CHAPTER 1 Introduction To Information Systems

1
Introduction to
information systems
CHAPTER OUTLINE LEARNING OBJECTIVES

1.1 Why should I study information 1 Identify the reasons why being an informed user of information
systems? systems is important in today’s world.
1.2 Overview of computer-based 2 Describe the various types of computer-based information
Copyright © 2014. Wiley. All rights reserved.
information systems systems in an organisation.

1.3 How does IT impact organisations? 3 Discuss ways in which information technology can affect
managers and non-managerial workers.
1.4 Why are information systems important
to society? 4 Identify positive and negative societal effects of the increased
use of information technology.
1
Rainer, R. Kelly, et al. Management Information Systems, Wiley, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/vuw/detail.action?docID=3059092.
Created from vuw on 2021-09-13 08:36:11.
OPENING CASE >
Kogan Technologies (www.kogan.com.au)
Founded in 2006 and led by CEO Ruslan Kogan, Kogan Technologies is a

Melbourne-based, Australian-owned consumer electronics online retailer that
sells products from Asian manufacturers to consumers in Australia and the
UK. Starting with zero external capital, Kogan Technologies has grown to a
A$250 million business, becoming the fastest growing business in Australia.
In 2013, Kogan Technologies was listed as one of the top 20 Australian online
retailers. At this pace, and with global expansion plans, Kogan Technologies are
expected to overtake long-established leading Australian consumer retailers
such as Harvey Norman. In addition to the strong entrepreneurial sense that
characterises its CEO, Kogan Technologies’ success is also attributed to the
innovative ways in which the advantages offered by the internet have been
capitalised. These advantages include availability of and access to inexpensive
internet and related technologies, and reduced financial barriers and reliance
on brick and mortar for starting up and developing Kogan Technologies. In an
interview with InTheBlack’s Mark Phillips, Ruslan Kogan argues that online
channels lower the barriers to entry to almost every industry. In his case, internet
technologies offered enormous efficiencies in relation to product sourcing,
business intelligence, targeted marketing, email marketing and administration
(e.g. paperless office).
By adopting advanced analytics including Google searches (e.g. using Google
and Google Adwords to search the number of times key words are searched for),
Kogan Technologies can determine the types of products that are in demand.
Subsequently, they use electronic commerce channels to cut out middle men
in supply chains, including agents, importers, wholesalers and retailers. In
doing so, Kogan Technologies have created efficiencies in the supply chain
and business processes that have enabled products to be sourced directly to
Australian and UK customers inexpensively from leading manufacturers in
Asia such as Samsung and LG. In this way, Kogan Technologies have achieved
price leadership in the competitive consumer electronics retail industry.
For example, in April 2013 Kogan Technologies was one of the cheapest
2 Managment information systems | First Australasian edition
consumer electronics providers, leaving behind competitors such as Harvey
Norman, JB Hi-Fi and Dick Smith.
Stemming from the understanding that consumers of commoditised products
(such as consumer electronics) are price sensitive, Kogan Technologies have
adopted effective targeted price marketing strategies by offering products
at the ‘world’s best price’, creating a source of unmatched competitive
advantage. Specifically, leveraging the power of internet technologies for
implementing their targeted marketing strategies, Kogan Technologies are
using viral marketing and online reviews which, in addition to contributing
to their positioning in the market relative to competitors, has also helped
realise enormous savings in their marketing budget. For example, given the
increasing sophistication of consumers, Ruslan Kogan is cited by AdNews to
have said that ‘customers are too smart to believe the ads now’, suggesting
that traditional Australian electronic retailers may have to spend their marketing
dollars more effectively both online and offline if they are to crystallise their
value proposition.
Additionally, Kogan Technologies are harnessing the power of internet technologies
to create and build the Kogan community which includes individuals that have
opted in because they feel connected to the Kogan brand. Using email marketing,
members of the Kogan community are engaged in a two-way conversation with
the company. That is, they are the first to learn about upcoming specials and new
products while also offering feedback to Kogan Technologies in relation to existing
products, services and business practices, offering a cost-effective market research
tool which has both enhanced the loyalty of existing customers and interest by
prospective customers to become part of this community. Taken together, these
approaches have increased Kogan’s conversions and retention rates, thereby
contributing to its spectacular growth.
Sources: Adnews (2013), ‘Kogan warns Harvey: the ads won’t fool anyone’, AdNews,
30 April, www.adnews.com.au/adnews/kogan-warns-harvey-the-ads-won-t-fool-anyone;
G Cassar (2012), ‘Supply chain & ecommerce master class’, Internet Marketing Magazine,
August, pp. 7–13, media.kogan.com/files/newsroom/attachments/20120801-internet-marketing-
mag2.pdf; Cdn (2013), ‘Harvey priciest chain: report’, Computer Daily News, 1 May, media.
kogan.com/files/newsroom/attachments/20130501_-_computer_daily_news_-_price_chain.
pdf; K Cincotta (2013), ‘Microsoft takes stock of strategy’, The Age, Digital Life, www.
theage.com.au/digital-life/tablets/microsoft-takes-stock-of-strategy-20130403-2h5l1.html;
N Clark (2013), ‘The mini moguls: armed with the latest technology, four Australian teenage
entrepreneurs are turning bright ideas into dollars’, VirginAustralia Inflight Magazine, 5 April,
media.kogan.com/files/newsroom/attachments/20130401_-_virgins_inflight_magazine_-_mini_
moguls.pdf; Kogan (2013), ‘About Kogan’, www.kogan.com/au/about/; M Phillips (2013), ‘Kogan
Technologies’ CEO and founder, Ruslan Kogan: how a computer geek started a business
in his parents’ garage and became Australia’s richest 20-something’, InTheBlack, 9 April,
newsle.com/article/0/68934534/’; P Stafford (2013), ‘The top 20 Australian online retailers of
2013’, Smart Company, 25 March, www.smartcompany.com.au/retail/054778-the-top-20-australian-
online-retailers-of-2013-5.html; P Stafford (2013), ‘Kogan’s prank a lesson — don’t ignore offline’,
Smart Company, 4 April, www.smartcompany.com.au/tech-head/054913-kogan-s-prank-a-lesson-don-t-
ignore-offline-6.html.
Introduction
Before you proceed, it is important to define 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 organisation. An information system (IS) collects, processes, stores, analyses
and disseminates information for a specific purpose.
IT has far-reaching effects on us as individuals, on organisations and on our planet.
Although this book is largely devoted to the many ways in which IT has transformed
modern organisations, you will also learn about the significant impacts of IT on i ndividuals
and societies, the global economy and our physical environment. In addition, IT is
making our world smaller, enabling more and more people to communicate, c ollaborate
and compete, thereby levelling the digital playing field.
Chapter 1 | Introduction to information systems 3
The Nook is a small cocktail bar that opened questions about technology. They have
in 2005 after its owners, Malakai and Abbie, teamed up with your IT lecturer and designed
graduated from university. Throughout questions to go along with the topics you
their college years, they DJed together and will be learning about in your information
earned business degrees in management and systems course.
marketing, respectively. They decided to put This apprenticeship is designed to
their collective knowledge together and open accomplish two things. First, it will give
their own venue in Paddington, Sydney. Malakai and Abbie the benefit of learning
The Nook has been very successful. technology in a class that was not offered
However, the pair realise that they can now when they were in university. Second, it
be more successful by collecting, analysing will give you the benefit of applying the
and using the data that is available to textbook knowledge you learn to the real
them. To do this, they need to upgrade world.
their infrastructure. This is the perfect time As this chapter states, your generation is
to upgrade everything because they have considered Homo conexus. This constant
recently closed for renovation. connectivity has to play a role in
Information technology (IT) was not even the restructuring of The Nook.
part of their degree structure when they were It is your job to help Malakai
in university, so they have not used much (if and Abbie understand exactly
any) technology in their bar. While they are how this will look. As you read
considering its use as they restructure, they through the chapters, you
are not sure how much and in what ways will be provided with some
they should pursue the use of IT. discussion questions to help
To help them with the use of IT in The Nook, you consider the impact of
Malakai and Abbie have hired you as an ISs on The Nook.
IT apprentice to help answer many of their
When you graduate, either you will start your own business or you will go to
work for an organisation, whether it is public sector, private sector, for profit, or not for
profit. Your organisation will have to survive and compete in an environment that has
been radically changed by information technology. This environment is global, mas-
sively interconnected, intensely competitive, 24/7/365, real time, rapidly changing and
information intensive. To compete successfully, your organisation must use IT and IS
effectively.
As the case illustrates, the core competency of business is not technology. Rather, it is
the company’s business model. However, the company is effectively using IT to support its
business model and thus to create a successful business.
As you read this chapter and this book, keep in mind that the information technol-
ogies 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
benefit from learning about IT. Who knows? Maybe you will have a great idea and use
the tools you learn about in this class to make your dream a reality, much the way Ruslan
Kogan has!
The modern environment is not only intensely competitive for your organisation, 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
knowledgeable about IT. It also distinguishes among data, information and knowledge,
and it differentiates computer-based information systems from application programs.
Finally, it considers the impacts of information systems on organisations and on society
in general.
1.1 Why should I study information
systems?
You are 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 gen-
eration in history. The MIT Technology Review refers to you as Homo conexus. Information
technologies are so deeply embedded in your life that your daily routines would be almost
unrecognisable to a university student just 20 years ago.
Essentially, you are practicing continuous computing, where you are surrounded with a
movable and fluid information network. Your network is created by constant cooperation
between the digital devices you carry (for example, smart phones, tablets, laptops and
media players); the wireline and wireless networks that you access as you move about;
and web-based tools for finding information and communicating 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 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 banking; 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); have your own blog and post your own podcasts and videocasts to it; have your own
page on Facebook; make and upload videos to YouTube; take, edit and print your own
digital photographs; 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, do
not worry. You will learn about everything mentioned here in detail later in this book.)
The informed user — you!

