TOPIC 2: INFORMATION SYSTEMS IN BUSINESS & SOCIETY

2.1 Information Systems in Business to collapse

Information systems play an important role in today's business world. Information systems in
businesses are designed to accomplish the following four aspects:

• Process improvement: Information systems help to improve processes within

organisations. For example, many companies use information systems to provide
customer self-service facilities, resulting in customers interacting with these systems to
obtain services. A good example is an ATM (did you know that ATM stands
for Automatic Teller Machines?). With an ATM, you can access money without needing
to speak to anyone. Additionally, the process of obtaining money from a machine is less
error-prone than from a person. In this way, the process has been improved for both the
client and the company.
• Automation of processes: Information systems allow for processes to be
automated. For example, a food retailer knows when to re-stock products by looking at
what has been sold. The payment system at the till and the re-stocking system are linked.
Through such a system the process of ordering new stock is automated.
• Control: Information systems improve control by applying rules. For example, when
you order a product online, you have to provide certain information and payment has to
be made before you receive the goods. The rule of "payment first" is enforced and
therefore control is improved.
• Information flow: Information systems improve information flow within and between
organisations. For example, the information flow of data within the university is made
easier through a system. You can view all your marks on one system independent of
the department hosting the course.

The simplest form of information systems that even small business relies on, are credit card
machines or the SnapScan mobile application. Both are information systems that assist in making
payment easier. Most information systems used in business organisations are designed for
electronic (e-commerce) and mobile commerce (m-commerce), transactions, processing,
management of information, and decision making.

2.2 Organisations and the Value Chain to collapse

We often use the term "business" or "organisation" without really thinking about what it means.Is
there a difference between these terms, or do they mean the same thing?
An organisation is a formal collection of people and resources which is established to accomplish
a set of goals. The primary focus of a for-profit organisation is to maximise the shareholder value
(often measured by the price of the company stock). Such organisations are referred to
as businesses. There are also non-profit organisations or non-governmental organisations,
whose purpose it is to add value to society. They may make a profit, but the benefit cannot be
distributed to shareholders, it has to be re-invested in the organisation. An excellent example of a
non-profit organisation is a government department. Non-governmental organisations are usually
not-for-profit organisations that are not part of the government.
An organisation is in itself a system which has inputs, processing mechanisms, outputs, and
feedback. Resources such as materials, people, and money are inputs to the organisation.
They go through a transformation to produce outputs, which are usually goods or services of higher
value compared to the inputs. Through adding value, organisations attempt to achieve their goal
of making a profit or contributing to society — for example, a car assembly plant. The inputs are
the staff, the assembly equipment, raw materials (such as metals and plastics), and pre-assembled
components (such as the engine). The processing is done to turn the inputs into the finished
vehicle, which is worth more than the value of the inputs and the processing.

Value Chain in Business

A value chain is a tool that is used to identify where and how value is added in an organisation. It
is a series of activities that includes inbound logistics, warehouse and storage, production, finished
product storage, outbound logistics, marketing and sales, and customer services.
Analysing the value chain when developing information systems often results in efficient
transaction processing systems. The value chain can reveal links between activities which can be
exploited by using information systems. Supply Chain Management (SCM) and Customer
Relationship Management (CRM) are two critical parts of managing the value chain.

1. SCM determines the supplies required for the value chain, the quantities needed to meet
customer demand, how the supplies are to be processed into finished goods & services,
and the shipment of finished products and services is to be scheduled, monitored, and
controlled. Using the example of the car assembly plant, SCM identifies key suppliers
and parts, negotiates with vendors for best prices and support, and makes sure all parts
and supplies are available to manufacture cars and send finished products to dealerships
around the country where they are needed.
2. CRM programs help a company manage all aspects of customer encounters, including
marketing and advertising, sales, customer service after the sale, and retaining loyal
customers. CRM can assist the company in collecting customers' information, informing
them about new products, and selling products to new and existing
customers. CRM software uses a variety of information sources such as sales from retail
stores, as well as email and Internet browsing habits for compiling customer profiles.

Information Systems in SCM & CRM: Traditionally IS systems are used to control and monitor
processes and increase effectiveness and efficiency. Information systems are also traditionally
independent of the processes in an organisation. Our view today is that information systems are a
part of these processes. Information systems themselves provide input; they are used for product
transformation or producing output. For example, a telephone directory business that creates
telephone books for all international companies may receive a request from a client for steel
companies in Europe. By using an information system, the directory business can sort files to find
the suppliers' names and telephone numbers, as requested, and organise them in alphabetic
order. Therefore the information system is itself a part of the business.

