CENGAGE Principles of Business Information © 2018, Cengage Learning EMEA Systems 3rd Edition Ralph Stair, George Reynolds and ‘Thomas Chesney [ALL RIGHTS RESERVED. No part ofthis work covered by the copyright herein may be reproduced or distributed in any form ‘or by any means, except as permitted by U.S. copyright law, Publisher: Annabel Ainscow «without the prior written permission of the copyright owner. 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Find your local representative at: www.cengage.co.uk |. cengage products are represented in Canada by Nelson EGucation Lt for your course an learning solutions, visit www.cengage.co.uk Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com. Printed in China by RR Donnelley Print Number: 01 Print Year: 2017For TahseenaOverview + 1. An Introduction to information Systems 3 a 2 Information Systems in Organizations 33 St. Ab Information Technology Concepts 6s dig 2 Haraware: Input, Processing, Output and Storage Devices 65 4 Soltware: S Software 115 38 and Applicatior 5 Organizing and Storing Data 187 6 Computer Networks 187 3 Business Information Systems 231 7 Operational Systems 233, 8 Management information and Decision Support Systems 26 jaized Information Sys 9 Knowledge Management and Sp 10 Pervasive Computing 935, 4 Systems Development 25 11. gystoms Analysis 387 12. Systems Design and Implementation 409 ar 2d Ethical Issues in Information Systems 449 Security, Privacy arEthical and Societal Issues: Customers Out of Pocket After Direct Transfer Exror 41 igineering and Continuous Improvement 43 User Satisfaction and Technology Acceptance 44 Information Systems @ Work: Noto Re The Applications Portfolio 46 Suecess Factors 47 Competitive Advantage 48 Factors That Lead Firms to Seek Competitive Advantage 48 Evaluating IS 49 Productivity 49 Retum on investment and the Valu of Information Systems 50 Careers in Information Systems §1 Operations 51 Systems Develooment 51 Support 52 Information Service Units 53 Typical i$ Titles and Functions §: Summary 54 Self-Assessment Test 56 Review Questions 5 Discussion Questions 56 Web Exercises 56 Case One: Cloud Computing and Social Media Make Nail Polish Success 57 Case Two: Can You Solve It? 58 Case Three: Raining Wine from the Cloud 60 Notes 60 World Views Case: ASAZONG Training and Consulting (Pty) Lte Helos Organizations and Users With Information Security Consultation and Training Awareness 6} Input, Processing, Out Devices 65 Principles 65 Learring Objectives 65 Why Learn About Hardware? 66 ‘CONTENTS c Computer Systems: integrating the Power of Technology 66 Hardware Components 67 Hardware Components in Action 68 Processing and Memory Devices: Power, Speed and Capacity 68 Processing Characteristics and Functions 69 Secondary Storage 74 ‘Access Mathods 75 S rage L Enterprise Storage Options 78 Input and Output Devices: The Gateway to Computer Systems 81 Characteristics and Functionality 81 Input Devices 82 Outout Devices 87 Computer System Types 91 Portable Computers 93 Nonportable Single-User Computers 95 Multiole-User Computer Systems 96 Information Systems @ Work: Printers Ariive in the Operating Theatre 97 Green Computing 101 Ethical and Societal Issues: Mobile Technology Fighting Human T ‘Summary 104 Self-Assessment Test 105 Reviow Questions 106 on Questions 6 106 Case One: Moore's La 106 Case Two: Sen Seis Holping to Create the Internet of Things 108 Case Three: The €30 computer 109 Ww About to Be Overturned Principles 115 Learning Objectives 115 \Why Leam about Systems and Aaplication Software? 116 ‘An Overview of Software 116 Systems Sofware Application Software 117er, Arrive ing 108 tuned ion ‘Supporting individual, Group ancl Organizational 7 Systems Software 118 Operating Systems 118 Current Operating Systems 122 Information Systems @ Work: Privacy ior Everyone, Everywhere 123 Workgroup Operating Systems 125 Enterprise Operating Systems 126 Operating Systems for Small Computers, Embedded Computers and Specie Purpose Devices 126 Unity Programs 127 Midieware 129 ‘Application Software 129, Overview of Aopiication S Personal Application Software ‘Mobile Application Sofware 135 up Application Software 1. Application Software 137 Application Software for information, Decision Support and Competitive Advantage 138 Programming Languages 138 Ethical and Societal Issues: Adblockers Salvation for Web Users Or a HighTex tion Racket? 139 tion of Program ct-Oriented. igence Languages 140 Software Issues and Trends 142 ware 143 Summary 146 Sel Assessment Test 148 eview Questions Discussion Questions 149 Case One: Software Cuts Legal Costs 149 Case Two: Ready. Steady. Go! 151 Case Thr nd Storing Data 157 ies 157 Parning Objectives 187 ‘i Learn About Organizing Data? 158 st@ Management and Data Modeling 158 Relationships Between Tables 160 si Databases 161 Database Management Systems 165 Creating and Modiying the Database 165 Storing and Retrieving Data 166 Manipulating Data and! Generat Database Administation 168 Selecting a Database Management System 169 Using Data Other Software Database Applications 170 Reports 167 Linking Databases to the intemet 170 Big Data Applications 170 Data Warehouses 171 Ethical and Societal Issues: Three Words 1nd a Few Symbols Cost a Business 40m 172 ining 173 igence 174 Information Systems @ Work: T (Quantum Experience 175 eM Visual, Au ‘Summary 180 Self-Assessment Test 181 Review Questions 181 $181 er Database Systems 179 corcises 181 Case One: Just Tel Me My Password Atready! 