So, the question is, Why should you learn about ISs and ITs? After all, you can comfort-
ably use a computer (or other electronic device) to perform many activities, you have been
surfing the web for years and you may feel confident that you can manage any IT appli-
cation that your organisation’s management information systems (MIS) department
installs. The answer lies in your becoming an informed user — that is, a person knowl-
edgeable about information systems and information technology. There are several reasons
why you should be an informed user.
Students today are connected by

many devices — almost all are
wireless.
In general, informed users tend to get more value from whatever technologies they
use. You will enjoy many benefits from being an informed user of IT. First, you will ben-
efit more from your organisation’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 organisation’s IT applications with
your input. Third, even as a new graduate, you will quickly be in a position to recom-
mend — and perhaps help select — the IT applications that your organisation will use.
Fourth, being an informed user will enable you to keep abreast of both new information
technologies and rapid developments in existing technologies. In fact, as you will see in
the c hapter’s Closing Case 1, every company today is a technology company, making it
even more important for you to be an informed user of information technologies.
Remaining ‘on top of things’ will help you to anticipate the impacts that ‘new and
improved’ technologies will have on your organisation and to make recommendations
on the adoption and use of these technologies. Finally, you will understand how IT can
be used to improve your organisation’s performance and teamwork as well as your own
productivity.
Managing the IS function within an organisation is no longer the exclusive responsi-
bility of the IS department. Rather, users now play key roles in every step of this process.
Our overall objective in this book is for you to be able to immediately contribute to man-
aging the IS function in your organisation from your user’s perspective. In short, we want
to help you become a very informed user!
In addition, if you wish to become an entrepreneur, then being an informed user will
help you use IT when you start your own business. IT’s About Business (overleaf) illus-
trates how you can build your own apps for your startup company or small business.
IT offers career opportunities

Because IT 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, net-
work security, telecommunications and multimedia design.
The ISs field includes the people in organisations who design and build information
systems, the people who use those systems and the people responsible for managing those
systems. At the top of the list is the chief information officer (CIO).
Users MIS
Figure 1.1 IT skills open many

doors because IT is so widely
used.
The CIO is the executive who is in charge of the IS function. In most modern
organisations, the CIO works with the chief executive officer (CEO), the chief financial
officer (CFO) and other senior executives. Therefore, he or she actively participates in the
organisation’s strategic planning process. In today’s digital environment, the IS function
has become increasingly important and strategic within organisations. As a result, although
the majority of CIOs still rise from the IS department, a growing number are coming up
through the ranks in the business units (e.g. marketing and finance). So, regardless of your
university major, you could become the CIO of your organisation one day. This is another
reason to be an informed user of information systems!
Figure 1.2 provides a list of IT jobs along with a description of each one.
Career opportunities in IS are strong and are projected to remain strong in the future.1
A report from Hudson ICT for ICT salary and employment insights for Australia and
New Zealand found that cheap hires are in fact dearer to Australian and New Zealand
organisations, suggesting that employers will now be attempting to attract high performers
Position Job description

Chief information Highest ranking IS manager; is responsible for all strategic
officer (CIO) planning in the organisation
IS director Manages all systems throughout the organisation and day-to-day

operations of the entire IS organisation
Information Manages IS services such as help desks, hot lines, training and
centre manager consulting
Applications Coordinates and manages new systems development projects

development manager
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 centre
Programming manager Coordinates all applications programming efforts
Systems analyst Interfaces between users and programmers; determines

information requirements and technical specifications 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 Creates the computer code for developing new applications or

programmer maintaining existing applications
Emerging Forecasts technology trends and evaluates and experiments with

technologies manager new technologies
Network manager Coordinates and manages the organisation’s voice and

data networks
Database administrator Manages the organisation’s databases and oversees the use of
database-management software
Auditing or computer Oversees the ethical and legal use of information systems
security manager
Webmaster Manages the organisation’s world wide web

(www) site
Web designer Creates world wide websites and pages

Figure 1.2 IT jobs.
IT’s not just students. Today’s
professionals must be able to use
computing technologies to do
their jobs.
who can offer the greatest worth to their organisations.2 In particular, individuals who
possess combined skills enabling them to carry out roles for liaising between business
management and leadership and technologists can command annual salaries of up to
$170K.3 Additionally, based on the Hudson ICT report the roles that are expected to be
most in demand in the future include:
• development consultant
• IT management
• data centre manager
• business analysts
• architects
• systems engineers (including virtualisation and cloud computing)
• business intelligence consultant
• application developers
• security consultants
• database administration
• web designers.
Managing information resources

Managing information systems in modern organisations is a difficult, complex task.
Several factors contribute to this complexity. First, information systems have enormous
strategic value to organisations. Firms rely on them so heavily that, in some cases, when
these systems are not working (even for a short time), the firm cannot function. (This situ-
ation is called ‘being hostage to information systems’.) Second, information systems are
very expensive to acquire, operate and maintain.
IT’S ABOUT BUSINESS
Driving business-driven mobile apps
business. In response to the new environment,
they are now using mobile apps to invigorate their
value proposition by enhancing the manner in which their
customers interact with Australia Post in relation to their
services. For example, Australia Post customers can use
mobile apps to send postcards or pay their bills or even
for personalised real-time tracking of parcels. In relation
to this, Australia Post CIO Andrew Walduck is quoted
saying that ‘mobile is the new front door for our
organisation’.6 Likewise, Westfield is identifying mobile
apps as opportunities for assisting customers in their
visits at Westfield shopping centres, including assisting
them with product research prior to the visit, planning
the trip to the centre and even in looking for parking.7
Additional examples of the use of mobile apps include:
• Andrew Campbell and GoCatch — developed a
smartphone app that allows passengers to directly
book taxis with taxi drivers, bypassing the networks
The use of mobile applications (apps) is in its infancy and their booking fees
both in Australia and internationally. Yet, the mobile • Steve Fanale and AppVillage — set up an incubator
apps industry has been growing and thriving at an for would-be ‘app entrepreneurs’. Developers pitch
unprecedented rate. For example, in Australia there are their ideas to AppVillage and if it is approved, its
over 30 million apps downloads per annum.4 Mobile community, or ‘villagers’ and ‘innovators’ can get
apps therefore constitute an important part of the trend involved in the process, offering everything from
towards online productivity and services delivery. In professional services to funding
fact, mobile apps need to be understood to cover areas • CliMate — a free app available through the iTunes
beyond games that encompass business applications, store that provides localised information for rainfall,
health and disability applications. A 2012 survey5 by the temperature and sunlight radiation data for the past
Australian Interactive Multimedia Industry Association 60 years, based on data collated by the Bureau of
(AIMIA) concerning the use of mobile apps and websites Meteorology for farmers.
found the following.
Small business owners who want to create mobile
• Overall, 77 per cent of all respondents access apps — whether to market their products and services to
websites and/or applications on their mobile phone. customers or to improve internal productivity — are
• Social networking websites and mobile apps were finding many alternatives to hiring professional
found to be almost equally popular with a little over programmers. These alternatives include:
40 per cent of respondents considering themselves as • Appsbar (www.appsbar.com)
high-level users.
• MyAppBuilder (myappbuilder.com)
• Approximately 69 per cent of the respondents
• AppBreeder (www.appbreeder.com)
indicated that they had installed mobile apps,
• AppsGeyser (www.appsgeyser.com)
representing a sharp rise from 55 per cent in 2011 and
41 per cent in 2010. • Mobile Roadie (www.mobileroadie.com)
• Approximately half of the respondents indicated • AppMakr (www.appmakr.com).
that they were using between 2 and 5 mobile apps The Queensland Government also offers tips about how
weekly on average, while just over one-third of mobile apps can be used to build and consolidate their
respondents indicated that they were using more than business.8

6 mobile apps. Do-it-yourself apps can be used to create more
In this context, business owners are becoming complex applications for businesses. Greg Taylor, who
increasingly dependent on mobile apps. Many runs an investment advisory firm called Powerline
Australian businesses envisage many emerging Advisors, created an app that brings together a wide
opportunities by using mobile apps to better connect range of data from five different online sources that
and engage with their customers. Australia Post, for could not be found in a single location. These include
example, is facing a significant decline in its traditional easily accessible sources such as Yahoo! Finance, in
addition to harder-to-find information such as company consumers shun games — mobile apps triumphant’, Forbes, 13 January;
balance sheets and cash flow statements. He paid B Tinker (2012), ‘2011: the year mobile figured out IT and vice versa’,
programmers about $700 to implement his app and put Forbes, 2 January; www.att.com; www.zoho.com.
about 200 hours of ‘sweat equity’ into the app.

Taylor updates the data in his app every night and QUESTIONS
pays a provider called Xignite (www.xignite.com) 1 Why are mobile apps becoming increasingly
about $100 per month for corporate financial data. The
important?
app integrates the data from different sources, allowing
Taylor to gain investment insights because he can more 2 Why are businesses becoming so dependent on
easily see relationships among the different types of mobile applications? Provide specific examples to
financial data. These insights enable him to provide his support your answer.
clients with better investment advice.
3 In what ways would smaller businesses and larger
Sources: Compiled from K Casey (2011), ‘Appsbar helps SMBs
build mobile apps’, InformationWeek, 28 April; S Gerber (2011), ‘Mobile businesses benefit from mobile applications? Explain
app development: 10 tips for small business owners’, Mashable, 7 April;
‘AT&T survey shows mobile apps integral to small business operations, your answer.
remote workers on the rise, Facebook use growing rapidly’ (2001), www.
4 Identify and evaluate the advantages and
att.com, 15 March; R King (2012), ‘DIY apps save small businesses time,
money’, Bloomberg BusinessWeek, 6 February; T Kuittinen (2012), ‘US disadvantages of do-it-yourself mobile apps.
A third factor contributing to the difficulty in managing information systems is the

evolution of the MIS function within the organisation. When businesses first began to use
computers in the early 1950s, the MIS department ‘owned’ the only computing resource
in the organisation: the mainframe. At that time, end users did not interact directly with
the mainframe.
In contrast, in the modern organisation, computers are located in all departments
and almost all employees use computers in their work. This situation, known as end user
computing, has led to a partnership between the MIS department and the end users. The
MIS department now acts as more of a consultant to end users, viewing them as cus-
tomers. 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 organisation? What is the
appropriate relationship 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.
Before There is no standard set of choices for how to regulate and divide responsibility for
developing and maintaining information resources between the MIS department and end
you go on . . .
users. Instead, that division depends on several factors:
1 Rate yourself as an • the size and nature of the organisation (e.g. public versus private)
informed user. (Be • the industry in which it operates (e.g. education, mining, healthcare)
honest; this is not a • the amount and type of IT resources
test!) • the organisation’s attitudes toward computing

2 Explain the benefits of • the attitudes of top management toward computing
being an informed user • the maturity level of the technology
of information systems. • the amount and nature of outsourced IT work
3 Discuss the various • the countries in which the company operates.
career opportunities Generally speaking, the MIS department is responsible for corporate-level and shared
offered in the IT field. resources, and the end users are responsible for departmental resources. Figure 1.3 ident-
ifies both the traditional functions and various new, consultative functions of the MIS
department.
So, where do the end users come in? Take a close look at figure 1.3. Under the t raditional
MIS functions, you will see two functions for which you provide vital input. Under the
consultative MIS functions, you will see how the primary responsibility for each function
is exercised and how the MIS department acts as an adviser.
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 14.
• Managing computer operations, including the computer centre
• Staffing, 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 specific 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) 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 largely
resides 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 and so on.
• Proactively using business and technical knowledge to seed innovative ideas about IT
❍❍ Your business needs will often 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 adviser on various issues, including
hardware and software compatibility, implementing extranets, communications
and security. Figure 1.3 The changing role of
the IS department.
QUESTIONS
1 Given that The Nook’s customers are university-aged Homo conexus users
of technology, do you think it will be possible for them to be successful
moving into the future without a strong IT strategy?
2 If ‘informed users’ provide more value to a company, can the same be said
of ‘informed customers’?
1.2 Overview of computer-based

information systems
Organisations refer to their MIS functional area by several names, including the MIS
department, the information systems department, the information 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 — IT
tools to help people perform all of the tasks related to information processing and man-
agement. 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 organisation.
An IS collects, processes, stores, analyses and disseminates information for a specific
purpose. In fact, the purpose of ISs is to get the right information to the right people at the
right time in the right amount and in the right format. Because ISs are intended to supply
useful information, we need to differentiate between information and two closely related
terms: data and knowledge (see figure 1.4).
Data items refer to an elementary description of things, events, activities and trans-
actions that are recorded, classified and stored but are not organised to convey any specific
meaning. Data items can be numbers, letters, figures, sounds and images. Examples of
data items are a collection 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).
Knowledge
Information
Figure 1.4 Binary code, the

