Introduction to Information Systems

BUS 782

David Chao

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

• An organizational solution, based on information technology, to challenges posed by the environment.

Fundamental Roles of IS in Business

Types of Information Systems

• Operations Support Systems– Efficiently support day-to-day operations

• Management Support Systems– Provide information and support for effective

decision making by managers

• Strategic Information Systems– Help get a strategic advantage over customer

• Transaction Processing Systems, TPS– Record and process business transactions

• Any exchange of money or other benefits between two or more parties

• Order processing, purchasing

• General ledger, accounts payable, accounts receivable

– Large amount of data, high processing speed, high reliability, accuracy, and security (fault tolerant)

– Data: internal, historical, detailed

Operations Support Systems

ObamaCare Websitehttps://www.healthcare.gov/

• The Website Problems Could Become A Total Disaster For Obamacare– http://www.businessinsider.com/why-the-obamacare-website-

could-turn-into-a-disaster-2013-10

• Why is the Obamacare website having so many problems? – Technical reason:

• http://www.wekeroad.com/2013/10/07/yes-bad-javascript-will-shut-your-site-down/

– Political reason: • http://www.forbes.com/sites/theapothecary/2013/10/14/obamacares-website-is-crashing-

because-it-doesnt-want-you-to-know-health-plans-true-costs/

Scalability

• Scalability is the ability of a system to handle a growing amount of work in a capable manner or its ability to be enlarged to accommodate that growth.

• A system is said to scale if it is suitably efficient when applied to large input data set. If the system fails when a quantity increases, it does not scale.

• Solutions:– Hardware– Software

Current Trend in Operations Support Systems

• Enterprise Resources Planning, ERP

• Customer Relationship Management, CRM

What is ERP?

• Video:– http://www.youtube.com/watch?v=lYCEQqSM08I– http://www.youtube.com/watch?

v=PVRgIXLWDHs&feature=related

• Readings:– http://whatiserp.net/– http://en.wikipedia.org/wiki/

Enterprise_resource_planning

Enterprise Resources Planning, ERP

• ERP software is multi-module application software that integrates activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking. ERP software may include application modules for the finance, accounting and human resources aspects of a business.

• Major characteristics:– Integrated– Cross-functional– Shared database

•

Major Modules of an ERP System

• Product planning, cost and development

• Manufacturing

• Marketing and sales– Fulfillment process:

• All steps involved in selling and delivering the products to customers.

• Inventory management

• Finance and accounting

A Fulfillment Process

ERP Market Share• Tier 1:

– http://www.youtube.com/watch?v=4R6GG9eL_1E

• Market share: http://whatiserp.net/erp-report/erp-market-share-and-vendor-evaluation-2011/

Customer Relationship Management, CRM• Front office operations: Call Center

• Direct interaction with customers, e.g. phone calls, e-mail, online services etc.

• Sales Force Automation• tracks all contact that has been made with a given

customer, the purpose of the contact, and any follow up that might be required.

• Sales Intelligence• Cross-selling: selling an additional product or service to an

existing customer

• Up-selling: induces the customer to purchase more expensive items, upgrades, or other add-ons.

• Switch-selling: customers are attracted by a special offer on some goods but the salesman's real aim is to sell other more expensive goods instead

Example of CRM Vendor

• Microsoft Dynamics CRM:– http://crm.dynamics.com/en-us/home– http://crm.dynamics.com/en-us/sales– Demo:– http://uscrmdynamics.cloudapp.net/demos/Dynamics-CRM-2011-Driving-Sales-

Productivity/CRM-2011-Driving-Sales-Productivity.html

• SalesForce.Com– Sales Cloud

• http://www.youtube.com/watch?v=nJQW-rbHMS0&list=PL50274E7562393953

Social Media Listening

• Social media listening, also known as social media monitoring, is the process of identifying and assessing what is being said about a company, individual, product or brand on the Internet.– http://www.youtube.com/watch?v=aqRZZrvOBnQ

• Tools:– Google Alert: http://www.google.com/alerts– Others:

• http://socialmedia-listening.wikispaces.com/Tools

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

Management Information Systems

• Facilitate management control by producing summarized reports that compare actual performance against planned performance on a regular and recurring basis.– Management control: Ensuring that

performance meets established standards.

• Serve middle management

• Provide reports on firm’s current performance, based on data from TPS

Sample MIS ReportSample MIS Report

Sample MIS Report

Other Examples:

• Budget control:– http://www.olemiss.edu/projects/sap/

REPORTS_II_Budget_Control_System.pdf

• LYTD VS YTD Sales comparison

Budget Control Report

Sales Comparison

– Serve middle management

– Support nonroutine decision making• E.g. What is impact on production schedule if December

sales doubled?

