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

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

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

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

The Power of Digital Systems Binary counting system uses only two digits: 0 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

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

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

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

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

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

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

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

Generating Information (continued) Management Information Systems, Sixth Edition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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