182 Dase Two: Reading Every Book That's Writer 183, Case Three: Life Is Short, Protect Your Data 184 Notes 185 fe Boen 6 Computer Networks 187 Principles 187 Leaming Objectives 187 hy Leain About Computer Networks? 188 Telecommunications 188, (Chane! Banciwiath fa Types 189 ia Types 192 ware 195 Networks and Distributed Processing 197 Network Types 197 Ethical and Societal Issues: The Gre: Data ributed Processing 202 Server Systerms 203, ations Software 204 British bi ci‘securing Data Transmission 205 f | Virtual Private Network (VPN) 207 \ | The Intemet 208 i How the Internet Wo 3 209 | Internet Applications 211 | The World Wide Web 212 Information Systems @ Work: Tech Firms Plan the Highest Capacity Atlantic Data Link 214 Email 218 | Telnet and FTP 219 Cloud Computing 219 Intranets and Extranets 219 ‘Summary 220 Sell Assesement Test 228 Review Questions 223 Discussion Questions 223 Wab Exercises 223 Case One: Instant Messaging Is Easier To Secure Than Email 224 case Twor Anatomy OF A Hack 225 Case Three: Digital Cartography Gets It Notes 227 | World Views Case: IT Purchase Des What Should You Buy? 222 eld lau is PS Cid 7 Operational Systems 233 Principles 233 | Learning Objectives 239 Why Learn About Operational Systems? 24 | Introduction 234 \ Enterprise Resource Planning 235 ‘Advantages of ERP Systems 2: Disadvantages of ERP Systems 237 ERP for Small-and Medium-Sized Enterprises (SMEs) 238 \ ‘Transaction Processing Systems 238 ‘Taditional Transaction Processing Methods ‘and Objectives 239 Transaction Processing Ac eat Information Systems @ Work: Fast Food Chain Yonghe King Upgrades Their POS 244 rs ‘Teacitional Transaction Processing ‘Applications 245 Order Processing Systems 245 Purchasing Systems 247 ‘Accounting Systems 248 Electronic and Mobile Commerce 248 Electronic Commerce 248 a Mobile Commerce 251 Ethical and Societal Issues: Tracking Staff Beyond the Workplace 251 Production and Supply Chain Management 253 Customer Relationship Management and Sales Ordering 254 Financial and Managerial Accounting 265 Hosted Software Mode! for Enterprise Software 258 International Issues Associated with ‘Operational Systems 256 Different Languages and Cultures 257 ion System Multiple Currencies 257 ‘Summary 258 Self-Assessment Test 258 Review Questions 259 Discussion Questions 260 Web Exercises 260 ‘Case One: Non-Linear Presentations 260 ase Two: When Stock Becomes a Liabilty 262 Case Three: Netfix Analytics Creates Content ‘That We'll Watch 263, Notes 264 8 Management Information and Decision Support Systems 2 Principies 265 Learning Objectives 265 Why Learn Aloout Management information Systems and Decision Support Systems? 268 ‘ Decision Making and Problem Solving 266 ammed versus Non-Prograrnmed Decisions 267 Optimization, Satisficing and Heuristic ‘Approaches 268NTENTS: x att ty 262 tent 266 INTENTS ‘Sense and Respond Big Data 269 ‘An Overview of Management Information Systems 269 Inputs toa Manageme Outputs of a Managem System 270 acteristics of a Management Information System 273 Functional MIS 274 Financial Management information Systems 275 Manufacturing Management Information ‘Systems 277 Marketing Management inforn Human Resource Manage ‘Systems 282 Geographic information Systems 284 Decision Support Systems 284 Characteristics of a Decision Support System 285 Capabiities of @ Decision Suppor System 286 ‘A Comparison of a DSS and an MIS 287 Components of a Decision Support System 287 Information Systems @ Work: Non-Linear \What-tf Analysis in OpenOffice 288 Group Suppor Systems 291 Ethical and Societal Issues: Online Divorce Form Error ‘Could Have Led to Untair ements! 202 ofa GS: formation Systern 269 Information jon Systems 280 ment Information Executive Support Systems 294 CCapabilties of Executive Support Systems 205 ‘Summary 296 8 298 One: Smart Meters Ci ray Decisions 299 15¢ Two: Taking Designs into the Next Dimension 300 e Big Data For as Decision Notes 303, 9 Knowledge Management and Pecialized Information Systems 205 Principles 308 Learning Objectives 305 Why Learn St arn About Knowledge Management and Spaced roe nauesge Management and Knowledge Management Systems 306 Overview of Knowledge Management Systems 306 Obtaining, Storing, Sharing and Us Knowledge 307 Technology to Support Knowledge Management 308 ‘Artificial Intelligence 309 The Nature of inteligence 308 Between Natural and Avtiicial at Information Systems @ Work: Playing with ‘Atoms 312 The Major Branct Inteligence 312 Ethical and Societal Issues: Augmented Realiy’s Kiler App 317 Expert Systems 318 When to Use Expert Systems 318 Components of Expert Systems 319 Virtual Reality 325 Interface Devices 325 Forms of Virtual Realty 326 1 Reality Applications 326 ‘Summary 327 Self-Assessment Test 328 Reviow Questions 32. Discussion Questions 329 Web Exercises 32% Case One: A ‘Soft’ Octopus Robot 329 Case Two: 360° Video Makes Virtual Reality Accessible 331 Case Three: Game-Show-Winning Al Now Diagnoses Rare Diseases 332 Notes 333 10 Pervasive Computing «05, Principles 335 Learning Ob) hy Learn About Introduction 338 Wireless Internet Access 337 Mobile Devices 837 ‘Smartphone Wearable Technology 339 Ethical and Societal Issues: Pay Up Or Your Data 0 Information Systems @ Work: The Blockchain Creates Tamper Proot Transactions 342 EMoney 343 Tangible Media 344 tives 335 ervesive Computing? 336 GetsPersonal Robotics 345 Virtual Pets 346 Computer Supported Cooperative Work 346 videoconterencing 347 ing 47 ctive Whiteboards 347 Blogs and Podcasts 349 More Applications of Electronic and Mobile ‘Commerce 350 Retail and Wholesal Auctions 363 Anywhere, An Commerce 354 Summary 365 Self-Assessment Review Question Discussion Questions 357 357 me to Share a Journey Web Exercist ¢ One: Si with 357 OF Notes 360 World Views Case: Information System Jin, South Africa 962 4 es Development Princip Learning Objectives Why Lear About § ‘An Overview of Systems Development 368 Development 368 Planning and Algning IS Goals 370 Case Two: Kids Finally Get a Real Magic Wand at Case Three: Let's Play and Become Famous 359 ystems Ir ystems Development Lifecycles 374 5 Systems Developmen a Information Systems @ Work: Open Source S Software Conquers Data Soience 378 rapid Application Development, Agi ‘Development, Joint Application De and Other Systems Development Approact The End-User Systems Development Lifecycle 380 Outsourcing and On-Demand Com Factors Affecting System Development 05s 381 ting 380 systems Investigation 387 Initiating S vestigation 387 Paricjoants in Systems Investigation 388 Feasibilty Analysis 988 The Systems Investigation Report 389 Ethical and Societal Issues: The Very Last ‘Step in Systems Development 390 systems Analysis 881 General Considerations 397 Feequiremer Critical St The IS Plan 39 ‘and Report Layout 398 Review Questions 403 ‘sion Questions 404 athon Culture 404 from Amazon 405 Case Three: The Internet of Bananas 1.0406 Notes 408TENTS 12 Systems Design and Implementation 403 Principles 408 Learning Objectives 409 Why Leam About Systems Design ‘and Implementation? 410 ‘Systems Design 410 Interface Design and Controls 4 Design of System Secunty and Controls 412 Generating Systems Design Ateratives 415 fons 420 sign Report 420 Information Systems @ Work: Creat Computer Games Without Needing to Program 421 Systems Implementation 422 Acquiring Hardware ftom an I$ Vendor 423 1g Software: Make or Buy? 423 1g Database and lecommunications reparation 4 IS Personnel: Hin Site Preparat Data Preparation 427, 27 ‘and Training 426 sing 427 Ethical and Societal Issues: Modeling a Mass Shooting 428 Start-Up 429 User Acceptance 430 ‘Systems Operation and Maintenance 431 Reasons for Maintenance 431 ‘Types of Maintenance 422 The Request for Maintenan Performing Mai Systems Review 434 Types of Review Procedures 434 Factors to Consider During Systems Review 435 ‘ nee Measurement 436 v Questions 439 Discussion, 9 8° One: Open Source Project Arms to Create Artitical Lite 440) Case Two: Build Your Own Robot 441 ‘ase Three: GitHub 442 Notes 443, World Views Case: Systems Developmen Damelin, South Arica 445 ‘a7 5 449 Principles 449 Leaming Objectives 449 Why Learn About Security, Privacy and Ethical Is Computer Waste and Mistakes 450 Preventing ComputerRelated Waste ‘and Mistakes 451 Information Systems @ Work: Admiral to Price Car Insurance Based on Facebook Posts 453 Computer Crime 454 Preventing Computer-Related Crime 460, Crime Prevention by the State 460 Crime Prevention by Organizations 451 Crime Prevention by Inlviduals 463 ig Intrusion & oftware 463 Using Managed St Providers (MSSPs) 46 Preventing Crime Privacy 465 and the Government 465 juacy at Work 465 465 ‘The Work Environment 469 Health Concerns 469 ‘Avoiaing Health and £ Problems 470 Ethical and Societal Issues: Kettle Botnet Heats Up 471 Ethical Issues in Information Systems 472Summary 473 Self-Assessment Test 474 Review Questions 475 Discussion Questions 475 Web Exercises 475 Case One: Open Access Pirates 475 Case Two: The Encryption Row is Back 476 Case Three: On Patroi With the Love Police 478 | Notes 479 World Views Case: Facebook: A Platform for Cyberbullying, and Cyber Racism or Not? 481 ‘a Answers fo SellAssessment Tests 483, lossary 487 . Index 499 Cred for 1S oe rather dh a mana, Present, overview, advance databas, commer, Neegs of‘As organizations continue to operate in an