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Module 1

Information Systems in Business

Learning Objectives (1 of 2)

Discuss common applications of computers and information systems

Explain the differences between computer literacy and information literacy

Define transaction-processing systems

Define management information systems

Describe the four major components of an information system

Discuss the differences between data and information

Learning Objectives (2 of 2)

Explain the importance and applications of information systems in functional areas of a business

Analyze how information technologies are used to gain a competitive advantage

Apply the Five Forces Model and strategies for gaining a competitive advantage

Review the IT job market

Summarize the future outlook of information systems

Computers and Information Systems in Daily Life

Many uses

Reduce costs

Gain a competitive advantage in the marketplace

Online classes

Grocery and retail stores

Telecommuting

Social networking

Video sharing

Computer Literacy and Information Literacy (1 of 2)

Computer literacy

Skill in using productivity software, as well as having a basic knowledge of hardware and software, the Internet, and collaboration tools and technologies

Software examples: word processors, spreadsheets, database management systems, and presentation software

Computer Literacy and Information Literacy (2 of 2)

Information literacy: understanding the role of information in generating and using Business Intelligence (BI)

BI provides historical, current, and predictive views of business operations and environments and gives organizations a competitive advantage in the marketplace

The Beginning: Transaction-Processing Systems

Transaction-processing systems (TPSs)

Focus on data collection and processing

Used for cost reduction

Applied to structured tasks (e.g., record keeping, simple clerical operations, and inventory control)

Require minimal human involvement when automated

Management Information Systems (1 of 2)

Management information system (MIS)

Organized integration of hardware and software technologies, data, processes, and human elements

Designed to produce timely, integrated, relevant, accurate, and useful information for decision-making

Management Information Systems (2 of 2)

Tasks in designing an MIS

Define the system’s objectives

Collect and analyze data

Provide information in a useful format for decision-making purposes

MIS applications

Used in both private and public sectors

Exhibit 1.3 Major Components of an Information System

Data (1 of 2)

Data component of an information system

Considered the input to the system

Sources of data

Internal: sales and personnel records

External: customers, competitors, suppliers, government agencies, financial institutions, labor and population statistics, as well as economic conditions

Data (2 of 2)

Has a time orientation

Past data: performance reports

Current data: operational reports

Future data: predicted for budgets or cash flow reports

Can be collected in different forms

Disaggregated data: helps analyze sales by product, territory, or salesperson

Aggregated data: useful for reporting overall performance during a sales quarter

Database

Collection of relevant data organized in a series of integrated files

Essential for the success of any information system

Database management system (DBMS)

Used to create, organize, and manage databases

Reduces personnel time needed to gather, process, and interpret data manually

Process

Generates the most useful type of information for making decisions

Transaction-processing reports

Models for decision analysis that can be built into the system or accessed from external sources

Information (1 of 3)

Consists of facts analyzed by the process component and is an output of an information system

Usefulness qualities

Timeliness

Integration with other data and information

Consistency and accuracy

Relevance

Information (2 of 3)

Needs to provide either a base for users to explore different options or insight into tasks

Usefulness is affected by the information system’s user interface

Graphical user interfaces (GUIs) are used because they are flexible and easy

Information (3 of 3)

Systems should produce information in different formats, including graphics, tables, and exception reports

Increases likelihood of users understanding and being able to use the information

Users also need to be able to make use of informal information when solving problems

Rumors

Unconfirmed reports

Stories

Examples of Information Systems (1 of 2)

A university database collects data including student names, ages, genders, majors, and nationalities.

The query feature in a university DBMS can generate information such as:

Number of students in each major

Which major is growing the fastest

Average age of the student body

Which country is home to the most international students

Ratio of male to female students

Forecasting models can be used to estimate the fastest growing major and help with decisions on faculty hiring and facilities planning.

Examples of Information Systems (2 of 2)

A textile company can use a database to store data on products, suppliers, sales personnel, and costs.

The information system’s process component analyzes the data to provide information such as:

Which salesperson generated the highest sales

Which product generated the highest (or lowest) sales

Which region generated the highest sales

Forecasting models can help predict the next sales period

Information can be used to allocate advertising budgets to products or regions

Using Information Systems and Information Technologies

Information technologies

The Internet

Computer networks

Database systems

Point-of-sale (POS) systems

Radio-frequency-identification (RFID) tags

The Importance of Information Systems (1 of 5)

Timely, relevant, and accurate information is a critical tool

Enhance a company’s competitive position in the marketplace

Manage the four Ms of resources

Manpower, machinery, materials, and money

The Importance of Information Systems (2 of 5)

Personnel information system (PIS) or human resource information system (HRIS)

Designed to provide information that helps decision makers in personnel carry out tasks effectively

Logistics information system (LIS)

Designed to reduce the cost of transporting materials while maintaining safe and reliable delivery

