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INFORMATION SYSTEM
People require information for many and varied reasons. For instance, you probably
seek information for entertainment and enlightenment by watching television,
seeing movies, browsing the Internet, listening to the radio, and reading newspaper
and book. In business, however, people and organization seek and use information
specifically for the purposes of sound decision making and problem solving.
What is a problem? A problem is any undesirable situation. When you are stuck in
the middle of nowhere with a flat tire, you have a problem. If you know that some
customers do not pay their debts on time, but you dont know who or how much
they owe, you have a problem. You can solve both problems with the aid of
information.
An organization or individual that finds more than one way to solve problems must
make decisions. As a manager for example you may face a problem of promoting
new car?
There are many potential ways to promote new cartelevision
advertising, radio advertising, newspaper advertising, Web advertising, auto shows,
direct mail, or any combination of these methods. This case calls for decision
making.
Generating Information
A process is any manipulation of data, usually with the goal of producing
information. Some processes, however, produce yet another set of interim data.
Hence while data are raw materials, information is output. Just as raw materials
are processed in manufacturing to create final useful products, so raw data is
processed in information systems to create final useful information.
Information in Context
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What is a System?
Simply put, a system is an array of components that work together to achieve a
common goal, or multiple goals, by accepting input, processing it, and producing
output in an organized manner.
A sound system consists of many electronic and mechanical parts, such as laser
head, amplifier, an equalizer, and so on. This system , uses input in the form of
electrical power and sound recorded on tape or CD, and processes the input to
reproduce music and other sounds. The components work together to achieve this
goal.
Computer
Calculate and perform programmed
logical operations extremely rapidly
Procedures
Several trends have made the use of ISs very important in business:
Computers power have grown tremendously while their prices have dropped.
Computer programs variety and ingenuity have increased.
Quick and reliable communication lines and access to the Internet and World
Wide Web have become widely available and affordable.
The fast growth of the Internet has opened opportunities and encouraged
competition in the global markets.
An increasing ration of workforce is computer literate.
Decision support systems help find the optimal course of action and answer What
if questions. DSSs are programmed to process raw data, make comparisons, and
generate information to help managers glean the best alternatives for financial
investments, marketing strategy, credit approval, and the like. However, it is
important to understand that a DSS is only a decision aid, not an absolute
alternative to human decision making.
Often, a group of managers must make a decision. To reach consensus, the
managers may use group decision support systems (GDSSs), programs that
help a group rather an individual, make decisions. GDSSs help managers work
collaboratively to brainstorm, generate ideas, prioritize various suggested actions,
and reach a decision acceptable to all, or most, decision makers.
Expert Systems
Although powerful decision-making tools, DSSs and EISs only include quantitative
formulas, or models, that process data. Often, however, managers or other workers
may need expertise to make certain decisions, not just formulas. In the past, only
human experts in a specific line of work could provide advice to decision makers.
Now, ISs can be developed that incorporate human expertise. These systems are
called expert systems (ESs). Highly structured decision making makes it easy to
choose one alternative from many that will yield the best results, thanks to a
previously proven set of steps. Expert systems, on the other hand, are used when
decision making is not structured.
Many environments are not sufficiently structured to let an IS use data to provide
one best answer. For instance, stock portfolio management takes place in a highly
uncertain environment. No single method exists to determine which securities
portfolio is best, that is, which one yield the highest return. Medical care is another
unstructured environment. There may be many methods of diagnosing a patient
on the basis of his or her symptoms.
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Accounting
In accounting, information systems help record business transactions, produce
periodic financial statements, and create reports required by law, such as balance
sheets and profit-and-loss statements. They also help create reports that may not
Finance
The purpose of financial systems is to facilitate financial planning and business
transactions. In finance, information systems help organize budgets, manage cash
flow, analyze investments, and make decisions that could reduce interest payments
and increase reveneues from financial transactions.
