Chapter

( week 1 & 2 )
Foundations of Information Systems in Business

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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
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Learning Objectives
3. Give examples to illustrate how business applications of information systems can support a firms
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

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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
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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 Intuits 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.
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Case Study Questions

1. How do information technologies 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.

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Case Study Questions

2. If you were a management 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.
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Case Study Questions

3. How could the use of information technology help a small business you know be more successful? Provide several examples to support your answer.

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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
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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

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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 information systems (CBIS) 1-11

What Should Business Professionals Know?

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Fundamental Roles of IS in Business

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Trends in Information Systems

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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

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How E-Business is Being Used

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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
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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

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Purposes of Information Systems

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Operations Support Systems

What do they do?

Efficiently process business transactions Control industrial processes Support communications and collaboration Update corporate databases

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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 Examples: email, video conferencing
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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
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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

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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 competitors

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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
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Other Information Systems

Strategic Information Systems

Help get a strategic advantage over customer Examples: shipment tracking, ecommerce Web systems

Functional Business Systems

Focus on operational and managerial applications of basic business functions Examples: accounting, finance, or marketing 1-26

IT Challenges and Opportunities

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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
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Developing IS Solutions

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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
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Challenges and Ethics of IT

Potential Risks
Consumer boycotts Work stoppages Government intervention

Possible Responses
Codes of ethics Incentives Certification
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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 companys IT resources? How can you protect yourself from computer crime?
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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
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IT Careers

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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
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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 todays networked business
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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 organizations information systems
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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
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Case Study Questions

1. Eric Brinker of JetBlue noted that the 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.
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Case Study Questions

2. With hindsight, we now know that 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.
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Case Study Questions

3. A small, undocumented change 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.
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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
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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
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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
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A Cybernetic System

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A Business as a System

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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
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Components of an IS

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Information System Resources

People Resources
Specialists End users

Hardware Resources
Machines Media

Software Resources
Programs Procedures
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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
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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
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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
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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
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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.
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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.

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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.
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Case 4: Lufthansa
In 2001, Lufthansa launched the Lufthansa Mobile Initiative, which aimed to provide all pilots with notebook computers. 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 computerbased training whether they are learning about new aircraft or things like specific hydraulic systems.
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Case Questions
1. Are many of Lufthansas challenges identified in the case similar to those being experienced by other businesses in todays 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 todays business environment? Provide some examples.
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