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Foundations of Information Systems in Business

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1 Foundations of Information Systems in Business
Chapter One Module I – Foundation Concepts Foundations of Information Systems in Business IS 605

2 Foundation Concepts: Information Systems in Business
Section 1 Foundation Concepts: Information Systems in Business An Essential Field of Study in Business What are the differences among the following fields: Management Information Systems (MIS) Computer Information Systems (CIS) Information Technology (IT) Computer Sciences (CS) Computer Engineering

3 Why an MBA Student need to know MIS/CIS/IT?
The role of IT in business Use a IT as a tool Understand how to use IT as a competitive weapon Understand the impact of IT on business Good or bad Predicate next wave of the technologies Become IT/IS/CS literacy Know how to deal with IT people While you may know/use some of the IT technologies, the course provides a systematic review for the theory or practices.

4 Real World Case - Amazon.Com
“In the physical world, it’s old saw: location, location, location” “Three most important things are for us are Technology, Technology, and Technology” Jeff Bezos, CEO of Amazon Computerized Warehouse at Fernley, Nevada Turnover rate for the warehouse is 20 times

5 Real World Case - Amazon.Com (Continue)
“The trouble with most companies is that they make judgment-based decisions when data-based decision can be made.”

6 Business Processes and Operations
Roles of IS in Business Support Strategies for Competitive Advantage Support Business Decision Making Information Technology is increasingly important in the competitive marketplace. Managers need all the help they can get. Information systems perform three vital roles in business: Support Business Operations. From accounting to tracking customers' orders, information systems provide management with support in day-to-day business operations. As quick response becomes more important, the ability of information systems to gather and integrate information across business functions is become crucial. Teaching Tip: For example, the ability to match a change in product items sales with as a result of a new marketing campaign to the inventory and ordering system, can help keep items in high demand in stock. Support Business Decision Making. Just as information systems can combine information to help run the business better, the same information can help managers identify trends and to evaluate the outcome of previous decisions. IS helps managers make better, quicker, and more informed decisions. Support Strategies for Competitive Advantage. Information systems designed around the strategic objectives of the company help create competitive advantages in the marketplace. Teaching Tip: For example, Wal-Mart stores can provide lower prices in part due to the lower costs incurred by their state-of-the art computerized inventory, tracking, and distribution system. Support Business Processes and Operations

7 Roles of e-Business in Business
The Internet Extranets Suppliers and Other Business Partners Company Boundary Supply chain management: Procurement, Distribution, and Logistics Intranets Engineering and Research Manufacturing and Production Accounting and Finance Intranets Emphasis should be placed on how businesses relate to a variety of constituencies in forming Virtual Teams The Internet and related technologies and applications is revolutionizing the way businesses are operated and people work, and how information technology supports business operations and end user work activities. Businesses are quickly becoming e-business enterprises. The Internet and Internet-like networks - inside the enterprise (intranets), and between an enterprise and its trading partners (extranets) - have become the primary information technology infrastructure that supports the business operations of many companies. E-business enterprises rely on such technologies as to: 1. Reengineer and revitalize internal business processes 2. Implement electronic commerce systems among businesses and their customers and suppliers. 3. Promote enterprise collaboration among business teams and workgroups. E-Business: is defined as the use of Internet technologies to Internetwork and empower business processes, electronic commerce, and enterprise communication and collaboration within a company and with its customers, suppliers, and other business stakeholders. Customer relationship management: Marketing Sales Customer Service Extranets Consumers and Business Customers

8 Trends in Information Systems
Electronic Business & Commerce: 1990s – 2000s Internet-Based E-Business and E-Commerce systems Strategic and End User Support: 1980s – 1990s End User Computing Systems Executive Information Systems Expert Systems Strategic Information Systems Decision Support: 1970s – 1980s Decision Support Systems Expanding Participation of End Users and Managers in IS Expanding Roles of IS in Business and Management PATIENTLY ALLOW TIME FOR ANIMATIONS TO WORK Provide Examples of Computers, Tasks, and Career Possibilities for each Decade Data Processing: 1950s ’s: Electronic data processing systems. Transaction processing, record-keeping, and traditional accounting applications Management Reporting: 1960s ’s: Management Information systems. Management reports of prespecified information to support decision making. Decision Support: 1970s s: Decision Support systems. Interactive ad hoc support of the managerial decision-making process. Strategic and End User Support: 1980s ’s: End User computing systems. Direct computing support for end user productivity and work group collaboration. Executive information systems. Critical information for top management Expert systems: Knowledge-based expert advice for end users Strategic Information Systems. Strategic products and services for competitive advantage Electronic Business and Commerce: 1990’s ’s: Internetworked e-business and e-commerce Systems. Internetworked enterprise and global e-business operations and e-commerce on the Internet, intranets, extranets, and other networks. Management Reporting: 1960s – 1970s Management Information Systems Data Processing: 1950s – 1960s Electronic Data Processing Systems