foundation of information and
knowledge, is the key to making
complex decisions. Data
Information refers to data that have been organised 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 GPAs and the letters could be grades in an Introduction to MIS class.
Knowledge consists of data and/or information that have been organised and pro-
cessed 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 who average a high distinction or higher 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 5.0. Organ-
isational knowledge, which reflects the experience and expertise of many people, has great
value to all employees.
Data [no context] Information [university context] Knowledge
5.16 5.16 + John Jones = GPA *Job prospects
4.92 4.92 + Sue Smith = GPA *Graduate school prospects
3.39 3.39 + Kyle Owens = GPA *Scholarship prospects
5.95 5.95 + Tom Elias = GPA
GPA = grade point average (higher is better)
You see that the same data items, with no context, can mean entirely different things in
different contexts.
Now that you have a clearer understanding of data, information and knowledge, we
shift our focus to computer-based information systems. As we noted, these systems pro-
cess 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 infor-
mation systems are computerised, today most are. For this reason, the term information
system is typically used synonymously with computer-based information system. The
following are the basic components of computer-based information systems. The first four
are called information technology (IT) components. Figure 1.5 shows how these four
components interact to form a CBIS.
Hardware Procedures Procedures
Database
Computer-based
People information system
Procedures
Procedures Figure 1.5 It takes technology
(hardware, software, databases
and networks) with appropriate
procedures to make a CBIS useful
Software Network for people.
• Hardware is a device such as a processor, monitor, keyboard, or printer. Together, these
devices accept data and information, process them and display them.
• Software is a program or collection of programs that enable the hardware to
process data.
• A database is a collection of related files or tables containing data.
• A network is a connecting system (wireline or wireless) that permits different com-
puters to share resources.
• Procedures are the set of instructions about how to combine hardware, software, data-
bases and networks in order to process information and generate the desired output.
• Users are those individuals who use the hardware and software, interface with it, or uti-
lise its output.
Computer-based information systems have many capabilities. Figure 1.6 summarises
the most important ones.
Figure 1.7 shows how components are integrated to form the wide variety of
information systems in an organisation. Starting at the bottom of the figure, you see that
the IT components of hardware, software, networks (wired and wireless) and databases
form the information technology (IT) platform. IT personnel use these components to
develop information systems, oversee security and risk, and manage data. These activities
cumulatively are called information technology (IT) services. The IT components plus
IT services comprise the organisation’s information technology (IT) infrastructure. At
the top of the pyramid are the various organisational information systems.
Information systems perform these various tasks via a wide spectrum of applications. An
application (app) is a computer program designed to support a specific task or business
process. (A synonymous term is application program.) Each functional area or department
within a business organisation 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 department is usually referred to as a departmental information system (also known
as a functional area information system). For example, the collection of application pro-
grams in the human resources area is called the human resources information system (HRIS).
Collections of application programs — that is, departmental information systems —
are used in other functional areas as well, such as accounting, finance, marketing and
production/operations. IT’s About Business (opposite) illustrates how the D epartment of
Primary Industries and Regions in South Australia (PIRSA), a key Government of South
Australia agency, is using information systems to improve their regulatory monitoring
operations.
Types of computer-based
information systems
Modern organisations employ many different types of information systems. Figure 1.7
illustrates the different types of information systems that function within a single organ
isation and figure 1.8 (overleaf) shows the different types of information systems that function
among multiple organisations. You will study transaction processing systems, management
information systems and enterprise resource planning systems in chapter 11. You will learn
about customer relationship management (CRM) systems in chapter 12 and supply chain
management (SCM) systems in chapter 13.
• Perform high-speed, high-volume, numerical computations
• Provide fast, accurate communication and collaboration within and among organisations
• 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 efficiently

Figure 1.6 Major capabilities of • Automate both semiautomatic business processes and manual tasks
information systems.
IS in SA agriculture
The Department of Primary Industries and Regions in objectives. For example, PIIMS offers a web- based interface
South Australia (PIRSA) is a key Government of South that can be used by all PIRSA departments to record all
Australia agency that aims at growing sustainable and licensing details as required under the law (e.g. Fisheries
competitive regions in South Australia. PIRSA focuses Management Act).11 Additionally, PIIMS can offer PIRSA
on the sustainable development SA’s agriculture, wine, staff (e.g. Fisheries compliance officers), with complete
seafood, forestry and food industry by providing relevant information in relation to a license or license holder in real
research, policy development, regulation and biosecurity time via personal digital assistants (PDA) or smartphones
imperatives.9 In order to proactively deal with SA’s diverse when they are out in the field. Additionally, PIIMS helps
communities, industries and natural resourses, PIRSA with the management of animal health programs in South
employees require information tools to assist them with Australia which includes (but is not limited to):
planning and monitoring activities. PIRSA partnered with
• generic registration processes
Fujitsu to develop the Primary Industries Information
• availability of both textual and spatial representations
Management System (PIIMS), which integrates 23 legacy
of all properties and associated managers, owners
systems. PIIMS offers a single geospatial reference
and relevant stakeholders
point in relation to activities concerning registration,
• capability for mapping of animal health zones and
management and ongoing monitoring of all types of
restricted and control areas
resources that are covered by PIRSA such as:10
• capability of recording, managing and reporting of
• land operation and animal registration various events including inspections (e.g. livestock
• disease outbreak and control properties and abattoir surveillance).
• livestock tagging and tracking through the value chain
PIIMS also supports the planning of rapid responses
• monitoring of rural chemical usage
to disease outbreak detection and coordination of
• support for fisheries and aquaculture industries
containment activities while offering greater visibility,
• licensing and associated financial processes
management and control for ensuring the enhancement
• plant produce accreditations held by plant produce
of South Australia’s key resources.
facilities that supply fruit and vegetable markets/
supermarkets
QUESTIONS
• opal mining permits and claims
• recording regulatory compliance activities. 1 Describe how PIRSA is using PIIMS to accomplish its
Specifically, PIIMS can support PIRSA in managing natural, operational and strategic objectives.
industrial and community resources with geospatial 2 Explain how information systems could be used by
representation and mapping and in doing so assist regulators for monitoring of regulatory compliance
PIRSA to meet its strategic environmental sustainability and intervention.
Business intelligence dashboards

expert systems
Production/operations
Human resources IS
management IS
Accounting IS
Marketing IS
Finance IS
Enterprise resource planning systems
Transaction processing systems

IT services
Figure 1.7 How IT components
are integrated to form the wide IT personnel
variety of information systems
IT components
within a single organisation.
Physical products
CUSTOMERS
Cu
sto ana
Online orders
me in
nt
m
me ge
na cha
Payments
r re me
Digital products
ma pply
ge
ls
lat n t
ia
Your
er
Individuals
Su
io n
organisation
at
M
shi
Business-to-consumer
p
electronic commerce
Physical products (B2C)
Information Online orders

Online orders Payments
Payments Digital products
Internet
SUPPLIERS Business
Figure 1.8 The different types of
Business-to-business Business-to-business
information systems that function electronic commerce electronic commerce
among multiple organisations. (B2B) (B2B)
In the next section, you will learn about the numerous and diverse types of information
systems employed by modern organisations. You will also read about the types of support
these systems provide.
Breadth of support for information systems

Certain information systems support parts of organisations, others support entire organ
isations and still others support groups of organisations. This section addresses all of
these systems.
Recall that each department or functional area within an organisation has its own
collection of application programs, or information systems. These functional area infor-
mation systems (FAISs) are supporting pillars for the information systems located at
the top of figure 1.7: business intelligence systems and dashboards. As the name suggests,
each FAIS supports a particular functional area within the organisation. Examples are
accounting IS, finance 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 o rganisation.
In finance 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 organisation is fundamentally sound and that all financial reports and documents
are accurate:
• 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.
Marketing managers also use IT to manage their relationships with their customers.
In manufacturing, 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).
In manufacturing, managers use IT to control inventory levels.
Managers in human resources use IT to manage the recruiting process, analyse 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 mon-
itor employee productivity. Finally, they rely on IT to manage compensation and ben-
efits packages.
Two information systems support the entire organisation: enterprise resource planning
systems and transaction processing systems.
Enterprise resource planning (ERP) systems are cross-functional systems that are
designed to correct a lack of communication among the FAISs. As a result, figure 1.7
shows ERP systems spanning the FAIS.
ERP systems were an important innovation because the various FAISs were often
developed as stand-alone systems and did not communicate effectively (if at all) with one
another. ERP systems resolve this problem by tightly integrating the FAISs via a common
database. In doing so, they enhance communications among the functional areas of an
organisation. For this reason, experts credit ERP systems with greatly increasing organ
isational productivity.
A transaction processing system (TPS) supports the monitoring, collection, storage
and processing of data from the organisation’s basic business transactions, each of which
generates data. For example, when you are checking out of Target or Coles, each time the
cashier swipes an item across the bar code reader, that is one transaction.
Definitions of a transaction differ throughout an organisation. In accounting, for
example, a transaction is anything that changes a firm’s chart of accounts. The information
system definition of a transaction is broader: A transaction is anything that changes the
firm’s database. The chart of accounts is only part of the firm’s database. Consider a scen
ario in which a student transfers from one section of an Introduction to MIS course to
another section. This move would be a transaction in the university’s information system,
but not a transaction in the university’s accounting department.
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 con-
sidered critical to the success of any enterprise because they support core operations.
Significantly, nearly all ERP systems are also TPSs, but not all TPSs are ERP systems. In
fact, modern ERP systems incorporate many functions that have previously been handled
by the organisation’s functional area information systems. You study both TPSs and ERP
systems in detail in chapter 11.
ERP systems and TPS function primarily within a single organisation. Information
systems that connect two or more organisations are referred to as interorganisational
information systems (IOSs). IOSs support many interorganisational operations, of
which supply chain management is the best known. An organisation’s supply chain is
the flow of materials, information, money and services from suppliers of raw materials
through factories and warehouses to the end customers.
Note that the supply chain in figure 1.8 shows physical flows, information flows and
financial flows. Digitisable products are those that can be represented in electronic form,
such as music and software. Information flows, financial flows and digitisable products go
through the internet, whereas physical products are shipped. For example, when you order
a computer from www.dell.com.au, your information goes to Dell via the internet.
When your transaction is completed (i.e. your credit card is approved and your order is
processed), Dell ships your computer to you.
Electronic commerce systems are another type of interorganisational information
system. An electronic commerce (e-commerce) system enables organisations to con-
duct transactions, called business-to-business (B2B) electronic commerce and customers
to conduct transactions with businesses, called business-to-consumer (B2C) electronic
commerce. (Note: You will learn about other types of e-commerce systems in chapter 9.)
E-commerce systems are typically internet based. Figure 1.8 illustrates B2B and B2C elec-
tronic commerce.
Support for organisational employees

