1. Management Information Systems, Sixth Edition
Chapter 1
Business Information Systems:
An Overview

2. Objectives 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
Management Information Systems, Sixth Edition

3. Objectives (continued)
Describe careers in information technology
Identify major ethical and societal concerns created by widespread use of information technology
Management Information Systems, Sixth Edition

4. Does Information Technology Matter?
Hackett Group study: “Does IT Matter? Hackett Concludes the Answer is Yes”
World’s best performing companies spent 7% more per employee on IT than typical companies
They recouped the investment fivefold in lower operational costs
Today’s business professionals must know how to develop and use IT
Management Information Systems, Sixth Edition

5. The Power of Digital Systems
Binary counting system uses only two digits: and 1
Digital systems:
Computers and devices that use the binary system
Can represent any information as a combination of zeros and ones
Information can be represented, stored, communicated, and processed digitally
Management Information Systems, Sixth Edition

6. The Power of Digital Systems (continued)
Digital information is stored and communicated by means of electromagnetic signals
Extremely fast
Digital copy is an exact copy of the original
Accuracy and speed make digital systems powerful, useful, and important
Management Information Systems, Sixth Edition

7. The Purpose of Information Systems
Businesses use information systems
To make sound decisions
To solve problems
Problem: any undesirable situation
Decision: arises when more than one solution to problem exists
Both problem solving and decision making require information
Management Information Systems, Sixth Edition

8. The Purpose of Information Systems (continued)
Keys to success in business:
Gathering correct information efficiently
Storing information
Using information
Purpose of information systems is to support these activities
Management Information Systems, Sixth Edition

9. Data, Information, and Information Systems
“Data,” “information,” and “system” are commonly used terms
Important to understand their similarities and differences
Management Information Systems, Sixth Edition

10. Data vs. Information Data: a given or fact
Can be number, statement, or picture
Is the raw material in the production of information
Information: facts or conclusions that have meaning within context
Composed of data that has been manipulated
Management Information Systems, Sixth Edition

11. Data Manipulation Data is manipulated to make useful information
New information can be generated from data, such as averages, trends, etc.
Survey is common method of collecting data
Raw data is hard to read
Information is more useful to business than data
Management Information Systems, Sixth Edition

12. Generating Information
Process: the manipulation of data
Usually produces information
May produce more data
A piece of information (output of a process) in one context may be considered data (input to a process) in another context
Management Information Systems, Sixth Edition

13. Generating Information (continued)
Management Information Systems, Sixth Edition

14. Information in Context
Not all information is useful
To be useful, information must be:
Relevant
Complete
Accurate
In business, information must also be:
Current
Obtained in a cost-effective manner
Management Information Systems, Sixth Edition

15. Information in Context (continued)
Management Information Systems, Sixth Edition

16. What Is a System?
System: array of components that work together to achieve goal or goals
System
Accepts input
Processes input
Produces output
Management Information Systems, Sixth Edition

17. What is a System? (continued)
System may have multiple goals
System may contain subsystems
Subsystem: component of a larger system
Subsystems have subgoals that contribute to main goal
Subsystems can receive input from and transfer output to other subsystems
Management Information Systems, Sixth Edition

18. What is a System? (continued)
Management Information Systems, Sixth Edition

19. 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
Subsystems by definition are always open
Information system (IS): components that work together to process data and produce information
Management Information Systems, Sixth Edition

20. Information and Managers
Systems thinking: thinking of an organization in terms of subsystems
Powerful management approach that creates a framework for problem solving and decision making
Helps keep managers focused on overall goals
Database: collection of electronic records
Information systems automate exchange of information among subsystems
Management Information Systems, Sixth Edition

21. Information and Managers (continued)
Information map: description of data and information flow within an organization
Shows a network of information subsystems that exchange information with each other and with the outside world
Information technology: technologies that facilitate construction and maintenance of information systems
Management Information Systems, Sixth Edition

