Operational Excellence

Chapter 1: What Is an Information System?

Learning Objectives

Upon successful completion of this chapter, you will be

able to:

• define what an information system is by identifying

its major components;

• describe the basic history of information systems;

and

• describe the basic argument behind the article

“Does IT Matter?” by Nicholas Carr.

Introduction

Welcome to the world of information systems, a world that seems to

change almost daily. Over the past few decades information systems

have progressed to being virtually everywhere, even to the point

where you may not realize its existence in many of your daily

activities. Stop and consider how you interface with various

components in information systems every day through different

Chapter 1: What Is an Information System? | 9

electronic devices. Smartphones, laptop, and personal computers

connect us constantly to a variety of systems including messaging,

banking, online retailing, and academic resources, just to name a

few examples. Information systems are at the center of virtually

every organization, providing users with almost unlimited

resources.

Have you ever considered why businesses invest in technology?

Some purchase computer hardware and software because everyone

else has computers. Some even invest in the same hardware and

software as their business friends even though different technology

might be more appropriate for them. Finally, some businesses do

sufficient research before deciding what best fits their needs. As

you read through this book be sure to evaluate the contents of each

chapter based on how you might someday apply what you have

learned to strengthen the position of the business you work for, or

maybe even your own business. Wise decisions can result in stability

and growth for your future enterprise.

Information systems surround you almost every day. Wi-fi

networks on your university campus, database search services in

the learning resource center, and printers in computer labs are

good examples. Every time you go shopping you are interacting

with an information system that manages inventory and sales. Even

driving to school or work results in an interaction with the

transportation information system, impacting traffic lights,

cameras, etc. Vending machines connect and communicate using

the Internet of Things (IoT). Your car’s computer system does more

than just control the engine – acceleration, shifting, and braking

data is always recorded. And, of course, everyone’s smartphone is

constantly connecting to available networks via Wi-fi, recording

your location and other data.

Can you think of some words to describe an information system?

Words such as “computers,” “networks,” or “databases” might pop

into your mind. The study of information systems encompasses a

broad array of devices, software, and data systems. Defining an

10 | Information Systems for Business and Beyond (2019)

information system provides you with a solid start to this course

and the content you are about to encounter.

Defining Information Systems

Many programs in business require students to take a course in

information systems. Various authors have attempted to define the

term in different ways. Read the following definitions, then see if

you can detect some variances.

• “An information system (IS) can be defined technically as a set

of interrelated components that collect, process, store, and

distribute information to support decision making and control

in an organization.” 1

• “Information systems are combinations of hardware, software,

and telecommunications networks that people build and use to

collect, create, and distribute useful data, typically in

organizational settings.” 2

• “Information systems are interrelated components working

together to collect, process, store, and disseminate

information to support decision making, coordination, control,

analysis, and visualization in an organization.” 3

As you can see these definitions focus on two different ways of

describing information systems: the components that make up an

information system and the role those components play in an

organization. Each of these need to be examined.

1. [1]

2. [2]

3. [3]

Chapter 1: What Is an Information System? | 11

The Components of Information Systems

Information systems can be viewed as having five major

components: hardware, software, data, people, and processes. The

first three are technology. These are probably what you thought

of when defining information systems. The last two components,

people and processes, separate the idea of information systems

from more technical fields, such as computer science. In order to

fully understand information systems, you will need to understand

how all of these components work together to bring value to an

organization.

Technology

Technology can be thought of as the application of scientific

knowledge for practical purposes. From the invention of the wheel

to the harnessing of electricity for artificial lighting, technology has

become ubiquitous in daily life, to the degree that it is assumed

to always be available for use regardless of location. As discussed

before, the first three components of information systems –

hardware, software, and data – all fall under the category of

technology. Each of these will be addressed in an individual chapter.

At this point a simple introduction should help you in your

understanding.

Hardware

Hardware is the tangible, physical portion of an information system

– the part you can touch. Computers, keyboards, disk drives, and

flash drives are all examples of information systems hardware. How

12 | Information Systems for Business and Beyond (2019)

these hardware components function and work together will be

covered in Chapter 2.

Software

Software comprises the set of instructions that tell the hardware

what to do. Software is not tangible – it cannot be touched.

Programmers create software by typing a series of instructions

telling the hardware what to do. Two main categories of software

are: Operating Systems and Application software. Operating

Systems software provides the interface between the hardware and

the Application software. Examples of operating systems for a

personal computer include Microsoft Windows and Ubuntu Linux.

The mobile phone operating system market is dominated by Google

Android and Apple iOS. Application software allows the user to

perform tasks such as creating documents, recording data in a

spreadsheet, or messaging a friend. Software will be explored more

thoroughly in Chapter 3.

Data

The third technology component is data. You can think of data as

a collection of facts. For example, your address (street, city state,

postal code), your phone number, and your social networking

Chapter 1: What Is an Information System? | 13

account are all pieces of data. Like software, data is also intangible,

unable to be seen in its native state. Pieces of unrelated data are

not very useful. But aggregated, indexed, and organized together

into a database, data can become a powerful tool for businesses.

Organizations collect all kinds of data and use it to make decisions

which can then be analyzed as to their effectiveness. The analysis

of data is then used to improve the organization’s performance.

Chapter 4 will focus on data and databases, and how it is used in

organizations.

Networking Communication

Besides the technology components (hardware, software, and data)

which have long been considered the core technology of

information systems, it has been suggested that one other

component should be added: communication. An information

system can exist without the ability to communicate – the first

personal computers were stand-alone machines that did not access

the Internet. However, in today’s hyper-connected world, it is an

extremely rare computer that does not connect to another device

or to a enetwork. Technically, the networking communication

component is made up of hardware and software, but it is such a

core feature of today’s information systems that it has become its

own category. Networking will be covered in Chapter 5.

