Chapter 1 Foundations of Information Systems in Business

1. Chapter 1 Foundations of Information Systems in Business James A. O'Brien, and George Marakas. ManagementInformation Systems with MISource 2007, 8th ed.  Boston, MA: McGraw-Hill, Inc., 2007.  ISBN: 13 9780073323091

2. Learning Objectives • Understand the concept of a system and how it relates to IS • Explain why knowledge of IS is important for business professionals; Identify five areas of Is knowledge needed • Give examples to illustrate how business applications of IS can support a firm’s business processes, managerial decision making, and strategies for competitive advantage • Provide examples of IS from your experiences with business organizations in the real world • Identify challenges that a business manager might face in managing the successful, ethical development and use of information technology • Provide examples of the components of real world IS • Become familiar with the myriad of career opportunities in IS Chapter 1 Foundations of Information Systems in Business

3. 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 Chapter 1 Foundations of Information Systems in Business

4. Case 1 Heidelberg, Honeywell, Eaton • Smart services, smart products • Using information technology to monitor, intervene, assist • Machines relay information via the Internet and wireless systems • Optimized performance • Minimized maintenance and repair costs • Less unanticipated downtime • Increased value justifies premium charge Chapter 1 Foundations of Information Systems in Business

5. Case Study Questions • Why should manufacturing companies build smart products and provide smart services? • What business benefits can be gained? • Provide examples beyond those discussed in this case • 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 • What are some limitations of a smart products and smart services strategy? • Give several examples that a business might encounter • Explain how it might overcome them Chapter 1 Foundations of Information Systems in Business

6. What is a System? • A set of interrelated components • With a clearly defined boundary • Working together • To achieve a common set of objectives Chapter 1 Foundations of Information Systems in Business

7. 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 Chapter 1 Foundations of Information Systems in Business

8. 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) Chapter 1 Foundations of Information Systems in Business

9. What Should Business Professionals Know? Chapter 1 Foundations of Information Systems in Business

10. Fundamental Roles of IS in Business Chapter 1 Foundations of Information Systems in Business

11. Trends in Information Systems Chapter 1 Foundations of Information Systems in Business

12. 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 Chapter 1 Foundations of Information Systems in Business

13. How E-Business is Being Used Chapter 1 Foundations of Information Systems in Business

14. 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 Chapter 1 Foundations of Information Systems in Business

15. 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 Chapter 1 Foundations of Information Systems in Business

16. Purposes of Information Systems Chapter 1 Foundations of Information Systems in Business

17. Operations Support Systems • What do they do? • Efficiently process business transactions • Control industrial processes • Support communications and collaboration • Update corporate databases Chapter 1 Foundations of Information Systems in Business

18. Types of OSS • Transaction Processing Systems • Record and process business transactions • Example: 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 • Example: email, video conferencing Chapter 1 Foundations of Information Systems in Business

19. 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 Chapter 1 Foundations of Information Systems in Business

20. 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 Chapter 1 Foundations of Information Systems in Business

21. 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 Chapter 1 Foundations of Information Systems in Business

22. 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 • Strategic Information Systems - help get a strategic advantage over customer • Example: shipment tracking, e-commerce Web systems • Functional Business Systems - focus on operational and managerial applications of basic business functions • Example: accounting, finance, or marketing Chapter 1 Foundations of Information Systems in Business

23. IT Challenges and Opportunities Chapter 1 Foundations of Information Systems in Business

24. 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 Chapter 1 Foundations of Information Systems in Business

25. Developing IS Solutions Chapter 1 Foundations of Information Systems in Business

26. 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 • Potential Risks • Consumer boycotts • Work stoppages • Government intervention • Possible Responses • Codes of ethics • Incentives • Certification Chapter 1 Foundations of Information Systems in Business

27. 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 company’s IT resources? • How can you protect yourself from computer crime? Chapter 1 Foundations of Information Systems in Business

28. 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 • Figure Chapter 1 Foundations of Information Systems in Business

29. IT Careers Chapter 1 Foundations of Information Systems in Business

30. 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 Chapter 1 Foundations of Information Systems in Business

31. 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 today’s networked business Chapter 1 Foundations of Information Systems in Business

32. 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 organization’s information systems Chapter 1 Foundations of Information Systems in Business

33. Real World Case: Lufthansa • Lufthansa wants to… • Keep 3,500 pilots • Trained on the latest technology and procedures • Plugged into the corporate infrastructure • Informed about schedules, weather events, and other facts that affect their jobs • Control costs • Provide Internet access to passengers Chapter 1 Foundations of Information Systems in Business

34. Case Study Questions • Are many of Lufthansa’s challenges identified in the case similar to those being experienced by other businesses in today’s global economy? • What other tangible and intangible benefits, beyond those identified by Lufthansa, might a mobile workforce enjoy as a result of deploying mobile technologies? • Lufthansa was clearly taking a big risk with their decision to deploy notebook computers to their pilots. What steps did they take to manage the risk, and what others might be needed in today’s business environment? Chapter 1 Foundations of Information Systems in Business

35. 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 Chapter 1 Foundations of Information Systems in Business

36. 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 Chapter 1 Foundations of Information Systems in Business

37. 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 Chapter 1 Foundations of Information Systems in Business

38. A Business as a System Chapter 1 Foundations of Information Systems in Business

39. 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 Chapter 1 Foundations of Information Systems in Business

40. Components of an IS Chapter 1 Foundations of Information Systems in Business

41. Information System Resources • People Resources • Specialists • End users • Hardware Resources • Machines • Media • Software Resources • Programs • Procedures • 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 Chapter 1 Foundations of Information Systems in Business

42. 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 • Example: • Sales data is names, quantities, and dollar amounts • Sales information is amount of sales by product type, sales territory, or salesperson Chapter 1 Foundations of Information Systems in Business

43. 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 Chapter 1 Foundations of Information Systems in Business

44. Recognizing IS • 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 Chapter 1 Foundations of Information Systems in Business

45. Case 3 Aviall, Inc. • Supplier of airplane parts and components • Had lost track of its inventory • Price-tracking software didn’t work with inventory control or purchasing forecasting • Sent wrong parts to wrong customers • Sales falling • Needed a middleware vision • Get all the software to work together Chapter 1 Foundations of Information Systems in Business

46. Case Study Questions • Why do you think that Aviall failed in their implementation of an airplane parts and components inventory control system? • How has information technology brought new business success to Aviall? How did IT change Aviall’s business model? • How could other companies use Aviall’s approach to the use of IT to improve their business success? Chapter 1 Foundations of Information Systems in Business

47. Case 4 Continental Airlines • Building customer loyalty has become crucial for success in the airline industry • Continental employs CallMinder systems to… • Monitor calls and keystrokes • Data mine keystrokes and voice calls • This technology resulted in… • Fewer calls going to the help desk • Higher customer satisfaction • Reduction of flight confirmation calls • Cost savings in excess of $1 million Chapter 1 Foundations of Information Systems in Business

48. Case Questions • What are the business benefits of the CallMiner system? • How can new technologies like CallMiner help companies improve their customer service and gain a competitive edge in the marketplace? • Andre Harris refers to calls to reconfirm a flight as “quite frankly, low-value calls.” Why are they classified as low value? Why do you think so many customers are placing such calls? Chapter 1 Foundations of Information Systems in Business