Management Management

Information Systems Information Systems

Management
Introduction to Data,
Information Systems
Information, and Systems
Punang Amaripuja
p_amaripuja@yahoo.com

Management Management
Information Systems Information Systems

Definitions (1/3) Information

• Data :
Streams of raw facts representing
events occurring in organizations or the Organized and Arranged
physical environment before they have
been organized and arranged into a
form that people can understand and
use (Laudon, 2000). Meaningful
• Information :
Data that have been shaped into a form
that is meaningful and useful to human Useful
beings (Laudon, 2000).

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Information Systems Information Systems

Definitions (2/3) CHAPTER 1: INFORMATION IN

• System :
A set of interrelated components that
work together to achieve some common
purpose (Martin et. al., 1994).
• Information System :
Interrelated components working
together to collect, process, store, and
disseminate information to support
decision making, coordination, control,
analysis and visualization in an
organization (Laudon, 2000).
BUSINESS SYSTEMS TODAY
• Information system:
– Set of interrelated components
– Collect, process, store, and distribute information
– Support decision making, coordination, and control
• Information vs. data
– Data are streams of raw facts
– Information is data shaped into meaningful form
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Management Management
Information Systems Information Systems

Definitions (3/3) Some points to remember…

• Formal System :
System resting on accepted and fixed definitions of
data and procedures, operating with predefined • An IS is expected to turn out useful
rules (Laudon, 2000).
• Computer Based Information Systems :
information
Information systems that rely on computer • A formal system is needed before
hardware and software for processing and designing the information system
disseminating information (Laudon, 2000).
• Business Perspective :
Information System is an organizational and
management solution, based on information
technology, to a challenge posed by the
environment.

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Information Systems Information Systems

System Classifications
Characteristics of a System
• Abstract System vs. Physical System
Components Interface Process (eg. theology - computer)
Boundary Input Objectives • Natural System vs. Human Made
System (eg. solar s. - computer)
Environment Output Goals
• Deterministic System vs. Probabilistic
System (predictability)
• Closed System vs. Open System
(decision by man or system)

Management Management
Information Systems Information Systems

CHAPTER 1: INFORMATION IN CHAPTER 1: INFORMATION IN

BUSINESS SYSTEMS TODAY BUSINESS SYSTEMS TODAY
• Three activities of information systems • Feedback:
produce information organizations need – Output returned to appropriate members of
organization to help evaluate or correct input stage
1. Input: Captures raw data from organization or
external environment • Computer/Computer program vs.
2. Processing: Converts raw data into meaningful information system
form – Computers and software are technical foundation
3. Output: Transfers processed information to and tools, similar to the material and tools used to
people or activities that use it build a house

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 Management Management
Information Systems Information Systems

CHAPTER 1: INFORMATION IN
BUSINESS SYSTEMS TODAY
Data and Information

Business Perspective of
Information Systems

Figure 1.3 Raw data from a supermarket checkout counter can be processed and organized to produce meaningful
information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a
specific store or sales territory.
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Management Management
Information Systems Information Systems

CHAPTER 1: INFORMATION IN IS From a Business

BUSINESS SYSTEMS TODAY Perspective
Functions of an
Information System
An information system contains
information about an organization
and its surrounding environment.
Three basic activities—input,
processing, and output—produce the
information organizations need.
Feedback is output returned to IS
appropriate people or activities in the
organization to evaluate and refine
the input. Environmental actors, such Environmental
as customers, suppliers, competitors,
stockholders, and regulatory Challenges
agencies, interact with the
The
organization and its information
systems. IS Organization IS

IS

Figure 1.4

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Information Systems Information Systems

IS’s Role in an Organization Who are the

external customers?
IS • Company:
– Consumers
The
IS Organization IS – Suppliers
– Distributors
•Satisfying External • Government:
IS
Customers – Citizens
– Suppliers
•Satisfying Internal – Other branches of government
Customers