increasingly competitive and global marketplace, workers in all areas of business inclucing accounting, finance, human resources, marketing, operations management and production must be well ore: pared to make the significant contributions required for success. Regarcless of your future role, you wil need to understand what information systems can and cannot do and be able to use them to help you accomplish your work, You will be expected to discover opportunities to use information systems and to participate in the design of solutions to business problems empio\ ing information systems, You will be challenged to identity and evaluate information systems options. To be successful, you must be able to view information systems fram the perspective of business and organizational needs. For your solutions to be accepted, you must recognize {and address their impact on fellow workers, customers, suppliers and other key business part nets. For these reasons, a course in information systems is essential for students in today’s, high-tech world The primary objective of Principles of Business Information Systems third edition is to provide the best information systems tex! and accompanying materials for the first information techno ogy course required of all business students. We want you to leam to use information technol- ‘ogy to ensure your personal success in your current or future job and io improve the success of your organization. Principles of Business Information Systems stands proudly at the beginning Of the information systems (IS) curriculum and remains unchallenged in its position as the only 1S principles text offering the basic IS concepts that every business student must learn to be successful This text has been written specifically for the introductory course in the IS curriculum. Princ ples of Business Information Systems treats the appropriate computer and IS concepts togethe with a strong managerial emphasis on meeting business and organizational needs, Approach of the Text Princiok les of Business information Systems offers the traditional coverage of computer con: cepts, but it places the material within the context of meeting business and organizational Needs. Placing IS concepts in this context and taking a general management perspective sets the text apart trom general computer books thus making it appealing not only to those studying for IS degrees but also to students from other fields of study. The tex’ isn't overly technical, but father deals withthe role that information systems playin an organization and the key principles @ manager needs to grasp to be successful. These principles of IS are brought together and resented in a way that is both understandable and relevant. In adation, tis book offers an Sow oF the entre IS discipline, while giving students a solic foundation for further study in Gatap et 'Scourses such as programming, systems analysis and design, projet management comme management, data communications, website and systems development, electronic reeds ake ne mobile commerce applications, and decision support. As such, I serves the oth general business students and those who will become IS professiorIS Principles First, Where They Belong vental 1S orinciples is an advantage for students who do not later Bees pling for advanced courses, Since most functional aeas in business SY GF Tee icine, an understanding oS pancipis Peps studs in oer cowse Wore in pers pouting students (0 tho principles of 1S eps future business (uneton Tein aeeoy information systems successtly and avokd mishaps thal offen at unfortunate Se! ences, Furthermore. presenting S concepts atthe introductory love! Test interest cree eneral busingss students who may later choose 1S as afield of concontaion, Exposing students to fundam Goals of this Text Principles of Business Information Systems has four main goals hnich every business student should be familiar. +1To provide a core of IS principles with wi 2 To offer a survey ofthe IS discipline that will enable al business students £9 understand the relationship of IS courses to their curriculum as a whole. $3 To present the changing role of the IS professional. vp To show the value of the aiscipiine as an attractive field of specialization. By achieving these goals, Principles of Business information Syste will enable students to understand and use fundamental IS prinples so that they can function More efficiently and Stoctvely as workers, managers, decision makers and orgarizational leaders 1S Principles although comprehensive, cannot cover every aspect is, provide students with Principles of Business Information Sy or the rapidly changing IS cscipiine, The authors, having recognized *h caine conta core of uiding IS principles to so as they face careet chalenges Snes Think of ‘Spies ae basic tins o ules that remain constant ragarcess of the sfuaicn AAs such, they trovide strong guidance inthe face of tough decisions, A