Objectives

Budiraharjo: Information Technology - Module 1

 Objectives

What is the role of information systems in today’s competitive

business environment?

What exactly is an information system? What do managers

need to know about information systems?

How are information systems transforming organizations and

management?

Budiraharjo: Information Technology - Module 1

 Objectives

How has the Internet and Internet technology transformed

business?

What are the major management challenges to building and

using information systems?

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Four powerful worldwide changes that have

altered the business environment:

1. Emergence of the Global Economy

2. Transformation of Industrial Economies
3. Transformation of the Business Enterprise
4. The Emerging Digital Firm

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Emergence of the Global Economy (1)

• Many countries in Asia and Europe are depends on

imports and exports
• Success of a firm is depends on their ability to operate
globally
• Globalization of the world’s industrial economies
enhances the value of information to firm, therefore they
required a powerful IS like Internet
– Values of communications: to control trade with
distributors and suppliers, control global corporation,
operate 24 hours a day worldwide

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Emergence of the Global Economy (2)

• Globalization has cause a stiff competition for local

business.
– Customer has more choices and ways to buy products,
can shop 24 hours a day, information is more available
at anytime

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Transformation of Industrial Economies

• Transform to knowledge- and information-based

economies  lead to knowledge- and information-intense
products
– Products that requires a great deals of learning and
knowledge to produce, i.e. computer games
• Information technology has contribute to increase
productivity (computerized factory machines), new
products and services (credit card, faster delivery,
worldwide reservation system)
• IS is needed to smoothen the flow of information to
maximize the used of company resources

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Figure 1

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Transformation of the Business Enterprise

• Flattening
• Decentralization
• Flexibility
• Location independence
• Low transaction and coordination costs
• Empowerment
• Collaborative work and teamwork

Budiraharjo: Information Technology - Module 1

 Why Information Systems?

Emergence of the Digital Firm

• Digitally-enabled relationships with customers, suppliers,

and employees
• Core business processes accomplished via digital networks
• Digital management of key corporate assets
• Rapid sensing and responding to environmental changes
• For example, Amazon-E-commerce company, banks - E-
banking, AirAsia – E-ticking system, E-genting for room
booking, etc.

Budiraharjo: Information Technology - Module 1

 System Concepts

Budiraharjo: Information Technology - Module 1

 System Concepts

System
“Set of elements or components that interact to
accomplish goals.”

Components of a system
– Inputs
– Processing mechanisms
– Outputs
– Feedback

Budiraharjo: Information Technology - Module 1

 System Concepts

Figure 2: Components of a system

Budiraharjo: Information Technology - Module 1

 System Concepts

Figure 3: Several sub-systems make up this corporate accounting system

Budiraharjo: Information Technology - Module 1

 Data vs Information

Budiraharjo: Information Technology - Module 1

 Data vs Information

Data
“Streams of raw facts representing events such as business
transactions.”

Information
“Clusters of facts that are meaningful and useful to human
beings in the processes such as making decisions.”

Information is one of an organization’s most valuable

resources and is often confused with the term data.

Budiraharjo: Information Technology - Module 1

 Data vs Information

Data and Information

Figure 4: Data vs Information

Budiraharjo: Information Technology - Module 1

 What is an Information Systems?

Budiraharjo: Information Technology - Module 1

 What is an Information Systems?

“A set of interrelated components that collect

(or retrieve), process, store, and distribute
information to support decision making and
control in an organization.”

Budiraharjo: Information Technology - Module 1

 What is an Information Systems?

Figure 5: System concept in an information

system – Feedback is critical to the
successful operation of a system

Budiraharjo: Information Technology - Module 1

 What is an Information Systems?

Input
Activity of gathering and capturing raw data

Processing
Converting data into useful outputs

Output
Production of useful information, usually in the form of
documents and reports

Feedback
Information from the system that is used to make changes to
input or processing activities

Budiraharjo: Information Technology - Module 1

 What is an Information Systems?

Computer-Based Information System (CBIS)

“Single set of hardware, software, telecommunications,

people, and procedures that are configured to collect,
manipulate, store, and process data into information.”

Budiraharjo: Information Technology - Module 1

 What is an Information Systems?

Figure 6: Components of a CBIS

Budiraharjo: Information Technology - Module 1

 Information Systems in Organizations

Budiraharjo: Information Technology - Module 1

 Information Systems in Organizations

Trends that have made

information systems important in business:

• Growing power and decreasing cost of computers

• Growing capacity and decreasing costs of data storage
devices
• Increasing variety and ingenuity of computer programs
• Available, reliable, affordable, and fast communications
links to the Internet
• Growth of the Internet
• Increasing computer literacy of the workforce

Budiraharjo: Information Technology - Module 1

 Information Systems in Organizations

Using information systems

ORGANIZATIONS TECHNOLOGY
effectively requires an
understanding of the
organization, management
and information technology
INFORMATION
shaping the system.
SYSTEMS

MANAGEMENT

Figure 7

Budiraharjo: Information Technology - Module 1

 Information Systems in Organizations

Information systems are a part of organizations

Key elements of an organizations are its:

People -
Structure -
Operating procedures -
Policies -
Culture -

Budiraharjo: Information Technology - Module 1

 Bussiness Information Systems (BIS)

Budiraharjo: Information Technology - Module 1

 Business Information Systems (BIS)

Definition

“Business information systems represent a system of controls

and processes which a business uses to analyze information
needed to effectively manage business in an organization.”

