managers during decision-making

  Purposes of Information Systems

  Operations Support Systems

• What do they do?
• – Efficiently process business transactions
• – Control industrial processes
• – Support communications and collaboration
• – Update corporate databases

  Types of Operations Support Systems

• Transaction Processing Systems
• – Record and process business transactions
• – Examples: sales processing, inventory systems, accounting systems
• Process Control Systems
• – Monitor and control physical processes
• – Example: using sensors to monitor chemical processes in a petroleum refinery
• Enterprise Collaboration Systems
• – Enhance team and workgroup communication

  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

  Management Support Systems

• What do they do?
• – Provide information and support for effective decision making by managers
>Management information systems
• Decision support systems
• Executive information systems

  Types of Management Support Systems

• Management Information Systems (MIS)
• – Reports and displays
• – Example: daily sales analysis reports
• Decision Support Systems (DSS)
• – Interactive and ad hoc support
• – Example: a what-if analysis to determine where to spend advertising dollars
• Executive Information Systems (EIS)
• – Critical information for executives and managers
• – Example: easy access to actions of

  Other Information 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

  Other Information Systems

• Strategic Information Systems
• – Help get a strategic advantage over customer
• – Examples: shipment tracking, e- commerce Web systems
• Functional Business Systems
• – Focus on operational and managerial applications of basic business functions
• – Examples: accounting, finance, or

  IT Challenges and Opportunities

  Measuring IT Success

• Efficiency
• – Minimize cost, time, and use of information resources
• Effectiveness
• – Support business strategies
• – Enable business processes
• – Enhance organizational structure and culture
• – Increase customer and business value

  Developing IS Solutions

  Challenges and Ethics of IT

• Application of IT
• – Customer relationship management
• – Human resources management
• – Business intelligence systems
• Potential Harm
• – Infringements on privacy
• – Inaccurate information
• – Collusion

  Challenges and Ethics of IT

• Potential Risks
• – Consumer boycotts
• – Work stoppages
• – Government intervention
• Possible Responses
• – Codes of ethics
• – Incentives
• – Certification

  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?

  IT Careers

• Economic downturns have affected all job sectors, including IT
• Rising labor costs are pushing jobs to India, the Middle East, and Asia-Pacific countries
• However, IT employment opportunities are strong, with new jobs emerging daily
• Shortages of IT personnel are frequent
• The long-term job outlook is positive and exciting

  IT Careers

  IT Careers

Job increases will be driven by… •

• – Rapid growth in computer system design and related services
• – The need to backfill positions
• – Information sharing and client/server environments
• – The need for those with problem-solving skills
• – Falling hardware and software prices, which will fuel expanded computerization of operations

  The IS Function

The IS function is… •

• – A major functional area of business
• – An important contributor to operational efficiency, employee productivity, morale, customer service and satisfaction
• – A major source of information and support for decision making
• – A vital ingredient in developing competitive products and services in the global marketplace
• – A dynamic and challenging career opportunity A key component of today’s networked business –

  System Concepts: A Foundation

System concepts help us understand… •

• – Technology: hardware, software, data management, telecommunications networks
• – Applications: to support inter-connected information systems
• – Development: developing ways to use information technology includes designing the basic components of information systems
• – Management: emphasizes the quality, strategic business value, and security of an organization’s information systems

  Real World Case: JetBlue and the Veterans Administration

• Good IT processes are as important as hardware and software when it comes to creating business value through the use of technology.
• Even seemingly smaller and less critical processes can have ramifications of a large magnitude in the interconnected world in which we live.
• The information system, which was developed by JetBlue in 24 hours and implemented in the middle of crisis in 2007, has now been implemented as a full-time system in the company.
• At Veterans Administration an unscheduled system failure took down key applications in 17 (VA) medical facilities for a day

  Case Study Questions

  database developed during the crisis

had not been needed before since

the company had never experienced

a meltdown. What are the risks and

benefits associated with this approach to IT planning? Provide some examples of each.