9 Types of Information Systems
Support of Managerial Decision Making Support of Business Operations Operations Support Systems Management Support Systems Information Systems can be classified by the type of support they provide an organization. Operations support systems process data generated by and used in business operations. They produce a variety of information products for internal and external use. Operations support systems do not emphasize producing the specific information products that can best be used by managers. Further processing by management information systems is usually required. The role of a business firm’s operations support systems is to: 1. Effectively process business transactions (TPS) 2. Control industrial processes 3. Support team and workgroup collaboration Management support systems assist managers in decision making. Providing information and support for decision making by all types of managers and business professionals is a complex task. Conceptually, several major types of information systems support a variety of decision-making responsibilities. 1. Management information systems - provide information in the form of reports and displays to managers and many business professionals. 2. Decision support systems - give direct computer support to managers during the decision-making process. 3. Executive information systems - provide critical information from a wide variety of internal and external sources in easy-to-use displays to executives and managers. Transaction Processing Systems Process Control Systems Enterprise Collaboration Systems Management Information Systems Decision Support Systems Executive Information Systems Processing Business Transactions Control of Industrial Processes Team and Workgroup Collaboration Prespecified Reporting for Managers Interactive Decision Support Information Tailored for Executives

10 Other Information Systems
Expert Systems (ES) Knowledge Management Systems Functional Business Systems Strategic Information Systems (SIS) Cross-Functional Information Systems Other Specialized Examples of Information Systems – Cite Examples of Each Expert Systems: Knowledge-based systems that provide expert advice and act as expert consultants to users. Examples: credit application advisor, process monitor, and diagnostic maintenance systems. Knowledge Management Systems: are knowledge-based information systems that support the creation, organization, and dissemination of business knowledge to employees and managers throughout a company. Examples: intranet access to best business practices, sales proposal strategies, and customer problem resolution systems. Functional Business Systems: Support a variety of operational and managerial applications in support of basic business functions of a company. Examples: information systems that support applications in accounting, finance, marketing, operations management, and human resource management. Strategic Information Systems: are information systems that support operations or management processes that provide a firm with strategic products, services, and capabilities for competitive advantage. Examples: online stock trading, shipment tracking, and e-commerce Web systems. Cross-Functional Information Systems: are information systems that are integrated combinations of business information systems, thus sharing information resources across the functional units of an organization

11 Managerial Challenges of IT
Hershey Foods: Failure and Success with IT Problems with ERP Software $112 Million Project – Order Processing Problems Multiple Vendor Applications Being Installed Simultaneously Initial Problems to Implement Recent Success with Upgrades Hershey Food Case addresses the problems inherent in a crash conversion of an ERP situation. All of the intended successes are not realized. Crash Conversions are Risky – at best!

12 Roles of e-Business in Business
WESCO International E-Business Sales and Supplier System Distributor of Electrical Products and Supplies Over 6,000 Employees 5 Distribution Centers 360 Branches Worldwide Over 100,000 Customers New E-Business Ordering System Increased Sales and Cut Costs Est. $12 million Savings Annually Key Points to the case are highlighted above Final analysis indicates that firm’s new E-Business ordering system net $12 million annual savings by increasing sales while containing costs.

13 Developing IS Solutions
Investigate Analyze Maintain Design Emphasis on the steps in the traditional information systems development cycle is based upon the stages in the systems approach to problem solving: (More details in Chapters 10-12) Systems Investigation. This stage may begin with a formal information systems planning process to help sort out choices from many opportunities. Typically, due to the expense associated with information systems development this stage includes a cost/benefit analysis as part of a feasibility study. This stage is covered in more detail on the following slide. Systems Analysis. This stage includes an analysis of the information needs of end users, the organizational environment, and any system currently used to develop the functional requirements of a new system. Systems Design. This stage develops specifications for the hardware, software, people, and data resources of the system. The information products the system is expected to produce are also designated. Systems Implementation. Here the organization develops or acquires the hardware and software needed to implement the system design. Testing of the system and training of people to operate and use the system are also part of this stage. Finally, the organization converts to the new system. Systems Maintenance. In this stage, management uses a postimplementation review process to monitor, evaluate, and modify the system as needed. Implement

14 Challenges of Ethics and IT
Ethical Responsibilities Be a Responsible End-User Applications of IT Potential Harms Potential Risks Possible Responses Customer Relationship Management Infringe- ments on Privacy Customer Boycotts Codes of Ethics Human Resources Management PATIENTLY ALLOW TIME FOR ANIMATIONS TO WORK Emphasis in this material is the ethical implications of the use of IT The various applications, their risks, harms, and possible responses are covered. Consider asking students about other risks and alternative responses that might be considered. Inaccurate Information Work Stoppages Incentives Business Intelligence Systems Government Intervention Certification Collusion