set ofS principles is hightig fhe beginning of each chapter. The ultimate goal of Principles of Busi 5s Information Systems a eavalonetfecve, thinking, action-oriented employees by instiing trem wiih principles 10 help guide their decision making and actions urvey of the !S Discip! Thi text not only offers the traditional coverage of computer concepts but a8 provides 2 ore tramework fo impart students with a solid grounding in the Business Uses St technot oy. in adition to serving general business students, this Book ofers overview of the entire uiseipline and solidly prepares future |S professionals for advanced 1S courses and thei careers in the rapidly changing IS disciotine. Changi ‘ole of the 1S Professional 1S discipline have changed, so too has the role of the 1S profession@!: As business and the an intot aoe nidered a technical specialist, today the |S professional operates: a ore reuitant to al nctional areas of the organization, being knowledgeable about thet .ds and competent in bringing the power of IS to be hroughout the organization, The F PREFACE professional v tion and the by The scope employer but rs, competite broad scope ina highly inte the IS profess To sunive, bu through come assumes the cost and qual the organizatic a specialist's average for a related In adaition, jo ther occupat Acareer in of the disciplir recluse. Toda, corganizationa ‘The need to responsibility all business ¢ 1018 protessiclater yon ork, In agers unate terest iar. and udents tly and aspect nits with Think of 2h, they hted at ystems riples to ovides @ techno! he entire and their assional an inter yout thelt n.The'S PREFACE professional views issues through a global perspective that encompasses the entire organiza tion and the broader industry and business environment in which it operates The scope of responsibilities of an IS professional today is not confined to just his or her ‘employer but encompasses the entire interconnected network of employees, suppliers, custom ‘ers, competitors, regulatory agencies and other entities, no matter where they are located. This broad scope of responsibilities creates a new challenge: how to help an or ina highly interconnected, highly compettive global environment. In accepting that challenge, the IS professional plays a pivotal role in shaping the business itself and ensuring its success. ‘Jo survive, Ousinesses must now strive for the highest level of customer satisfaction and loyalty through competitive prices and evermproving product and service quality, The IS professional ‘assumes the critical responsibilty of determining the organization’s approach to both overall ‘cost and quality performance and therefore plays an important role in the ongoing survival of the organization. This new duaity in the role of the IS employee ~ a professional who exercises fa specialist's skils with a generalists perspective -is reflected throughout the book. S as a Field for Further Study Employment of computer and IS managers is expected to grow much faster than the average for all occupations. Technological advancements will boost the employment of com: puterrelated workers; in turn, this will boost the demand for managers to direct these workers in addition, job openings will result from the need to replace managers who retire or move into ‘ther occupations, ‘A career in IS can be exciting, challenging and rewarding! itis important to show the value of the discipline as an appeaiing field of study and that the IS graduate is no longer a technical recluse, Today, perhaps more than ever before, the IS professional must be able to align IS and ‘organizational goals and ensure that 'S investments are justified from a business perspective The need to draw bright and interested students into the IS discipline is part of our ongoing responsibilty. Upon graduation, IS graduates at many schools are among the highest paid of all business graduates. Throughout this text, the many challenges and opportunities avalable to IS professionals are highlighted and emphasized.f Ghanges to the Third Edition Ee i principles of Business Information Systems is an adaptation of the popular US text i book Principles of Information’ Systems, now in its thirteenth edition. With a more : international outlook, this book is sutable for students in the UK, Europe. the Middle ast and South Airica on introductory BIS or MIS courses. The new tile elects he fact that this, ak nas boosted its business emphasis but retained its technology focus ening to present IS concep! with @ managerial emphasis, this eon retains the over coron, framework and pedagogy that mace the previous US editions so popular « Prinioles of Business Information Systems keeps the same five-part structure, is racked with new real world examples and business cases, and highlights ethical issues i throughout. «is til an IS text almed at those studying business and management However in order to inorease Its internat The