Management Management
Information Systems Information Systems

Who are the Where do we stand?

internal customers?
• Company:
– Other divisions
– Employees
• Government:
– Bureaucracy
– Higher levels of government
– Government officials

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Information Systems Information Systems

IS Requires Understanding of :
Organization
Management
Technology

A Systems Perspective Contemporary IS Issues & Insights

Technical Approach Behavioral
Approach
Management Science Psychology
Computer Science Economics
Operations Research Sociology

Management Management
Information Systems Information Systems

Usage of Data and

Quality and Value
Information
Quality of Information : Data Information Function
• Accurate : free of error, bias & noise
• Timely basis : on-time Salesman Commission & Bonus
• Relevant : user based
RECEIPT Region Promotion, Advertising
Value of Information :
• Benefit > Cost Product Product Evaluation

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Information Systems Information Systems

• The New Yankee Stadium Looks to the Future • The Role of Information Systems in Business Today

• Problem: Yankee fans choosing to watch games on TV or choose • How information systems are transforming business
other forms of entertainment
– Increase in wireless technology use, Web sites
• Solutions: Use information systems to enhance experience. Game – Increased business use of Web 2.0 technologies
coverage, statistics, delivered via ubiquitous HDTV monitors,
mobiles can order concessions, view replays – Cloud computing, mobile digital platform allow more
distributed work, decision-making, and collaboration
• Cisco Systems provides technology to make Yankee Stadium the
most wired in all of baseball • Globalization opportunities
• Demonstrates IT’s role in providing new products and services. – Internet has drastically reduced costs of operating on
global scale
• Illustrates the benefits of utilizing networks and mobile applications
to enhance entertainment, information. – Presents both challenges and opportunities

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Management Management
Information Systems Information Systems

• The Role of Information Systems in Business Today • Perspectives on Information Systems

Information Technology Capital Investment
• Business perspective on information
systems:
– Information system is instrument for creating
value
– Investments in information technology will result
in superior returns:
• Productivity increases
FIGURE 1-1 Information technology capital investment, defined as hardware, software, and communications equipment,
• Revenue increases
grew from 32 percent to 52 percent of all invested capital between 1980 and 2009.
• Superior long-term strategic positioning

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Information Systems Information Systems

• Perspectives on Information Systems • Perspectives on Information Systems

The Business Information Value Chain
• Business information value chain
– Raw data acquired and transformed through
stages that add value to that information
– Value of information system determined in part by
extent to which it leads to better decisions,
greater efficiency, and higher profits
• Business perspective:
– Calls attention to organizational and
managerial nature of information systems
Figure 1-7 From a business perspective, information systems are part of a series of value-adding activities for acquiring,
transforming, and distributing information that managers can use to improve decision making, enhance
organizational performance, and, ultimately, increase firm profitability.

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Management Management
Information Systems Information Systems

• Perspectives on Information Systems

Variation in Returns
On Information
Technology
Investment
Although, on average,
investments in information

Types of
technology produce returns far
above those returned by other
investments, there is

Information Systems
considerable variation across
firms.

Figure 1.8

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 Management Management
Information Systems Information Systems

Variables to Consider What is Management?

• Management Roles
• Management Levels
• Business Processes
Planning Organizing Actuating Controlling

Management Management
Information Systems Information Systems

Information and Types of Systems

Levels of Management STRATEGIC LEVEL
ESS : Executive Support Systems Top Mng.