– Often use external information as well from TPS and MIS

Decision support systems

Information and Management Decisions

• A decision is a selection between several courses of action:– Penalty for bad decision

• Information helps reduce uncertainty:– Incomplete information

• Information systems improve decision-making effectiveness by providing decision makers with information related to the decisions for which they are responsible.

Components of DSS

• Database: Current & Historical Data from Many Sources. – Internal and external data

• Model base: Collection of Mathematical & Analytical Building Blocks

• Interface for analysis: What - If Questions; visual dashboard

Using Decision Support Systems• What-IF Analysis:Observing how changes to

selected variables affect other variables.• Sensitivity Analysis: Observing how

repeated changes to a single variable affect other variables.

• Goal-Seeking Analysis:Set a target value for a variable, and then repeatedly changes other variables until the target is achieved.– Example: Benefit.Xls

• Optimization Analysis• Simulation: IBM Innov8 2.0

– http://www-01.ibm.com/software/solutions/soa/innov8/index.html

Strategic Information System

• Information systems that provide a firm with competitive products and services which give it a strategic advantage over its competitors in the marketplace.– Information systems that promote

business innovation, improve operational efficiency.

Strategic Advantage and Strategic Necessity

• Strategic advantage refers to obtaining a sustainable competitive edge over competitors. The ability to obtain a greater than normal return on investment.

• A strategic necessity is a system that must be installed to remain competitive and stay in business.

Threat of New Entrants

Bargaining Powerof Suppliers

Bargaining Powerof Customers

Rivalry amongExisting Competitors

Threat of SubstituteProducts

Competitive forces model by Michael Porter

Competitive Strategies• Cost leadership strategy:

– Become a low cost producer of products and services – Find ways to help suppliers or customers reduce their costs

• Product differentiation strategy.• Innovation strategy: Finding new way of doing

business, enter new market.• Alliance strategy: Establish alliances with customer,

suppliers, competitors, other company.• Growth strategy: expanding, diversifying,

integrating.

Strategic Roles for Information Systems

• Improving business operations• Promoting business innovation• Locking in customers and suppliers

– Interorganizational IS, EDI, automatic inventory replenishment system

• Creating switching costs– make customers dependent on the continued use of

innovative IS.• Raising barriers to entry

– discourage competitors from entering a market

Components of an Information System

• Information technology

• People

• Database

• Procedure

People

• Information specialists– programmer, system analyst, database

administrator, etc.

• End-user:– Menu-level end users– Command-level end users– End-user programmer

• End-user computing and management

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?

Workplace Cyber Surveillance on the Risehttp://www.awarenesstech.com/Employee/Articles/

• Cyber-surveillance: The person most likely to be spying on you is your boss. 27% of businesses surveyed by the American Management Association said they review employee email.

• Reasons:– Productivity– Liability– Network performance

Typical Features

• Email monitor

• Instant message monitor

• Keystroke logger

• Monitor/Block websites

• Content filtering

• Take screenshots

Database

• A group of related files– Support business operations– Provide information

An example of database application

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Major Functions of Database Management

• Creating a database– Analysis: Entity-Relationship Diagram– Design: Design file structure– Implementation

• Accessing a database

• Updating a database

Database Security

• Logical protection:– Illegal access– Illegal update– Virus

• Physical protection

Internet firms flocks to store data in blast-proof bunker

• Some biggest companies are running their Internet operations on systems installed in a 300-foot-deep nuclear blast-proof bunker.

Weird Data Center Locationhttp://en.wikipedia.org/wiki/Pionen

Procedures• Procedure: A step-by-step process or a

set of instructions for accomplishing specific results.– Operations– Backup and Recovery– Security– Development

• Operations Procedure: A procedure that describes how a computer system or application is used, how often it can be used, who is authorized to use it, and where the results of processing should go.

• Backup Procedure: A procedure that describes how and when to make extra copies of information or software to protect against losses.– http://www.tldp.org/LDP/lame/LAME/linux-

admin-made-easy/server-backup.html• Recovery Procedure: An action taken when

information or software must be restored.• Security Procedure: A procedure designed to

safeguard data centers, communications networks, computers, and other IT components from accidental intrusion or intentional damage.

• Development Procedure: A procedure that explains how IT professionals should describe user needs and develop applications to meet those needs.