main improvements are: wyance, we have made @ number of changes. ws Cases are more international in flavour, including examples from South Africa, Australia. and Europe, and have a broader sector spread, reflecting a wider variety of Dusiness types (including SMEs). | aw The book has been brought completely up to date in terms of innovations in IT 1» Legal and ethical issues in IT have been made more international. = Acchapter on pervasive computing reflects the move of the computer away from the desktop to enter almost every aspect of our lives. = Separate information systems are still discussed in Chapters 7, 8, 9 and 10 fall of Sec- : tion 3) but we recognize that many large - and some small - companies take a more integrated approach and this is covered at the start of Section 3.Principles of Businoss information Systems is orgerized into ve pats ~ an over view of inormation systems, an introduction to information technology concen, an cxaminaton of aferent classes of business infomation systems, a study of ystems development an afoous on information eyetems i Business and tho wise: soc The content ofeach chap ig a oows Chapter 1 An Introduction to Information Systems Chaplet creates afamework fhe ene book. Major sections inthis chapter become entire piers inthe text. This chapter describes the components ofan nfrmaton system and io Guzes majo classes of business information systems ies an oeniew of sysems develon- tment ang outlines some maior challenges that S professionals fa Chapter 2 Information Systems in Orga chapter 2 gies an overview of business organizations an presents a foundation fr te ef tie and elleent use ofS n a business environment. We have stressed that the traciional mission o Ss to deliver the ight information othe right person athe right time. Inthe section Gnortual organizational stucture, we discuss that vitual organizational sutures alow work tobe separated irom fooaton and te, Work can be dene anywhere, anytime. The concept of busness process reengineering (BPR) i noduced and competive advantage is examined higher qualy product, bate custome service and iower cos Chapter 3 Hardware: Input, Processing, Output and Storage Devices, ‘Tg chapter concerts onthe hardware component ofa computr-based information sys tem (CAIs) and elects te latest equipment and computer capabiies ~ computer memory is bxlaned anda variety of harcware patforms are dscussed inclucing mobile technology. Chapter 4 Sofware: Systems and Application Sofware “eu cannot come nto contact wih a comeuter without coming into contact wih software. This per examines a wide range of Software and elated issues inclucing operating systems and application sotware, open source and propitary software, sofware for mooie devices and copyrights and censes Chapter 5 Organizing and Storing Data Databases ae the hear of almost al S, A huge amount of dalais entered ito computer sys tems every day. Chapter 5 examines database management systems and how they can help businesses, The chapter includes a bit cverviaw of Rw 1 organize datain a database ook Sministation and dscusses How data can be used competivey by examining Processing f > _Ouiput of st selecting which cleaning ootion you want (wash ot vax and hand dry, etc.) and communicating that to the operator of 1 S09 or car wax depending on where your ¢# ‘The processing mech: sh with wax, wash with st ok er of of ove 85 As tor eac be!overview profes- Wertise trends. ather to vompa: finance als, >, data terprise ont, and paring allect data esses use machines solve com- business. cerce often omputers n systems, ros around r than ever he way v sf elements hemselves s. Systems Figure 1.1) ‘omatic car ngredients: are needed {wash oni stator of the your car CHAPTER 1 AN INTRODUCTION TO INFORM inthe provess and which options you selected. The output isa clean car. As in all systems, indepen dent elements or components (the liquid sprayer, foarring brush and air dryer interact 10 lean car. feodback mechanism is your assessment of how clean the car is System performance can be measured in various ways. Efficiency is armea- eleney A measure of wnat sure of what is produced divided by what is consumed. For example, the ef-s edveed dded by whats y of motoris the energy produced (in terms of work done) divided by the Sonsumed ‘energy consumed (in terms of electric or fuel). Some motors haven efficiency (f50 per cent or less because ofthe energy lost to friction and heat generation Effectiveness is a measure of the extent to which a system achieves its efleevenes A messi of goals. It can be computed by dividing the goals actualy achieved by the total vom spin y might want to achieve anet arom Sew ena Rant 10 million forthe year with a new information system. Actual profits, how- Stal ached y fe of ight only be €85 milion for the year. In this case, the effectiveness is the sted goa. 85 per cent (85/100 = 85 per cent) Evaluating system performance also