So far you have been concentrating on information systems that support specific func-
tional areas and operations. Now you will learn about information systems that typically
support particular employees within the organisation.
Before Clerical workers, who support managers at all levels of the organisation, include book-
keepers, secretaries, administration officers and insurance claim processors. Lower-level
you go on . . . managers handle the day-to-day operations of the organisation, making routine d ecisions
such as assigning tasks to employees and placing purchase orders. Middle managers make
1 What is a computer-
tactical decisions, which deal with activities such as short-term planning, organising
based information
and control.
system?
Knowledge workers are professional employees, such as financial and marketing
2 Describe the analysts, engineers, lawyers and accountants. All knowledge workers are experts in a
components of particular subject area. They create information and knowledge, which they integrate
computer-based into the business. Knowledge workers act as advisers to middle managers and executives.
information systems. Finally, executives make decisions that deal with situations that can significantly change the
3 What is an application manner in which business is done. Examples of executive decisions are introducing a new
program? product line, acquiring other businesses and relocating operations to a foreign country.
4 Explain how Office automation systems (OASs) typically support the clerical staff, lower and
information systems middle managers, and knowledge workers. These employees use OASs to develop docu-
provide support for ments (word processing and desktop publishing software), schedule resources (electronic
knowledge workers. calendars) and communicate (email, voice mail, videoconferencing and groupware).
5 As we move up the FAISs summarise data and prepare reports, primarily for middle managers, but some-
organisation’s hierarchy times for lower-level managers as well. Because these reports typically concern a specific
from clerical workers to functional area, report generators (RPGs) are an important type of functional area IS.
executives, how does Business intelligence (BI) systems provide computer-based support for complex,
the type of support non-routine decisions, primarily for middle managers and knowledge workers. (They also
provided by support lower-level managers, but to a lesser extent.) These systems are typically used with
information systems a data warehouse and they enable users to perform their own data analysis. You learn
change? about BI systems in chapter 5.
Expert systems (ESs) attempt to duplicate the work of human experts by applying
reasoning capabilities, knowledge and expertise within a specific 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. Significantly, expert systems can operate
as stand-alone systems or be embedded in other applications. We examine ESs in greater

detail in Plug IT In 4.
Dashboards (also called digital dashboards) are a special form of IS that support all
managers of the organisation. 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 5 provides a
thorough discussion of dashboards.
Table 1.1 provides an overview of the different types of organisational information
systems.
Table 1.1 Types of organisational information systems
Type of system Function Example
Functional area IS Supports the activities within System for processing payroll
specific functional area
Transaction Processes transaction data Target or Coles checkout point-

processing system from business events of-sale terminal
Enterprise resource Integrates all functional areas Oracle, SAP

planning system of the organisation
Office automation system Supports daily work activities Microsoft Office

of individuals and groups
Management Produces reports summarised Report on total sales for

information system from transaction data, usually each customer
in one functional area
Decision support system Provides access to data and ‘What-if’ analysis of

analysis tools changes in budget
Expert system Mimics human expert Credit card approval analysis

in a particular area and
makes decisions
Executive dashboard Presents structured, Status of sales by product

summarised information
about aspects of business
important to executives
Supply chain Manages flows of products, Woolworths or Coles supply

management system services and information chain management systems
among organisations connecting suppliers to
Woolworths or Coles
Electronic Enables transactions among www.dell.com.au

commerce system organisations and between
organisations and customers
Apply the Concept

Background
This section discusses the various functional areas that you will most likely work
in and the different systems that support them. It should be no surprise that these
are the very majors you can choose from in most business programs. These four
major functional areas are:
• marketing/sales
• finance/accounting
• manufacturing
• human resources.
Often, these different functional areas will use the same database and networks
within a company, but they will all use them to support their specific needs. This
activity will help you develop a solid understanding of the role of information
systems within the different functional areas.
Activity
Review the section material that describes the major function of the following
departments in most companies: marketing/sales, finance/accounting,
manufacturing and human resources. Then review the basic function of the
following types of information systems: transaction processing, management
information and decision support. Once you have a solid understanding of the
functional areas and information systems that support them you are ready to move
forward with the activity!
Deliverable
Rebuild and complete the chart shown below with the activities that may be
completed by each system for each department. To help out, we have pre-filled
one item in each type of system. Once you complete your chart, submit it to your
tutorial group.
Transaction Management
processing information Decision support
Marketing/sales Enter sales data
Accounting/finance
Human resources Comply with EEOC
Manufacturing Inventory reporting
QUESTIONS
1 Given that The Nook is a bar with a small food menu, what type of data do
you think this establishment should collect from a single transaction (such
as an order for food)?
2 How can The Nook use data from transactions over a month to help
manage inventory?
3 If Malakai and Abbie have transactional data that is organised to create
information regarding their customer base, why could knowledge be
gained from this that would help them develop a marketing plan?
1.3 How does IT impact organisations?

Throughout this book, you will encounter numerous examples of how IT affects various
types of organisations. This section provides an overview of the impact of IT on modern
organisations. As you read this section, you will learn how each of these impacts will affect
you as well.
IT will reduce the number of middle

managers
IT makes managers more productive and it increases the number of employees who can
report to a single manager. In these ways, IT ultimately decreases the number of managers
and experts. It is reasonable to assume, therefore, that in the coming years organisations
will have fewer managerial levels and fewer staff and line managers. If this trend
materialises, then promotional opportunities will decrease, making promotions much
more c ompetitive. Bottom line: pay attention in class!
IT will change the manager’s job

One of the most important tasks of managers is making decisions. One of the major con-
sequences of IT has been to change the manner in which managers make many of their
decisions. In this way, IT ultimately has changed managers’ jobs.

IT often provides managers with near real-time information, meaning that managers
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.
We have been focusing on managers in general in this section. Now, let’s focus on you.
Because of advances in IT, you will increasingly supervise employees and teams who are
geographically dispersed. Employees can work from anywhere at any time and teams can
consist of employees who are literally dispersed throughout the world. Information tech-
nologies such as telepresence systems (discussed in chapter 4) can help you manage these
employees even though you do not often see them face to face. For these employees, elec-
tronic or ‘remote’ supervision will become the norm. Remote supervision places greater
emphasis on completed work and less emphasis on personal contacts and office politics.
You will have to reassure your employees that they are valued members of the organ-
isation, thereby diminishing any feelings they might have of being isolated and ‘out of
the loop’.
Will IT eliminate jobs?

One of the major concerns of every employee, part time or full time, is job security.
Relentless cost-cutting measures in modern organisations often lead to large-scale layoffs.
Put simply, organisations are responding to today’s highly competitive environment by
doing more with less. Regardless of your position, then, you will consistently have to add
value to your organisation and ensure your superiors are aware of this value.
Many companies have responded to difficult economic times, increased global compe-
tition, demands for customisation and increased consumer sophistication by increasing
their investments in IT. In fact, as computers continue to advance in terms of intelli-
gence 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 computerisation. They feel like
‘just another number’ because computers reduce or eliminate the human element that was
present in non-computerised systems.
The internet threatens to exert an even more isolating influence than 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 ‘pro-
gress’, 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 computerisation has benefited organisations by increasing productivity, it
has also 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’ prod
uctivity while jeopardising their physical and mental health. Management can help to
alleviate these problems by providing training, redistributing the workload among workers
and hiring more workers.
On a more specific level, the long-term use of keyboards can lead to repetitive strain
injuries such as backaches and muscle tension in the wrists and fingers. 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 com-
puting environment. The science of designing machines and work settings that minimise
injury and illness is called ergonomics. The goal of ergonomics is to create an environ-
ment 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 1.9 on the next page displays
some sample ergonomic products.
(a) (b)
Figure 1.9 Ergonomic products
protect computer users.
(a) Ergonomic keyboard
(b) Ergonomic office chair
Before
you go on . . . IT provides opportunities for people with
1 Why should employees
disabilities
in all functional areas Computers can create new employment opportunities for people with disabilities by inte-
become knowledgeable grating speech- and vision-recognition capabilities. For example, individuals who cannot
about IT? type are able to use a voice-operated keyboard and individuals who cannot travel can
work at home.
2 Describe how IT might
Going further, adaptive equipment for computers permits people with disabilities to
change the manager’s
job.
perform tasks they would not normally be able to do. You should note that the web and
graphical user interfaces (e.g. Microsoft Windows) can still make life difficult for people
3 Discuss several ways in
with impaired vision. Adding audible screen tips and voice interfaces to deal with this
which IT impacts
problem essentially restores functionality to the way it was before rich, graphical inter-
employees at work.
faces became standard.
Other devices help improve the quality of life for people with disabilities in more mun-
dane, but useful, ways. 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 organ-
isations specialise in IT designed for people with disabilities.
QUESTIONS
1 Malakai and Abbie have always spent hours going through paper receipts
trying to determine past sales. They need these figures to know purchase
quantities for the products they sell. Given that some of their products
have a short shelf life (perishable foods), this needs to be very accurate.
In what ways could the capabilities of ISs help them accomplish this task?
2 What type of procedures would Malakai and Abbie need to ensure that the
people interacting with the ISs are doing so in an appropriate manner
(i.e. correctly inputting data, not using customer data, etc.)?
1.4 Why are information systems
important to society?
This section explains in greater detail why IT is important to society as a whole. Other
examples of the impacts of IT on society appear throughout the book.
IT affects our quality of life

IT has significant 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 flexibility that can significantly improve the quality of leisure
time, even if it does not increase the total amount of leisure time.
From the opposite perspective, however, IT can also place employees on ‘constant call’
where they are never truly away from the office, even when they are on holiday. In fact,
a recent poll revealed that 80 per cent of respondents took their laptop computers on
their most recent holidays and 100 per cent took their mobile phones. Going further,
80 per cent did some work while on holiday and almost all of them checked their email.
Robot revolution on the way

