Chapter

1
Foundations of
Information Systems in
Business

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

• Understand the concept of a system and

how it relates to information systems.
• Explain why knowledge of information
systems is important for business
professionals and identify five areas of
information systems knowledge they need.

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 Learning Objectives

• Give examples to illustrate how business

applications of information systems can
support a firm’s business processes,
managerial decision making, and strategies
for competitive advantage.
• Provide examples of several major types of
information systems from your experiences
with business organizations in the real
world.

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 Learning Objectives

• Identify several challenges that a business

manager might face in managing the
successful and ethical development and use
of information technology in a business.
• Provide examples of the components of real
world information systems
• Demonstrate familiarity with the myriad of
career opportunities in information systems.

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 Competitive Advantage

• “Developing products, services, processes,

or capabilities that give a company a
superior business position relative to its
competitors and other competitive forces.”
Glossary, p. 637

• Attributed to a firm that is … “leading an

industry in some identifiable way, such as
sales, revenues or new products.” Ch. 2, p. 53
• “…when a firm sustains profits that exceed
the average for an industry …”
Ch. 2, p. 53

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 What is E-Business?

• An online exchange of value

– Conducting business on the Internet
• Using Internet technologies to empower…
– Business processes
– Electronic commerce
– Collaboration within a company
– Collaboration with customers, suppliers, and
other business stakeholders

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 E-Business Use

• Reengineering
– Internal business processes
• Enterprise collaboration systems
– Support teams and work groups
• Electronic commerce
– Buying, selling, marketing, and servicing of
products and services over networks

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 Information systems combine:
• Operations Support Systems (Figure 1.7)
– Transaction Processing systems
– Process Control Systems
– Enterprise Collaboration Systems
• Management Support Systems (Figure 1.9)
– Management Information Systems
– Decision Support Systems
– Executive Information Systems
• Other Systems (Figure 1.11)
– Expert Systems
– Knowledge Management Systems
– Strategic Information Systems
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 Types of Management Support Systems

• Management Information Systems (MIS)

– Reports and displays
– Example: daily sales analysis reports
• Decision Support Systems (DSS)
– Interactive and ad hoc support
– Example: a what-if analysis to determine
where to spend advertising dollars
• Executive Information Systems (EIS)
– Critical information for executives and
managers
– Example: easy access to actions of
competitors
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 Other Information Systems

• Expert Systems
– Example: credit application advisor
• Knowledge Management Systems
– Support creation, organization, and
dissemination of business knowledge Example:
intranet access to best business practices
• Strategic Information Systems
– Help get a strategic advantage over customer
– Examples: shipment tracking, e-commerce Web
systems
• Functional Business Systems
– Focus on operational and managerial
applications Examples: accounting, finance, or
marketing
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 Responsibility and Accountability

• IT plays an integral role in every facet of a

business
• Failure is often pinned on IT
• Cultivate a culture that embraces change
• Break projects into pieces
• Set realistic expectations
• There will always be problems
– “That’s life in IT”

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 IT Careers

• IT employment opportunities are strong

• Shortages of IT personnel are frequent
• Long-term job outlook is positive and
exciting
• Starting salaries are high

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 Business Analysts serve critical role

• CIO – broker between management and IT

• Business Analyst
– In the trenches
– Analyzes business need and creates solution
– Communicates solution to technicians
– Balances IT resources with business needs
• Business Analyst credentials
– 5-10 years experience
– Technical undergraduate degree and MBA
– Process driven through changes to finish
– $45,000 to $100,000

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 The IS Function
• Major functional area of business
• Important contributor to
– Efficiency, productivity, morale, customer
service and satisfaction
• Major source of information for decisions
• Vital ingredient in developing competitive
products and services
• Dynamic and challenging career
opportunity
• Key component of networked business

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 IS Activities

• Input of data resources

• Processing of data into information
• Output of information products
• Storage of data resources
• Control of system performance

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