calls for using performance standards. A system performance standard is a spectic objective of the system, For sytem performance standard example, a system performance standard for a marketing campaign might be Soesicabectie of 10 have each sales representative sell €100 000 of a certain type of product!" each year (see Figure 1.2a). A system performance standard for a manufacturing process might be to provide no more than 1 per cent defective parts (see Figure 1.2). After standards are ION SYSTEMS | reate a of the stated goals. For example, a comp: of es 50 000| good | Figure 1.2 system Pertormance Standards 125 o00| ‘Sales byoken down by sales Sales ‘dams Davis Thornas 7 | Salesperson Bed A Standard = 1% y ee eee cI eee cee Production dayPART: OVERVIEW established, system performance is measured and compared with the standard, Variances from the standard are determinants of system performance. What is Infor: Information is one of thse concepts that we all seem intuitively able to grasp, but find tricky to define. In the 1940s, mathematician Claude Shannon defined it as: information is that which reduces uncertainty, Shannon was working on the technical problems involved in sending mes- sages over communication networks, and his concept of information is actually quite different from what we in business information systems mean by ‘information’. Nevertheless, we can Use his definition as a starting point. Imagine you are unsure of what today's weather will be like, Getting out of bed you open the curtains to see that the sun is shining. You now know a bit more about what's i's going to be like: your uncertainty about the weather has been reduced. Therefore looking out the window gave you information. When you turn on your radio and hear a detailed weather report, your uncertainty has been reduced further. When you look at the temperature gauge in your car, again your uncertainty has gone down. According to Shannon's definition, each of these events has therefore given you information. However his definition does not really capture what we would think of when we consider the information in, say, a management report. Therefore we simply define information as a collection. of facts. These facts can take many forms. The temperature gauge in the car gives information in, the form of a number. The radio gives audio information. Looking out of the window gives visual information. Other forms of information include text, images and video clips. Another term that is closely related to information is ‘data’. I's nat intuitive but a philosopher might define data as ‘variation’. To explain this: a blank page contains no data, but as soon as there is a mark on the page, that is, as scon as there is variation in the blankness, then data exist, Again this doesn't really capture what we mean by data in the context of busi- ness information systems. The traditional information systems view is that the input to an information system is data, and the output from the system is information. This means there- fore that the difference between them is to do with how much processing has been done’ unprocessed facts are data, processed facts are information. Unfortunately, however, this | istinction is of litle practical use. Therefore we will simply use the terms ‘information’ and ‘data’ interchangeably and define them as a collection of facts which can come in a variety, of formats. (Incidentally, strictly speaking, the term data is plural, so we would say ‘data are. used rather than ‘data is used’. However this is often not adhered to and we won't worry too, much about it here.) What is an Information System? Now that we have defined the terms ‘system’ and ‘information’, we can definé Information system (18) Aset an information system: an information system (ISLis_a set of interrelated of nterelted components that components that collect, manipulate, store and disseminate information and collec, manipulate, store and <ésserinate infomation and provide a feedback mechanism to meet an objective. Itis the feedback mechs provide a fedbackmactanism nism that helps organizations achieve their goals, such as increasing profits 0 to meet an objective improving customer service. input The activity of gathering In information systems, inputs the activity of gathering and capturing dele and capturing data In producing paycheques, for example, the number of hours every employe? processing Converting or ‘works must be collected before the cheques can be calculated or printed. transforming input ino useful puts. a university grading system, instructors must submit student grades befor? ? summary of grades for the semester can be compiled and sent tothe stude™ Processing means converting or transforming this input into useful outputs, Process! can involve making calculations, comparing data and taking alternative actions, and ch 40 fall bec tior isu cou uty gett totr futu: usec ‘ce: sible Thi Tob all of deter