22. The Benefits of Human-Computer Synergy
Humans are relatively slow and make mistakes
Computers cannot make decisions unless programmed to do so
Synergy: combining resources to produce output that exceeds the sum of outputs of the separate resources by themselves
Human-computer combination allows human thought to be translated into efficient processing of data
Management Information Systems, Sixth Edition

23. The Benefits of Human-Computer Synergy (continued)
Management Information Systems, Sixth Edition

24. Information Systems in Organizations
Information system consists of data, hardware, software, telecommunications, people, and procedures
Computer-based Information system: system with one or more computers at center
Organizations lag behind and lose competitiveness if they do not use information systems
Management Information Systems, Sixth Edition

25. Information Systems in Organizations (continued)
Trends that have made information systems important in business:
Growing power and decreasing cost of computers
Growing capacity and decreasing costs of data storage devices
Increasing variety and ingenuity of computer programs
Available, reliable, affordable, and fast communications links to the Internet
Growth of the Internet
Increasing computer literacy of the workforce
Management Information Systems, Sixth Edition

26. Information Systems in Organizations (continued)
Management Information Systems, Sixth Edition

27. The Four Stages of Processing
Input: collect and introduce data to system
Transaction: a business event, usually entered as input
Transaction processing system (TPS): a system that records transactions
Input devices include keyboards, bar code readers, voice recognition systems, touch screens
Data processing: perform calculations on input
Management Information Systems, Sixth Edition

28. The Four Stages of Processing (continued)
Output: what is produced by the information system
Output devices include printers and speakers
Storage: maintaining vast amounts of data
Storage devices include optical discs
Management Information Systems, Sixth Edition

29. Computer Equipment for Information Systems
Different technologies are used to support the four data processing functions:
Input devices: receive input
Computers: process data
Output devices: display information
Storage devices: store data
Network devices: transfer data
Telecommunications: communication that takes place between computers over great distances
Management Information Systems, Sixth Edition

30. Computer Equipment for Information Systems (continued)
Management Information Systems, Sixth Edition

31. From Recording Transactions to Providing Expertise: Types of Information Systems
Different types of information systems serve different functions
Capabilities of applications have been combined and merged
Management Information System: a system that supports planning, control, and making decisions
Management Information Systems, Sixth Edition

32. Transaction Processing Systems
Transaction processing system (TPS): most widely used type of system
Records data collected at point where organization transacts business with other parties
Point-of-sale machines: record sales
Include cash registers, ATMs, and purchase order systems
Management Information Systems, Sixth Edition

33. Supply Chain Management Systems
Supply chain: sequence of activities involved in producing and selling products or services
For products, activities include marketing, purchasing raw materials, manufacturing and assembly, packing and shipping, billing, collection, and after-sale services
For services, activities include marketing, document management, and monitoring customer portfolios
Management Information Systems, Sixth Edition

34. Supply Chain Management Systems (continued)
Supply chain management (SCM) systems: systems that support these activities
Also known as enterprise resource planning systems
SCM systems eliminate the need to reenter data that was captured elsewhere in the organization
An SCM is an enterprise application
Management Information Systems, Sixth Edition

35. Customer Relationship Management Systems
Customer relationship management (CRM) systems: systems for managing relations with customers
Used in combination with telephones to provide customer service
Often linked to Web applications that track online transactions
Retaining loyal customers is less expensive than acquiring new ones
Management Information Systems, Sixth Edition

36. Business Intelligence Systems
Business intelligence (BI) systems: systems that glean relationships and trends from raw data to help organization compete
Often contain statistical models
Access large pools of data
Data warehouse: large database that usually store transactional records
Management Information Systems, Sixth Edition

37. Decision Support and Expert Systems
Decision support system (DSS): supports decision making
Relies on models to produce tables
Extrapolates data to predict outcomes
Helps answer “What if?” questions
Expert system (ES): supports knowledge-intensive decision making
Uses artificial intelligence techniques
Can preserve the knowledge of retiring experts
Management Information Systems, Sixth Edition