Environment - MANAGEMENT LEVEL

Strategic Planning Brief - General
MIS : Management Inform. Syst.
DSS : Decision Support Systems
Management Control KNOWLEDGE LEVEL
KWS : Knowledge Work Systems
OAS : Office Automation Syst.
Operational Control Internal –
OPERATIONAL LEVEL
Detailed - Specific
TPS : Transaction Proc Systems
Management Information
Systems

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Information Systems Information Systems

Major Types of Systems in Organizations

Interrelationships among systems

• Business processes:
– Workflows of material, information, knowledge
– Sets of activities, steps
– May be tied to functional area or be cross-
functional
• Businesses: Can be seen as collection of
business processes
• Business processes may be assets or
liabilities
Management Information
Systems
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Management Management
Information Systems Information Systems

• Business Processes and Information Systems • Business Processes and Information Systems
The Order Fulfillment Process
• Examples of functional business processes
– Manufacturing and production
• Assembling the product
– Sales and marketing
• Identifying customers
– Finance and accounting
• Creating financial statements
– Human resources
• Hiring employees
FIGURE 2-1 Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales,
accounting, and manufacturing functions.
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Information Systems Information Systems

• Business Processes and Information Systems Types of IS

• Information technology enhances business

processes in two main ways:
1. Increasing efficiency of existing processes
• Automating steps that were manual
2. Enabling entirely new processes that are
capable of transforming the businesses
• Change flow of information
• Replace sequential steps with parallel steps
• Eliminate delays in decision making

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Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

A Payroll TPS
• Transaction processing systems A TPS for payroll

– Perform and record daily routine transactions processing captures

employee payment

necessary to conduct business

transaction data (such as
a time card). System
outputs include online

• Examples: sales order entry, payroll, shipping and hard-copy reports

for management and
employee paychecks.
– Allow managers to monitor status of operations FIGURE 2-2
and relations with external environment
– Serve operational levels
– Serve predefined, structured goals and decision
making

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 Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

How Management Information Systems Obtain Their Data from the Organization’s TPS
• Management information systems
– Serve middle management
– Provide reports on firm’s current
performance, based on data from TPS
– Provide answers to routine questions with
predefined procedure for answering them
– Typically have little analytic capability
FIGURE 2-3 In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting
system at the end of the time period. Managers gain access to the organizational data through the MIS, which
provides them with the appropriate reports.

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Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

Sample MIS Report
• Decision support systems
– Serve middle management
– Support non-routine decision making
• Example: What is impact on production schedule if
December sales doubled?
– Often use external information as well from TPS and
MIS
– Model driven DSS
• Voyage-estimating systems
– Data driven DSS
• Intrawest’s marketing analysis systems
FIGURE 2-4 This report, showing summarized annual sales data, was produced by the MIS in Figure 2-3.

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Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

Voyage-Estimating Decision Support System
• Business intelligence
– Class of software applications
– Analyze current and historical data to find
patterns and trends and aid decision-making
– Used in systems that support middle and
senior management
• Data-driven DSS
• Executive support systems (ESS)
FIGURE 2-5 This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.

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Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

• Executive support systems • Systems from a constituency

– Support senior management perspective
– Address non-routine decisions – Transaction processing systems: supporting
• Requiring judgment, evaluation, and insight operational level employees
– Incorporate data about external events (e.g. new tax
laws or competitors) as well as summarized – Management information systems and
information from internal MIS and DSS decision-support systems: supporting
– Example: Digital dashboard with real-time view of managers
firm’s financial performance: working capital, – Executive support systems: supporting
accounts receivable, accounts payable, cash flow, and
inventory executives

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Information Systems Information Systems

• Types of Information Systems

• Relationship of systems to one another

– TPS: Major source of data for other systems
– ESS: Recipient of data from lower-level
systems Enterprise-wide
Information Systems
– Data may be exchanged between systems
– In reality, most businesses’ systems are
only loosely integrated (but they are
getting better!)
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Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

• Enterprise applications Enterprise

Application
– Systems for linking the enterprise Architecture

– Span functional areas Enterprise applications

automate processes that
span multiple business
– Execute business processes across firm functions and
organizational levels and
– Include all levels of management may extend outside the
organization.

