Business Information Systems: An Overview

Management Information Systems, Fifth Edition by Effy Oz

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Objectives

• 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

• Describe careers in information technology• Identify major ethical and societal concerns created by

widespread use of information technology

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The Purpose of Information Systems

• Businesses use information systems– To make sound decisions

– To solve problems

• Problem is any undesirable situation• Decision arises when more than one solution to

problem exists

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The Purpose of Information Systems (continued)

• Problem solving and decision making require information

• Keys to success in business are– Gathering correct information

– Storing information

– Using information

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Data, Information, and Information Systems

• “Data”, “information” and “system” are commonly used terms

• Important to understand their similarities and differences

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Data vs. Information

• Data: a given or fact– Can be number, statement, or picture

• Information: facts or conclusions that have meaning within context– Composed of data that is manipulated

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Data Manipulation

• Data is manipulated to make useful information• Survey is common method of collecting data• Raw data is hard to read• Information is more useful to business than data

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Generating Information

• A process is manipulation of data• Process usually produces information• Process may produce more data• A piece of information in one context may be

considered data in another context

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Generating Information (continued)

Figure 1.1: Input-process-output

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Information in Context

• Not all information is useful• Useful information is

– Relevant

– Complete

– Accurate

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Information in Context (continued)

• Useful information is– Current

– Obtained economically (in business)

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Information in Context (continued)

Figure 1.2: Characteristics of useful information

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What Is a System?

• System: array of components that work together to achieve goal or goals

• System– Accepts input

– Processes input

– Produces output

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What is a system? (continued)

• System may have multiple goals• System may contain subsystems• Subsystems have sub-goals that meet main goal• Subsystems transfer output to other subsystems

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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

• Information system: processes data and produces information

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Information and Managers

• Systems thinking: thinking of an organization in terms of subsystems

• Database: collection of electronic records• Information systems automate exchange among

subsystems• Information map: network of information

systems• Information technology: technologies that

facilitate construction and maintenance of information systems

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The Benefits of Human-Computer Synergy

• Humans are relatively slow and make mistakes• Computers cannot make decisions• Synergy: combining resources to produce

greater output

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The Benefits of Human-Computer Synergy (Continued)

Figure 1.4: Qualities of humans and computers that contribute to synergy

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Information Systems in Organizations

• Computer-based Information system: system with computer at center

• Certain trends have made information systems important in business

• Organizations lag behind if they do not use information systems

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Components of information systems

Figure 1.5: Components of an information system

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The Four Stages of Processing

• Input: collect and introduce data to system– Transaction: a business event, usually entered

as input

• Data processing: perform calculations on input• Output: what is produced by the information

system• Storage: vast amounts of data stored on optical

discs

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Computer Equipment for Information Systems

• Input devices: receive input• Computer: process data• Output: displays information• Storage devices: store data• Network devices: transfer data

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Computer Equipment for Information Systems (continued)

Figure 1.6: Input, process, output, storage, and networking devices

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From Recording Transactions to Providing Expertise: Types of

Information Systems• Many types of information systems• Capabilities of applications have been combined

and merged• Management Information System: supports

planning, control, and making decisions

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Transaction Processing Systems

• Most widely used type of system• Records data collected at point where

organization interacts with other parties• Encompasses cash registers, ATMs and

purchase order systems

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Supply Chain Management Systems

• Supply chain: sequence of activities involved in producing products– Activities include marketing, purchasing raw

materials, manufacturing, shipping, billing, collection, and after-sale services

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Customer Relationship Management Systems

• Customer relationship management: managing relations with customers– Used in combination with telephones to provide

customer service

– Often linked to Web applications that track online transactions

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Business Intelligence Systems

• Business Intelligence: gather data to help organization compete– Often contains statistical models

– Access large pools of data

• Data warehouse: large database that usually store transactional records

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Decision Support and Expert Systems

• Decision support system: supports decision-making– Relies on models to produce tables

– Extrapolates data to predict outcomes

• Expert system: supports knowledge-intensive decision-making– Uses artificial intelligence

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Geographic Information Systems

• Geographic information system: ties data to physical locations

• Represents data on a map in different formats• May reflect demographic information in addition

to geographic• May use information from GPS satellites

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Geographic Information Systems (continued)

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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

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Accounting

• Information systems help record transactions• Produce periodic statements• Create required reports for law• Create supplemental reports for managers

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Finance

• Finance systems facilitate financial planning and business transactions

• Tasks include organizing budgets, managing cash flow, analyzing investments, and making decisions

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Marketing

• 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

• Web provides opportunity to collect marketing data

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Human Resources

• Human resource management systems aid record-keeping– Must keep accurate records

– Aids recruiting, selection, placement, and reward analysis

• Performance evaluation systems provide grading utilities

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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

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Careers in Information Systems

• Information technology professionals are increasingly in demand

• Networking, system analyst, software engineering, and database administrator jobs are increasing in demand

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Systems Analyst

• System analyst: designs and updates information systems

• Involves analyzing system requirements, documenting development efforts, and providing specifications for programmers

• Requires communication and presentation skills

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Database Administrator

• Database administrator: responsible for databases– Develops and acquires database applications

– Must protect privacy of customers and employees

– Responsible for securing the database

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Network Administrator

• Network administrator: acquires, implements, manages, maintains, troubleshoots networks

• Implements security– Firewalls

– Access codes

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Webmaster

• Webmaster: creates and maintains Web site• Designs and codes the page• Demand for Webmasters grows as more

businesses use Web

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Chief Security Officer

• Chief security officer: supervises security of information system

• Position exists due to growing threat to information security

• Reports to chief information officer

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Chief Information Officer and Chief Technology Officer

• Chief information officer: responsible for all aspects of information system– Often the vice president

• Chief technology officer: has similar duties as CIO

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Chief Information Officer and Chief Technology Officer (continued)

Figure 1.7: Traits of a successful CIO

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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

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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 accounting, finance, marketing,

and human resources

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Summary (continued)

• The job prospects for IT professionals are bright• IT has created societal concerns