Once restricted largely to science fiction 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 floors, in hospital corridors and
in farm paddocks. In our homes, iRobot (www.irobot.com) produces the Roomba to
vacuum our floors, the Scooba to wash our floors, 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 field of robotics. IT’s About Busi-
ness (overleaf) illustrates how organisations use these robots.
The telepresence robot provides a solution to all of the issues listed earlier.
Telepresence robots
The business problem a joystick that controlled her assistant in the remote
emergency room: a telepresence robot.
In our modern digital world, knowledge workers can
She acknowledged the nurse and introduced herself
work from anywhere via a process called telecommuting.
to the patient’s grandson, explaining that she would
In fact, a new term, digital nomad, has appeared that
question the patient to determine what drug to give
refers to someone who uses a variety of information
him. The robot’s stereophonic hearing conveyed the
technologies such as smartphones, wireless internet
answers and its hypersensitive camera allowed her to
access and web-based applications to work remotely
zoom her view of the room in and out, and swing the
from a home, coffee shop, restaurant, airport, aeroplane,
display left and right.
internet café or other location.
By speaking directly with the patient, examining his
Digital nomads present a couple of issues for the offices
face and how he controlled his hands and looking at
that employ them. First, digital nomads lack a ‘presence’
the cardiac monitor in the emergency room, Dr Johns
in their respective offices. Second, it is typically
was able to assess the stroke with the same accuracy
expensive and time-consuming for them to travel to their
as if she had been physically present. She instructed
offices for example, to attend meetings.
the nurse to give the patient a particular drug.
Yet another business issue occurs when a person with
• Telepresence robot technology is being used at the
a highly desirable skill is needed at a distant location.
National Museum of Australia to enable students from
Examples of individuals with such desirable skills
regional and remote Australia to visit the museum
include surgeons, consultants with expertise in a specific
virtually. Students can control the telepresence robots
industry, salespeople who are well known to high-value
which are equipped with cameras, allowing them to
clients and many others.
control their own view of the items in the museum as
well as to interact with museum educators.12
The IT solution
• Chad Evans, a software designer for Phillips
Telepresence robots have been humorously described as Healthcare, is located at his home in Atlanta, Georgia,
a cross between a Segway and Wall-E. These robots are and his telepresence robot works at the company’s
designed to help companies save money on travel and headquarters in Santa Monica, California. While he
on expensive teleconferencing technology. The robots works at his desk in Atlanta, he is visible on the monitor
enable people in remote offices or locations to have a of his robot. His colleagues can see at a glance whether
rich communications experience without having to use a he is available for a chat. When Chad needs to go to
complicated videoconferencing system. a meeting in California or visit a colleague, he drives
A telepresence robot has both a video camera and a his robot to a desk or meeting room. If he needs to go
video screen embedded in its ‘head’. It also has wheels to a different floor, someone has to press the elevator
and can be moved around remotely by computer. It is buttons for his robot. His robot enables Chad to be as
designed to steer its way clear of obstacles or people. available and transparent to his colleagues as though
The robots let a person maintain a consistent he were physically present in the office.
connection with co-workers, customers, or clients. The • Tom Serani’s boss was frustrated that while Tom was
human user controls the robot, located at a remote on the road, his 20-person sales team working the
location and directs it to move around — for example, phones back at company headquarters did not have
around a conference room during a meeting — the same ‘energy’ as when Tom was in the office. As a
while broadcasting what is going on to the human it result, Tom now has a telepresence robot at company
represents. Interestingly, the robots actually break down headquarters. When he is travelling, Tom can roll
barriers of awkwardness that people sometimes feel in his robot up to an office cubicle at headquarters,
person-to-person meetings. listen in on a telephone sales pitch and offer advice.
Organisations are using telepresence robots for a variety Interestingly, Tom’s boss noted that the telepresence
of applications. Consider the following examples. robot increased the sales team’s energy level to the
same level as when Tom was physically in the office.
• Dr Johns was paged because a man had suffered
a stroke and someone had to quickly decide which
drug to give him. She hurried, not to the emergency The results
room 200 kilometres away where the man had been Telepresence robots allow much greater flexibility for
admitted, but to a room in her local hospital. She digital nomads. They provide a flexible view into what is
sat in front of computer monitors, a keyboard and happening in their offices, without requiring money
and time to be spent on travel. As you saw in my robots talk to your robots’, Bloomberg BusinessWeek, 21–27 February;
A Diana (2011), ‘12 advances in medical robotics’, InformationWeek,
the previous examples, companies benefit from
29 January; D Terdiman (2010), ‘The telepresence robots are coming’,
valuable employees having a ‘presence’ in the CNET.com, 18 May; J Markoff (2010), ‘The boss is robotic, and rolling up
office. Companies also use telepresence robots to behind you’, The New York Times, 4 September; www.anybots.com.
connect with people having specialised skills in
remote locations. QUESTIONS
In the near future, telepresence robots will have artificial 1 What are the advantages of a telepresence robot
intelligence that allows them to do some things on their representing you at your office? Provide specific
own. Inevitably, these robots will become ‘smarter’ and examples to support your answer.
more agile.They will not only represent their human users,
2 What are the disadvantages of a telepresence robot
they will augment them.
representing you at your office? Provide specific
Sources: Compiled from K Terry (2012), ‘Roomba maker sets sights on examples to support your answer.
telemedicine’, InformationWeek, 2 February; D Bennett (2011), ‘I’ll have
University of Sydney is developing and trialling robotic systems, sensors and intelligent
devices that are capable of identifying individual fruits on a tree and their ripeness. They
can also diagnose the health state of trees. These robotic systems are currently being tri-
alled on an almond farm in Mildura, Victoria, and an apple orchard near Melbourne.13
Many robotic devices are also being developed for military purposes. For example, the
Pentagon is researching self-driving vehicles and bee like 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 environments that are repetitive,
harsh, or dangerous to humans.
Improvements in health care

IT has brought about major improvements in health care delivery. Medical personnel use
IT to make better and faster diagnoses and to monitor critically ill patients more accu-
rately. 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 have
used a surgical robot to perform long-distance surgery by controlling the robot’s move-
ments. In addition, doctors discuss complex medical cases via videoconferencing and new Before
computer simulations re-create the sense of touch, allowing doctors in training to perform you go on . . .
virtual procedures without risking harm to an actual patient.
1 What are some of the
Of the thousands of other applications related to health care, administrative systems
quality-of-life
are critically important. These systems range from detecting insurance fraud to creating
improvements made
nursing schedules to financial and marketing management.
possible by IT? Has IT
The internet contains vast amounts of useful medical information (see www.mydr. had any negative
com.au, for example). In an interesting study, researchers at the Princess Alexandra Hos- effects on our quality
pital in Brisbane, Australia, identified 26 difficult diagnostic cases published in the New of life?
England Journal of Medicine. They selected three to five search terms from each case and 2 Describe the robotic
then conducted a Google search. The researchers selected and recorded the three diag- revolution and consider
noses that Google ranked most prominently and that appeared to fit the symptoms and its possible
signs. They then compared these results with the correct diagnoses as published in the implications for
journal. They discovered that their Google searches had found the correct diagnosis in 15 humans.
of the 26 cases, a success rate of 57 per cent. The researchers caution, however, against the 3 Explain how IT has
dangers of self-diagnosis. They maintain that people should use the information gained improved health care
from Google and medical websites such as myDr only to participate in their health care by practices.
asking questions of their doctor.
Apply the Concept
Background
As you have read in this chapter, ISs have made a very significant impact on
society. In fact, most of us now use the internet to communicate with friends,
family and colleagues. Email, Facebook, Twitter, text messages, Skype and all
other communication technologies run on and are supported by IS. We can also
collaborate in ways that have never before been possible.
For example, what if you needed to plan a holiday with some friends for a long
weekend? Although this may seem simple, you will use search tools, post links,
take notes, etc. Why not give it a try?
Activity
If you do not have a Google account (that provides access to Gmail, Calendars,
Drive, YouTube, etc.), you will need to set one up for this activity. Have your friends
do the same and share your usernames (not passwords) with each other.
Now sign into Google Drive (drive.google.com) and create a new document. Towards
the right-hand side, you will see a ‘share’ button. Click this and add your friends’
Google email addresses in the share box. Be sure to give the rights to edit.
Coordinate with them for all of you to sign on at the same time and use the
document to type, share links, notes, ideas, etc. and plan your trip! Look up hotels,
activities, restaurants and so on.
Deliverable
Download the document as a PDF when you have your trip planned out (and are a
bit disappointed that you are not actually going). Be prepared to discuss some of
the benefits of using of Google Drive (or any tool that may become available that
would be similar to it). What are some ways in which you could use this tool at
university, at home, or at work?
QUESTIONS
1 How might a well-designed information system impact The Nook’s
employees? Specifically, how might it impact Malakai and Abbie? What
aspects of running a club would be easier on a computer than on paper?
2 Do you think the addition of an IS would create or eliminate jobs at
The Nook?
WHAT’S IN IT FOR ME?

In a previous section of this chapter, we discussed how IT supports each of the
functional areas of the organisation. Here we examine the MIS function.
FOR THE MIS MAJOR

The MIS function directly supports all other functional areas in an organisation. 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, while MIS personnel must think ‘business needs’ first and ‘technology’
second, they must also consider the ways in which technology restricts or enhances
the ability of MIS personnel to address business needs.
SUMMARY
1 Identify the reasons why being an informed user of >> Functional area information systems (FAISs) support
information systems is important in today’s world. a particular functional area within the organisation.
You will benefit more from your organisation’s IT >> Interorganisational information systems (IOSs)
applications because you will understand what is support many interorganisational operations, of
‘behind’ those applications. which supply chain management is the best known.
>> You will be able to provide input into your >> Enterprise resource planning (ERP) systems correct
organisation’s IT applications, therefore improving a lack of communication among the FAISs by
the quality of those applications. tightly integrating the functional area ISs via a
>> You will quickly be in a position to recommend, or common database.
participate in, the selection of IT applications that >> Electronic commerce (e-commerce) systems enable
your organisation will use. organisations to conduct transactions with other
>> You will be able to keep up with rapid organisations (called business-to-business (B2B)
developments in existing information technologies, electronic commerce) and with customers (called
as well as the introduction of new technologies. business-to-consumer (B2C) electronic commerce).
>> You will understand the potential impacts that >> Office automation systems (OASs) typically support
‘new and improved’ technologies will have on the clerical staff, lower and middle managers,
your organisation and, therefore, will be qualified and knowledge workers, by enabling them to
to make recommendations concerning their develop documents (word processing and desktop
adoption and use. publishing software), schedule resources (electronic
>> You will play a key role in managing the calendars) and communicate (email, voice mail,
information systems in your organisation. videoconferencing and groupware).

>> You will be in a position to use IT if you decide to >> Business intelligence (BI) systems provide
start your own business. computer-based support for complex, non-routine
2 Describe the various types of computer-based decisions, primarily for middle managers and
information systems in an organisation. knowledge workers.
>> Transaction processing systems (TPS) support the >> Expert systems (ESs) attempt to duplicate the
monitoring, collection, storage and processing work of human experts by applying reasoning
of data from the organisation’s basic business capabilities, knowledge and expertise within a
transactions, each of which generates data. specific domain.
3 Discuss ways in which information technology can 4 Identify positive and negative societal effects of the
affect managers and non-managerial workers. increased use of information technology.
Potential IT impacts on managers Positive societal effects
>> IT may reduce the number of middle managers.
>> IT can provide opportunities for people with
>> IT will provide managers with real-time or near disabilities.
real-time information, meaning that managers will
have less time to make decisions. >> IT can provide people with flexibility in their work
(e.g. work from anywhere, anytime).
>> IT will increase the likelihood that managers
will have to supervise geographically dispersed >> Robots can take over mundane chores.
employees and teams. >> IT can enable improvements in health care.
Potential IT impacts on non-managerial workers
Negative societal effects
>> IT may eliminate jobs.
>> IT can cause health problems for individuals.
>> IT may cause employees to experience a loss
of identity. >> IT can place employees on constant call.
>> IT may cause job stress and physical problems, >> IT can potentially misinform patients about their
such as repetitive stress injury. health problems.
>>>> CHAPTER GLOSSARY

application (app) A computer program designed to functional area information systems (FAISs) ISs
support a specific task or business process. that support a particular functional area within the
business intelligence (BI) systems Provide computer- organisation.
based support for complex, non-routine decisions, hardware A device such as a processor, monitor,
primarily for middle managers and knowledge workers. keyboard, or printer. Together, these devices accept data
computer-based information system (CBIS) An and information, process them and display them.
information system that uses computer technology to information Data that have been organised so that they
perform some or all of its intended tasks. have meaning and value to the recipient.
dashboards (or digital dashboards) A special form of information system (IS) Collects, processes, stores,
IS that supports all managers of the organisation by analyses and disseminates information for a
providing rapid access to timely information and direct specific purpose.
access to structured information in the form of reports. information technology (IT) Relates to any computer-
data items Elementary descriptions of things, events, based tool that people use to work with information
activities and transactions that are recorded, classified and support the information and information processing
and stored but are not organised to convey any needs of an organisation.
specific meaning. information technology (IT) services IT personnel use
database A collection of related files or tables IT components to perform these IT services: develop
containing data. information systems, oversee security and risk, and
electronic commerce (e-commerce) system A type of manage data.
interorganisational information system that enables informed user A person knowledgeable about
organisations to conduct transactions, called business- information systems and information
to-business (B2B) electronic commerce and customers to technology.
conduct transactions with businesses, called business- interorganisational information systems (IOSs)
to-consumer (B2C) electronic commerce. Information systems that connect two or more
enterprise resource planning (ERP) systems ISs that organisations.
correct a lack of communication among the FAISs knowledge Data and/or information that have been
by tightly integrating the functional area ISs via a organised and processed to convey understanding,
common database. experience, accumulated learning and expertise as they
ergonomics The science of adapting machines and work apply to a current problem or activity.
environments to people with the goal of creating an knowledge workers Professional employees, such as
environment that is safe, well lit and comfortable. financial and marketing analysts, engineers, lawyers
expert systems (ESs) Attempt to duplicate the work and accountants, who are experts in a particular subject
of human experts by applying reasoning capabilities, area and create information and knowledge, which they
knowledge and expertise within a specific domain. integrate into the business.
network A connecting system (wireline or wireless) that software A program or collection of programs that
permits different computers to share resources. enable the hardware to process data.
office automation systems (OASs) Typically support supply chain The flow of materials, information, money
clerical staff, lower and middle managers, and
and services from suppliers of raw materials through
knowledge workers to develop documents, schedule
factories and warehouses to the end customers.
resources and communicate.
transaction processing system (TPS) Supports the
procedures The set of instructions about how to
combine the components of information technology monitoring, collection, storage and processing of data
in order to process information and generate the from the organisation’s basic business transactions, each
desired output. of which generates data.
>>>> DISCUSSION QUESTIONS