People

14 | Information Systems for Business and Beyond (2019)

Jeff Bezos, Amazon CEO

When thinking about information

systems, it is easy to focus on the

technology components and forget to

look beyond these tools to fully

understand their integration into an

organization. A focus on the people

involved in information systems is the

next step. From the front-line user

support staff, to systems analysts, to

developers, all the way up to the chief

information officer (CIO), the people

involved with information systems are

an essential element. The people

component will be covered in Chapter 9.

Process

The last component of information systems is process. A process

is a series of steps undertaken to achieve a desired outcome or

goal. Information systems are becoming more integrated with

organizational processes, bringing greater productivity and better

control to those processes. But simply automating activities using

technology is not enough – businesses looking to utilize

information systems must do more. The ultimate goal is to improve

processes both internally and externally, enhancing interfaces with

suppliers and customers. Technology buzzwords such as “business

process re-engineering,” “business process management,” and

“enterprise resource planning” all have to do with the continued

improvement of these business procedures and the integration of

technology with them. Businesses hoping to gain a competitive

advantage over their competitors are highly focused on this

Chapter 1: What Is an Information System? | 15

IBM 704 Mainframe (Copyright: Lawrence Livermore National Laboratory)

component of information systems. The process element in

information systems will be discussed in Chapter 8.

The Role of Information Systems

You should now understand that information systems have a

number of vital components, some tangible, others intangible, and

still others of a personnel nature. These components collect, store,

organize, and distribute data throughout the organization. You may

have even realized that one of the roles of information systems

is to take data and turn it into information, and then transform

that information into organizational knowledge. As technology has

developed, this role has evolved into the backbone of the

organization, making information systems integral to virtually every

business. The integration of information systems into organizations

has progressed over the decades.

The Mainframe Era

From the late 1950s through the

1960s, computers were seen as

a way to more efficiently do

calculations. These first

business computers were

room-sized monsters, with

several machines linked

16 | Information Systems for Business and Beyond (2019)

Registered trademark of International Business Machines

together. The primary work was to organize and store large volumes

of information that were tedious to manage by hand. Only large

businesses, universities, and government agencies could afford

them, and they took a crew of specialized personnel and dedicated

facilities to provide information to organizations.

Time-sharing allowed dozens or even hundreds of users to

simultaneously access mainframe computers from locations in the

same building or miles away. Typical functions included scientific

calculations and accounting, all under the broader umbrella of “data

processing.”

In the late 1960s,

Manufacturing Resources

Planning (MRP) systems were

introduced. This software,

running on a mainframe

computer, gave companies the

ability to manage the

manufacturing process, making it more efficient. From tracking

inventory to creating bills of materials to scheduling production, the

MRP systems gave more businesses a reason to integrate computing

into their processes. IBM became the dominant mainframe

company. Continued improvement in software and the availability

of cheaper hardware eventually brought mainframe computers (and

their little sibling, the minicomputer) into most large businesses.

Today you probably think of Silicon Valley in northern California

as the center of computing and technology. But in the days of the

mainframe’s dominance corporations in the cities of Minneapolis

and St. Paul produced most computers. The advent of the personal

computer resulted in the “center of technology” eventually moving

to Silicon Valley.

Chapter 1: What Is an Information System? | 17

IBM PC

The PC Revolution

In 1975, the first microcomputer was announced on the cover of

Popular Mechanics: the Altair 8800. Its immediate popularity

sparked the imagination of entrepreneurs everywhere, and there

were soon dozens of companies manufacturing these “personal

computers.” Though at first just a niche product for computer

hobbyists, improvements in usability and the availability of practical

software led to growing sales. The most prominent of these early

personal computer makers was a little company known as Apple

Computer, headed by Steve Jobs and Steve Wozniak, with the hugely

successful “Apple II.” Not wanting to be left out of the revolution,

in 1981 IBM teamed with Microsoft, then just a startup company,

for their operating system software and hurriedly released their

own version of the personal computer simply called the “PC.” Small

businesses finally had affordable computing that could provide

them with needed information systems. Popularity of the IBM PC

gave legitimacy to the microcomputer and it was named

Time magazine’s “Man of the Year” for 1982.

Because of the IBM PC’s open

architecture, it was easy for

other companies to copy, or

“clone” it. During the 1980s,

many new computer

companies sprang up, offering

less expensive versions of the

PC. This drove prices down and

spurred innovation. Microsoft

developed the Windows

operating system, with version

3.1 in 1992 becoming the first

commercially successful release. Typical uses for the PC during this

period included word processing, spreadsheets, and databases.

18 | Information Systems for Business and Beyond (2019)

Registered Trademark of SAP

These early PCs were standalone machines, not connected to a

network.

Client-Server

In the mid-1980s, businesses began to see the need to connect their

computers as a way to collaborate and share resources. Known as

“client-server,” this networking architecture allowed users to log

in to the Local Area Network (LAN) from their PC (the “client”) by

connecting to a central computer called a “server.” The server would

lookup permissions for each user to determine who had access to

various resources such as printers and files. Software companies

began developing applications that allowed multiple users to access

the same data at the same time. This evolved into software

applications for communicating, with the first popular use of

electronic mail appearing at this time.

This networking and data

sharing all stayed mainly within

the confines of each business.

Sharing of electronic data

between companies was a very

specialized function.

Computers were now seen as tools to collaborate internally within

an organization. These networks of computers were becoming so

powerful that they were replacing many of the functions previously

performed by the larger mainframe computers at a fraction of the

cost. It was during this era that the first Enterprise Resource

Planning (ERP) systems were developed and run on the client-server

architecture. An ERP system is an application with a centralized

database that can be used to run a company’s entire business. With

separate modules for accounting, finance, inventory, human

resources, and many more, ERP systems, with Germany’s SAP

Chapter 1: What Is an Information System? | 19

ARPANet, 1969

leading the way, represented the state of the art in information

systems integration. ERP systems will be discussed in Chapter 9.

