Chapter 1

Business Information Systems:

An Overview

Management Information Systems, 4 th Edition 1

 Learning Objectives
• Explain why information systems are essential to
business
• Describe how computers process data into useful
information for problem solving and decision
making
• Identify the functions of different types of
information systems
• Describe how different information systems serve
different levels within an organization

Management Information Systems, 4 th Edition 2

 Learning Objectives (Cont.)
• Evaluate how telecommunications and database
technology can help implement the goals of
information systems
• Recognize the role of information technology in
e-commerce
• List major factors to consider when evaluating
information systems and their roles in organizations
• Identify major ethical and societal conflicts created
by widespread use of information systems

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 Information Systems
• Why Do People Need Information?
– Individuals: Entertainment and enlightenment
– Businesses: Decision making and problem solving
• Gathering
• Storing
• Manipulating

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 Data, Information, and Systems
• Data vs. Information
– Data
• A “given” or fact: a number, a statement, or a
picture
• The raw materials in the production of information
– Information
• Data that have meaning within a context
• Raw data or data that have been manipulated

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 Data Manipulation
• Raw data
– Time-consuming to read
– Difficult to understand

• Manipulated Data
– Provides useful information

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 Generating Information
• Raw data are
processed in an IS to
create final useful
information
– Process:
Manipulation of
data
– Computer-based
ISs: process data to
produce information
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 Information: Important Resource
• Information
must be useful
– Relevant
– Complete
– Accurate
– Current
– Cost
effective in
business
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 What Is a System?
• System: A set of components that work together
to achieve a common goal
• Subsystem: One part of a system where the
products of more than one system are combined to
reach an ultimate goal
• Closed system: Stand-alone system that has no
contact with other systems
• Open system: System that interfaces with other
systems

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 Systems and Subsystems

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 Information and Managers
• Systems thinking:

– Viewing organization in terms of suborganizations

or subsystems

– A framework for problem solving and decision

making

– Managers focus on overall goals and operations of

business

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 Information and Managers (Cont.)
• Systems thinking (Cont.)

– Information Map: data and information flow

within an organization

– Information Technology: all technologies that

facilitate construction and maintenance of
information systems

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 The Benefits of Human-Computer
Synergy
• Synergy: combined
resources produce output
exceeding the sum of the
outputs of the same
resources employed
separately
• Translates human thought
into efficient processing
of large amounts of data

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 Information Systems in
Organizations
• Data

• Hardware

• Software

• People

• Procedures

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 Trends
• Power of computers increasing; prices dropping

• Increase in programming variety and ingenuity

• Internet access faster and more reliable

• Internet growth resulting in opportunities

• Increasing ratio of computer-literate workforce

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 Components of an Information
System

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 The Four Stages of Data Processing
• Input: Data are collected and entered into
computer
• Data processing: Data are manipulated into
information using mathematical, statistical, and
other tools
• Output: Information is displayed or presented
• Storage: Data and information are maintained for
later use

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 Computer Equipment for
Information System

• Input devices: introduce data into the IS

• Processor: manipulates data through the IS

• Output devices: display information

• Storage devices: store data and information

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Input-process-output-storage devices

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 ISs: From Recording Transactions
to Providing Expertise
• Transaction Processing Systems (TPS)
– Record data and perform basic processing
• Cash registers and ATMs

• Management Information Systems (MIS)

– Recorded transactions and other data produce
information for problem solving and decision
making

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 Types of MISs
• Decision Support Systems (DSS)
– Contain models, or formulas, that manipulate data
into information
– Often answer “what if?” questions
• Group Decision Support Systems (GDSS)
– Generate ideas, establish priorities, and reach
decisions in group environment

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 Types of MISs (Cont.)
• Executive Information Systems (EIS)
– Can gather information from vast amounts of data
for high-level executives
– Highly useful in control and planning
• Expert Systems (ES)
– Programmed with human expertise
– Can help solve problems of unstructured nature

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 Types of MISs (Cont.)
• Geographic Information Systems (GIS)
– Represents local conditions or features
– Allows planning, decision-making, and monitoring
of local conditions or activities
• On-demand Output
– Managers can obtain reports tailored to their needs
at any time

Management Information Systems, 4 th Edition 23

 ISs in Functional Business Areas
• Accounting
– Record business transactions, produce periodic
financial statements, and create reports required by
law
• Finance
– Organize budgets, manage the flow of cash,
analyze investments, and make decisions that could
reduce interest payments and increase revenues

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 ISs in Functional Business Areas
(Cont.)
• Marketing

– Analyze demand for various products in different

regions and population groups

• Human Resources

– Help with record keeping and employee evaluation

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 ISs in Different Business Sectors
• Manufacturing
– Allocate resources such as personnel, raw material,
and time
– Control inventory, process customer orders,
prepare production schedules, perform quality
assurance, and prepare shipping documents

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 ISs in Different Business Sectors
(Cont.)
• Service
– ISs are often the backbone of service organizations
• Retail
– Some retail stores (e.g., Wal-Mart, Sears) are now
linked to communication networks by satellite
– Management can determine which items move
quickly and which do not

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 ISs in Different Business Sectors
(Cont.)
• New Businesses
– ISs have made new products and services possible,
such as credit reports and shipment tracking
• Government
– Tax authorities, national insurance and welfare
agencies, defense departments, economic
organizations, immigration authorities

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 Shared Data Resources
• Effective way to operate: different systems share
same data from same pool
• Company’s database: one of the most powerful
resources
• Categorized and structured data can be
manipulated to produce useful information

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 Shared Data Resources (Cont.)

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 E-Commerce
• Business-to-business and business-to-consumer
transactions done electronically via networks

• Database management online makes information

cheaper to distribute

• E-commerce is now synonymous with “doing

business on the Internet”

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 Why Study IS?
• Knowledge Workers
– Employers seek computer-literate professionals
who know how to use information technology
• Degrees in IS
– Computer Science and Management Information
Systems
• Information Systems Careers
– Systems analyst, specialist in enterprise resource
planning (ERP), database administrator,
telecommunications specialist, consulting, etc.
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 Ethical and Societal Issues
The Not-So-Bright Side
• Consumer Privacy

– Organizations collect (and sometimes sell) huge

amounts of data on individuals

• Employee Privacy

– IT supports remote monitoring of employees,

violating privacy and creating stress

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 Ethical and Societal Issues
The Not-So-Bright Side
• Freedom of Speech

– Opportunities increase for pornography, hate

speech, intellectual property crime, and other
intrusions

– Prevention may abridge free speech

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 Ethical and Societal Issues
The Not-So-Bright Side
• IT Professionalism
– No mandatory or enforced code of ethics for IT
professionals--unlike other professions
• Social Inequality
– Less than 20% of the world’s population have ever
used a PC; less than 3% have Internet access

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 Business Information Systems:
An Overview

• Information Systems • Shared Data

• Data, Information, and Resources
Systems • E-Commerce
• ISs: From Recording • Why Study IS?
Transactions • Ethical and Societal
to Providing Expertise Issues
• Information Systems in The Not-So-Bright
Business Side

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 Summary
• Information Systems are essential to business
• Data is processed into useful information for
problem solving and decision making
• Information systems provide information for
different levels within an organization
• There are major factors to consider when
evaluating information systems

Management Information Systems, 4 th Edition 37