1 Describe a business that you would like to start. What are some negative impacts of robots in the
Discuss how you would use outsourcing to workplace?
accomplish your goals. 6 Is it possible to endanger yourself by accessing too
2 Your university wants to recruit high-quality high much medical information on the web? Why or why
school students from your state. Provide examples of not? Support your answer.
(a) the data that your recruiters would gather in this 7 Is the vast amount of medical information on the
process, (b) the information that your recruiters would web a good thing? Answer from the standpoint of a
process from these data and (c) the types of patient and from the standpoint of a doctor.
knowledge that your recruiters would infer from this 8 Describe other potential impacts of IT on societies as
information. a whole.
3 Can the terms data, information and knowledge have 9 What are the major reasons why it is important for
different meanings for different people? Support your employees in all functional areas to become familiar
answer with examples. with IT?
4 Information technology makes it possible to ‘never be 10 Refer to the study at Princess Alexandra Hospital
out of touch’. Discuss the pros and cons of always (see p. 25). How do you feel about Google searches
being available to your employers and clients finding the correct diagnosis in 57 per cent of the
(regardless of where you are or what you are doing). cases? Are you impressed with these results? Why
5 Robots have the positive impact of being able to or why not? What are the implications of this study
relieve humans from working in dangerous conditions. for self-diagnosis?
>>>> PROBLEM-SOLVING ACTIVITIES

1 Visit some websites that offer employment a Find out what information is available to customers
opportunities in IT. Prominent examples are www. before they send a package.
seek.com.au, www.unijobs.com.au, www.recruitshop. b Find out about the package tracking system.
com.au, www.hays.com.au, www.recruitment
3 Surf the internet for information about the Australian
directory.com.au and www.recruitloop.com.au.
Taxation Office (ATO). Examine the available
Compare the IT salaries to salaries offered to
accountants, marketing personnel, financial information and comment on the role of information
personnel, operations personnel and human technologies in the ATO.
resources personnel. For other information on IT 4 Access www.irobot.com and investigate the
salaries, check www.computerworld.com.au or www. company’s robots for education and research.
acs.org.au for annual salary information data. Surf the web for other companies that manufacture
2 Enter the website of Australia Post (auspost.com.au/ robots and compare their products with those of
index.html). iRobot.
>>>> COLLABORATION EXERCISE

Background (software developers who write word processing
This chapter has shown the many ways ISs have programs).
changed business. As you will learn through this Activity
course, many jobs have been created as a result of Divide your team into the following functional
the growth of IS. Although many positions have been areas: marketing, accounting, finance, human
eliminated (such as the typist), others have been created relations, logistics. Do some research as individuals
to find out what type of jobs are related to IT for Deliverable
each area. Find some software companies that Build a short table that has four columns as shown in
provide the systems (such as Frontier Technologies the example below. Submit work to your tutor.
for human resources) and learn about the IT people
IS that Related IS Current job
involved in the organisation who support the various Department supports positions opening
departments.
Once everyone has completed the research, meet as
a team and have a conversation about the current job
market. Work as a team to find open positions related to
the areas you have found.
CLOSING CASE 1 >

Today, every company is a technology company
THE BUSINESS PROBLEM physical copies.14 In 2012 Booktopia won the Telstra
Sixty years into the computer revolution, forty years into Business Awards People’s Choice Award. They were
the age of the microprocessor and twenty years into also listed in the BRW Fast 100 in 2009, 2010, 2011 and
the rise of the modern internet, all of the technology 2012. In 2012 the Australian Institute of Management’s
required to transform industries through software has publication, Management Today, ranked Booktopia
been developed and integrated and can be delivered in the Top 10 of all retailers operating online in
globally. Over two billion people now access the internet Australia.15
via broadband connections. Worldwide, over five • The music industry: Today’s dominant music
billion people use mobile phones. One billion of those companies are software companies, such as Apple’s
five billion mobile phone users have smartphones that iTunes (www.apple.com/itunes). Traditional record
provide them with instant access to the internet at all labels today exist largely to provide those software
times. companies with content. In Australia and New
In addition, software programming tools and internet- Zealand, APRA|AMCOS endeavour to ensure that
based services allow companies in many industries composers, songwriters and publishers are rewarded
to launch new software-powered startups without adequately when their works are played, performed
investing in new infrastructure or training existing or or reproduced in any shape or form via any media
new employees. For example, in the year 2000 the cost (www.apra-amcos.com.au).
of a business operating a basic internet application was • The video industry: Movie rental kiosks operated by
approximately $150 000 per month. Operating that same companies such as Oovie are replacing traditional
application today in Amazon’s cloud (discussed in detail movie rental businesses, as are online rental and
in Plug IT In 3) costs approximately $1500 per month. download companies such as Quickflix (www.quickflix.
In essence, software is disrupting every industry and every com.au) and BigPond (bigpondmovies.com).
organisation must prepare for this disruption. Numerous • The software industry: Incumbent software companies
companies have attempted to meet the disruption such as Oracle and Microsoft are increasingly
challenge; some have succeeded and some have failed. threatened by software-as-a-service products (e.g.
Salesforce.com) and Android, an open-source
SOFTWARE DISRUPTIONS operating system developed by the Open Handset
Let’s look at examples of software disruption across Alliance (www.openhandsetalliance.com) and led by
several industries. In many of these examples, you can Google. (We discuss operating systems in Plug IT In 2
first see where software disrupted the previous market and software-as-a-service in Plug IT In 3).
leading companies and then where a new company • The videogame industry: Today, the fastest growing
(or companies) used software to gain a competitive entertainment companies are videogame makers —
advantage. again, software. Examples of fast-growing videogame
• The book industry: Booktopia is one of Australia’s few companies include the following.
online booksellers and is one of the few companies ❍❍ Electronic Arts (www.electronicarts.com.au)
partnering with Google to sell its eBooks alongside develops and distributes interactive
software worldwide for internet-connected consoles, Software is also disrupting industries that operate
personal computers, mobile phones and social primarily in the physical world. Consider these
networks. In 2012, EA reported a net revenue of examples.
$4.1 billion. Electronic Arts is known for high-quality • The motor vehicle industry: In modern cars, software
blockbuster franchises including The Sims™, Madden is responsible for running the engines, controlling
NFL, FIFA Soccer, Need for Speed™, Battlefield™ and safety features, entertaining passengers, guiding
Mass Effect™. drivers to their destinations and connecting the
❍❍ Rovio (www.rovio.com), the maker of Angry Birds, car to mobile, satellite and GPS networks. Other
made almost $100 million in revenue in 2011. The software functions in modern cars include
company was nearly bankrupt when it launched Wi-Fi receivers, which turn your car into a mobile
Angry Birds on the iPhone in late 2009. hot spot, software, which helps maximise fuel
❍❍ Minecraft (www.minecraft.net), another video game efficiency and ultrasonic sensors, which enable
delivered only online over the internet, was first automatic parallel parking.
released in 2009. By February 2012, over 5 million The next step is to network all vehicles together.
people had downloaded it. Interestingly, the creator The creation of software-powered driverless cars is
of Minecraft, Markus Persson, has never spent any already being undertaken at Google and major car
money to market his game. Sales grew only by companies.
word of mouth.
• The photography industry: This industry was disrupted THE RESULTS
by software years ago. Today it is virtually impossible As you have seen, an increasing number of
to buy a mobile phone that does not include a major businesses and industries are being run on
software-powered camera and photos can be software and delivered as online services — from
uploaded automatically to the internet for permanent motion pictures to agriculture to national defence.
archiving and global sharing. The previous market Regardless of the industry, companies face constant
leader, Kodak, has been replaced by companies such competitive threats from established rivals and
as Shutterfly (www.shutterfly.com), Snapfish (www. entrepreneurial technology companies that are
snapfish.com), Flickr (www.flickr.com) and Instagram developing disruptive software. These threats will force
(www.instagram.com). Kodak declared bankruptcy in companies to become more agile in the future and
January 2012. respond to competitive threats more quickly, efficiently
• The marketing industry: Today’s largest direct and effectively.
marketing companies are Facebook (www.facebook.
Sources: Compiled from M De La Merced (2012), ‘Eastman
com), Google (www.google.com), Groupon (www.
Kodak files for bankruptcy’, The Wall Street Journal, 19 January;
groupon.com.au), Living Social (www.livingsocial. J Trachtenberg and M Peers (2012), ‘Barnes & Noble seeks next chapter’,
com), DealsDirect (www.dealsdirect.com.au), The Wall Street Journal, 6 January; ‘Driverless car: Google awarded US
Orchard Marketing (www.orchard.com.au), iMarketing patent for technology’ (2011), BBC News, 15 December; J McKendrick
(2011), ‘Five non-IT companies that are now indistinguishable
(www.imarketingsolutions.com.au), Tapjoy (www. from software companies’, ZDNet, 7 December; A Bleicher (2011), ‘Five
tapjoy.com.au) and others. These companies are using reasons every company should act like a software startup’, Forbes,
software to disrupt the retail marketing industry. 14 November; B Austen (2011), ‘The end of Borders and the future of
books’, Bloomberg BusinessWeek, 10 November; M Andreessen (2011),
• The recruiting industry: LinkedIn (www.linkedin.com) ‘Why software is eating the world’, The Wall Street Journal, 20 August;
is a fast-growing recruiting company. For the first J Knee (2011), ‘Why content isn’t king’, The Atlantic, July/August;
time, employees can maintain their own resumes on J Checkler and J Trachtenberg (2011), ‘Bookseller Borders begins a new
chapter…11’, The Wall Street Journal, 17 February.
LinkedIn for recruiters to search in real time. Another
example is Seek (www.seek.com.au).
QUESTIONS
• The financial services industry: Software has
transformed the financial services industry. Practically 1 If every company is now a technology company, then
every financial transaction is performed by software. what does this mean for the company’s employees?
And many of the leading innovators in financial Discuss your answer and provide specific examples
services are software companies. For example, to support your answer.
Financial Services Online (www.financialservicesonlin. 2 If every company is now a technology company,
com.au) assists Australian residents source financial then what does this mean for every person
services, products and information online. Almost majoring in business at university? Discuss your
all major banks operating in Australia offer financial answer and provide specific examples to support
services online at different levels. your answer.
CLOSING CASE 2 >
The Arab Spring
THE PROBLEM the corruption at the highest levels of the Tunisian
The Arab Spring is a wave of demonstrations and government, deepened the popular rage. Mobile phone
protests occurring in the Arab world. Demonstrators videos posted online documented the government’s brutal
have been demanding greater political freedom and an response, including images of police beating and shooting
end to autocracy. By mid 2012, there were revolutions in protesters, resulting in at least 100 deaths. The protesters
Tunisia and Egypt, a civil war in Libya, civil uprisings in used the one weapon they understood much better than
Bahrain, Syria and Yemen, major protests in Algeria, Iraq, the government: the internet. Young Tunisians —
Jordan, Kuwait, Morocco and Oman, and minor protests educated, multilingual and knowledgeable about the
in Lebanon, Mauritania, Saudi Arabia and Sudan. internet and social media — devised strategies to evade
Protesters have made use of mobile communications, the government’s crude firewalls. Protestors spent several
the internet and social media to organise, communicate hours each day on Facebook and other social networks. By
and raise awareness in the face of state repression and rendering the state television and radio stations irrelevant,
internet censorship. In this case, we will look at three they were able to undermine the regime’s propaganda for
examples: Tunisia, Egypt and Syria. the first time in many years.
Tunisia Egypt
In December 2010, the modern Arab world’s first In an effort to silence demonstrators, President Mubarak
successful popular uprising, called the Jasmine ‘turned off the internet’. At 12.34 am on 28 January
Revolution (named for the national flower), erupted 2011, Egypt’s four primary internet providers — Link
in Tunisia when Mohamed Bouazizi set himself on Egypt, Vodafone/Raya, Telecom Egypt and Etisalat Misr
fire. When he died 18 days later, his story went viral, — all went ‘dark’. That is, the four providers stopped
providing millions of angry young Tunisians with a transmitting all internet traffic into and out of Egypt.
martyr. Vast numbers of protesters took to the streets, The blackout appeared to be designed to disrupt the
sparking the Jasmine Revolution. organisation of the country’s protest movement.
Egypt ‘ When countries block, we evolve’, wrote one activist