The Internet, World Wide Web and E-Commerce

The first long distance

transmission between two

computers occurred on

October 29, 1969 when

developers under the direction

of Dr. Leonard Kleinrock sent

the word “login” from the

campus of UCLA to Stanford

Research Institute in Menlo

Park, California, a distance of

over 350 miles. The United

States Department of Defense

created and funded ARPA Net

(Advanced Research Projects

Administration), an

experimental network which

eventually became known as

the Internet. ARPA Net began with just four nodes or sites, a very

humble start for today’s Internet. Initially, the Internet was confined

to use by universities, government agencies, and researchers. Users

were required to type commands (today we refer to this as

“command line”) in order to communicate and transfer files. The

first e-mail messages on the Internet were sent in the early 1970s as

a few very large companies expanded from local networks to the

Internet. The computer was now evolving from a purely

computational device into the world of digital communications.

In 1989, Tim Berners-Lee developed a simpler way for researchers

to share information over the Internet, a concept he called the

20 | Information Systems for Business and Beyond (2019)

Registered trademark of Amazon.com, Inc.

World Wide Web. 4 This invention became the catalyst for the growth

of the Internet as a way for businesses to share information about

themselves. As web browsers and Internet connections became the

norm, companies rushed to grab domain names and create

websites.

In 1991 the National Science

Foundation, which governed

how the Internet was used,

lifted restrictions on its

commercial use. Corporations

soon realized the huge potential of a digital marketplace on the

Internet and in 1994 both eBay and Amazon were founded. A mad

rush of investment in Internet-based businesses led to the dot-com

boom through the late 1990s, and then the dot-com bust in 2000.

The bust occurred as investors, tired of seeing hundreds of

companies reporting losses, abandoned their investments. An

important outcome for businesses was that thousands of miles of

Internet connections, in the form of fiber optic cable, were laid

around the world during that time. The world became truly “wired”

heading into the new millenium, ushering in the era of globalization,

which will be discussed in Chapter 11. This TED Talk video focuses

on connecting Africa to the Internet through undersea fibre optic

cable.

The digital world also became a more dangerous place as virtually

all companies connected to the Internet. Computer viruses and

worms, once slowly propagated through the sharing of computer

disks, could now grow with tremendous speed via the Internet.

Software and operating systems written for a standalone world

found it very difficult to defend against these sorts of threats. A

whole new industry of computer and Internet security arose.

Information security will be discussed in Chapter 6.

4. [4]

Chapter 1: What Is an Information System? | 21

Web 2.0

As the world recovered from the dot-com bust, the use of

technology in business continued to evolve at a frantic pace.

Websites became interactive. Instead of just visiting a site to find

out about a business and then purchase its products, customers

wanted to be able to customize their experience and interact online

with the business. This new type of interactive website, where you

did not have to know how to create a web page or do any

programming in order to put information online, became known as

Web 2.0. This new stage of the Web was exemplified by blogging,

social networking, and interactive comments being available on

many websites. The new Web 2.0 world, in which online interaction

became expected, had a major impact on many businesses and even

whole industries. Many bookstores found themselves relegated to a

niche status. Video rental chains and travel agencies simply began

going out of business as they were replaced by online technologies.

The newspaper industry saw a huge drop in circulation with some

cities such as New Orleans no longer able to support a daily

newspaper.

Disintermediation is the process of technology replacing a

middleman in a transaction. Web 2.0 allowed users to get

information and news online, reducing dependence of physical

books and newspapers.

As the world became more connected, new questions arose.

Should access to the Internet be considered a right? Is it legal

to copy a song that had been downloaded from the Internet? Can

information entered into a website be kept private? What

information is acceptable to collect from children? Technology

moved so fast that policymakers did not have enough time to enact

appropriate laws. Ethical issues surrounding information systems

will be covered in Chapter 12.

22 | Information Systems for Business and Beyond (2019)

The Post-PC World, Sort of

Ray Ozzie, a technology visionary at Microsoft, stated in 2012 that

computing was moving into a phase he called the post-PC world. 5

Now six years later that prediction has not stood up very well to

reality. As you will read in Chapter 13, PC sales have dropped slightly

in recent years while there has been a precipitous decline in tablet

sales. Smartphone sales have accelerated, due largely to their

mobility and ease of operation. Just as the mainframe before it, the

PC will continue to play a key role in business, but its role will

be somewhat diminished as people emphasize mobility as a central

feature of technology. Cloud computing provides users with mobile

access to data and applications, making the PC more of a part of

the communications channel rather than a repository of programs

and information. Innovation in the development of technology and

communications will continue to move businesses forward.

5. [5]

Chapter 1: What Is an Information System? | 23

Eras of Business Computing

Era Hardware Operating System Applications

Mainframe (1970s)

Terminals connected to mainframe computer

Time-sharing (TSO) on Multiple Virtual Storage (MVS)

Custom-written MRP software

PC (mid-1980s)

IBM PC or compatible. Sometimes connected to mainframe computer via network interface card.

MS-DOS WordPerfect, Lotus 1-2-3

Client-Server (late 80s to early 90s)

IBM PC “clone” on a Novell Network.

Windows for Workgroups

Microsoft Word, Microsoft Excel

World Wide Web (mid-90s to early 2000s)

IBM PC “clone” connected to company intranet.

Windows XP Microsoft Office, Internet Explorer

Web 2.0 (mid-2000s – present)

Laptop connected to company Wi-Fi.

Windows 10 Microsoft Office

Post-PC (today and beyond)

Smartphones Android, iOS Mobile-friendly websites, mobile apps

Can Information Systems Bring Competitive Advantage?

It has always been the assumption that the implementation of

information systems will bring a business competitive advantage. If

installing one computer to manage inventory can make a company

more efficient, then it can be expected that installing several

computers can improve business processes and efficiency.

In 2003, Nicholas Carr wrote an article in the Harvard Business

24 | Information Systems for Business and Beyond (2019)

Registered Trademark of Walmart, Inc.

Review that questioned this assumption. Entitled “I.T. Doesn’t

Matter.” Carr was concerned that information technology had

become just a commodity. Instead of viewing technology as an

investment that will make a company stand out, Carr said

technology would become as common as electricity – something to

be managed to reduce costs, ensure that it is always running, and be

as risk-free as possible.

The article was both hailed and scorned. Can I.T. bring a

competitive advantage to an organization? It sure did for Walmart

(see sidebar). Technology and competitive advantage will be

discussed in Chapter 7.

Sidebar: Walmart Uses Information Systems to Become the World’s Leading Retailer

Walmart is the world’s largest

retailer, earn 8.1 billion for the

fiscal year that ended on

January 31, 2018. Walmart

currently serves over 260

million customers every week worldwide through its 11,700 stores in

28 countries. 6

In 2018 Fortune magazine for the sixth straight year

ranked Walmart the number one company for annual revenue as

they again exceeded $500 billion in annual sales. The next closest

company, Exxon, had less than half of Walmart’s total revenue. 7

Walmart’s rise to prominence is due in large part to making

6. [6]

7. [7]

Chapter 1: What Is an Information System? | 25

information systems a high priority, especially in their Supply Chain

Management (SCM) system known as Retail Link.ing $14.3 billion on

sales of $30

This system, unique when initially implemented in the mid-1980s,

allowed Walmart’s suppliers to directly access the inventory levels

and sales information of their products at any of Walmart’s more

than eleven thousand stores. Using Retail Link, suppliers can

analyze how well their products are selling at one or more Walmart

stores with a range of reporting options. Further, Walmart requires

the suppliers to use Retail Link to manage their own inventory

levels. If a supplier feels that their products are selling out too

quickly, they can use Retail Link to petition Walmart to raise the

inventory levels for their products. This has essentially allowed

Walmart to “hire” thousands of product managers, all of whom have

a vested interest in the products they are managing. This

revolutionary approach to managing inventory has allowed Walmart

to continue to drive prices down and respond to market forces

quickly.

Today Walmart continues to innovate with information

technology. Using its tremendous market presence, any technology

that Walmart requires its suppliers to implement immediately

becomes a business standard. For example, in 1983 Walmart became

the first large retailer to require suppliers to the use Uniform

Product Code (UPC) labels on all products. Clearly, Walmart has

learned how to use I.T. to gain a competitive advantage.

Summary

In this chapter you have been introduced to the concept of

information systems. Several definitions focused on the main

components: technology, people, and process. You saw how the

26 | Information Systems for Business and Beyond (2019)

business use of information systems has evolved over the years,

from the use of large mainframe computers for number crunching,

through the introduction of the PC and networks, all the way to

the era of mobile computing. During each of these phases, new

innovations in software and technology allowed businesses to

integrate technology more deeply into their organizations.

Virtually every company uses information systems which leads

to the question: Does information systems bring a competitive

advantage? In the final analysis the goal of this book is to help you

understand the importance of information systems in making an

organization more competitive. Your challenge is to understand the

key components of an information system and how it can be used to

bring a competitive advantage to every organization you will serve

in your career.

Study Questions

1. What are the five major components that make up an

information system?

2. List the three examples of information system hardware?

3. Microsoft Windows is an example of which component of

information systems?

4. What is application software?

5. What roles do people play in information systems?

6. What is the definition of a process?

7. What was invented first, the personal computer or the

Internet?

8. In what year were restrictions on commercial use of the

Internet first lifted?

9. What is Carr’s main argument about information technology?

Chapter 1: What Is an Information System? | 27

Exercises

1. Suppose that you had to explain to a friend the concept of an

information system. How would you define it? Write a one-

paragraph description in your own words that you feel would

best describe an information system to your friends or family.

2. Of the five primary components of an information system

(hardware, software, data, people, process), which do you think

is the most important to the success of a business

organization? Write a one-paragraph answer to this question

that includes an example from your personal experience to

support your answer.

3. Everyone interacts with various information systems every

day: at the grocery store, at work, at school, even in our cars.

Make a list of the different information systems you interact

with daily. Can you identify the technologies, people, and

processes involved in making these systems work.

4. Do you agree that we are in a post-PC stage in the evolution of

information systems? Do some original research and cite it as

you make your prediction about what business computing will

look like in the next generation.

5. The Walmart sidebar introduced you to how information

systems was used to make them the world’s leading retailer.

Walmart has continued to innovate and is still looked to as a

leader in the use of technology. Do some original research and

write a one-page report detailing a new technology that

Walmart has recently implemented or is pioneering.

Labs

1. Examine your PC. Using a four column table format identify

and record the following information: 1st column: Program

28 | Information Systems for Business and Beyond (2019)

name, 2nd column: software manufacturer, 3rd column:

software version, 4th column: software type (editor/word

processor, spreadsheet, database, etc.).

2. Examine your mobile phone. Create another four column table

similar to the one in Lab #1. This time identify the apps, then

record the requested information.

3. In this chapter you read about the evolution of computing

from mainframe computers to PCs and on to smartphones.

Create a four column table and record the following

information about your own electronic devices: 1st column –

Type: PC or smartphone, 2nd column – Operating system

including version, 3rd column – Storage capacity, 4th column –

Storage available.

1. Laudon, K.C. and Laudon, J. P. (2014) Management Information

Systems, thirteenth edition. Upper Saddle River, New Jersey:

Pearson.

2. Valacich, J. and Schneider, C. (2010). Information Systems Today

– Managing in the Digital World, fourth edition. Upper Saddle

River, New Jersey: Prentice-Hall.

3. Laudon, K.C. and Laudon, J. P. (2012). Management Information

Systems, twelfth edition. Upper Saddle River, New Jersey:

Prentice-Hall.

4. CERN. (n.d.) The Birth of the Web. Retrieved

from http://public.web.cern.ch/public/en/about/web-

en.html

5. Marquis, J. (2012, July 16) What is the Post-PC World? Online

Universities.com. Retrieved from

https://www.onlineuniversities.com/blog/2012/07/what-

post-pc-world/

6. Walmart. (n.d.) 2017 Annual Report. Retrieved from

http://s2.q4cdn.com/056532643/files/doc_financials/2017/

Annual/WMT_2017_AR-(1).pdf

Chapter 1: What Is an Information System? | 29

7. McCoy, K. (2018, May 21). Big Winners in Fortune 500 List. USA

Today. Retrieved from http://https://www.usatoday.com/

story/money/2018/05/21/big-winners-fortune-500-list-

walmart-exxon-mobil-amazon/628003002/

30 | Information Systems for Business and Beyond (2019)

Chapter 2: Hardware

Learning Objectives

Upon successful completion of this chapter, you will be

able to:

• describe information systems hardware;

• identify the primary components of a computer

and the functions they perform; and

• explain the effect of the commoditization of the

personal computer.

Introduction

As you learned in the first chapter, an information system is made

up of five components: hardware, software, data, people, and

process. The physical parts of computing devices – those that you

can actually touch – are referred to as hardware. In this chapter, you

will take a look at this component of information systems, learn a

little bit about how it works, and discuss some of the current trends

surrounding it.

As stated above, computer hardware encompasses digital devices

that you can physically touch. This includes devices such as the

following:

Chapter 2: Hardware | 31

• desktop computers

• laptop computers

• mobile phones

• tablet computers

• e-readers

• storage devices, such as flash drives

• input devices, such as keyboards, mice, and scanners

• output devices such as printers and speakers.

Besides these more traditional computer hardware devices, many

items that were once not considered digital devices are now

becoming computerized themselves. Digital technologies are being

integrated into many everyday objects so the days of a device being

labeled categorically as computer hardware may be ending.

Examples of these types of digital devices include

automobiles, refrigerators, and even beverage dispensers. In this

chapter, you will also explore digital devices, beginning with

defining what is meant by the term itself.

Digital Devices

A digital device processes electronic signals into discrete values, of

which there can be two or more. In comparison analog signals are

continuous and can be represented by a smooth wave pattern. You

might think of digital (discrete) as being the opposite of analog.

Many electronic devices process signals into two discrete values,

typically known as binary. These values are represented as either

a one (“on”) or a zero (“off”). It is commonly accepted to refer to

the on state as representing the presence of an electronic signal.

It then follows that the off state is represented by the absence of

an electronic signal. Note: Technically, the voltages in a system are

evaluated with high voltages converted into a one or on state and

low voltages converted into a zero or off state.

32 | Information Systems for Business and Beyond (2019)

Each one or zero is referred to as a bit (a blending of the two

words “binary” and “digit”). A group of eight bits is known as a byte.

The first personal computers could process 8 bits of data at once.

The number of bits that can be processed by a computer’s processor

at one time is known as word size. Today’s PCs can process 64 bits of

data at a time which is where the term 64-bit processor comes from.

You are most likely using a computer with a 64-bit processor.

Sidebar: Understanding Binary

The numbering system you first learned was Base 10 also known as

Decimal. In Base 10 each column in the number represents a power

of 10 with the exponent increasing in each column as you move to

the left, as shown in the table:

Thousands Hundreds Tens Units

103 102 101 100

The rightmost column represents units or the values zero through

nine. The next column from the left represents tens or the values

teens, twenties, thirties, etc, followed by the hundreds column (one

hundred, two hundred, etc.), then the thousands column (one

thousand, two thousand) etc. Expanding the table above, you can

write the number 3456 as follows:

Thousands Hundreds Tens Units

103 102 101 100

3 4 5 6

3000 400 50 6

Chapter 2: Hardware | 33

Computers use the Base 2 numbering system. Similar to Base 10,

each column has a Base of 2 and has an increasing exponent value

moving to the left as shown in the table below:

Two cubed

Two squared

Two Units

23 22 21 20

The rightmost column represents 20 or units ( 1 ). The next

column from the left represents 21 twos or ( 2 ). The third column

represents 22 or ( 4 ) and the fourth column represents 23 or ( 8 ).

Expanding the table above, you can see how the decimal number 15

is converted to 1111 in binary as follows:

Two cubed

Two squared

Two Units

23 22 21 20

1 1 1 1

8 4 2 1

8 + 4 + 2 + 1 = 15

Understanding binary is important because it helps us understand

how computers store and transmit data. A “bit” is the lowest level

of data storage, stored as either a one or a zero. If a computer

wants to communicate the number 15, it would need to send 1111 in

binary (as shown above). This is four bits of data since four digits

are needed. A “byte” is 8 bits. If a computer wanted to transmit the

number 15 in a byte, it would send 00001111. The highest number

that can be sent in a byte is 255, which is 11111111, which is equal

to 27+26+25+24+23+22+21+20.

34 | Information Systems for Business and Beyond (2019)

As the capacities of digital devices grew, new terms were developed

to identify the capacities of processors, memory, and disk storage

space. Prefixes were applied to the word byte to represent different

orders of magnitude. Since these are digital specifications, the

prefixes were originally meant to represent multiples of 1024 (which

is 210), but have more recently been rounded for the sake of

simplicity to mean multiples of 1000, as shown in the table below:

Prefix Represents Example

kilo one

thousand kilobyte=one

thousand bytes

mega one million megabyte = one

million bytes

giga one billion gigabyte = one

billion bytes

tera one trillion terabyte = one trillion bytes

peta one

quadrillion petabyte = one

quadrillion bytes

exa one

quintillion exabyte = one

quintillion bytes

zetta one

sextillion zettabyte = one sextillion bytes

yotta one

septillion yottabyte = one septillion bytes

Tour of a PC

All personal computers consist of the same basic components: a

Central Processing Unit (CPU), memory, circuit board, storage, and

input/output devices. Almost every digital device uses the same set

of components, so examining the personal computer will give you

Chapter 2: Hardware | 35

Intel Core i7 CPU

insight into the structure of a variety of digital devices. Here’s a

“tour” of a personal computer.

Processing Data: The CPU

The core of a computer is the Central Processing Unit, or CPU. It

can be thought of as the “brains” of the device. The CPU carries out

the commands sent to it by the software and returns results to be

acted upon.

The earliest CPUs were large circuit

boards with limited functionality.

Today, a CPU can perform a large

variety of functions. There are two

primary manufacturers of CPUs for

personal computers: Intel and

Advanced Micro Devices (AMD).

The speed (“clock time”) of a CPU is

measured in hertz. A hertz is defined

as one cycle per second. A kilohertz (abbreviated kHz) is one

thousand cycles per second, a megahertz (mHz) is one million cycles

per second, and a gigahertz (gHz) is one billion cycles per second.

The CPU’s processing power is increasing at an amazing rate (see

the sidebar about Moore’s Law).

Besides a faster clock time, today’s CPU chips contain multiple

processors. These chips, known as dual-core (two processors) or

quad-core (four processors), increase the processing power of a

computer by providing the capability of multiple CPUs all sharing

the processing load. Intel’s Core i7 processors contain 6 cores and

their Core i9 processors contain 16 cores. This video shows how a

CPU works.

36 | Information Systems for Business and Beyond (2019)

Sidebar: Moore’s Law and Huang’s Law

As you know computers get faster every year. Many times we are

not sure if we want to buy today’s model because next week it

won’t be the most advanced any more. Gordon Moore, one of the

founders of Intel, recognized this phenomenon in 1965, noting that

microprocessor transistor counts had been doubling every year. 1

His insight eventually evolved into Moore’s Law:

The number of integrated circuits on a chip doubles every two

years.

Moore’s Law has been generalized into the concept that

computing power will double every two years for the same price

point. Another way of looking at this is to think that the price for the

same computing power will be cut in half every two years. Moore’s

Law has held true for over forty years (see figure below).

The limits of Moore’s Law are now being reached and circuits

cannot be reduced further. However, Huang’s Law regarding

Graphics Processors Units (GPUs) may extend well into the future.

Nvidia’s CEO Jensen Huang spoke at the GPU Technology

Conference in March 2018 announcing that the speed of GPUs are

increasing faster than Moore’s Law. Nvidia’s GPUs are 25 times

faster than five years ago. He admitted that the advancement is

because of advances in architecture, memory technology,

algorithms, and interconnects. 2

1. [1]

2. [2]

Chapter 2: Hardware | 37

Motherboard

Motherboard bus traces

Motherboard

The motherboard is the main

circuit board on the computer.

The CPU, memory, and storage

components, among other

things, all connect into the

motherboard. Motherboards

come in different shapes and

sizes, depending upon how

compact or expandable the

computer is designed to be. Most modern motherboards have many

integrated components, such as network interface card, video, and

sound processing, which previously required separate components.

The motherboard provides

much of the bus of the

computer (the term bus refers

to the electrical connections

between different computer

components). The bus is an

important factor in

determining the computer’s

speed – the combination of how

fast the bus can transfer data

and the number of data bits that can be moved at one time

determine the speed. The traces shown in the image are on the

underside of the motherboard and provide connections between

motherboard components.

Random-Access Memory

When a computer boots, it begins to load information from storage

38 | Information Systems for Business and Beyond (2019)

DDR4 Memory

Hard disk interior

into its working memory. This working memory, called Random-

Access Memory (RAM), can transfer data much faster than the hard

disk. Any program that you are running on the computer is loaded

into RAM for processing. In order for a computer to work effectively,

some minimal amount of RAM must be installed. In most cases,

adding more RAM will allow the computer to run faster. Another

characteristic of RAM is that it is “volatile.” This means that it can

store data as long as it is receiving power. When the computer is

turned off, any data stored in RAM is lost.

RAM is generally installed in a

personal computer through the

use of a Double Data Rate (DDR)

memory module. The type of

DDR accepted into a computer

is dependent upon the motherboard. There have been basically four

generations of DDR: DDR1, DDR2, DDR3, and DDR4. Each generation

runs faster than the previous with DDR4 capable of speeds twice as

fast as DDR3 while consuming less voltage.

Hard Disk

While the RAM is used as

working memory, the computer

also needs a place to store data

for the longer term. Most of

today’s personal computers use

a hard disk for long-term data

storage. A hard disk is

considered non-volatile

storage because when the

computer is turned off the data

remains in storage on the disk, ready for when the computer is

turned on. Drives with a capacity less than 1 Terabyte usually have

Chapter 2: Hardware | 39

Solid State Drive interior

just one platter. Notice the single platter in the image. The read/

write arm must be positioned over the appropriate track before

accessing or writing data.”

Solid State Drives

Solid State Drives (SSD) are becoming more popular in personal

computers. The SSD performs the same function as a hard disk,

namely long-term storage. Instead of spinning disks, the SSD uses

flash memory that incorporates EEPROM (Electrically Erasable

Programmable Read Only Memory) chips, which is much faster.

Solid-state drives are

currently a bit more expensive

than hard disks. However, the

use of flash memory instead of

disks makes them much lighter

and faster than hard disks. SSDs

are primarily utilized in

portable computers, making

them lighter, more durable, and

more efficient. Some computers combine the two storage

technologies, using the SSD for the most accessed data (such as the

operating system) while using the hard disk for data that is accessed

less frequently. SSDs are considered more reliable since there are

no moving parts.

40 | Information Systems for Business and Beyond (2019)

USB Drive

Removable Media

Removable storage has changed

greatly over the four decades of

PCs. Floppy disks have been

replaced by CD-ROM drives,

then they were replaced by USB

(Universal Serial Bus) drives.

USB drives are now standard on

all PCs with capacities

approaching 512 gigabytes. Speeds have also increased from 480

Megabits in USB 2.0 to 10 Gigabits in USB 3.1. USB devices also use

EEPROM technology.

3

Network Connection

When personal computers were first stand-alone units when first

developed, which meant that data was brought into the computer

or removed from the computer via removable media. Beginning in

the mid-1980s, however, organizations began to see the value in

connecting computers together via a digital network. Because of

this personal computers needed the ability to connect to these

networks. Initially, this was done by adding an expansion card to

the computer that enabled the network connection. These cards

were known as Network Interface Cards (NIC). By the mid-1990s

an Ethernet network port was built into the motherboard on most

personal computers. As wireless technologies began to dominate

3. [3]

Chapter 2: Hardware | 41

USB port on a computer

in the early 2000s, many personal computers also began including

wireless networking capabilities. Digital communication

technologies will be discussed further in Chapter 5.

Input and Output

In order for a personal

computer to be useful, it must

have channels for receiving

input from the user and

channels for delivering output

to the user. These input and

output devices connect to the

computer via various

connection ports, which

generally are part of the

motherboard and are accessible outside the computer case. In early

personal computers, specific ports were designed for each type of

output device. The configuration of these ports has evolved over the

years, becoming more and more standardized over time. Today,

almost all devices plug into a computer through the use of a USB

port. This port type, first introduced in 1996, has increased in its

capabilities, both in its data transfer rate and power supplied.

Bluetooth

Besides USB, some input and output devices connect to the

computer via a wireless-technology standard called Bluetooth

which was invented in 1994. Bluetooth exchanges data over short

distances of 10 meters up to 100 meters using radio waves. Two

devices communicating with Bluetooth must both have a Bluetooth

42 | Information Systems for Business and Beyond (2019)

communication chip installed. Bluetooth devices include pairing

your phone to your car, computer keyboards, speakers, headsets,

and home security, to name just a few.

Input Devices

All personal computers need components that allow the user to

input data. Early computers simply used a keyboard for entering

data or select an item from a menu to run a program. With the

advent operating systems offering the graphical user interface, the

mouse became a standard component of a computer. These two

components are still the primary input devices to a personal

computer, though variations of each have been introduced with

varying levels of success over the years. For example, many new

devices now use a touch screen as the primary way of data entry.

Other input devices include scanners which allow users to input

documents into a computer either as images or as text.

Microphones can be used to record audio or give voice commands.

Webcams and other types of video cameras can be used to record

video or participate in a video chat session.

Output Devices

Output devices are essential as well. The most obvious output

device is a display or monitor, visually representing the state of

the computer. In some cases, a personal computer can support

multiple displays or be connected to larger-format displays such as

a projector or large-screen television. Other output devices include

speakers for audio output and printers for hardcopy output.

Chapter 2: Hardware | 43

Sidebar: Which Hardware Components Contribute to the Speed of Your Computer

The speed of a computer is determined by many elements, some

related to hardware and some related to software. In hardware,

speed is improved by giving the electrons shorter distances to

travel in completing a circuit. Since the first CPU was created in

the early 1970s, engineers have constantly worked to figure out

how to shrink these circuits and put more and more circuits onto

the same chip – these are known as integrated circuits. And this

work has paid off – the speed of computing devices has been

continuously improving.

Multi-core processors, or CPUs, have contributed to faster

speeds. Intel engineers have also improved CPU speeds by using

QuickPath Interconnect, a technique which minimizes the

processor’s need to communicate directly with RAM or the hard

drive. Instead, the CPU contains a cache of frequently used data

for a particular program. An algorithm evaluates a program’s data

usage and determines which data should be temporarily stored in

the cache.

The hardware components that contribute to the speed of a

personal computer are the CPU, the motherboard, RAM, and the

hard disk. In most cases, these items can be replaced with newer,

faster components. The table below shows how each of these

contributes to the speed of a computer. Besides upgrading

hardware, there are many changes that can be made to the software

of a computer to make it faster.

44 | Information Systems for Business and Beyond (2019)

Component Speed measured by

Units Description

CPU Clock speed

GHz (billions of cycles)

Hertz indicates the time it takes to complete a cycle.

Motherboard Bus speed

MHz The speed at which data can move across the bus.

RAM Data transfer rate

Mb/s (millions of bytes per second)

The time it takes for data to be transferred from memory to system measured in Megabytes.

Hard Disk

Access time

ms (millisecond)

The time it takes for the drive to locate the data to be accessed.

Data transfer rate

MBit/s The time it takes for data to be transferred from disk to system.

Other Computing Devices

A personal computer is designed to be a general-purpose device,

able to solve many different types of problems. As the technologies

of the personal computer have become more commonplace, many

of the components have been integrated into other devices that

previously were purely mechanical. The definition or description

of what defines a computer has changed. Portability has been an

important feature for most users. Here is an overview of some

trends in personal computing.

Chapter 2: Hardware | 45

MacBook Air

Portable Computers

Portable computing today

includes laptops, notebooks

and netbooks, many weighing

less than 4 pounds and

providing longer battery life.

The MacBook Air is a good

example of this: it weighs less

than three pounds and is only

0.68 inches thick!

Netbooks (short for Network

Books) are extremely light because they do not have a hard drive,

depending instead on the Internet “cloud” for data and application

storage. Netbooks depend on a Wi-Fi connection and can run Web

browsers as well as a word processor.

Smartphones

While cell phones were introduced in the 1970s, smartphones have

only been around for the past 20 years. As cell phones evolved

they gained a broader array of features and programs. Today’s

smartphones provide the user with telephone, email, location, and

calendar services, to name a few. They function as a highly mobile

computer, able to connect to the Internet through either cell

technology or Wi-Fi. Smartphones have revolutionized computing,

bringing the one feature PCs and laptops could not deliver, namely

mobility. Consider the following data regarding mobile computing 4 :

4. [4]

46 | Information Systems for Business and Beyond (2019)

1. There are 3.7 billion global mobile Internet users as at January 2018.

2. Mobile devices influenced sales to the tune of over $1.4 trillion

in 2016.

3. Mobile commerce revenue in the U.S. is projected to be

$459.38 billion in 2018, and it is estimated to be $693.36 billion

by 2019.

4. By the end of 2018, over $1 trillion — or 75 percent — of

ecommerce sales in China will be done via mobile devices.

5. The average order value for online orders placed on

Smartphones in the first quarter of 2018 is $84.55 while the

average order value for orders placed on Tablets is $94.91.

6. Of the 2.79 billion active social media users in the world, 2.55

billion actively use their mobile devices for social media-

related activities.

