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What Is an Information System?
• Information system is a collection of components that work together to process data and provide information to help in the operation and management of an organization.
• Information system is an organizational and management solution, based on information technology, to a challenge posed by the environment.
Perspectives on Information Systems
Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment.
Figure 1-5
Information Systems Are More Than ComputersInformation Systems Are More Than Computers
Perspectives on Information Systems
An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.
Figure 1-4
Functions of an Information SystemFunctions of an Information System
The Fundamental Roles of Information Systems
• Support of business operations• Support of managerial decision making• Support of strategic competitive advantage:
Information systems that give a company a competitive advantage in the market place.– Operational level:
• Travel websites: yahoo vs expedia• Auction: eBay
– Management level:• eBay store, Amazon associates
Organizational Dimension of Information Systems
• Hierarchy of authority, responsibility• Senior management• Middle management• Operational management
• Separation of business functions• Sales and marketing• Human resources• Finance and accounting• Production and manufacturing
Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.
Figure 1-6
Levels in a FirmLevels in a Firm
Types of Information Systems
• Operations Support Systems (Transaction Support Systems, TPS)– Efficiently process business transactions
• Management Support Systems– Provide information and support for effective
decision making by managers
– Sales and marketing systems
– Manufacturing and production systems
– Finance and accounting systems
– Human resources systems
– Etc.
Operations Support Systems(TPS)
• Sales and marketing systems– Functional concerns include:
• Sales management, customer identification market research, advertising and promotion, pricing, new products
– Examples of systems: • Order processing (operational level)• Pricing analysis (middle mgmt)• Sales trend forecasting (senior mgmt)
• Finance and accounting systems– Functional concerns include:
• Managing financial assets (cash, stocks, etc.) and capitalization of firm, and managing firm’s financial records
– Examples of systems: • Accounts receivable (operational mgmt)• Budgeting (middle mgmt)• Profit planning (senior mgmt)
An Accounts Receivable SystemAn Accounts Receivable System
Figure 2-4
An accounts receivable system tracks and stores important customer data, such as payment history, credit rating, and billing history.
An Employee Record Keeping SystemAn Employee Record Keeping System
Figure 2-5
This system maintains data on the firm’s employees to support the human resources function.
Types of Business Information Systems
Management Information SystemsManagement Information SystemsChapter 2 Global E-Business: How Businesses Use Information SystemsChapter 2 Global E-Business: How Businesses Use Information Systems
Characteristics of Operational Support Systems (TPS)
– Serve operational levels
– Perform and record daily routine transactions necessary to conduct business
• E.g. sales order entry, payroll, shipping
– Large amount of data, high processing speed, high reliability, accuracy, and security (fault tolerant)
– Data: internal, historical, detailed
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
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
How Management Information Systems Obtain their How Management Information Systems Obtain their Data from the Organization’s TPSData from the Organization’s TPS
Figure 2-6
In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting system at the end of the time period. Managers gain access to the organizational data through the MIS, which provides them with the appropriate reports.
Sample MIS ReportSample MIS Report
Figure 2-7
This report, showing summarized annual sales data, was produced by the MIS in Figure 2-6.
Other Examples:
• Budget control:– http://www.olemiss.edu/projects/sap/REPORT
S_II_Budget_Control_System.pdf
• LYTD VS YTD 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.
Structured Decision
– The information requirements are known precisely.
– The criteria for making decision are known.
– The quality of a decision can be measured precisely.
Manager + Computer(DSS)
Solution
ComputerSolution
ManagerSolution
Structured Semistructured Unstructured
DEGREE OF PROBLEM STRUCTUREDEGREE OF PROBLEM STRUCTURE
The DSS Focuses on Semistructured ProblemsThe DSS Focuses on Semistructured Problems
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; sensitivity analysis
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
– Support senior management– Address nonroutine decisions requiring judgment,
evaluation, and insight– Incorporate data about external events (e.g. new
tax laws or competitors) as well as summarized information from internal MIS and DSS
Executive support systems
• Span functional areas
• Execute business processes across firm
• Include all levels of management
• Four major applications:• Enterprise systems• Supply chain management systems• Customer relationship management systems
Enterprise applications
Other Information Systems
• Expert Systems– Provide expert advice– Knowledge base and rules– Example: Investment Expert System
• Knowledge Management Systems– Support creation, organization, and
dissemination of business knowledge throughout company
– Example: intranet access to best business practices, FAQ
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
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?
Do you think it is wrong to
• Copy company’s software for use at home?• 35 % say no.
• Use company equipment like computers to search for a new job?
• 34% say no.• Blame your own personal errors on
technological glitches?• 39% say no.
• Use office computers to do personal shopping on the Internet?
• 46% say no.
Workplace PCs May Not Be Very Private
• Don’t be fooled: It may be personal, but it is not private.
• 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
Detroit Mayor Scandal and Privacy
• Use city-issued pager• Communications are stored for legal
reasons.• "There's absolutely no expectation of privacy
with phones, e-mails, text messages or computers," expert said.
• Comment: HOW IN THE WORLD DIDTHE PRESS DIG UP TEXT MESSAGES FROM 2001? AND IF THEY CAN DO THAT FOR HIM... THEN WHAT ABOUT OUR PRIVACY RIGHTS AS WELL.. BECAUSE THAT SHOULD BE PROTECTED..IF WE ARE TALKING ON OUR PHONES OR TEXTING..OMG!!!!!!!!
An example of database application
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BART Tries Pay-By-Phone System http://www.sfexaminer.com/local/BART-dials-in-to-phone-pay-system-44573062.html
• A contact-free cell phone payment program – puts a chip inside a phone that used like a
debit card.– lets people pay by passing their phone over a
turntile.– When the account became low in funds, the
system could automatically fill it up by charging a credit card.
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.
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.