38. Geographic Information Systems
Geographic information system (GIS): ties data to physical locations
Represents data on a map in different formats
May reflect demographic information in addition to geographic information
May use information from global positioning system (GPS) satellites
Examples: Google Earth, Mapquest
Management Information Systems, Sixth Edition

39. Geographic Information Systems (continued)
Management Information Systems, Sixth Edition

40. 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
Management Information Systems, Sixth Edition

41. Accounting Accounting information systems: Help record transactions
Produce periodic statements
Create required reports for law
Create supplemental reports for managers
Contain controls to guarantee adherence to standards
Management Information Systems, Sixth Edition

42. Finance Finance systems:
Facilitate financial planning and business transactions
Tasks include organizing budgets, managing cash flow, analyzing investments, and making decisions
Management Information Systems, Sixth Edition

43. Marketing
Marketing’s purpose is to 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
Help analyze how advertising campaigns affect profit
Web provides opportunity to collect marketing data as well as promote products and services
Management Information Systems, Sixth Edition

44. Human Resources Human resource management systems aid record-keeping
Must keep accurate records
Aids recruiting, selection, placement, benefits analysis, requirement projections
Performance evaluation systems provide grading utilities
Management Information Systems, Sixth Edition

45. 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
An emerging advertising medium
A place to conduct e-commerce
Management Information Systems, Sixth Edition

46. Careers in Information Systems
Information technology professionals are increasingly in demand
Network administrator, system administrator, system analyst, software engineering, data communications analyst, and database administrator jobs are increasing in demand
Management Information Systems, Sixth Edition

47. Help Desk Technician Help desk technician:
Supports end users in their daily use of IT
Often provides help via telephone
May use software that gives them control of the user’s PC
May need to have knowledge of a wide variety of PC applications
Management Information Systems, Sixth Edition

48. Systems Analyst Systems analyst:
Researches, plans, and recommends software and systems choices
Responsible for developing cost analyses, design considerations, implementation timelines, and feasibility studies
Involves analyzing system requirements, documenting development efforts, and providing specifications for programmers
Requires communication and presentation skills
Management Information Systems, Sixth Edition

49. Database Administrator
Database administrator (DBA): responsible for databases and data warehouses
Develops and acquires database applications
Must adhere to federal, state, and corporate regulations to protect privacy of customers and employees
Responsible for securing the database
Management Information Systems, Sixth Edition

50. Network Administrator
Network administrator: acquires, implements, manages, maintains, and troubleshoots networks
Implements security
Firewalls
Access codes
Management Information Systems, Sixth Edition

51. System Administrator
System administrator: manages an organization’s computer operating systems
Must ensure that operating systems work together, support business requirements, and function properly
Responsible for backup and recovery, adding and deleting user accounts, performing system upgrades
Management Information Systems, Sixth Edition

52. Webmaster Webmaster: creates and maintains Web site
Must be familiar with Web transaction software, payment-processing software, security software
Manages both the intranet and extranet
Demand for Webmasters grows as more businesses use Web
Management Information Systems, Sixth Edition

53. Chief Security Officer
Chief security officer (CSO): supervises security of information system
Position exists due to growing threat to information security
Usually reports to chief information officer (CIO)
Management Information Systems, Sixth Edition

54. Chief Information Officer and Chief Technology Officer
Chief information officer (CIO): responsible for all aspects of information system
Often a corporate vice president
Must have technical understanding of information technologies as well as business knowledge
Chief technology officer (CTO): has similar duties as CIO
Management Information Systems, Sixth Edition

55. Chief Information Officer and Chief Technology Officer (continued)
Management Information Systems, Sixth Edition

56. 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
Management Information Systems, Sixth Edition

57. 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 many business functions, including accounting, finance, marketing, and human resources
Management Information Systems, Sixth Edition

58. Summary (continued) The job prospects for IT professionals are bright
IT has created societal concerns regarding privacy, identity theft, spam, and Web annoyances
Management Information Systems, Sixth Edition