  Case Study Questions

  

the decision made by Eric Raffin of

the VA not to fail over to the Denver site was the correct one. However, it involved failing to follow established backup procedures. With the information he had at the time, what other alternatives could he have considered? Develop at least two of them.

  Case Study Questions

  resulted in the collapse of the VA

system, largely because of the high

interrelationship between its applications. What is the positive side of this high degree of

interconnection, and how does this

benefit patients? Provide examples

from the case to justify your answer.

  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

  Basic Functions of a System

• Input
• – Capturing and assembling elements that enter the system to be processed
• Processing
• – Transformation process that converts input into output
• Output
• – Transferring transformed elements to their ultimate destination

  Cybernetic System

• All systems have input, processing, and

  output

• A 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 to determine whether a system is moving toward the achievement of its goal

  A Cybernetic System

  A Business as a System

  Other System Characteristics

• If a system is one of the components

  of a larger system, it is a subsystem

• – The larger system is an environment
• Several systems may share the same environment
• – Some may be connected via a shared boundary, or interface
• Types of systems…
• – Open Adaptive

  Components of an IS

  Information System Resources

• People Resources
• – Specialists
• – End users
• Hardware Resources
• – Machines
• – Media
• Software Resources
• – Programs

  Information System Resources

• Data Resources
• – Product descriptions, customer records, employee files, inventory databases
• Network Resources
• – Communications media, communications processors, network access and control software
• Information Resources
• – Management reports and business documents using text and graphics displays, audio responses, and paper forms

  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

• Examples:
• – Sales data is names, quantities, and dollar amounts
• – Sales information is amount of sales by product type, sales territory, or salesperson

  IS Activities

• Input of data resources
• – Data entry activities
• Processing of data into information
• – Calculations, comparisons, sorting, and so on
• Output of information products
• – Messages, reports, forms, graphic images
• Storage of data resources
• – Data elements and databases
• Control of system performance
• – Monitoring and evaluating feedback

  Recognizing Information Systems

• Business professionals should be

  able to look at an information system

  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

  Case 3: Heidelberg, Honeywell, and Eaton

• Today, it is not be enough for a company to offer services but it will have to provide “smart services.”
• To provide smart services, companies must use information technology to build “smart products.”
• Smart products can detect that a part is approaching failure and alert users, thus giving the company opportunity to provide maintenance services and enjoy the resulting benefits.

  Case 3: Heidelberg, Honeywell, and Eaton

• Heidelberg developed the technology to monitor its equipment remotely, using built-in sensors, networking microprocessors, and other information technologies.
• With such smart services, Heidelberg now offers total support of its products.
• Eaton corporation has developed a product called Home Heartbeat which monitors the status of various home systems and alerts the homeowner when something is wrong.

  Case Study Questions

  1. Why should manufacturing companies build smart

  products and provide smart services? What business benefits can they gain? Provide several examples beyond those discussed in this case.

  2. 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 of the capabilities they would provide.

  3. What are some limitations of a smart products and

  smart services strategy? Give several examples of challenges that a business might encounter, and explain how it might overcome them.

  Case 4: Lufthansa

• Initiative,” which aimed to provide all pilots with notebook computers.

  In 2001, Lufthansa launched the “Lufthansa Mobile

• It helps 3,500 highly mobile airline pilots plugged into the corporate infrastructure, that informs them about schedules, weather events, and other facts that affect their jobs throughout the world.
• The Lufthansa Mobile Initiative is yielding significant productivity and efficiency improvements, while keeping costs manageable.
• Pilots use their notebook computers for computer- based training whether they are learning about new aircraft or things like specific hydraulic systems.

  Case Questions 1.

  Are many of Lufthansa’s challenges identified in the case similar to those being experienced by other businesses in today’s global economy? Explain and provide some examples.

  2. What other tangible and intangible benefits,

  beyond those identified by Lufthansa, might a mobile workforce enjoy as a result of deploying mobile technologies? Explain.

  3. Lufthansa was clearly taking a big risk with their

  decision to deploy notebook computers to their pilots. What steps did they take to manage that risk, and what others might be needed in today’s business environment? Provide some examples.