Chapter 1: Business Information

Systems: An Overview

Management Information Systems, Fifth

Edition
 Objectives

• 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

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 Objectives (continued)

• Describe careers in information technology

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

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 The Purpose of Information Systems

• Businesses use information systems

– To make sound decisions
– To solve problems
• Problem is any undesirable situation
• Decision arises when more than one solution to
problem exists

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 The Purpose of Information Systems
(continued)
• Problem solving and decision making require
information
• Keys to success in business are
– Gathering correct information
– Storing information
– Using information

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 Data, Information, and Information
Systems
• “Data”, “information” and “system” are commonly
used terms
• Important to understand their similarities and
differences

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 Data vs. Information

• Data: a given or fact

– Can be number, statement, or picture
• Information: facts or conclusions that have
meaning within context
– Composed of data that is manipulated

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 Data Manipulation

• Data is manipulated to make useful information

• Survey is common method of collecting data
• Raw data is hard to read
• Information is more useful to business than data

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 Generating Information

• A process is manipulation of data

• Process usually produces information
• Process may produce more data
• A piece of information in one context may be
considered data in another context

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 Generating Information (continued)

Figure 1.1: Input-process-output

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 Information in Context

• Not all information is useful

• Useful information is
– Relevant
– Complete
– Accurate

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 Information in Context (continued)

• Useful information is
– Current
– Obtained economically (in business)

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 Information in Context (continued)

Figure 1.2: Characteristics of useful information

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 What Is a System?

• System: array of components that work together

to achieve goal or goals
• System
– Accepts input
– Processes input
– Produces output

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 What is a system? (continued)

• System may have multiple goals

• System may contain subsystems
• Subsystems have sub-goals that meet main goal
• Subsystems transfer output to other subsystems

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 What is a system? (continued)

• Closed system: has no connections with other

systems
• Open system: interfaces and interacts with
other systems
– Often a subsystem of a bigger system
• Information system: processes data and
produces information

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 Information and Managers
• Systems thinking: thinking of an organization in
terms of subsystems
• Database: collection of electronic records
• Information systems automate exchange among
subsystems
• Information map: network of information
systems
• Information technology: technologies that
facilitate construction and maintenance of
information systems

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 The Benefits of Human-Computer
Synergy
• Humans are relatively slow and make mistakes
• Computers cannot make decisions
• Synergy: combining resources to produce
greater output

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 The Benefits of Human-Computer
Synergy (Continued)

Figure 1.4: Qualities of humans and computers that contribute to synergy

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 Information Systems in Organizations

• Computer-based Information system: system

with computer at center
• Certain trends have made information systems
important in business
• Organizations lag behind if they do not use
information systems

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 Components of information systems

Figure 1.5: Components of an information system

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 The Four Stages of Processing

• Input: collect and introduce data to system

– Transaction: a business event, usually entered
as input
• Data processing: perform calculations on input
• Output: what is produced by the information
system
• Storage: vast amounts of data stored on optical
discs

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 Computer Equipment for Information
Systems
• Input devices: receive input
• Computer: process data
• Output: displays information
• Storage devices: store data
• Network devices: transfer data

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 Computer Equipment for Information
Systems (continued)

Figure 1.6: Input, process, output, storage, and networking devices

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 From Recording Transactions to
Providing Expertise: Types of
Information Systems
• Many types of information systems
• Capabilities of applications have been combined
and merged
• Management Information System: supports
planning, control, and making decisions

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 Transaction Processing Systems

• Most widely used type of system

• Records data collected at point where
organization interacts with other parties
• Encompasses cash registers, ATMs and
purchase order systems

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 Supply Chain Management Systems

• Supply chain: sequence of activities involved in

producing products
– Activities include marketing, purchasing raw
materials, manufacturing, shipping, billing,
collection, and after-sale services
• Also known as enterprise resource planning
systems

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 Customer Relationship Management
Systems
• Customer relationship management:
managing relations with customers
– Used in combination with telephones to provide
customer service
– Often linked to Web applications that track online
transactions

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 Business Intelligence Systems

• Business Intelligence: gather data to help

organization compete
– Often contains statistical models
– Access large pools of data
• Data warehouse: large database that usually
store transactional records

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Decision Support and Expert Systems

• Decision support system: supports decision-

making
– Relies on models to produce tables
– Extrapolates data to predict outcomes
• Expert system: supports knowledge-intensive
decision-making
– Uses artificial intelligence

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 Geographic Information Systems

• Geographic information system: ties data to

physical locations
• Represents data on a map in different formats
• May reflect demographic information in addition
to geographic
• May use information from GPS satellites

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 Geographic Information Systems
(continued)

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 Information Systems in Business
Functions
• Functional business area: services within a
company that support main business
– Includes accounting, finance, marketing, and
human resources
– Part of a larger enterprise system

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 Accounting

• Information systems help record transactions

• Produce periodic statements
• Create required reports for law
• Create supplemental reports for managers

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 Finance

• Finance systems facilitate financial planning and

business transactions
• Tasks include organizing budgets, managing
cash flow, analyzing investments, and making
decisions

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 Marketing

• Pinpoint likely customers and promote products

• Marketing information systems analyze demand
for products in regions and demographic groups
– Identify trends in demand for products/services
• Web provides opportunity to collect marketing
data

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 Human Resources

• Human resource management systems aid

record-keeping
– Must keep accurate records
– Aids recruiting, selection, placement, and reward
analysis
• Performance evaluation systems provide
grading utilities

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 Web Empowered Enterprises

• E-commerce: Buying and selling goods and

services through Internet
• Internet is a vast network of computers
connected globally
• Web has a profound impact on information
systems

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 Careers in Information Systems

• Information technology professionals are

increasingly in demand
• Networking, system analyst, software
engineering, and database administrator jobs
are increasing in demand

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 Systems Analyst

• System analyst: designs and updates

information systems
• Involves analyzing system requirements,
documenting development efforts, and providing
specifications for programmers
• Requires communication and presentation skills

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 Database Administrator

• Database administrator: responsible for

databases
– Develops and acquires database applications
– Must protect privacy of customers and employees
– Responsible for securing the database

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 Network Administrator

• Network administrator: acquires, implements,

manages, maintains, troubleshoots networks
• Implements security
– Firewalls
– Access codes

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 Webmaster

• Webmaster: creates and maintains Web site

• Designs and codes the page
• Demand for Webmasters grows as more
businesses use Web

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 Chief Security Officer

• Chief security officer: supervises security of

information system
• Position exists due to growing threat to
information security
• Reports to chief information officer

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 Chief Information Officer and Chief
Technology Officer
• Chief information officer: responsible for all
aspects of information system
– Often the vice president
• Chief technology officer: has similar duties as
CIO

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 Chief Information Officer and Chief
Technology Officer (continued)

Figure 1.7: Traits of a successful CIO

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 Summary

• Computer-based information systems pervade

almost every aspect of our lives
• A system is a set of components that work
together to achieve a common goal
• Subsystem: a system performs a limited task
that produces an end result, which must be
combined with other products from other
systems to reach an ultimate goal
• Data processing has four stages

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 Summary (continued)

• Any IS that helps in management is a

management information system (MIS)
• Many different types of MIS
• Enterprise application systems (SCM or ERP) tie
together different functional areas of a business
• ISs are used in accounting, finance, marketing,
and human resources

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 Summary (continued)

• The job prospects for IT professionals are bright

• IT has created societal concerns

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