In January 2011, another popular uprising broke out from the group We Rebuild in a Twitter message on
in Egypt. In 2010, Khaled Said, a young man from 28 January. We Rebuild and other activist groups
Alexandria, was beaten to death by the police. Protesters scrambled to keep the country connected to the outside
rallied around a Facebook page entitled ‘We Are All world, turning to landline telephones, fax machines and
Khaled Said’. Mr Said’s death became the focal point even ham radios to keep information flowing in and out
for Egyptians who had not previously been involved in of Egypt.
the protest movement. Beginning on 25 January 2011, The activists were successful. On 2 February Egypt’s
millions of protesters from a variety of backgrounds and embattled leaders realised that the communications
religions demanded the overthrow of Egyptian President blockage was largely ineffective and indeed
Hosni Mubarak, who had held office since 1981. counterproductive. The shutdown proved to be more
Syria a source of fresh anger than an impediment to the
An uprising began in Syria on 26 January 2011, when protest movement. Protesters had no trouble gathering
Hasan Ali Akleh set himself on fire, protesting against larger and larger crowds, culminating with an estimated
the Syrian government. Since that date, the protests 250 000 people who assembled in central Cairo on
have become more widespread and violent. According 29 January to demand an end to Mubarak’s rule.
to the United Nations, by mid-2013 between 92 900 and Syria
100 000 people were estimated to have been killed and The internet is playing a major role in the organisation
the conflict was ongoing. and coverage of the protests in Syria. The largest
Facebook page in support of the Syrian uprising, called
THE ROLE OF INFORMATION TECHNOLOGY ‘The Syrian Revolution 2011’, has more than 380 000
Tunisia followers. The page reports on news related to the
The Jasmine Revolution did not need any prominent uprising.
leaders to rally the protesters or organise the Because the international news media were banned in
demonstrations. Instead, the revolution was fuelled by a Syria, the main source of information to the outside
steady stream of anonymous text messages and Twitter world has been private videos, usually taken with mobile
and Facebook updates. Documents posted on WikiLeaks phone cameras and uploaded to YouTube and Flickr.
(see chapter 6), in which US diplomats had catalogued Such videos are difficult to verify independently.
To add credibility to the videos, protesters often on Syria, including bans on trade and transportation,
explicitly mention the date and location of the scene and isolating the Assad regime.
show current newspaper issues.
Sources: Compiled from J Peterson (2011), ‘The Facebook revolutions: one
Activists are organising protests via Twitter and Facebook year on’, The Daily Caller, 18 December; J Harris (2011), ‘The year of the
and are using Skype and Twitter to communicate networked revolution’, The Guardian, 13 December; A Hauslohner (2011),
‘The revolution’s second act’, Time, 5 December; J Titlow (2011), ‘How
because the regime often blocks mobile phone Syrian protesters are using the iPhone to fuel an uprising’, ReadWriteWeb,
transmissions. 18 November; A Flamand and H Macleod (2011), ‘Syria’s protesters turn to
Facebook to expose “citizen spies”’, The Guardian, 8 October; R Ratnesar
For example, Syrian activists are using an iPhone
(2011), ‘Not just the Facebook revolution’, Bloomberg BusinessWeek,
app called ‘Souria Wa Bas’ to disseminate news and 6–12 June; R Mackey (2011), ‘Social media accounts of protests in Syria’,
information about the conflict. The app, which works The New York Times, 23 April; N Blanford (2011), ‘On Facebook and
Twitter, spreading revolution in Syria’, The Christian Science Monitor,
on both iPhone and iPad, includes recent news about
8 April; J Solomon and C Levinson (2011), ‘West to isolate Gadhafi’, Wall
opposition groups and their activities, as well as videos, Street Journal, 26–27 February; ‘The faces of Egypt’s “Revolution 2.0”’
maps and photos. (2011), CNN.com, 21 February; ‘After Egypt, people power hits like a
tsunami’ (2011), CNN.com, 15 February; ‘Egyptian president steps down
amidst groundbreaking digital revolution’ (2011), CNN.com, 11 February;
THE RESULT C Levinson, M Coker and J Solomon (2011), ‘How Cairo, US were
Tunisia blindsided by revolution’, Wall Street Journal, 2 February; P McNamara
(2011), ‘Egypt lifts blockade on internet service’, Network World,
On 14 January 2011, President Ben Ali was forced into
2 February; V Blue (2011), ‘#Egypt blocked in China: is internet access a
exile. human right?’, ZDNet.com, 31 January; V Walt (2011), ‘Tunisia’s nervous
neighbors watch the Jasmine Revolution’, Time, 31 January; N Gohring
Egypt
and R McMillan (2011), ‘Without internet, Egyptians find new ways to get
On 11 February 2011, following weeks of determined online’, Computerworld, 28 January; J Robertson (2011), ‘The day part
popular protest and pressures, President Mubarak of the internet died: Egypt goes dark’, USA Today, 28 January; ‘Tunisia’s
resigned from office. On 24 June 2012, Egypt’s election revolution should be wake-up call to Middle East autocrats’ (2011),
Washington Post, 15 January.
commission announced that Muslim Brotherhood
candidate Mohamed Morsi had won Egypt’s presidential
QUESTIONS
election. In 2013 there was a coup and interim Prime
Minister Adly Mansour was appointed. 1 Describe how information technology enabled the
Jasmine and Egyptian revolutions.
Syria 2 Describe efforts by the Tunisian and Egyptian
The conflict continues. Some countries have cut ties governments to quell the revolutions. In particular,
with the Assad regime including the Gulf States, Libya, describe the efforts that were directed at information
Tunisia, Britain, Spain, Turkey, the United States and technology.
Belgium. In addition, the Arab League, Turkey and 3 Discuss how information technology contributed to
most Western powers have imposed severe sanctions higher oil prices and higher prices you pay for petrol.
SPREADSHEET ACTIVITY
OBJECTIVE Chapter connection
A spreadsheet is a software tool that allows large amounts Data, information and knowledge are the main focus of
of data to be stored, organised, analysed and presented this chapter. Spreadsheets are just one of many tools
in graphical form. A spreadsheet is extremely useful (albeit the most widespread and easily accessible)
because of its ability to make simple work of a mundane that can be used to manage data, information and
knowledge.
task (such as calculating the average inventory turnover
time for 1000 products). Although it is not difficult to Activity
calculate averages, the sheer volume of the work makes it As the text introduces the concepts of data, information
and knowledge, this activity will introduce you to
very time-consuming. A spreadsheet allows you to create
the vast possibilities of using spreadsheets to help

your own ‘formula’ and then apply that formula to all
manage and control data. Unmanaged data will never
1000 products at the same time, reducing the amount of
provide information or knowledge, so it is imperative to
work necessary dramatically.
understand not only how to use a spreadsheet but the
Given these possibilities, you need to take some time possibilities of when to use it. Consider the following
to consider the possible applications of a spreadsheet. three examples, then develop your own ideas about how
It is the endless application of the spreadsheet that spreadsheets can be used.
makes it so powerful. This activity will show you that this • Individual: Money is something everyone has to
tool can be used for a variety of situations and purposes. deal with. A spreadsheet is a great tool to help track
and manage personal finances. Someone with a What ‘maths formulas’ would you use that a spreadsheet
spreadsheet budget can quickly see where his or her could help with? If it will help, search the web for
money is being spent and make plans for where it will ‘vehicle maintenance spreadsheets’ to see what other
go in the future. With a little creativity and experience, people do with it!
one can quickly create a personal spreadsheet that Deliverable
will help track finances without purchasing a boxed
You will provide a written description that demonstrates
program.
the ways a spreadsheet can be used to help keep up
• Organisations: It is still the simple things that make with routine maintenance on a vehicle.
a big difference. Companies continue to seek better
DISCUSSION QUESTIONS
ways to manage inventory and often these systems
1 For data to be turned into information, they often need
incorporate a spreadsheet. Many supply chain
to be cleaned, organised, calculated and ultimately
management tools will export data into spreadsheets
presented in some graphical format. Spreadsheets are
for analysis. Once in a spreadsheet, charts and graphs
can be used to easily display how inventory is being excellent at all of these. Discuss three tools that help
handled. spreadsheets accomplish all of these goals.
• Society: The Australian Bureau of Statistics (ABS) 2 Students have generated their own ideas for using
performs a census regularly. Much of this information spreadsheets. Be prepared to discuss your ideas with
is available to the public. A good deal of interesting the class at large. Hopefully, you did not all come up
information can be gained by placing these data with the same possibilities as other students and this
in a spreadsheet. Charts and graphs can be used will help broaden their horizons even more.
to analyse population changes, employment rates, Suggested solution: There is no suggested solution.
demographic information and trends over time. There is no end to the possible applications of
Spreadsheets can be used to tell a story with this spreadsheet tools. This is the major point of this
information. exercise. It does not teach you anything in particular
Having read these descriptions, describe to your tutorial (although you may learn something); it simply opens
group how you might use a spreadsheet to help manage your eyes to see that this tool will apply to you
the required maintenance on your vehicle. Think about sometime. We hope it will make these concepts more
things like petrol mileage, oil changes, expenses, etc. real to you as you work through the following exercises.
DATABASE ACTIVITY INTRODUCTION TO THE DATABASE PROJECT