The Importance of Information Systems (3 of 5)

Manufacturing information system (MFIS)

Used to manage manufacturing resources

Reduce manufacturing costs

Increase product quality

Improve inventory decisions

The Importance of Information Systems (4 of 5)

Financial information system (FIS)

Used to provide information to financial executives in a timely manner

Marketing information system (MKIS)

Used to improve marketing decisions

Provides timely, accurate, and integrated information about the marketing mix

Price, promotion, place, and product

The Importance of Information Systems (5 of 5)

Marketing technology tools

Business, Web, and mobile analytics

E-mail marketing

Search engine marketing

Mobile technologies

Marketing automation

Using Information Technologies for a Competitive Advantage (1 of 3)

Michael Porter: three strategies for successfully competing in the marketplace

Overall cost leadership

Differentiation

Focus

Using Information Technologies for a Competitive Advantage (2 of 3)

Information systems

Help organizations reduce the cost of products and services

Help bottom-line and top-line strategies

Use enterprise systems to create an efficient and effective link between suppliers and consumers

Using Information Technologies for a Competitive Advantage (3 of 3)

Differentiation strategies

Making products and services different from competitors

Focus strategies

Focusing on specific market segments to achieve a cost or differentiation advantage

Porter’s Five Forces Model: Understanding the Business Environment (1 of 3)

Analyzes a firm’s position in the marketplace and how information systems can make it more competitive

Five forces

Buyer power

Supplier power

Threat of substitute products or services

Threat of new entrants

Rivalry among existing competitors

Exhibit 1.4: The Five Forces Model

Porter’s Five Forces Model (2 of 3)

Buyer power

High when customers have many choices and low when customers have few choices

Supplier power

High when customers have fewer options and low when customers have more options

Threat of substitute products or services

High when many alternatives to an organization’s products and services are available

Porter’s Five Forces Model (3 of 3)

Threat of new entrants

Low when duplicating a company’s product or service is difficult

Focus strategies are used to ensure that the threat remains low

Rivalry among existing competitors

High when competitors occupy the same marketplace position

Low when there are few competitors

The IT Job Market (1 of 6)

Categories of IT jobs

Operations and help desk

Programming

Systems design

Web design and Web hosting

Network design and maintenance

Database design and maintenance

Robotics and artificial intelligence

The IT Job Market (2 of 6)

Chief technology officer (CTO)/chief information officer (CIO)

Oversees long-range planning and monitors new developments that can affect a company’s success

Chief privacy officer (CPO)

Responsible for managing the risks and business impacts of privacy laws and policies

The IT Job Market (3 of 6)

Manager of information systems services

Responsible for managing hardware, software, and personnel in the information systems department

Systems analyst

Responsible for the design and implementation of information systems

Should have a thorough understanding of business systems and functional areas within a business organization

The IT Job Market (4 of 6)

Network administrator

Oversees a company’s internal and external network systems

Provides network and cybersecurity

Database administrator (DBA)

Responsible for database design and implementation

Required to have knowledge and understanding of data warehouses and data-mining tools

The IT Job Market (5 of 6)

Computer programmer

Writes programs or software segments that allow the information system to perform a specific task

Webmaster

Designs and maintain the organization’s Web site

Have been in high demand owing to the popularity of e-commerce applications

The IT Job Market (6 of 6)

IT-related jobs created in recent years include:

Data scientist

Social media/online-community manager

Social media architect

Telework manager or coordinator

Search engine optimization specialist

Business architect

Mobile technology expert

Enterprise mobile developer

Cloud architect

Outlook for the Future (1 of 3)

Predictions for the future

Hardware and software costs will decline

Artificial intelligence and related technologies will improve and expand

Computer literacy of users will improve

Networking technology will improve

Personal computers will improve in power and quality

More affordable, easier to maintain

Outlook for the Future (2 of 3)

Internet growth will continue

Place small and large organizations on the same footing

Make e-collaboration easier

Computer criminals will become more sophisticated

Protecting personal information will become more difficult

Outlook for the Future (3 of 3)

Some trends that should continue

Ubiquitous computing and the Internet of Things (IoT)

3D and 4D printing

Pervasive analytics, context-aware computing

Smart machines and devices

Cloud computing

Software-defined applications and infrastructures

Security

Summary (1 of 3)

Computers and information systems are used to reduce costs and gain a competitive advantage in the marketplace

Information systems are designed to collect data, process it, and deliver timely, relevant, and useful information for making decisions

Four major components of an information system:

Data, database, process, information

Summary (2 of 3)

Porter’s Five Forces Model

Buyer power high when customers have many options

Supplier power high when customers have fewer options

Threat of substitute products or services high when alternatives are available

Threat of new entrants low when duplicating a product or service is difficult

Rivalry among competitors high when they occupy the same marketplace position

Summary (3 of 3)

IT jobs fall into these broad categories: