EIS Test

Chapter

Introduction to Information Systems

1

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[ LEARNING OBJECTIVES ] [ CHAPTER OUTLINE ] [ WEB RESOURCES ]

1. Begin the process of becoming an informed user of your organization’s information systems.

2. Defi ne the terms data, information, and knowledge, and give examples of each.

3. Defi ne the terms information technology, information system, computer-based information system, and application.

4. Identify three ways in which you depend on information technology in your daily life.

5. Discuss three ways in which information technology can impact managers and three ways in which it can impact nonmanagerial workers.

6. List three positive and three negative societal effects of the increased use of information technology.

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1.1 Why Should I Study Information Systems?

1.2 Overview of Computer-Based Information Systems

1.3 How Does IT Impact Organizations?

1.4 Importance of Information Systems to Society

POMFIN HRMKT MISACCT Forecast revenues Determine best

sources for funds Process customer

orders Hire new employees Directly support

all functional areas

Develop new goods and services

What’s In ITFor Me? T H I S C H A P T E R W I L L H E L P P R E P A R E Y O U T O . . .

3

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4 CHAPTER 1 Introduction to Information Systems

[ Revolution!] The Problem

I n January 2011, the Arab world’s fi rst successful popular uprising, called the Jasmine Revolution (after the national fl ower of Tunisia), erupted in Tunisia when a small-town policewoman slapped a fruit seller named Mohammed Bouazizi and ordered him to pack up his street cart. Bouazizi

was a computer science graduate who was unable to fi nd any work as a computer technician. As a result, he was forced to sell fruit to support his seven siblings. Bouazizi, like many young, educated Tunisians, was frustrated by the overall lack of oppor- tunities. For him, the slap was the fi nal straw. He went to the governor’s offi ce and demanded an appointment, threatening to set himself on fi re in public if the governor refused to see him. Despite this dire warning, he was turned away. In response, on December 17, 2010, Bouazizi carried out his threat. When he died 18 days later, his story went viral, providing millions of angry young Tunisians with a martyr. Vast numbers of protestors took to the streets, sparking the Jasmine Revolution. The Jasmine Revolution did not need any prominent leaders to rally the protesters or to orga- nize the demonstrations. Instead, the revolution was fueled by a steady stream of anonymous text messages and Twitter and Facebook updates. Documents posted on WikiLeaks (see Chapter 3), in which U.S. diplomats had cataloged corruption at the highest levels of the Tunisian govern- ment, deepened the popular rage. Mobile phone videos posted online documented the govern- ment’s brutal response, including scenes of the police beating and shooting at protestors, leading to at least 100 deaths. The protesters used the one weapon that they understood much better than did the government: the Internet. Young Tunisians—educated, multilingual, and wired— devised strategies to evade the government’s crude fi rewalls. Protestors spent several hours each day on Facebook and other social networks. By rendering the state television and radio stations irrelevant, they were able to undermine the regime’s propaganda for the fi rst time in many years. Finally, on January 14, 2011, President Ben Ali was forced into exile. Later that month, another popular uprising broke out in a different Middle Eastern country— Egypt. In 2010, Khaled Saied, a young man from Alexandria with no history of political activism, had been beaten to death by the police. Protesters rallied around a Facebook page called We Are All Khaled Saied. Mr. Saied’s death became the focal point for Egyptians who had not been previously involved in the protest movement. Beginning on January 25, 2011, millions of protesters from a variety of backgrounds and religions demanded the overthrow of Egyptian President Hosni Mubarak, who had held offi ce since 1981.

An Attempted Solution In an effort to silence the demonstrators and avoid the fate of Tunisia’s President Ben Ali, Mubarak “turned off the Internet.” On January 28, at 12:34 am, Egypt’s four primary Internet providers—Link Egypt, Vodafone/Raya, Telecom Egypt, and Etisalat Misr—all went “dark.” That is, the four providers stopped transmitting all Internet traffi c into and out of Egypt. The blackout appeared to be designed to disrupt the organization of the country’s protest movement.

The Results “When countries block, we evolve,” an activist with the group We Rebuild wrote in a Twitter message on January 28. We Rebuild and other activist groups scrambled to keep the country connected to the outside world, turning to landline telephones, fax machines, and even ham radio to keep information fl owing in and out of Egypt. The activists were successful. On February 2, Egypt’s embattled leaders realized that the com- munications blockage was largely ineffective and indeed counterproductive. The shutdown proved to be more a source of fresh anger than an impediment to the protest movement. Protesters had no trouble assembling increasingly larger crowds, culminating with an estimated 250,000 people who assembled in central Cairo on January 29 to demand an end to Mubarak’s rule. On February 11, following weeks of determined popular protest and pressures, Mubarak resigned from offi ce.

Robert F. Balazik/Shutterstock

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CASE 5

The Jasmine Revolution and the Egyptian Revolution helped to instigate major uprisings throughout the Middle East and North Africa. By April 2011, Algeria, Bahrain, Iran, Jordan, Libya, Morocco, and Yemen all had experienced major protests, and minor incidents had occurred in Iraq, Kuwait, Mauritania, Oman, Saudi Arabia, Somalia, Sudan, and Syria.

What We Learned From This Case The chapter-opening case illustrates how information technology is encouraging and assisting people living under repressive regimes in their struggles to attain freedom of expression and economic opportunity. In fact, social networking technologies literally provided the necessary underpinnings of these uprisings. You will learn about social networking technologies in detail in Chapter 9. The case also demonstrates that the impacts of information technology are wide- ranging and global. You will encounter many other examples of the societal and environmental effects of information technology throughout this text. Before we proceed, we need to defi ne information technology and information systems. Information technology (IT) relates to any computer-based tool that people use to work with information and to support the information and information-processing needs of an organization. An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specifi c purpose. The opening case is a dramatic example of the far-reaching effects of IT on individuals, organizations, and our planet. Although this text is largely devoted to the many ways in which IT has transformed modern organizations, you will also learn about the signifi cant impacts of  IT on individuals and societies, the global economy, and our physical environment. In addition, IT is making our world smaller, enabling more and more people to communicate, collaborate, and compete, thereby leveling the digital playing fi eld. When you graduate, you either will start your own business or will go to work for an organiza- tion, whether it is public sector, private sector, for-profi t, or not-for-profi t. Your organization will have to survive and compete in an environment that has been radically changed by informa- tion technology. This environment is global, massively interconnected, intensely competitive, 24/7/365, real-time, rapidly changing, and information-intensive. To compete successfully, your organization must effectively use IT. Moreover, your organization does not have to be large to benefi t from IT, as you will see in the case of E-Mealz in IT’s About [Small] Business 1.1. As the case of E-Mealz illustrates, small business owners do not need to be experts in technol- ogy to be successful. The core competency of Jane’s business is not technology. Rather, it is the service of saving time and money. However, she has effectively employed social media and available Internet-related tools to create a successful business. As you read this chapter and this text, keep in mind that the information technologies you will learn about are important to businesses of all sizes. No matter what area of business you major in, what industry you work for, or the size of your company, you will benefi t from learning about IT. Who knows? Maybe you will use the tools you learn about in this class to make your great idea a reality much the way Jane DeLaney has! The modern environment is intensely competitive not only for your organization, but for you as well. You must compete with human talent from around the world. Therefore, you will also have to make effective use of IT. Accordingly, this chapter begins with a discussion of why you should become knowledge- able about IT. It also distinguishes among data, information, and knowledge, and it differenti- ates computer-based information systems from application programs. Finally, it considers the impacts of information systems on organizations and on society in general.

Sources: Compiled from J. Solomon and C. Levinson, “West to Isolate Gadhafi ,” The Wall Street Journal, February 26–27, 2011; “The Faces of Egypt’s ‘Revolution 2.0’,” CNN.com, February 21, 2011; “After Egypt, People Power Hits Like a Tsunami,” CNN. com, February 15, 2011; “Egyptian President Steps Down Amidst Groundbreaking Digital Revolution,” CNN.com, February 11, 2011; C. Levinson, M. Coker, and J. Solomon, “How Cairo, U.S. Were Blindsided by Revolution,” The Wall Street Journal, February 2, 2011; P. McNamara, “Egypt Lifts Blockade on Internet Service,” Network World, February 2, 2011; V. Blue, “Egypt Blocked in China: Is Internet Access a Human Right?” ZDNet.com, January 31, 2011; V. Walt, “Tunisia’s Nervous Neighbors Watch the Jasmine Revolution,” Time, January 31, 2011; N. Gohring and R. McMillan, “Without Internet, Egyptians Find New Ways to Get Online,” Computerworld, January 28, 2011; J. Robertson, “The Day Part of the Internet Died: Egypt Goes Dark,” USA Today, January 28, 2011; “Tunisia’s Revolution Should Be Wake-Up Call to Middle East Autocrats,” The Washington Post, January 15, 2011.

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6 CHAPTER 1 Introduction to Information Systems

1.1 Why Should I Study Information Systems? You are part of the most connected generation in history: You have grown up online; you are, quite literally, never out of touch; you use more information technologies (in the form of digital devices), for more tasks, and are bombarded with more information, than any generation in history. The MIT Technology Review refers to you as Homo conexus. Information technologies are so deeply embedded in your lives that your daily routines would be almost unrecognizable to a college student just 20 years ago. Essentially, you practice continuous computing, surrounded by a movable information net- work. This network is created by constant cooperation between the digital devices you carry (for example, laptops, media players, and smart phones); the wired and wireless networks that you access as you move about; and Web-based tools for fi nding information and communicat- ing and collaborating with other people. Your network enables you to pull information about virtually anything from anywhere, at any time, and to push your own ideas back to the Web, from wherever you are, via a mobile device. Think of everything you do online, often with your smart phone: register for classes; take classes (and not just at your university); access class syllabi, information, PowerPoints, and lectures; research class papers and presentations; conduct bank- ing; pay your bills; research, shop, and buy products from companies or other people; sell your “stuff”; search for, and apply for, jobs; make your travel reservations (hotel, airline, rental car); create your own blog and post your own podcasts and videocasts to it; design your own page on Facebook; make and upload videos to YouTube; take, edit, and print your own digital photo- graphs; “burn” your own custom-music CDs and DVDs; use RSS feeds to create your personal electronic newspaper; text and tweet your friends and family throughout your day; and many other activities. (Note: If any of these terms are unfamiliar to you, don’t worry. You will learn about everything mentioned here in detail later in this text.)

IT’s about [small] business

Jane DeLaney grew up in a home where family meals around the table were the norm. She wanted the same for her family, but she found it very diffi cult due to their busy schedules. She would go from one week of a somewhat organized meal plan to another week of sheer chaos. In 2003, Jane decided it was time to do something about the problem. She created a meal-planning service, called E-Mealz (www.E-Mealz.com), that she could both use herself and offer to other families. How does E-Mealz work? Essentially, Jane and a few employees create a weekly meal plan for different-sized fami- lies. They then draw up a grocery list with prices from various gro- cery stores. Customers pay for the service—in April 2011, the cost was only $1.85 a week—and they receive their grocery list at the beginning of the week. Jane needed information technology to put her great idea to work. The E-Mealz Web site promotes her products and con- vinces customers to sign up for her service. If you visit her site, you will fi nd that she also uses Twitter and Facebook to promote her product and to create a community of customers. Visitors can submit their own recipes to be included in the system. Members can sign up for newsletters, and they can manage their accounts to determine which particular plan they will join. The Web site offers plans for couples and families, and it provides information

about a host of nutritional needs, all of which is updated weekly. Although the tools that Jane uses are not complicated, she could not have transformed her dream into a reality without them. When Jane DeLaney started E-Mealz, her objective was not to create a huge meal-planning service. Rather, her goal was simply to provide a way for families to spend time together, save money, and enjoy delicious meals. Since its inception, E-Mealz has been acclaimed for improving family meals while helping families con- trol their budgets. Members testify that they are able to shop more quickly and spend less money, while feeling confi dent that they have purchased all the ingredients they will need for the week. Jane has successfully utilized IT to accomplish her goal of helping families spend time together, much as they did when she was growing up.

Questions 1. Provide two examples of how Jane uses information technology

to provide her service. 2. Provide two additional examples of how Jane might use

information technology to improve her service. Be specifi c.

Sources: Compiled from A. Caldwell, “E-Mealz.com—Meal Planning Resource Review,” Blissfully Domestic, February 17, 2011; http://E-Mealz. com; http://maketimeforfamily.org; www.daveramsey.com/recommends/dave-

recommends; accessed March 21, 2011.

1.1 E-Mealz

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SECTION 1.1 Why Should I Study Information Systems? 7

FIGURE 1.1 IT skills open many doors because IT is so widely used. What do you think is this woman’s job? (Source: © Slawomir Fajer/ iStockphoto)

USERS MIS

The Informed User—You! So, the question is: Why you should learn about information systems and information tech- nologies? After all, you can comfortably use a computer (or other electronic devices) to perform many activities, you have been surfi ng the Web for years, and you feel confi dent that you can manage any IT application that your organization’s MIS department installs. The answer lies in your becoming an informed user; that is, a person knowledgeable about information systems and information technology. There are several reasons why you should be an informed user. In general, informed users tend to get more value from whatever technologies they use. You will enjoy many benefi ts from being an informed user of IT. First, you will benefi t more from your organization’s IT applications because you will understand what is “behind” those applications (see Figure 1.1). That is, what you see on your computer screen is brought to you by your MIS department operating “behind” your screen. Second, you will be in a position to enhance the quality of your organization’s IT applications with your input. Third, even as a new graduate, you will quickly be in a position to recommend—and perhaps help select—the IT applications that your organization will use. Fourth, being an informed user will keep you abreast of both new information technologies and rapid developments in existing technologies. Remaining “on top of things” will help you to anticipate the impacts that “new and improved” technologies will have on your organization and to make recommendations on the adoption and use of these technologies. Finally, you will understand how using IT can improve your organization’s performance and teamwork as well as your own productivity. Managing the IS function within an organization is no longer the exclusive responsibility of the IS department. Rather, users now play key roles in every step of this process. The overall objective in this text is to be able to immediately contribute to managing the IS function in your organization from the user’s perspective. In short, the goal is to help you become a very informed user! In addition, if you have ideas of becoming an entrepreneur, then being an informed user will help you use IT when you start your own business. IT’s About Business 1.2 illustrates how one couple uses IT to run their own multinational businesses from their home.

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8 CHAPTER 1 Introduction to Information Systems

IT’s [about business]

Global outsourcing is no longer used only by big corporations. Increasingly, small businesses are fi nding it easier to farm out software development, accounting, support services, and design work to other countries than to perform these services them- selves. Improved software, search engines, and new features are boosting the online services industry. Companies in this industry include Elance (www.elance.com), Guru (www.guru.com), Brickwork India (www.b2kcorp.com), DoMyStuff (www.domystuff.com), and vWorker.com (www.vworker.com). As examples of added features, Guru has launched a system to avoid disputes over payments by allowing buyers to put funds into escrow until the work is received; meanwhile, Elance has developed software to track work in prog- ress and to handle billing, payments, and tax records.

Take Randy and Nicola Wilburn, for example. Their house is the headquarters of a multinational company. The Wilburns operate real estate, consulting, design, and baby food enterprises out of their home. They accomplish these tasks by making effective use of outsourcing. Professionals from around the world are at their service. For example, for $300 an Indian artist designed Nicola’s letterhead as well as the logo of an infant peering over the words “Baby Fresh Organic Baby Foods.” A London-based freelancer wrote promo- tional materials. Randy employs “virtual assistants” in Jerusalem to transcribe voice mail, update his Web site, and design Power- Point graphics. Retired brokers in Virginia and Michigan handle real estate paperwork. The Wilburns began buying graphic designs through Elance in 2000. Today, remote help has enabled Randy to shift his em- phasis within the changing economy. His real estate business has slowed in response to the housing crisis, so he spends more time advising nonprofi t organizations across the United States on how to help homeowners avoid foreclosure. Virtual assistants handle routine correspondence and put together business materials while he travels, all for less than $10,000 per year. Nicola decided to work from home after having their second child. She now farms out design work to freelancers and is start- ing to sell organic baby food she cooks herself. She is setting up a Web site for that business and has offered $500 for the design work. Of the 20 bidders who responded via Elance, 18 were from outside the United States. The couple employs two primary offshore vendors. One is GlobeTask (www.globetask.com), a Jerusalem-based outsourcing

fi rm that employs graphic artists, Web designers, writers, and virtual assistants in Israel, India, and the United States. The com- pany generally charges $8 per hour. The other vendor is Webgrity (www.webgrity.com), headquartered in Kolkata, India. For $125, Webgrity designed a logo for Randy’s real estate business, which he maintains would have cost as much as $1000 in the United States. Interestingly, the Wilburns employ representatives of a growing lifestyle trend: the digital nomads. In fact, the Wilburns are digital nomads as well. A digital nomad is someone who uses informa- tion technologies such as smart phones, wireless Internet access, and Web-based applications to work remotely—from home, a coffee shop, an Internet café, and similar locations. Digital no- mads have location independence, and they frequently work as freelance writers, photographers, affi liate marketers, Web design- ers, developers, graphic designers, and other types of knowledge workers.

Questions 1. Identify and evaluate the advantages and disadvantages of

outsourcing work overseas. 2. Can anyone do what Randy and Nicola Wilburn are doing? Or,

does their strategy require special qualifi cations or knowledge? Support your answer.

3. Explain how global outsourcing can affect people who are starting their own business. (Hint: Consider capital outlay, labor costs, IT infrastructure costs, etc.)

4. Would you like to be a digital nomad? Why or why not? Be specifi c.

Sources: Compiled from B. Russell, “Ever Heard of a Digital Nomad?” www.brentonrussell.com, June 10, 2010; M. Elgan, “Is Digital Nomad Living Going Mainstream?” Computerworld, August 1, 2009; M. Rosenwald, “Digital Nomads Choose Their Tribes,” The Washington Post, July 26, 2009; M. Elgan, “Recession Woes? Why Not Become a Digital Nomad,” Com- puterworld, March 23, 2009; P. Engardio, “Mom-and-Pop Multinationals,” BusinessWeek, July 14 and 21, 2008; T. Ferriss, The 4-Hour Workweek: Escape 9–5, Live Anywhere and Join the New Rich, 2007, Crown Publishing Group; B. McDermott, “Ahoy the Micro-Multinational,” Forbes, September 14, 2007; S. Harris, “Rise of the Micro Giants,” San Jose Mercury News, July 14, 2007; A. Campbell, “The Trend of the Micro-Multinationals,” Small Business Trends, February 20, 2007; M. Copeland, “The Mighty Micro- Multinational,” Business 2.0 Magazine, July 28, 2006; H. Varian, “Technology Levels the Business Playing Field,” The New York Times, August 25, 2005.

1.2 Build Your Own Multinational Company

IT Offers Career Opportunities Because information technology is vital to the operation of modern businesses, it offers many employment opportunities. The demand for traditional IT staff—programmers, business analysts, systems analysts, and designers—is substantial. In addition, many well-paid jobs exist in areas such as the Internet and electronic commerce (e-commerce), mobile commerce, network security, telecommunications, and multimedia design.

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SECTION 1.1 Why Should I Study Information Systems? 9

The information systems fi eld includes the people in organizations who design and build information systems, the people who use those systems, and the people responsible for manag- ing those systems. At the top of the list is the chief information offi cer (CIO). The CIO is the executive who is in charge of the IS function. In most modern organizations, the CIO works with the chief executive offi cer (CEO), the chief fi nancial offi cer (CFO), and other senior executives. Therefore, he or she actively participates in the organization’s strategic planning process. In today’s digital environment, the IS function has become increasingly impor- tant and strategic within organizations. As a result, although most CIOs still rise from the IS depart- ment, a growing number are coming up through the ranks in the business units (e.g., marketing, fi nance, etc.). So, regardless of your major, you could become the CIO of your organization one day. This is another reason to be an informed user of information systems! Table 1.1 provides a list of IT jobs along with a description of each one. For further details about careers in IT, see www.computerworld.com/careertopics/careers and www.monster.com.

Table 1.1 Information Technology Jobs

Position Job Description

Chief Information Offi cer Highest-ranking IS manager; is responsible for all strategic planning in the organization

IS Director Manages all systems throughout the organization and the day-to-day operations of the entire IS organization

Information Center Manager Manages IS services such as help desks, hot lines, training, and consulting

Applications Development Manager Coordinates and manages new systems development projects

Project Manager Manages a particular new systems development project

Systems Manager Manages a particular existing system

Operations Manager Supervises the day-to-day operations of the data and/or computer center

Programming Manager Coordinates all applications programming efforts

Systems Analyst Interfaces between users and programmers; determines information requirements and technical specifi cations for new applications

Business Analyst Focuses on designing solutions for business problems; interfaces closely with users to demonstrate how IT can be used innovatively

Systems Programmer Creates the computer code for developing new systems software or maintaining existing systems software

Applications Programmer Creates the computer code for developing new applications or maintaining existing applications

Emerging Technologies Manager Forecasts technology trends; evaluates and experiments with new technologies

Network Manager Coordinates and manages the organization’s voice and data networks

Database Administrator Manages the organization’s databases and oversees the use of database- management software

Auditing or Computer Security Manager Oversees the ethical and legal use of information systems

Webmaster Manages the organization’s World Wide Web site

Web Designer Creates World Wide Web sites and pages

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10 CHAPTER 1 Introduction to Information Systems

Career opportunities in IS are strong and are projected to remain strong over the next ten years. In fact, when Money Magazine’s Best Jobs in America (http://money.cnn.com/magazines/ moneymag/bestjobs/2010) listed the “top jobs” in America in 2010, 10 of the top 30 jobs related directly to information technology. These jobs (with their ranks) are:

• Software architect (#1) • Database administrator (#7) • Information systems security administrator (#17) • Software development director (#18) • Information technology manager (#20) • Telecommunications and networking manager (#21) • Network operations manager (#24) • Information technology business analyst (#26) • Information technology consultant (#28) • Software development engineer (#30)

Not only do IS careers offer strong job growth, but the pay is excellent as well. The Bureau of Labor Statistics, an agency within the Department of Labor that is responsible for tracking and analyzing trends relating to the labor market, notes that the median salary for “computer and information systems managers” is approximately $115,000.

Managing Information Resources Managing information systems in modern organizations is a diffi cult, complex task. Several factors contribute to this complexity. First, information systems have enormous strategic value to organizations. Firms rely on them so heavily that, in some cases, when these systems are not working (even for a short time), the fi rm cannot function. (This situation is called “being hostage to information systems.”) Second, information systems are very expensive to acquire, operate, and maintain. A third factor contributing to the diffi culty in managing information systems is the evolu- tion of the management information systems (MIS) function within the organization. When businesses fi rst began to use computers in the early 1950s, the MIS department “owned” the only computing resource in the organization, the mainframe. At that time, end users did not interact directly with the mainframe. In contrast, in the modern organization, computers are located in all departments, and almost all employees use computers in their work. This situation, known as end user comput- ing, has led to a partnership between the MIS department and the end users. The MIS depart- ment now acts as more of a consultant to end users, viewing them as customers. In fact, the main function of the MIS department is to use IT to solve end users’ business problems. As a result of these developments, the responsibility for managing information resources is now divided between the MIS department and the end users. This arrangement raises several important questions: Which resources are managed by whom? What is the role of the MIS department, its structure, and its place within the organization? What is the appropriate rela- tionship between the MIS department and the end users? Regardless of who is doing what, it is essential that the MIS department and the end users work in close cooperation. There is no standard way to divide responsibility for developing and maintaining informa- tion resources between the MIS department and the end users. Instead, that division depends on several factors: the size and nature of the organization, the amount and type of IT resources, the organization’s attitudes toward computing, the attitudes of top management toward com- puting, the maturity level of the technology, the amount and nature of outsourced IT work, and even the countries in which the company operates. Generally speaking, the MIS depart- ment is responsible for corporate-level and shared resources, and the end users are responsible for departmental resources. Table 1.2 identifi es both the traditional functions and various new, consultative functions of the MIS department.

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SECTION 1.1 Why Should I Study Information Systems? 11

Table 1.2 The Changing Role of the Information Systems Department

Traditional Functions of the MIS Department

• Managing systems development and systems project management ° As an end user, you will have critical input into the systems development process. You will learn about systems

development in Chapter 13. • Managing computer operations, including the computer center • Staffi ng, training, and developing IS skills • Providing technical services • Infrastructure planning, development, and control

° As an end user, you will provide critical input about the IS infrastructure needs of your department.

New (Consultative) Functions of the MIS Department

• Initiating and designing specifi c strategic information systems ° As an end user, your information needs will often mandate the development of new strategic information systems.

You will decide which strategic systems you need (because you know your business needs better than the MIS department does), and you will provide input into developing these systems.

• Incorporating the Internet and electronic commerce into the business ° As an end user, you will be primarily responsible for effectively using the Internet and electronic commerce in your

business. You will work with the MIS department to accomplish this task. • Managing system integration including the Internet, intranets, and extranets

° As an end user, your business needs will determine how you want to use the Internet, your corporate intranets, and extranets to accomplish your goals. You will be primarily responsible for advising the MIS department on the most effective use of the Internet, your corporate intranets, and extranets.

• Educating the non-MIS managers about IT ° Your department will be primarily responsible for advising the MIS department on how best to educate and train your

employees about IT. • Educating the MIS staff about the business

° Communication between the MIS department and the business units is a two-way street. You will be responsible for educating the MIS staff on your business, its needs, and its goals.

• Partnering with business-unit executives ° Essentially, you will be in a partnership with the MIS department. You will be responsible for seeing that this

partnership is one “between equals” and ensuring its success. • Managing outsourcing

° Outsourcing is driven by business needs. Therefore, the outsourcing decision resides largely with the business units (i.e., with you). The MIS department, working closely with you, will advise you on technical issues such as communications bandwidth, security, etc.

• Proactively using business and technical knowledge to seed innovative ideas about IT ° Your business needs often will drive innovative ideas about how to effectively use information systems to

accomplish your goals. The best way to bring these innovative uses of IS to life is to partner closely with your MIS department. Such close partnerships have amazing synergies!

• Creating business alliances with business partners ° The needs of your business unit will drive these alliances, typically along your supply chain. Again, your MIS

department will act as your advisor on various issues, including hardware and software compatibility, implementing extranets, communications, and security.

So, where do the end users come in? Take a close look at Table 1.2. Under the traditional MIS functions, you will see two functions for which you provide vital input. Under the consul- tative MIS functions, you will see how you exercise the primary responsibility for each func- tion, and how the MIS department acts as your advisor.

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12 CHAPTER 1 Introduction to Information Systems

1.2 Overview of Computer-Based Information Systems Organizations refer to their management information systems functional area by several names, including the MIS Department, the Information Systems (IS) Department, the In- formation Technology Department, and the Information Services Department. Regardless of the name, however, this functional area deals with the planning for—and the development, management, and use of—information technology tools to help people perform all the tasks related to information processing and management. Information technology relates to any computer-based tool that people use to work with information and to support the information and information-processing needs of an organization. An information system collects, processes, stores, analyzes, and disseminates information for a specifi c purpose. It has been said that the purpose of information systems is to get the right information to the right people, at the right time, in the right amount, and in the right format. Because information systems are intended to supply useful information, we need to differenti- ate between information and two closely related terms: data and knowledge (see Figure 1.2).

FIGURE 1.2 Binary Code, the foundation of information and knowledge, is the key to making complex decisions. (Sources: © janaka Dharmasena-Fotolia. com; Exactostock/SuperStock; uttam gurjar/Shutterstock)

Data

Information

Knowledge

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SECTION 1.2 Overview of Computer-Based Information Systems 13

Data items refer to an elementary description of things, events, activities, and transactions that are recorded, classifi ed, and stored but are not organized to convey any specifi c meaning. Data items can be numbers, letters, fi gures, sounds, and images. Examples of data items are col- lections of numbers (e.g., 3.11, 2.96, 3.95, 1.99, 2.08) and characters (e.g., B, A, C, A, B, D, F, C). Information refers to data that have been organized so that they have meaning and value to the recipient. For example, a grade point average (GPA) by itself is data, but a student’s name coupled with his or her GPA is information. The recipient interprets the meaning and draws conclusions and implications from the information. Consider the examples of data provided in the preceding paragraph. Within the context of a university, the numbers could be grade point averages, and the letters could be grades in an Introduction to MIS class. Knowledge consists of data and/or information that have been organized and processed to convey understanding, experience, accumulated learning, and expertise as they apply to a current business problem. For example, suppose that a company recruiting at your school has found over time that students with grade point averages over 3.0 have experienced the greatest success in its management program. Based on this accumulated knowledge, that company may decide to interview only those students with GPAs over 3.0. Organizational knowledge, which refl ects the experience and expertise of many people, has great value to all employees. Consider this example:

Data Information Knowledge

[No context] [University context]

3.16 3.16 � John Jones � GPA * Job prospects 2.92 2.92 � Sue Smith � GPA * Graduate school prospects 1.39 1.39 � Kyle Owens � GPA * Scholarship prospects 3.95 3.95 � Tom Elias � GPA

[No context] [Professional baseball pitcher context]

3.16 3.16 � Ken Rice � ERA 2.92 2.92 � Ed Dyas � ERA * Keep pitcher, trade pitcher, or

send pitcher to minor leagues 1.39 1.39 � Hugh Carr � ERA * Salary/contract negotiations 3.95 3.95 � Nick Ford � ERA

GPA � grade point average (higher is better) ERA � earned run average (lower is better); ERA is the number of runs per nine innings accountable to a pitcher

You see that the same data items, with no context, can mean entirely different things in differ- ent contexts. Now that you have a clearer understanding of data, information, and knowledge, the focus shifts to computer-based information systems. As you have seen, these systems process data into information and knowledge that you can use. A computer-based information system (CBIS) is an information system that uses computer technology to perform some or all of its intended tasks. Although not all information systems are computerized, today most are. For this reason the term “information system” is typically used synonymously with “computer-based information system.” The basic components of computer- based information systems are listed below. The fi rst four are called information technology components. Figure 1.3 shows how these four components interact to form a CBIS.

• Hardware consists of devices such as the processor, monitor, keyboard, and printer. Together, these devices accept, process, and display data and information.

• Software is a program or collection of programs that enable the hardware to process data. • A database is a collection of related fi les or tables containing data. • A network is a connecting system (wireline or wireless) that permits different computers to

share resources. • Procedures are the instructions for combining the above components in order to process

information and generate the desired output.

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14 CHAPTER 1 Introduction to Information Systems

• People are those individuals who use the hardware and software, interface with it, or utilize its output.

Figure 1.4 shows how these components are integrated to form the wide variety of in- formation systems in an organization. Starting at the bottom of the fi gure, you see that the IT components of hardware, software, networks (wireline and wireless), and databases form the information technology platform. IT personnel use these components to develop infor- mation systems, oversee security and risk, and manage data. These activities cumulatively are called information technology services. The IT components plus IT services comprise

FIGURE 1.3 It takes technology (hardware, software, databases, and networks) with appropriate procedures to make a CBIS useful for people. (Sources: Nasonov/Shutterstock; Angela Waye/Shutterstock; alexmillos/Shutterstock; broukoid/ Shutterstock; zhu difeng/ Shutterstock)

IT Personnel

IT Components

P ro

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o n

/O p

e ra

ti o

n s

M a n

a g

e m

e n

t IS

H u

m a n

R e s o

u rc

e s I S

M a rk

e ti

n g

I S

F in

a n

c e I S

A c c o

u n

ti n

g I S

IT I n

fr a s tr

u c tu

re

IT Services

Transaction Processing Systems

Enterprise Resource Planning Systems

IT Platform

Business Intelligence Systems

Dashboards

FIGURE 1.4 Information technology inside your organization.

Database

NetworkSoftware

Computer-based information system

Procedures

Procedures Procedures

Procedures

Hardware

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SECTION 1.2 Overview of Computer-Based Information Systems 15

Table

1.3

Major Capabilities of Information Systems

Perform high-speed, high-volume numerical computations.

Provide fast, accurate communication and collaboration within and among organizations.

Store huge amounts of information in an easy-to-access, yet small space.

Allow quick and inexpensive access to vast amounts of information, worldwide.

Interpret vast amounts of data quickly and effi ciently.

Automate both semiautomatic business processes and manual tasks.

the organization’s information technology infrastructure. At the top of the pyramid are the various organizational information systems. Computer-based information systems have many capabilities. Table 1.3 summarizes the most important ones. Information systems perform these various tasks via a wide spectrum of applications. An application (or app) is a computer program designed to support a specifi c task or business process. (A synonymous term is application program.) Each functional area or department within a business organization uses dozens of application programs. For instance, the human resources department sometimes uses one application for screening job applicants and another for monitoring employee turnover. The collection of application programs in a single depart- ment is usually referred to as a departmental information system (also known as a functional area information system). For example, the collection of application programs in the human resources area is called the human resources information system (HRIS). There are collections of application programs—that is, departmental information systems—in the other functional areas as well, such as accounting, fi nance, marketing, and production/operations. IT’s About Business 1.3 illustrates how electronic discovery software applications improve the effi ciency and effectiveness of the legal discovery process.

Types of Computer-Based Information Systems Modern organizations employ many different types of information systems. Figure 1.4 illus- trates the different types of information systems that function within a single organization, and Figure 1.5 shows the different types of information systems that function among multiple orga- nizations. You will study transaction processing systems, management information systems, and enterprise resource planning systems in Chapter 10. You will learn about customer relationship management (CRM) systems and supply chain management (SCM) systems in Chapter 11. In the next section you will learn about the numerous and diverse types of information systems employed by modern organizations. You will also read about the types of support these systems provide.

Breadth of Support of Information Systems. Certain information systems support parts of organizations, others support entire organizations, and still others support groups of organizations. This section addresses all of these systems. Recall that each department or functional area within an organization has its own collection of application programs, or information systems. These functional area informa- tion systems (FAISs) are supporting pillars for the information systems located at the top of Figure 1.4, namely, business intelligence systems and dashboards. As the name suggests, each FAIS supports a particular functional area within the organization. Examples are accounting IS, fi nance IS, production/operations management (POM) IS, marketing IS, and human resources IS. Consider these examples of IT systems in the various functional areas of an organization. In fi nance and accounting, managers use IT systems to forecast revenues and business activity, to determine the best sources and uses of funds, and to perform audits to ensure that the or- ganization is fundamentally sound and that all fi nancial reports and documents are accurate.

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16 CHAPTER 1 Introduction to Information Systems

When the U.S. Justice Department sued CBS for antitrust viola- tions in 1978, fi ve television studios became involved. The cost to the studios was extremely high. As part of the discovery process— which includes providing documents relevant to a lawsuit—studio lawyers and paralegals examined 6 million documents at a cost of $2.2 million. Today, electronic discovery (e-discovery) software applications can analyze documents in a fraction of the time at a fraction of the cost. For example, in January 2011, Blackstone Discovery (www.blackstonediscovery.com) helped one company analyze 1.5 million documents for less than $100,000. Some e-discovery applications go beyond just rapidly fi nding documents with relevant terms. They can extract relevant con- cepts, even in the absence of specifi c terms, and can deduce patterns of behavior that would have eluded lawyers examining millions of documents. E-discovery software generally falls into two broad categories that can be described as “linguistic” and “sociological.” The most basic linguistic software uses specifi c search words to fi nd and sort relevant documents. More advanced applications fi lter documents through a large number of interrelated word and phrase defi nitions. In contrast, sociological applications add inferential analysis, closely resembling human reasoning. For example, software from Cataphora (www.cataphora.com) analyzes documents for informa- tion pertaining to the activities and interactions of people—who did what and when, and who talked to whom. The software then manipulates this information to visualize chains of events. It identi- fi es discussions that might have taken place across e-mail, instant messages, and telephone calls. The software then captures digital anomalies that white-collar criminals often create when they try to hide their activities. For example, the software fi nds “call me” moments—those incidents when an employee decides to hide a particular action by having a private conversation. This process usu- ally involves switching media, perhaps from an e-mail conversation to instant messaging, telephone, or even a face-to-face encounter. The Cataphora software also can recognize the sentiment in an e-mail message—whether a person is positive or negative, or what Cataphora calls “loud talking”—unusual emphasis that hints that a document might concern a stressful situation. For example, a shift in an author’s e-mail style from breezy to unusually formal can raise a red fl ag about illegal activity.

Another e-discovery company, Clearwell (www.clearwellsystems. com), has developed software that analyzes documents to fi nd concepts rather than specifi c keywords. This process decreases the time required to locate relevant material in litigation. Clearwell’s software uses language analysis and a visual way of represent- ing general concepts found in documents. In 2010, for example, the DLA Piper law fi rm used Clearwell software to search through some 570,000 documents under a court-imposed deadline of one week. The software analyzed the documents in two days. The law fi rm required just one more day to identify more than 3,000 docu- ments that were relevant to the discovery motion. E-discovery software is doing an excellent job and, as a result, the discovery process is becoming increasingly automated, scientifi c, and objective. One lawyer used e-discovery software to reanalyze work that his company’s lawyers had performed in the 1980s and 1990s. He discovered that his human colleagues had been only 60 percent accurate. Quantifying the impact of these software applications on employment is diffi cult. However, the founder of Autonomy (www. autonomy.com), an e-discovery fi rm, is convinced that the U.S. legal sector will likely employ fewer people in the future. He estimates that the shift from manual document discovery to e-discovery will lead to a manpower reduction because one lawyer can now do the work that once required hundreds of lawyers.

Questions 1. What are the advantages of e-discovery software? Provide

specifi c examples. 2. What are the disadvantages of e-discovery software? Provide

specifi c examples. 3. Based on this scenario, how do you think e-discovery software

will affect the legal profession?

Sources: Compiled from B. Kerschberg, “E-Discovery and the Rise of Pre- dictive Coding,” Forbes, March 23, 2011; J. Markoff, “Armies of Expensive Lawyers, Replaced by Cheaper Software,” The New York Times, March 4, 2011; K. Fogarty, “E-Discovery: How a Law Firm Slashes Time and Costs,” CIO, February 15, 2011; B. Kerschberg, “Surviving e-Discovery with the Department of Justice’s Antitrust Division,” Forbes, February 14, 2011; M. Pratt, “E-Discovery Moves In-House,” Computerworld, December 30, 2010; www.autonomy.com, www.clearwellsystems.com, www.cataphora.com, www.blackstonediscovery.com, accessed March 21, 2011.

1.3 Electronic E-Discovery Software Replaces Lawyers

IT’s [about business]

In sales and marketing, managers use information technology to perform the following functions:

• Product analysis: developing new goods and services • Site analysis: determining the best location for production and distribution facilities • Promotion analysis: identifying the best advertising channels • Price analysis: setting product prices to obtain the highest total revenues

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SECTION 1.2 Overview of Computer-Based Information Systems 17

Marketing managers also use IT to manage their relationships with their customers. In manu- facturing, managers use IT to process customer orders, develop production schedules, control inventory levels, and monitor product quality. They also use IT to design and manufacture products. These processes are called computer-assisted design (CAD) and computer-assisted manufacturing (CAM). Managers in human resources use IT to manage the recruiting process, analyze and screen job applicants, and hire new employees. They also employ IT to help employees manage their careers, to administer performance tests to employees, and to monitor employee productivity. Finally, they rely on IT to manage compensation and benefi ts packages. Two information systems support the entire organization: enterprise resource planning systems and transaction processing systems. Enterprise resource planning (ERP) systems are designed to correct a lack of communication among the functional area ISs. For this reason Figure 1.4 shows ERP systems spanning the FAISs. ERP systems were an important innovation because the various functional area ISs were often developed as standalone sys- tems and did not communicate effectively (if at all) with one another. ERP systems resolve this problem by tightly integrating the functional area ISs via a common database. In doing so, they enhance communications among the functional areas of an organization. For this reason, experts credit ERP systems with greatly increasing organizational productivity. A transaction processing system (TPS) supports the monitoring, collection, storage, and processing of data from the organization’s basic business transactions, each of which generates data. When you are checking out at Walmart, for example, a transaction occurs each time the cashier swipes an item across the bar code reader. There also are different defi nitions of a trans- action in an organization. In accounting, for example, a transaction is anything that changes a fi rm’s chart of accounts. The information system defi nition of a transaction is broader: A transaction is anything that changes the fi rm’s database. The chart of accounts is only part of the fi rm’s database. Consider a scenario in which a student transfers from one section of an introduction to MIS course to another section. This move would be a transaction to the university’s information system, but not to the university’s accounting department.

Business-to-business electronic commerce

(B2B)

Business-to-business electronic commerce

(B2B)

SUPPLIERS

S up

pl y

ch ai

n m

an ag

em en

t

C ustom

er relationship

m anagem

ent

Your Organization

Business-to-consumer electronic commerce

(B2C)

CUSTOMERS

Individuals

Information

Online orders

Payments

Online orders

Payments

Digital products

Digital products

Payments

Online orders

Physical products

Physical products

M at

er ia

ls

Internet

Business

FIGURE 1.5 Information systems that function among multiple organizations.

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18 CHAPTER 1 Introduction to Information Systems

The TPS collects data continuously, typically in real time—that is, as soon as the data are generated—and provides the input data for the corporate databases. TPSs are considered critical to the success of any enterprise because they support core operations. Signifi cantly, nearly all ERP systems are also TPSs, but not all TPSs are ERP systems. In fact, modern ERP systems incorporate many functions that previously were handled by the organization’s functional area information systems. You study both TPSs and ERP systems in detail in Chapter 10. ERP systems and TPSs function primarily within a single organization. Information systems that connect two or more organizations are referred to as interorganizational information systems (IOSs). IOSs support many interorganizational operations, of which supply chain management is the best known. An organization’s supply chain is the fl ow of materials, infor- mation, money, and services from suppliers of raw materials through factories and warehouses to the end customers. Note that the supply chain in Figure 1.5 shows physical fl ows, information fl ows, and fi nancial fl ows. Digitizable products are those that can be represented in electronic form, such as music and software. Information fl ows, fi nancial fl ows, and digitizable products go through the Internet, whereas physical products are shipped. For example, when you order a computer from www.dell.com, your information goes to Dell via the Internet. When your transaction is completed (that is, your credit card is approved and your order is processed), Dell ships your computer to you. Electronic commerce (e-commerce) systems are another type of interorganizational infor- mation system. These systems enable organizations to conduct transactions, called business-to- business (B2B) electronic commerce, and customers to conduct transactions with businesses, called business-to-consumer (B2C) electronic commerce. E-commerce systems typically are Internet-based. Figure 1.5 illustrates B2B and B2C electronic commerce. Electronic commerce systems are so important that we discuss them in detail in Chapter 7, with additional examples interspersed throughout the text.

Support for Organizational Employees. So far, you have concentrated on informa- tion systems that support specifi c functional areas and operations. Now you will learn about information systems that typically support particular employees within the organization. Clerical workers, who support managers at all levels of the organization, include bookkeepers, secretaries, electronic fi le clerks, and insurance claim processors. Lower-level managers handle the day-to-day operations of the organization, making routine decisions such as assigning tasks to employees and placing purchase orders. Middle managers make tactical decisions, which deal with activities such as short-term planning, organizing, and control. Knowledge workers are professional employees such as financial and marketing ana- lysts, engineers, lawyers, and accountants. All knowledge workers are experts in a particu- lar subject area. They create information and knowledge, which they integrate into the business. Knowledge workers, in turn, act as advisors to middle managers and executives. Finally, executives make decisions that deal with situations that can significantly change the manner in which business is done. Examples of executive decisions are introducing a new product line, acquiring other businesses, and relocating operations to a foreign country. Offi ce automation systems (OASs) typically support the clerical staff, lower and middle managers, and knowledge workers. These employees use OASs to develop documents (word processing and desktop publishing software), schedule resources (electronic calendars), and communicate (e-mail, voice mail, videoconferencing, and groupware). Functional area information systems summarize data and prepare reports, primarily for middle managers, but sometimes for lower-level managers as well. Because these reports typically concern a specifi c functional area, report generators (RPGs) are an important type of functional area IS. Business intelligence (BI) systems provide computer-based support for complex, non- routine decisions, primarily for middle managers and knowledge workers. (They also support

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SECTION 1.2 Overview of Computer-Based Information Systems 19

lower-level managers, but to a lesser extent.) These systems are typically used with a data ware- house, and they enable users to perform their own data analysis. You learn about BI systems in Chapter 12. Expert systems (ES) attempt to duplicate the work of human experts by applying rea- soning capabilities, knowledge, and expertise within a specifi c domain. They have become valuable in many application areas, primarily but not exclusively areas involving decision making. For example, navigation systems use rules to select routes, but we do not typically think of these systems as expert systems. Signifi cantly, expert systems can operate as stand- alone systems or be embedded in other applications. We examine ESs in greater detail in Technology Guide 4. Dashboards (also called digital dashboards) are a special form of IS that support all managers of the organization. They provide rapid access to timely information and direct access to structured information in the form of reports. Dashboards that are tailored to the information needs of executives are called executive dashboards. Chapter 12 provides a thorough discussion of dashboards. Table 1.4 provides an overview of the different types of information systems used by organizations.

Table 1.4 Types of Organizational Information Systems

Type of System Function Example

Functional area IS Supports the activities within specifi c System for processing payroll functional area.

Transaction processing system Processes transaction data from Walmart checkout point-of-sale business events. terminal

Enterprise resource planning Integrates all functional areas of the Oracle, SAP system organization.

Offi ce automation system Supports daily work activities of Microsoft® Offi ce individuals and groups.

Management information system Produces reports summarized from Report on total sales for each transaction data, usually in one customer functional area.

Decision support system Provides access to data and analysis “What-if” analysis of changes in tools. budget

Expert system Mimics human expert in a particular Credit card approval analysis area and makes decisions.

Executive dashboard Presents structured, summarized Status of sales by product information about aspects of business important to executives.

Supply chain management system Manages fl ows of products, Walmart Retail Link system services, and information among connecting suppliers to Walmart organizations.

Electronic commerce system Enables transactions among www.dell.com organizations and between organizations and customers.

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20 CHAPTER 1 Introduction to Information Systems

1.3 How Does IT Impact Organizations? Throughout this text you will encounter numerous examples of how IT affects various types of organizations. This section provides an overview of the impact of IT on modern organizations. As you read this section you will learn how IT will affect you as well.

IT Reduces the Number of Middle Managers IT makes managers more productive and increases the number of employees who can report to a single manager. Thus, IT ultimately decreases the number of managers and experts. It is reasonable to assume, therefore, that in coming years organizations will have fewer managerial levels and fewer staff and line managers. If this trend materializes, promotional opportunities will decrease, making promotions much more competitive. Bottom line: Pay attention in school!

IT Changes the Manager’s Job One of the most important tasks of managers is making decisions. A major consequence of IT has been to change the manner in which managers make their decisions. In this way, IT ultimately has changed managers’ jobs. IT often provides managers with near real-time information, meaning that they have less time to make decisions, making their jobs even more stressful. Fortunately, IT also provides many tools—for example, business intelligence applications such as dashboards, search engines, and intranets—to help managers handle the volumes of information they must deal with on an ongoing basis. So far in this section, we have been focusing on managers in general. Now, let’s focus on you. Due to advances in IT, you will increasingly supervise employees and teams who are geo- graphically dispersed. Employees can work from anywhere at any time, and teams can consist of employees who are literally dispersed throughout the world. Information technologies such as telepresence systems (discussed in Chapter 6) can help you manage these employees even though you do not often see them face-to-face. For these employees, electronic or “remote” supervision will become the norm. Remote supervision places greater emphasis on completed work and less emphasis on personal contacts and offi ce politics. You will have to reassure your employees that they are valued members of the organization, thereby diminishing any feelings they might have of being isolated and “out of the loop.”

Will IT Eliminate Jobs? One major concern of every employee, part-time or full-time, is job security. Relentless cost- cutting measures in modern organizations often lead to large-scale layoffs. Put simply, orga- nizations are responding to today’s highly competitive environment by doing more with less. Regardless of your position, then, you consistently will have to add value to your organization and to make certain that your superiors are aware of this value. Many companies have responded to diffi cult economic times, increased global competi- tion, demands for customization, and increased consumer sophistication by increasing their

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SECTION 1.3 How Does IT Impact Organizations? 21

investments in IT. In fact, as computers continue to advance in terms of intelligence and capabilities, the competitive advantage of replacing people with machines is increasing rapidly. This process frequently leads to layoffs. At the same time, however, IT creates entirely new categories of jobs, such as electronic medical record keeping and nanotechnology.

IT Impacts Employees at Work Many people have experienced a loss of identity because of computerization. They feel like “just another number” because computers reduce or eliminate the human element present in noncomputerized systems. The Internet threatens to exert an even more isolating infl uence than have computers and television. Encouraging people to work and shop from their living rooms could produce some unfortunate psychological effects, such as depression and loneliness.

IT Impacts Employees’ Health and Safety. Although computers and information systems are generally regarded as agents of “progress,” they can adversely affect individuals’ health and safety. To illustrate this point, we consider two issues associated with IT: job stress and long-term use of the keyboard. An increase in an employee’s workload and/or responsibilities can trigger job stress. Although computerization has benefi ted organizations by increasing productivity, it also has created an ever-expanding workload for some employees. Some workers feel overwhelmed and have become increasingly anxious about their job performance. These feelings of stress and anxiety can actually diminish rather than improve workers’ productivity while jeopardizing their physical and mental health. Management can help alleviate these problems by providing training, re- distributing the workload among workers, and hiring more workers. On a more specifi c level, the long-term use of keyboards can lead to repetitive strain injuries such as backaches and muscle tension in the wrists and fi ngers. Carpal tunnel syndrome is a particularly painful form of repetitive strain injury that affects the wrists and hands. Designers are aware of the potential problems associated with the prolonged use of computers. To address these problems, they continually attempt to design a better computing environ- ment. The science of designing machines and work settings that minimize injury and illness is called ergonomics. The goal of ergonomics is to create an environment that is safe, well lit, and comfortable. Examples of ergonomically designed products are antiglare screens that alleviate problems of fatigued or damaged eyesight and chairs that contour the human body to decrease backaches. Figure 1.6 displays some sample ergonomic products.

IT Provides Opportunities for People with Disabilities. Computers can create new employment opportunities for people with disabilities by integrating speech- and vision- recognition capabilities. For example, individuals who cannot type can use a voice-operated keyboard, and individuals who cannot travel can work at home. Going further, adaptive equipment for computers enables people with disabilities to per- form tasks they normally would not be able to do. The Web and graphical user interfaces (e.g., Windows) can be diffi cult to use for people with impaired vision. Audible screen tips and voice interfaces added to deal with this problem essentially restore the functionality of computers to the way it was before graphical interfaces become standard. Other devices help improve the quality of life in more mundane, but useful, ways for people with disabilities. Examples are a two-way writing telephone, a robotic page turner, a hair brusher, and a hospital-bedside video trip to the zoo or the museum. Several organizations specialize in IT designed for people with disabilities.

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22 CHAPTER 1 Introduction to Information Systems

1.4 Importance of Information Systems to Society As you saw in the chapter-opening case, IT literally provided the underpinnings of the revolts against the Tunisian and Egyptian regimes. This section will explain in greater detail why IT is important to society as a whole. Other examples of the impact of IT on society appear throughout the text.

IT Affects Our Quality of Life IT has signifi cant implications for our quality of life. The workplace can be expanded from the traditional 9-to-5 job at a central location to 24 hours a day at any location. IT can provide employees with fl exibility that can signifi cantly improve the quality of leisure time, even if it doesn’t increase the total amount of leisure time. From the opposite perspective, however, IT also can place employees on “constant call,” which means they are never truly away from the offi ce, even when they are on vacation. In fact, a recent poll revealed that 80 percent of respondents took their laptop computers on their most recent vacations, and 100 percent took their cell phones. Going further, 80 percent did some work while vacationing, and almost all of them checked their e-mail.

FIGURE 1.6 Ergonomic products protect computer users. (a) Wrist support. (Source: Media Bakery) (b) Back support. (Source: Media Bakery) (c) Eye-protection fi lter (optically coated glass). (Source: Media Bakery) (d) Adjustable foot rest. (Source: Media Bakery)

a b

c d

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SECTION 1.4 Importance of Information Systems to Society 23

Robot Revolution on the Way Once restricted largely to science fi ction movies, robots that can perform practical tasks are becoming more common. In fact, “cyberpooches,” “nursebots,” and other mechanical beings may be our companions before we know it. Around the world, quasi-autonomous devices have become increasingly common on factory fl oors, in hospital corridors, and in farm fi elds. For home use, iRobot (www.irobot.com) produces the Roomba to vacuum our fl oors, the Scooba to wash our fl oors, the Dirt Dog to sweep our garages, the Verro to clean our pools, and the Looj to clean our gutters. Telepresence robots are a recent development in the fi eld of robotics. The following example illustrates how organizations use these robots.

Example

Telepresence robots have been humorously described as a cross between a Segway and a Wall-E. These robots are designed to help companies save money on travel and on expensive telecon- ferencing technology. The robots enable people in remote offi ces or locations to have a rich communications experience without using a complicated video conference system. A telepresence robot has both a video camera and a video screen embedded in its “head.” It also has wheels and can be moved around remotely by computer. It is designed to steer its way clear of obstacles and people. The robots enable a person to maintain a consistent connection with co-workers, customers, or clients. The user places the robot at a remote location and directs it to move around, for example, a conference room during a meeting, broadcasting what is going on to the human controlling it from afar. Interestingly, the robots actually break down barriers of awkwardness that people sometimes feel in person-to-person meetings. Although this technology is rather expensive, some companies are buying multiple units to place in their remote locations. That way, someone running a meeting could, for example, easily hear what is being said—or see what is being written on a whiteboard—in each location, without having to spend hundreds of thousands of dollars on travel costs. Business managers are using telepresence robots to walk factory fl oors. Healthcare organiza- tions are employing them for home care. Storage companies are utilizing them for security. In the retail environment, a robot could wander the fl oor with a customer who asks it purchasing or support questions. The person controlling the robot could answer the questions, essentially making the robot a mechanical sales clerk. Consider how Reimers Electra Steam uses a telepresence robot. One of the fi rm’s electrical engineers, John Samuels, moved from the company’s location in Virginia to the Dominican Republic. At fi rst, he would attend meetings back in Virginia through Skype. If he needed to see something on the shop fl oor, a colleague would carry around a laptop, pointing it wherever Samuels instructed. Essentially, a human had to act as the remote Samuels’s virtual body, and if no one was available, Samuels was out of luck. To resolve this problem, the company purchased a telepresence robot for Samuels. Now, “he” wheels easily from desk to desk and around the shop fl oor, answering questions and inspecting designs, often using the robot’s vision feature to examine wiring in detail. In an example of precision agriculture, Carnegie Mellon University in Pittsburgh has developed self-directing tractors that harvest hundreds of acres of crops around the clock in California. These “robot tractors” use global positioning systems (GPSs) combined with video image processing that identifi es rows of uncut crops. Many robotic devices are being developed for military purposes as well. For example, the Pentagon is researching self-driving vehicles and beelike swarms of small surveillance robots, each of which would contribute a different view or angle of a combat zone. The Predator, an unmanned aerial vehicle (UAV), is being used in Iraq, Libya, Pakistan, and Afghanistan. It probably will be a long time before we see robots making decisions by themselves, handling unfamiliar situations, and interacting with people. Nevertheless, robots are extremely helpful in various environments, particularly those that are repetitive, harsh, or dangerous to humans.

Sources: Compiled from D. Bennett, “I’ll Have My Robots Talk to Your Robots,” Bloomberg BusinessWeek, February 21–27, 2011; A. Diana, “12 Advances in Medical Robotics,” InformationWeek, January 29, 2011; D. Terdiman, “The Telepresence Robots Are Coming,” CNET.com, May 18, 2010; www.vgocom.com, www.anybots.com, accessed March 23, 2011.

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24 CHAPTER 1 Introduction to Information Systems

Improvements in Healthcare IT has brought about major improvements in healthcare delivery. Medical personnel use IT to make better and faster diagnoses and to monitor critically ill patients more accurately. IT also has streamlined the process of researching and developing new drugs. Expert systems now help doctors diagnose diseases, and machine vision is enhancing the work of radiologists. Surgeons use virtual reality to plan complex surgeries. They also use surgical robots to perform long-distance surgery. Finally, doctors discuss complex medical cases via videoconferencing. New computer simulations recreate the sense of touch, allowing doctors-in-training to perform virtual procedures without risking harm to an actual patient. Of the thousands of other applications related to healthcare, administrative systems are criti- cally important. These systems perform functions ranging from detecting insurance fraud, to creating nursing schedules, to fi nancial and marketing management. The Internet contains vast amounts of useful medical information (see www.webmd. com for example). In an interesting study, researchers at the Princess Alexandra Hospital in Brisbane, Australia, identifi ed 26 diffi cult diagnostic cases published in the New England Journal of Medicine. They selected three to fi ve search terms from each case and then conducted a Google search. The researchers selected and recorded the three diagnoses that Google ranked most prominently and that appeared to fi t the symptoms and signs. They then compared these results with the correct diagnoses as published in the journal. They discovered that their Google searches had found the correct diagnosis in 15 of the 26 cases, a success rate of 57 percent. The researchers caution, however, against the dangers of self-diagnosis. They maintain that people should use diagnostic information gained from Google and medical Web sites such as WebMD (www.webmd.com) only to ask questions of their physicians.

In section 1.2, we discussed how IT supports each of the functional areas of the organization. Here we examine the MIS function.

For the MIS Major The MIS function directly supports all other functional areas in an organization. That is, the MIS function is responsible for providing the information that each functional area needs in order to make decisions. The overall objective of MIS personnel is to help users improve performance and solve business problems using IT. To accomplish this objective, MIS personnel must understand both the information requirements and the technology associated with each functional area. Given their position, however, they must think “business needs” fi rst and “technology” second.

What’s In ITFor Me?

F T T

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Summary 25

[ Summary ] 1. Begin the process of becoming an informed user of your organization’s

information systems. The benefi ts of being an informed user of IT include:

• You will benefi t more from your organization’s IT applications because you will under- stand what is “behind” those applications.

• You will be able to provide input into your organization’s IT applications, thus improving the quality of those applications.

• You will quickly be in a position to recommend, or participate in the selection of IT applications that your organization will use.

• You will be able to keep up with rapid developments in existing information technolo- gies, as well as the introduction of new technologies.

• You will understand the potential impacts that “new and improved” technologies will have on your organization and therefore will be qualifi ed to make recommendations concerning their adoption and use.

• You will play a key role in managing the information systems in your organization. • You will be in a position to use IT if you decide to start your own business.

2. Defi ne the terms data, information, and knowledge, and give examples of each. Data items refer to an elementary description of things, events, activities, and transactions that are recorded, classifi ed, and stored, but are not organized to convey any specifi c mean- ing. Examples of data items are collections of numbers (e.g., 3.11, 2.96, 3.95, 1.99, 2.08) and characters (e.g., B, A, C, A, B, D, F, C).

Information is data that have been organized so that they have meaning and value to the recipient. For example, a grade point average (GPA) by itself is data, but a student’s name coupled with his or her GPA is information. In the above examples, the numbers could be grade point averages, and the letters could be grades in an Introduction to MIS class.

Knowledge consists of data and/or information that have been organized and processed to convey understanding, experience, accumulated learning, and expertise as they apply to a current business problem. For example, a company recruiting at your school has found over time that students with grade point averages over 3.0 have enjoyed the greatest success in its management program. Based on this accumulated knowledge, that company may decide to interview only those students with GPAs over 3.0.

3. Defi ne the terms information technology, information system, computer- based information system, and application. Information technology (IT) relates to any computer-based tool that people use to work with information and to support the information and information-processing needs of an organization.

An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specifi c purpose. A computer-based information system (CBIS) is an information system that uses computer technology to perform some or all of its intended tasks. An application (or app) is a computer program designed to support a specifi c task or business process.

4. Identify several ways in which you depend on information technology in your daily life. You are practicing continuous computing, where you are surrounded with a movable information network. Think of all you do online, often with your phone: register for classes; take classes, and not just classes from your university; access class syllabi, information, PowerPoints, and lectures; conduct banking; pay your bills; research, shop, and buy products from com- panies or other people; sell your “stuff”; search for, and apply for, jobs; have your own page

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26 CHAPTER 1 Introduction to Information Systems

on Facebook; text and tweet your friends and family throughout your day; and many other activities.

5. Discuss three ways in which information technology can impact managers and three ways in which it can impact nonmanagerial workers. Potential IT impacts on managers:

• IT may reduce the number of middle managers; • IT will provide managers with real-time or near real-time information, meaning that

managers will have less time to make decisions; • IT will increase the likelihood that managers will have to supervise geographically dis-

persed employees and teams.

Potential IT impacts on nonmanagerial workers:

• IT may eliminate jobs; • IT may cause employees to experience a loss of identity; • IT can cause job stress and physical problems, such as repetitive stress injury.

6. List three positive and three negative societal effects of the increased use of information technology. Positive societal effects:

• IT can provide opportunities for people with disabilities; • IT can provide people with fl exibility in their work (e.g., work from anywhere, anytime); • Robots will take over mundane chores; • IT will enable improvements in healthcare.

Negative societal effects:

• IT can cause health problems for individuals; • IT can place employees on constant call; • IT can potentially misinform patients about their health problems.

application (or app) A computer program designed to sup- port a specifi c task or business process. business intelligence (BI) systems Provide computer-based support for complex, nonroutine decisions, primarily for mid- dle managers and knowledge workers. computer-based information system (CBIS) An information system that uses computer technology to perform some or all of its intended tasks. dashboards A special form of IS that support all managers of the organization by providing rapid access to timely information and direct access to structured information in the form of reports. data items An elementary description of things, events, activi- ties, and transactions that are recorded, classifi ed, and stored but are not organized to convey any specifi c meaning. database A collection of related fi les or tables containing data. electronic commerce (e-commerce) systems A type of inter- organizational information system that enables organizations to conduct transactions, called business-to-business (B2B) electronic commerce, and customers to conduct transactions

with businesses, called business-to-consumer (B2C) elec- tr onic commerce. enterprise resource planning (ERP) systems Information systems that correct a lack of communication among the func- tional area ISs by tightly integrating the functional area ISs via a common database. ergonomics The science of adapting machines and work environments to people; focuses on creating an environment that is safe, well lit, and comfortable. expert systems (ES) Attempt to duplicate the work of human experts by applying reasoning capabilities, knowledge, and expertise within a specifi c domain. functional area information systems (FAISs) ISs that sup- port a particular functional area within the organization. hardware A device such as a processor, monitor, keyboard, or printer. Together, these devices accept, process, and display data and information. information Data that have been organized so that they have meaning and value to the recipient.

[ Chapter Glossary ]

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Problem-Solving Activities 27

information system (IS) Collects, processes, stores, analyzes, and disseminates information for a specifi c purpose. information technology (IT) Relates to any computer-based tool that people use to work with information and support the in- formation and information-processing needs of an organization. information technology components Hardware, software, databases, and networks. information technology infrastructure IT components plus IT services. information technology platform Formed by the IT compo- nents of hardware, software, networks (wireline and wireless), and databases. information technology services IT personnel use IT com- ponents to perform these IT services: develop information sys- tems, oversee security and risk, and manage data. informed user A person knowledgeable about information systems and information technology. interorganizational information systems (IOSs) Informa- tion systems that connect two or more organizations. knowledge Data and/or information that have been orga- nized and processed to convey understanding, experience,

accumulated learning, and expertise as they apply to a current problem or activity. knowledge workers Professional employees such as fi nan- cial and marketing analysts, engineers, lawyers, and accoun- tants, who are experts in a particular subject area and create information and knowledge, which they integrate into the business. network A connecting system (wireline or wireless) that permits different computers to share resources. procedures The set of instructions for combining hardware, software, database, and network components in order to pro- cess information and generate the desired output. software A program or collection of programs that enable the hardware to process data. supply chain The fl ow of materials, information, money, and services from suppliers of raw materials through factories and warehouses to the end customers. transaction processing system (TPS) Supports the monitor- ing, collection, storage, and processing of data from the orga- nization’s basic business transactions, each of which generates data.

[ Discussion Questions ] 1. Describe a business that you would like to start. Discuss how

you would use global outsourcing to accomplish your goals. 2. Your university wants to recruit high-quality high school

students from your state. Provide examples of (1) the data that your recruiters would gather in this process, (2) the information that your recruiters would process from these data, and (3) the types of knowledge that your recruiters would infer from this information.

3. Can the terms data, information, and knowledge have dif- ferent meanings for different people? Support your answer with examples.

4. Information technology makes it possible to “never be out of touch.” Discuss the pros and cons of always being avail- able to your employers and clients (regardless of where you are or what you are doing).

5. Robots have the positive impact of being able to relieve humans from working in dangerous conditions. What are some negative impacts of robots in the workplace?

6. Is it possible to endanger yourself by accessing too much medical information on the Web? Why or why not? Sup- port your answer.

7. Is the vast amount of medical information on the Web a good thing? Answer from the standpoint of a patient and from the standpoint of a physician.

8. Describe other potential impacts of IT on societies as a whole.

9. What are the major reasons why it is important for em- ployees in all functional areas to become familiar with IT?

10. Refer to the study at Princess Alexandra Hospital (in the “Improvements in Healthcare” section). How do you feel about Google searches fi nding the correct diagnosis in 57 percent of the cases? Are you impressed with these results? Why or why not? What are the implications of this study for self-diagnosis?

[ Problem-Solving Activities ] 1. Visit some Web sites that offer employment opportuni-

ties in IT. Prominent examples are: www.dice.com, www. monster.com, www.collegerecruiter.com, www.careerbuilder. com, www.jobcentral.com, www.job.com, www.career.com, www.simplyhired.com, and www.truecareers.com. Com- pare the IT salaries to salaries offered to accountants, marketing personnel, fi nancial personnel, operations

personnel, and human resources personnel. For other in- formation on IT salaries, check Computerworld’s annual salary survey.

2. Enter the Web site of UPS (www.ups.com). a. Find out what information is available to customers

before they send a package. b. Find out about the “package tracking” system.

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28 CHAPTER 1 Introduction to Information Systems

c. Compute the cost of delivering a 10� � 20� � 15� box, weighing 40 pounds, from your hometown to Long Beach, California (or to Lansing, Michigan, if you live in or near Long Beach). Compare the fastest delivery against the least cost.

3. Surf the Internet for information about the Department of Homeland Security (DHS). Examine the available

information, and comment on the role of information technologies in the department.

4. Access www.irobot.com, and investigate the company’s Education and Research Robots. Surf the Web for other companies that manufacture robots, and compare their products with those of iRobot.

[ Team Assignments ] 1. (a) Create an online group for studying IT or an aspect of

IT that you are interested in. Each member of the group must establish a Yahoo! e-mail account (free). Go to http:// groups.yahoo.com.

Step 1: Click on “Start Your Group.” Step 2: Select a category that best describes your group

(use Search Group Categories, or use the Browse Group Categories tool). Yahoo! will force you to be very specifi c in categorizing your group. Continue until you see the button: “Place My Group Here.”

Step 3: Name your group. Step 4: Enter your group e-mail address. Step 5: Describe your group. Step 6: Select your Yahoo! Profi le and e-mail addresses

for your group.

Step 7: Now you can customize your group and invite people to join.

Step 8: Conduct a discussion online of at least two topics of interest to the group.

Step 9: Find a similar group (use Yahoo!’s “fi nd a group” and make a connection). Write a report for your instructor.

(b) Now, follow the same steps for Google Groups. (c) Compare Yahoo! Groups and Google Groups. 2. Review the Wall Street Journal, Fortune, Business Week, and

local newspapers for the last three months to fi nd stories about the use of computer-based information systems in organizations. Each group will prepare a report describing fi ve applications. The reports should emphasize the role of each application and its benefi t to the organization. Pre- sent and discuss your work.

[ Closing Case L’Oréal Retools Its Information Systems ] The Problem Headquartered in France, the L’Oréal Group (www.loreal. com) is the world’s largest cosmetics and beauty company. Concentrating on hair color, skin care, sun protection, make- up, perfumes, and hair care, the company is active in derma- tology and pharmaceuticals. The company’s philosophy is that everyone aspires to beauty, and its core mission is to help people around the world realize that aspiration. L’Oréal employs more than 67,000 people in 130 coun- tries, and it supports 23 global brands. The fi rm’s products are manufactured in more than 40 factories located around the world. The company has a tremendous challenge to produce high-quality, consistent products globally. It must ensure that all of its products are created with uniform production pro- cesses and quality control. By 2010 L’Oréal had come to realize that its current en- terprise resource planning system, based on software manu- factured by SAP, could not support its goal of global product uniformity without consolidating its many different informa- tion systems located around the world. For example, L’Oréal had multiple versions of SAP running in different regions and countries. As a result, the company used to take between two and fi ve years to upgrade to the latest version of SAP. L’Oréal

also wanted to improve productivity, safety, and quality by standardizing the best-practice business processes throughout the fi rm.

The Solution To accomplish its mission, L’Oréal reengineered its entire manufacturing process to work more effi ciently while still sup- porting the quality and integrity of its brands. The company integrated its SAP ERP system with Apriso’s (www.apriso.com) FlexNet for operations management. FlexNet is a unifi ed set of manufacturing software applications that coordinate a company’s manufacturing operations within a plant, between plants, and across an entire supply chain. The integration of SAP and FlexNet resulted in a global, central IT system called the Integrated Solution for Industrial Systems (ISIS). ISIS consists of all the transactional applications, fi nancial controls, and purchasing transactions integrated into the manufactur- ing operations on the plant fl oor. FlexNet and ISIS support all factory processes—including production, quality assurance, and purchasing—while promoting L’Oréal’s best practices. ISIS runs in L’Oréal’s central data center in Montpellier, France, where the master data for the business are stored. FlexNet runs on servers located in individual factories so that

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Interactive Case: Planning a New Web Site for Ruby’s Club 29

each factory can continue operations in case a problem arises in the central data center.

The Results In its reengineering process, L’Oréal implemented a single, global instance of SAP and FlexNet, so the last upgrade took only one weekend. By upgrading so quickly, the fi rm was able to update its systems without disrupting its factories. The new software implementation also allows L’Oréal to bring factories online much more quickly. In the past, when L’Oréal acquired a factory, it took years to bring it online. In contrast, the new software enabled L’Oréal to integrate an Yves St. Laurent factory that it had acquired, along with its quality assurance, safety, and effi ciency practices, in two months. Every one of L’Oréal’s manufacturing facilities handles thousands of different recipes for L’Oréal cosmetic products. Every ingredient must be tested for quality, and every worker must follow each recipe exactly. This demanding level of complexity can lead to human error, which can threaten quality, slow the workfl ow, and create waste. The new soft- ware guides the operators through each recipe and automati- cally records the weight of each ingredient to ensure that the quantities are exactly correct. Once raw materials are tested for quality, they are given labels that the worker must scan

before adding them to the recipe. This step ensures that all materials are tested. The labels also give forklift drivers direc- tions as to which materials need to be taken to the packaging station. They also provide information on shelf life. Shop workers confi rm that the new system is easy to use and has reduced confusion and stress. By deploying a single, global instance of SAP and FlexNet, L’Oréal has increased its overall capacity, decreased discrepan- cies in its actual-versus-planned production, and reduced its wasted materials. As a result, the company is able to maintain lower, better-managed inventories at signifi cant cost savings.

Questions 1. Describe several reasons why L’Oréal needed to reengineer its infor-

mation systems. 2. Describe the benefi ts of L’Oréal’s new information systems. Explain

how the benefi ts you describe are related to L’Oréal’s strategic goals, using specifi c examples to support your arguments.

Sources: Compiled from J. Playe, “L’Oreal’s Manufacturing Makeover,” Baseline Magazine, January 28, 2011; “Business Process Management in Manufacturing,” Aberdeen Research Report, January 20, 2011; M. Littlefi eld, “Business Process Management in Manufacturing: Paving the Way for Effective Collaboration,” Aberdeen Research Report, November 30, 2010; M. Johnson, “What’s Happening with ERP Today,” CIO, January 27, 2010; E. Lai, “Microsoft Brings BI to the Cloud,” Computerworld, April 30, 2009; “Case Study: Siemens,” www.acresso.com, 2008; www.loreal.com, www.apriso.com, accessed March 1, 2011.

Planning a New Web Site for Ruby’s Club Go to the Ruby’s Club link at the Student Companion web site or WileyPLUS where you will fi nd a description of your internship at Ruby’s Club, a downtown music venue, and information for your assignment. Your assignment will include providing input on Ruby’s new web site design in a memo to the club’s managers.

[ Interactive Case ]

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