OBJECTIVE Prerequisites
How to open and use an existing Access 2010 database, None.
even if you have never done it before. ACTIVITY
Chapter connection 1 Download the Ch 01 NeTrouble database from www.
All aspects of modern information systems depend johnwiley.com/au/highered/rainer/ausnz/
on shared databases. Being able to work with them studentresources and double-click to open it.
is essential to any manager or knowledge worker of 2 Familiarise yourself with the parts of the Access
the 21st century. In this chapter, you saw how every window you see. The main ones are shown in
department in a modern organisation uses information Figure 1A.1. (It is from a different database, but the
systems. You saw how different departments use them window has the same parts.)
differently: HR staff to recruit, marketing managers to The ribbon, A, provides tools to manipulate your
select marketing channels, manufacturing coordinators database. The tools depend on the object you are
to develop production schedules. Much of this working with and are organised into groups accessed
information is not just for one part of the organisation. via tabs (B). The tabs vary with object type, but there
Order information from sales, for example, goes will always be a Home tab at the left and a Create tab
to manufacturing (if you sell something, it must be next to it.
produced), purchasing (materials come from suppliers) The arrangement of the icons on the ribbon depends
and accounting (payments, adjustments to inventory on how much space Access has to spread them out.
values). Linking an organisation through a shared Vary the width of your window to see how the icons
database is a major benefit of today’s systems. rearrange as it becomes narrower. (On most displays,
These uses depend on data. You will read more about it starts out wide enough for a full array, so making it
that later in this course. However, it is never too early wider will not change anything.) The sections stay the
to start thinking about ISs in terms of the data they same, but some tools may lose their labels or
use. Computers can only work with the data they have. disappear under an arrow indicating a pull-down
Having the right data is vital to any IS. menu when space is tight.
Figure 1A.1 Microsoft Access:
Screen shot 1.
via Options under the File ribbon tab. Click Current

The File tab, letter C, controls the database as a file.
Database, then Navigation Options.
You open, close and save your work here. In Office
2010, this was done via the Office button. Prior 4 Sort this table by date of birth: Click in the UserDOB
releases used a File menu. column to select it, then click the top (A to Z) sorting
icon in the Sort & Filter section under the ribbon. Who
The navigation pane, D, lists the objects in the current
is the oldest user? How old is he or she?
database. You can choose which types of objects it lists
via the pull-down menu that opens when you click the 5 Look at the UserDept (User Department) column of
the User table. It does not have department names.
down arrow to the right of ‘All Tables’. Each object type
Instead, it has numbers. Adam is from Department
has its own icon. In the screen shot, the spreadsheets
1 and so on.
represent tables; the green booklets, reports.
6 Open DeptTbl (Department Table). What is the name of
Usage hint: If you see just ‘Navigation Pane’ vertically
Department 1?
at the left of the window, click on that text or the »
above to expand it. The « at the top of the navigation 7 Open UserRpt (User Report). Adam is listed under
pane in the screen shot shrinks the pane. That leaves that department. Access used his department number
more space for other items. to connect his name in the user table with the
department name in the department table. This is how
The main part of the window, E, houses all open
relational databases link different types of data. How
objects. The screen shot shows a data table. Each
many users in the Marketing department submitted
object has a tab with its name at the top. Clicking a
network trouble tickets? After you find the answer,
tab brings that object to the front. You probably do
close the report. Be sure to click the X at the top right
not see any open tables in your database yet.
of the object area, below the ribbon — not the one at
The navigation area, F, lets you move through the top right of the entire Access window. Clicking the
individual records in a database. Here, it shows ‘1 of X at the top right of the entire Access window will exit
19’, corresponding to the highlighted first record of the Access application.
19 in the table.
8 Open UserFrm (User Form). You will see information
Most Access objects can be manipulated in about the first user, Adam. In the navigation area at
several views. A table, for example, has one view the bottom of the window, F in the figure, click on the
(Datasheet view) for reading and editing data, far right icon to insert a new record. Enter reasonable
another (Design view) for designing the table itself. data. For the user’s department, pick any department
You can switch views by clicking the icon at the left from the list to the right of the legend ‘Select
of the ribbon (G), by pulling down the menu there, or department.’ What department did you pick? Note the
via the icons at the lower right of the window (also G). User ID number of your new user. Click the New
The Access window has two Close boxes (H). The one at Record icon again to save your work.
the top right of the object area closes the object in front Usage hint: Access saves new data in the database as
(here, the table TicketTbl). If other objects are open, one soon as you exit a record. Changes to the design of
of them will now be in front. The Close box at the top the database, however, are saved only when you tell
right of the window closes the application and exits it to.
Access. (It prompts you to save unsaved work first.)
3 Open UserTbl (short for ‘User Table’). How many
records are in it?
Usage hint: Access can be set to open objects with a
single or double click in the navigation pane. If you
are using a personal copy, you can set this preference Figure 1A.2 Microsoft Access: Screen shot 2.
9 Now open TicketTbl. Click in the ‘New’ row of the d It can be found by asking the user or a member of
table. Do not enter anything in the first column; it will his/her family.
be filled automatically with the next number. In the 4 The report you looked at in step 7 had all of the
next column, TicketUser, enter the number of the user following elements, except:
you just created. In the next two, TicketDevice and a An overall header at the top, to identify it.
TicketTech, fill in any numbers that are already used
b Number of trouble tickets submitted by each
in the existing rows of the table. In the next two,
department, below the list of that department’s
enter any dates you want. (If you click on the
employees.
calendar icon that appears when you select either of
those fields, you can use a built-in calendar to select c Number of trouble tickets submitted by each
dates.) In the last column, enter any data you want. department, above the list of that department’s
employees.
10 Open UserRpt again. How many users are in that
department now? d Detail rows with information about each user.
Usage hint: Reports are not automatically updated DISCUSSION QUESTIONS

when data they are based on change. You have to 1 In step 9 of this activity, you entered a birth date
close and reopen them. cut-off for the query. User input like this, that
determines what data a query returns, is called a
Usage hint: The reason you created a ticket for your
parameter. Now, suppose you want to book a round
new user is that this report shows only users who
trip on an air travel reservation system. List three
have submitted trouble tickets. It could have been
parameters you must enter into such a system before
designed to show all users, whether or not they
it can tell you about available flights.
submitted tickets, but it was not.
2 The report you used in steps 7 and 8 of this activity
11 Open UserQry (User Query) to find all users born
included a summary field after each department. It
after a certain date. Key in 6/6/1986 (June 6, 1986) and
was a simple summary, just a count of users in that
click OK. How many users were born after that date?
department. Suppose this report also contained
DELIVERABLE numeric data, such as user salaries. What other types
Submit answers to the eight questions posed in the of department summaries could you have? Are there
activity above and on the previous page: any summaries, other than the employee count, that
In step 3: 1 question you could possibly create from this table as it exists
In step 4: 2 questions here? (Be creative. Do not worry about whether or not
In step 6: 1 question it would make sense to create them. Just ask: Would it
be possible?)
In step 7: 1 question
3 A university cafeteria checkout system reads the bar
In step 8: 2 questions
code on each item, looks it up in a table and finds the
In step 11: 1 question
product description and price. Using this information, it
(Steps not listed have no questions.) keeps track of the running total. At the end it calculates
QUIZ QUESTIONS the total due and compares it to the student’s account
1 True or false: Access puts all the information about balance. If the balance is insufficient, it calls a
something of interest (such as an employee) into a supervisor. Otherwise, it subtracts the cost of the meal
single table. from the balance and prints an itemised receipt
2 Which of the following information items about a user showing the remaining balance.
is not given in UserTbl? a What tables does this database need? (One was
a The user’s name. mentioned in the description.)
b The user’s date of birth. b Using paper and pencil or any other tools your
c The user’s email address. instructor specifies, draw the tables as in TicketTbl
in the Figure 1A.1. Show columns for all the data in
d The user’s blood type.
them. Show a few sample rows. Also draw a
3 If you want to find out a user’s age from UserTbl, sample itemised receipt as it might be printed for a
which of the following is correct? student. For each different kind of data item on the
a There is insufficient information here to determine it. receipt, say where it comes from: in the database
b It can be found by subtracting the date of birth or as the result of some other calculation.
from today’s date, dividing the difference in days 4 The technician table (TechTbl) lists all the technicians,
by 365 and deleting any fractional remainder. with their names and other information such as their pay
c It can be found by subtracting the date of hire from grade (job title). Describe in words how you could find,
today’s date, dividing the difference in days by 365 using the tables in this database, the names of all the
and deleting any fractional remainder. users whose problems a given technician worked with.

CHAPTER 1 Introduction To Information Systems

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CHAPTER 1 Introduction To Information Systems

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1

CHAPTER OUTLINE LEARNING OBJECTIVES

information systems systems in an organisation.

Founded in 2006 and led by CEO Ruslan Kogan, Kogan Technologies is a

2 Managment information systems | First Australasian edition

to work with information and to support the information and information-processing

Chapter 1 | Introduction to information systems 3

4 Managment information systems | First Australasian edition

The informed user — you!

Students today are connected by

Chapter 1 | Introduction to information systems 5

IT offers career opportunities

Figure 1.1 IT skills open many

6 Managment information systems | First Australasian edition

Position Job description

IS director Manages all systems throughout the organisation and day-to-day

Applications Coordinates and manages new systems development projects

Project manager Manages a particular new systems development

Systems manager Manages a particular existing system

Operations manager Supervises the day-to-day operations of the data and/or

Programming manager Coordinates all applications programming efforts

Systems analyst Interfaces between users and programmers; determines

Business analyst Focuses on designing solutions for business problems;

Applications Creates the computer code for developing new applications or

Emerging Forecasts technology trends and evaluates and experiments with

Network manager Coordinates and manages the organisation’s voice and

Webmaster Manages the organisation’s world wide web

Web designer Creates world wide websites and pages

Chapter 1 | Introduction to information systems 7

Managing information resources

8 Managment information systems | First Australasian edition

respondents indicated that they were using more than business.8

Chapter 1 | Introduction to information systems 9

about 200 hours of ‘sweat equity’ into the app.

A third factor contributing to the difficulty in managing information systems is the

test!) • the organisation’s attitudes toward computing

10 Managment information systems | First Australasian edition

Traditional functions of the MIS department

• Managing computer operations, including the computer centre

• Staffing, training and developing IS skills

• Providing technical services

• Infrastructure planning, development and control

New (consultative) functions of the MIS department

• Initiating and designing specific strategic information systems

• Incorporating the internet and electronic commerce into the business

• Managing system integration including the internet, intranets and extranets

• Educating the non-MIS managers about IT

• Educating the MIS staff about the business

• Partnering with business-unit executives

• Creating business alliances with business partners

Chapter 1 | Introduction to information systems 11

1.2 Overview of computer-based

Figure 1.4 Binary code, the

12 Managment information systems | First Australasian edition

4.92 4.92 + Sue Smith = GPA *Graduate school prospects

3.39 3.39 + Kyle Owens = GPA *Scholarship prospects

5.95 5.95 + Tom Elias = GPA

GPA = grade point average (higher is better)

Hardware Procedures Procedures

Chapter 1 | Introduction to information systems 13

• Perform high-speed, high-volume, numerical computations

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

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