Budiraharjo: Information Technology - Module 1

 Business Information Systems (BIS)

Most management information systems specialize in particular

commercial and industrial sectors, aspects of the enterprise, or
management substructure. Their most common types are:

Transaction Processing Systems (TPS)

A transaction process system (TPS) is an information processing
system for business transactions involving the collection,
modification and retrieval of all transaction data.
Characteristics of a TPS include performance, reliability and
consistency.

Budiraharjo: Information Technology - Module 1

 Business Information Systems (BIS)

Management Information Systems (MIS)

Produce fixed, regularly scheduled reports based on data
extracted and summarized from the firm’s
underlying transaction processing systems to middle and
operational level managers to identify and inform structured
and semi-structured decision problems.

Decision Support Systems (DSS)

They are computer program applications used by middle and
higher management to compile information from a wide
range of sources to support problem solving and decision
making. DSS is majorly used for semi-structured and
unstructured decision problems.

Budiraharjo: Information Technology - Module 1

 Business Information Systems (BIS)

Executive Information Systems (EIS)

It is a reporting tool that provides quick access to summarized
reports coming from all company levels and departments such
as accounting, human resources and operations.

Enterprise Resource Planning (ERP)

It facilitates the flow of information between all business
functions inside the boundaries of the organization and
manage the connections to outside stakeholders.

Budiraharjo: Information Technology - Module 1

 Business Information Systems (BIS)

Figure 8: BIS utilization in an organization

Budiraharjo: Information Technology - Module 1

 Business Information Systems (BIS)

Figure 9: The development of important BIS

Budiraharjo: Information Technology - Module 1

 Organizational Transformation Through IS

Budiraharjo: Information Technology - Module 1

 Organizational Transformation Through IS

Flattening organizations by removing the layer of

management and work as peer and team.
Separating work from location through email, Internet and
video conferencing.
Reorganizing work-flows as computerized information system
has slowly replacing manual system where it able the staff to
complete the work more efficient and effectively.
Increasing flexibility by using communications technology to
organize in more flexible ways.
Redefining organizational boundaries by having a networked
information systems.
The changing management process from manual system to
computerized process.
Budiraharjo: Information Technology - Module 1
 Organizational Transformation Through IS

Figure 10: Flattening organization through IS

Budiraharjo: Information Technology - Module 1

 Organizational Transformation Through IS

Small companies
• Desktop machines, inexpensive computer-aided design (CAD) software,
and computer-controlled machine tools provide the precision, speed and
quality of giant manufacturers.
• Information immediately accessed by the telephone and communications
links eliminate the need for research staff and business libraries.

Large companies
• Custom manufacturing system offer customized products
• Massive databases of customer records to analyze the customer
preferences
• Information can help lower level employees to solve problem more easily

Figure 11: How Information Technology Increases organizational Flexibility

Budiraharjo: Information Technology - Module 1

 Organizational Transformation Through IS

An application requiring 33 days in a paper system would only take 5

days using computers, networks and a streamlined work flow.

Figure 11

Budiraharjo: Information Technology - Module 1

 Organizational Transformation Through IS

Electronic Commerce
- Internet links buyers and sellers
- Lower transaction costs
- Goods and services advertised, bought, exchanged worldwide
- Business-to-business transactions increasing

Electronic Business
- Internet: Business builds private, secure network
- E-mail, Web documents, group software: Extends effective
communication and control
- Extranet: Extension of intranet to authorized external users

Budiraharjo: Information Technology - Module 1

 Organizational Transformation Through IS

Figure 12
Budiraharjo: Information Technology - Module 1
 Assignments and Exercises

Budiraharjo: Information Technology - Module 1

 Exercises
1. What changes that have altered the business environment?
Explain and give examples.
2. What is the definition of “system”?
3. What are the components of a system? Give explanation.
4. What is the difference between data and information?
5. What is the definition of information systems?
6. What are the components of CBIS? Explain and give
examples.
7. What are the key elements of an organization?
8. What is the definition of Business Information Systems?
9. Explain about the most common types of BIS.
10. How does information systems change and transform
business in an organization?
Budiraharjo: Information Technology - Module 1
 Thank you… 

Budiraharjo: Information Technology - Module 1