15 Systems Concepts: A Foundation
What is a System? Input Processing Output Feedback Control Define and Describe the Components of a System

16 Information System Model
Stakeholders in the Business Environment The Community Competitors Control Management Feedback Government Agencies Customers Information Systems PATIENTLY ALLOW TIME FOR ANIMATIONS TO WORK System concepts underlie the field of information systems. From the end user perspective, it is necessary to understand the fundamentals of systems theory: System. A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. Systems have the following three basic interacting functions: (Give examples of each) Input. Input involves capturing and assembling elements that enter the system to be processed. Processing. Processing involves the transformation of input into output. Output. Output is the end result of the transformation process. Output involves transferring elements that have been produced by a transformation process to their ultimate destination. Identify: External Constituencies. Feedback Systems. Managerial Control. Economic Resources Business Resources Goods & Services Suppliers Stockholders Input Processing Output Financial Institutions Labor Unions

17 Components of an Information Systems
1. People Resources End Users - IS Specialists 2. Hardware Machines Media 3. Software Programs Procedures 4. Data Resources - Data and Knowledge Bases 5. Network Resources - Communications Media and Networks The information system model shown on Figure 1.7 highlights the relationships among the components and activities of information systems: People Resources. People are required for operation of all ISs. People resources include: End Users. As mentioned, these people use the IS or the information it produces. IS Specialists. These people develop and operate the IS. Hardware Resources. These include all the physical devices and materials used in information processing, including all machines and data media. Key components include: Computer Systems. These are the CPUs and their related peripherals, such as terminals and networked PCs. Computer Peripherals. These are input and output devices like keyboards, monitors, and secondary storage. Telecommunications Networks. These are the computer systems interconnected by various telecommunications media such as modems.

18 Components of an Information Systems (Continue)
Software Resources System Software Application Software Procedures Data Resources Data Bases Knowledge Bases Data vs. Information (Continuation of the IS Model from Previous Slide) Software Resources. These include all sets of information processing instructions. Software resources include: System Software. This controls the computer. Application Software. These are for a specific end user task, such as word-processing. Procedures. These are the operating instructions for the people who use the IS. Data Resources. Data is both the raw material of and among the most valuable organizational resources in the IS. Data can be in alphanumeric, text, image and/or audio form. Data are typically organized into either Databases - which hold processed and organized data; or Knowledge bases - which hold knowledge in a variety of forms such as facts and rules of inference about a given subject. Data: Data is the plural of datum, though data commonly represents both singular and plural forms. Data are raw facts or observations, typically about physical phenomena or business transactions. Data should be viewed as raw material resources that are processed into finished information products. Data are usually subjected to a value-added process (data processing or information processing) where Its form is aggregated, manipulated, and organized Its content is analyzed and evaluated It is placed in a proper context for a human user Information: Information can be defined as data that have been converted into a meaningful and useful context for specific end users. Information should be viewed as processed data which has been placed in a context that gives it value for specific end users.

19 Kodak, HP, and Amersham Biosciences
Case 2 Kodak, HP, and Amersham Biosciences What is the business challenge facing companies like Kodak and HP in supporting their global sales forces? How successfully is the Eloquent software tool helping these two companies meet this challenge? Explain. Case Study Questions 1- What is the business challenge facing companies like Kodak and HP in supporting their global sales forces? How successfully is the Eloquent software tool helping these two companies meet this challenge? Explain. Continued Next Page…

20 Kodak, HP, and Amersham Biosciences
Case 2 Kodak, HP, and Amersham Biosciences Challenges would include: Silo syndrome - The Cost of Employee Time Spent on Research, Preparing Reports and Developing Support for the Sales Staff Without an Easy Way to Access the Information Data is Being Collected, but Kodak and HP are not Good at Sharing and Updating the Data Unused Valuable Marketing Information and Other Intellectual Property Challenges would include: Silo syndrome or the cost of thousands of hours of employee time spent on research, preparing reports and developing support for the sales staff without an easy way to access the gold mine of information. Data is being collected, but Kodak and HP are not good at sharing and updating the data. Unused valuable marketing information and other intellectual property. Continued Next Page…

21 Kodak, HP, and Amersham Biosciences
Case 2 Kodak, HP, and Amersham Biosciences How successful is the Eloquent software tool is described by Kodak and HP: Ability to Deliver a Full Range of Product Information Includes Text, Synchronized Video, Graphics, Audio and Search Capabilities to Globally Dispersed Sales Organizations Allowing People to get More Done and Spend More Face Time with Customers as Opposed to Calling on the Phone to Kodak How successful is the Eloquent software tool is described by Kodak and HP: Its ability to deliver a full range of product information – including text, synchronized video, graphics, audio and search capabilities to globally dispersed sales organizations by allowing people to get more done and spend more face time with customers as opposed to calling around for information on the phone at Kodak. Continued Next Page…

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