Marketing
Marketings purpose is to pinpoint the people most likely to purchase what the
organization sells and to promote the appropriate products and services to those
people. For instance marketing information systems help analyze demand for
various products in different regions and population groups, to more accurately
market the right product to target consumers. Marketing MISs provide information
that helps management decide how many sales representative to assign to a
specific products in specific geographical areas. The systems identify trends in the
demand for the companys products and services. The Web has created excellent
opportunities both to collect marketing data and to promote products and services
by displaying information about them. That is why organizations conduct so much
of their marketing efforts through ISs linked to the Web.
Human Resources
Human resource management systems help mainly in record keeping and employee
evaluation. Every organization must maintain accurate employee records. Human
resource managements maintain records, including employees pictures, employee
status and tax information, and other data that other systems such as payroll may
use.
Performance evaluation systems provide essential checklists that managers can use
to assess their subordinates. These systems also offer a scoring utility to quantify
workers strengths and weaknesses.
Service
Information systems play such a central role in the service sector that they are
often the backbone of service organizations.
Imagine an airline without an
information systemit would be unable to reserve seats for passengers and
schedule flights. Think for a moment what banks would do without ISs. We could
argue that the only thing banks manufacture is information. Bank information
systems inputs include the type of account as well as dates and quantities of
deposits and withdrawals; their output onsist of statements, which show interest
paid or owed, balances and other information. People even make cash withdrawals,
in most cases through information systems called automated teller machines
(ATMs). Banks give less and less information to customers in paper form. Clients
can now receive information about their accounts directly from information systems
over the phone and through their home computers. In fact, the home banking
phenomenon owes its growth to information systems.
Retail
Because ISs enable large retail chain to run as a single big store, retail chains gain
significant economies of scale using ISs; that is, they could cut costs thanks to their
overall size. Retail chains invested billions of dollars in information systems in the
past decade. The major purpose of this systems is to minimize understocking and
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New Businesses
ISs impact on business goes beyond mere automation. Many firms implemented ISs
to provide new products and services that are economical only with the
development of information technology. Credit history firms, such as Experian,
Equifax, and TransUnion, use ISs to record important credit information on millions
credit-holders and borrowers.
They sell information to banks and financial
institutions. Some airline sell reservation system services to travel agencies.
Shipping companies provide tracking services to their clients to locate parcels.
These are just three examples of services that would not be available without ISs.
And the Internet has spawned thousands of small businesses and home-based,
information systemsbased businesses as well as some of the worlds largest
corporations.Amazon.com, ebay, and Yahoo exist thanks to development in
information technology and telecommunications. The entire phenomenon of online
businesses would not exist without information systems.
Government
Over the past four decades governmental and commercial organizations have
installed computer-based ISs to automate processes and replace human labor. The
business of government depends heavily on ISs for collecting taxes, paying social
security, and purchasing goods and services for various departments.
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E-COMMERCE
The most exciting intersection of IT and business in recent years is electronic
commerce, or as it is popularly called e-commerce. It is a business activity that is
electronically executed between parties, such as two businesses or a business and a
consumer.
E-commerce is not a new business concept; it has existed between businesses for
years but was limited in scope and restricted to business-to-business activities for a
number of reasons. For instance, complicated and costly dedicated communication
lines were required for business activities to conduct computer-to-computer
operations over large distances.
In addition, early e-commerce required a
significant investment in special software. And because of the high costs, many
smaller businesses resisted the adoption of e-commerce. The development of the
World Wide Web and the opening of the Internet to commercial activities spawned a
huge surge in business-to-business and business-to-customer electronic trade.
Suddenly, electronic data interchange was no longer the privilege of large and rich
corporations that could pay for private and third-party managed computer
networks. Now, every individual and small business can afford to use a network for
business: the Internet.
Many businesses use their powerful database management systems to engage in ecommerce in order to better serve customers and improve their own internal
operations.
Database management systems are powerful tools for data
manipulation and storage. They are the core technology in practically every
business. By taking in key company data and making other data and information
accessible over the Internet, databases have new value with the growth of online
business operations.
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