7. 90 percent of the time spent on mobile devices is spent in

apps.

8. Mobile traffic is responsible for 52.2 percent of Internet traffic

in 2018 — compared to 50.3 percent from 2017.

9. While the total percentage of mobile traffic is more than

desktop, engagement is higher on desktop. 55.9 percent of

time spent on sites is by desktop users and 40.1 percent of time

spent on sites is by mobile users.

10. By 2020, mobile commerce will account for 45 percent of all e-

commerce activities — compared to 20.6 percent in 2016.

The Apple iPhone was introduced in January 2007 and went on

the market in June of that same year. Its ease of use and intuitive

interface made it an immediate success and solidified the future of

smartphones. The first Android phone was released in 2008 with

functionality similar to the iPhone.

Chapter 2: Hardware | 47

iPad Air

Tablet Computers

A tablet computer uses a

touch screen as its primary

input and is small enough and

light enough to be easily

transported. They generally

have no keyboard and are self-

contained inside a rectangular

case. Apple set the standard for

tablet computing with the

introduction of the iPad in 2010

using iOS, the operating system

of the iPhone. After the success

of the iPad, computer

manufacturers began to

develop new tablets that

utilized operating systems that

were designed for mobile devices, such as Android.

Global market share for tablets has changed since the early days

of Apple’s dominance. Today the iPad has about 25% of the global

market while Amazon Fire has 15% and Samsung Galaxy has 14%. 5 However, the popularity of tablets has declined sharply in recent

years.

Integrated Computing and Internet of Things (IoT)

Along with advances in computers themselves, computing

5. [5]

48 | Information Systems for Business and Beyond (2019)

technology is being integrated into many everyday products. From

automobiles to refrigerators to airplanes, computing technology is

enhancing what these devices can do and is adding capabilities into

our every day lives thanks in part to IoT.

Internet of Things and the Cloud

The Internet of Things (IoT) is a network of billions of devices,

each with their own unique network address, around the world with

embedded electronics allowing them to connect to the Internet

for the purpose of collecting and sharing data, all without the

involvement of human beings. 6

Objects ranging from a simple light bulb to a fitness band such

as FitBit to a driverless truck are all part of IoT thanks to the

processors inside them. A smartphone app can control and/or

communicate with each of these devices as well as others such as

electric garage door openers (for those who can’t recall if the door

has been closed), kitchen appliances (“Buy milk after work today.”),

thermostats such as Nest, home security, audio speakers, and the

feeding of pets.

Here are three of the latest ways that computing technologies are

being integrated into everyday products through IoT:

6. [6]

Chapter 2: Hardware | 49

• How IoT Works

• The Smart House

• The Self-Driving Car

The Commoditization of the Personal Computer

Over the past forty years, as the personal computer has gone from

technical marvel to part of everyday life, it has also become a

commodity. There is very little differentiation between computer

models and manufacturers, and the primary factor that controls

their sale is their price. Hundreds of manufacturers all over the

world now create parts for personal computers which are

purchased and assembled. As commodities, there are essentially

little or no differences between computers made by these different

companies. Profit margins for personal computers are minimal,

leading hardware developers to find the lowest-cost manufacturing

methods.

There is one brand of computer for which this is not the case

– Apple. Because Apple does not make computers that run on the

same open standards as other manufacturers, they can design and

manufacture a unique product that no one can easily copy. By

creating what many consider to be a superior product, Apple can

charge more for their computers than other manufacturers. Just

as with the iPad and iPhone, Apple has chosen a strategy of

differentiation, an attempt to avoid commoditization.

Summary

Information systems hardware consists of the components of digital

50 | Information Systems for Business and Beyond (2019)

technology that you can touch. This chapter covered the

components that make up a personal computer, with the

understanding that the configuration of a personal computer is very

similar to that of any type of digital computing device. A personal

computer is made up of many components, most importantly the

CPU, motherboard, RAM, hard disk, removable media, and input/

output devices. Variations on the personal computer, such as the

smartphone, were also examined. Finally, commoditization of the

personal computer was addressed.

Study Questions

1. Write your own description of what the term information

systems hardware means.

2. What has lead to the shift toward mobility in computing?

3. What is the impact of Moore’s Law on the various hardware

components described in this chapter?

4. Write a one page summary of one of the items linked to in the

“Integrated Computing” section.

5. Explain why the personal computer is now considered a

commodity.

6. The CPU can also be thought of as the _____________ of

the computer.

7. List the units of measure for data storage in increasing order

from smallest to largest, kilobyte to yottabyte.

8. What is the bus of a computer?

9. Name two differences between RAM and a hard disk.

10. What are the advantages of solid-state drives over hard disks?

Chapter 2: Hardware | 51

Exercises

1. If you could build your own personal computer, what

components would you purchase? Put together a list of the

components you would use to create it, including a computer

case, motherboard, CPU, hard disk, RAM, and DVD drive. How

can you be sure they are all compatible with each other? How

much would it cost? How does this compare to a similar

computer purchased from a vendor such as Dell or HP?

2. Re-read the section on IoT, then find at least two scholarly

articles about IoT. Prepare a minimum of three slides that

address issues related to IoT. Be sure to give attribution to

your sources.

3. What is the current status of solid-state drives vs. hard disks?

Research online and compare prices, capacities, speed, and

durability. Again, be sure to give attribution to your sources.

Labs

1. Review the sidebar on the binary number system. Represent

the following decimal numbers in binary: 16, 100. Represent the

following binary numbers in decimal: 1011, 100100. Write the

decimal number 254 in an 8-bit byte.

2. Re-read the section on IoT, then look around your building

(dorm, apartment, or house) and make a list of possible

instances of IoTs. Be sure to list their location and likely

function.

1. Moore, G. E. (1965). Cramming more components onto

integrated circuits. Electronics Magazine, 4.

2. Huang, J. (2018, April 2). Move Over Moore’s Law: Make Room

52 | Information Systems for Business and Beyond (2019)