– Four major applications: FIGURE 2-6

• Enterprise systems
• Supply chain management systems
• Customer relationship management systems
• Knowledge management systems

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 Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

• Enterprise systems • Supply chain management (SCM) systems

– Collects data from different firm functions and stores
data in single central data repository – Manage firm’s relationships with suppliers
– Resolves problem of fragmented, redundant data – Share information about
sets and systems
• Orders, production, inventory levels,
– Enable:
• Coordination of daily activities
delivery of products and services
• Efficient response to customer orders (production, – Goal:
inventory)
• Provide valuable information for improving • Right amount of products to destination with
management decision making least amount of time and lowest cost

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Management Management
Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

• Customer relationship management systems: • Knowledge management systems (KMS)

– Provide information to coordinate all of the
business processes that deal with customers in
sales, marketing, and service to optimize
revenue, customer satisfaction, and customer
retention
– Integrate firm’s customer-related processes and
consolidate customer information from multiple
communication channels
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– Support processes for acquiring, creating,
storing, distributing, applying, integrating
knowledge
• How to create, produce, distribute products
and services
– Collect internal knowledge and experience
within firm and make it available to employees
– Link to external sources of knowledge
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Information Systems Information Systems

• Types of Information Systems • Types of Information Systems

• Alternative tools that increase integration • E-business

and expedite the flow of information – Use of digital technology and Internet to drive major
business processes
– Intranets:
• E-commerce
• Internal company Web sites accessible only by
employees – Subset of e-business
– Buying and selling goods and services through
– Extranets: Internet
• Company Web sites accessible externally only • E-government:
to vendors and suppliers
– Using Internet technology to deliver information and
• Often used to coordinate supply chain services to citizens, employees, and businesses

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Federation of IS
Management Management
Information Systems Information Systems

Examples of IS
Types of IS Sales & Mark Manufacturing Finance Accounting Human Res
STRATEGIC-LEVEL SYSTEMS
ESS 5-year sales 5-year 5-year budget Profit planning Personnel
trend forecast operating plan forecasting planning
MANAGEMENT-LEVEL SYSTEMS
MIS Sales Inventory Annual Capital Relocation
management control budgeting investment an. analysis
DSS Sales region Production Cost analysis Pricing/profitab Contract cost
analysis scheduling ility analysis analysis
KNOWLEDGE-LEVEL SYSTEMS
KWS Engineering workstation Graphics workstation Managerial workstation
OAS Word processing Document imaging Electronic calendars
OPERATIONAL-LEVEL SYSTEMS
Machine control Securities trdg Payroll Compensation
Order tracking Plant schedule Acc payable Training & dev
TPS
Order Material Cash Accounts Employee
Management Information processing movement ctrl Information
management receivable record keeping
Management Systems
Systems

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Information Systems Information Systems

Dimension TPS MIS DSS ES EIS

Examples of IS
Application pay-roll, inventory, production control, long range diagnosis, support to top
record keeping sales forecasting, strategic planning planning, narrow management
Types of IS Sales & Mark Manufacturing Finance Accounting Human Res monitoring domain decision

STRATEGIC-LEVEL SYSTEMS
Focus data transactions Information decisions, inferencing, tracking control
ESS flexibility, user transfer of
friendly expertise

MANAGEMENT-LEVEL SYSTEMS Database unique to each interactive access DBMS, interactive procedural & external (on line)
application, batch by programmers access, factual factual knowledge, and corporate
MIS update knowledge KB (facts,rules)

Decision no decision or semistructured semistructred complex decisions none

DSS simple decision routine problems problems, & unstructured,
Capabilities
models using O—R integrated, add use of rules
techniques judgments
OPERATIONAL-LEVEL SYSTEMS
Type of summary reports, scheduled & information to advice and status access
information operational demand reports, support specific explanations exception
structured flow decisions reporting, key
exception reporting indicators
TPS

Highest submanagerial low middle top management top management & senior executives
organizational management management specialists
level served
Impetus Expediency Efficiency effectiveness effectiveness & timeliness
Management Information Systems
expediency

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