Please listen to the narrated lecture slides for an explanation of the value chain in business!

2.3 Information Systems in Society

There are 100s of examples of information systems (IS) in society, like Facebook, YouTube and
Instagram. These systems are often referred to as social media - we prefer the term social
information system (SocIS).

The SocIS consists of the same components as the IS:

• Hardware,
• Software,
• Telecommunications (media or social media),
• People,
• Procedures and
• Databases.
Your notes from previous session give the details of these components. Telecommunications
(media or social media) is only one component of the system; hence we prefer the term social
information systems.

The Social Information System

Any system that has a social component (people, groups, procedures) and a technical component
(hardware, software, databases, telecommunications), that enable individuals to connect with one
another, to cultivate relationships and to be entertained.
The SocIS is used for:
• keeping in touch - sending messages, audio / video calls just to keep in touch and
communicate with colleagues, family and friends
• sharing content - pictures, videos, and audio files to allow others to be part of individual
experiences or events
• collaborating with others - to share ideas and explore new ways of doing things
• reviewing products and services - rating purchasing experiences, rating stays at hotels,
guest houses or B&Bs
• participating in virtual worlds – think of Meta, and becoming immersed in an alternate
reality
Importantly, interaction with the SocIS creates, stores and distributes information.

2.4 Differences between the IS and the SocIS

The IS exists to support organizational members with their work-related activities and problems.
The SocIS exists to support online social interaction.
There are 5 key differences between the IS and the SocIS:
1. Formal versus Informal Membership - Membership of an IS is formally managed in
organizations and membership is compulsory / membership of the SocIS community is
voluntary and is managed very informally
2. Availability and Reach – membership of the IS is limited to organizational members and
interaction with the IS usually occurs in the office during office hours / SocIS members
could come from the same neighbourhood or different parts of the world, they could belong
to multiple social groups and they can connect from any place at any time.
3. Defined Use versus Variable Use - the IS is used to support specific organizational tasks
/ the SocIS can be used in very different ways like creating content, engaging in discussion,
sharing new ideas, mobilizing community members into action.
4. Tight versus Loose Controls - the owner of an IS has full control over who may interact
with their IS and how the IS is used / members of the SocIS are not assigned roles and
don’t have any formal authority. Interaction is controlled loosely, through feedback from
community members.
5. Producers and Consumers versus Prosumers – content on the IS is produced by
organizational members and authorized by the owner of the IS (Producers) before it can
be consumed, by customers, suppliers and others (Consumers) / any member of a SocIS
can create, modify, exchange and consume content (Prosumers)

2.4 Components of the SocIS

• Technology component - hardware, software, telecommunications, databases

• Social component - people and procedures
• Information component - as people interact with technology they create, change, share and
consume information
 Information
Information has been described from 4 different stances:

1. a physical stance - information is something that can be seen to be causing a physical

difference in the environment in the form of a token, sign or mark. Therefore, information
can be captured, specified, and measured in terms of unambiguous and objective physical
units.
2. an objective stance – information is the human understanding that is contained in signs.
Information exists whether or not people have observed it. The content of signs or
messages is meaningful, and the content can be assessed as true or false.
3. a subject-centered stance - people assign meaning to signs and messages. The result is
that the same sign or message could convey different information to different people.
People must have prior knowledge in order to understand the information contained in
signs. At the same time, the information people are exposed to can create and internally
shape their knowledge.
4. a sociocultural stance - information is dependent on society and culture. The members
of a group must agree on what is meaningful and relevant for information to exist. Meaning
and relevance changes from one sociocultural setting to another. Information grows and
spreads through social interaction.

2.5 Benefits and Challenges of the SocIS

• societal benefits – sharing, connecting, collabaroting, being entertained

• unexpected societal benefits – using features of the SocIS in unusual ways that benefit
society, like warning people about areas of flooding that should be avoided or re-connecting
family members who have been displaced through events like tropical storms, cyclones or
earthquakes.
• social dilemmas - teenage girls on Instagram show increased levels of anxiety and
depression, suicidal thoughts, and eating disorders. Facebook used for human trafficking, to
incite violence against ethnic minorities and for the sale of human organs. The spread of
misinformation has become a common occurrence.

Differences between the SocIS and the IS challenge the effectiveness of existing thinking in
dealing with these new social dilemmas.