tion accuy euros tug into Pany of fun, can ir Feleva can by+ oveRviEW iances trom at find tricky 5 that which anding mes- ite different 28s, we can ather will be wwknow a bit an reduced. fio and hear took at the a Shannon's zonsider the acollection formation in gives visual philosopher oul as soon kness, then ext of busi: Input to an teans there: been done: awever, this ‘nation’ and in a variety ay ‘data are Ytworry too 2-can define interrelated ‘mation and jack mech’ 1g profits oF turing data ry employe? or printed. des before he students Processing ana storind CHAPTER 1 AN INTRODUCTION TO INFOF MATION svSTeMs Clata for future use. In a payrol application, the number of hours each employee worked must bbe converted ito net, o take-home, pay, Other inputs often include employes) number and depariment, The requited processing can frst involve multiplying the number of hours worked by the employee's hourly pay rate to get gross pay. If weekly hours worked exceed basic hours, overtime pay might aiso be included. Then tax must be deducted tions to health and ife insurance or savings plans to get net pay. ‘Ate these calculations anc comparisons are Performed, the resus ae typically stored, Storage volves keeping data and infomation available for future use, including output Outputinvoives producing usefulinformation, usually nthe formof decurments| ‘along with contribu- cither groups. In adition, output rom one system can become input for another For example, output roma system that processes sales orders can be used as input to a customer biling system. Computers typically produce output on printers and display screens. Output can also behandwriten or manually produced reports, although this snot common, astly, feedback is information from the system that is used to make make it necessary to correct input data or change a process. Consider a payroll ™00essing actives, example. Perhaps the number of hours an employee w was entered as 400 instead of 40 hours. Fortunately, most information systems check to make sure that data falls within certain ranges. For number of hours worked, the range might be from 0 to 100 hours because its unlikely that an employee would work more than 100 hours in a week. The inforrna tion system would determine that 400 hours is out of range and provide fecaback. The feedback is used to check and correct the input on the number of hours worked to 40, Feedback is also important for managers and decision makers. For example, a furniture maker Could use a computerized feedback system to link its suppliers and manufacturing plants, The utput from an information system might incicate that inventory levels for mahogany and oak are {getting low ~ a potential problem. A manager could use this feedback to decide lo order mor \Wood from a supplier. These new inventory orders then become input to the system. In addition {o this reactive approach, a computer system can also be proactive — predicting [uture events fo avoid problems, This concept, often called forecasting, can be terecasting reciting lure Used to estimate future sales and order more inventory before a shortage ven. Sccurs. Forecasting is also used to predict the strength of hurricanes and po: Stile landing sites, future stock-market values and who will win a political election. The Characteristics of Valuable Infor To be valuable to manager: all ofthe characteristics determine the exact oc tion makes them ation 'S and devision makers, information should have some and possibly described in Table 1.1. Many shipping companies, for example, can ation of inventory items and packages in their systems, and this infoxma- fesponsive to their customers. in contrast, if an organization's information is nat cureant F complete, people can make poor decisions costing thousands or oven allen of on ony Claim, for example, that the collanse and bankruptcy of some companies, such as. information moe and energy racing fs, was a result of inaccurate accounting and reporting Bany’s inane cn ed investors and employees alike to misjudge the actual state of the com Ot future derma ad Sutfer huge personal iosses. As ancthor exarnple, i an inaccurate forecast Can invest pie nCiestes that sales wil be very high when the opposites true, an organization 2 New plant that is not needed, Funhermore, information is not : lions of euros in lvant, not de Can be ota go" decision makers in a timely fashion, or too complex to undersland i vant Value to the organization Me value ation i 8 Of information is direct 8 902s. For example, th lylinked to how it helps decision makers achieve their organi 2 value of information might be measured in the time required to output Production of useful ‘and reports. Outputs can include paycheques for employees, reports for manag- Infomation. often in the farm es, and information supplied to stockholders, banks, government agencies and ° dcuments and reports. feedback Output hats used changes to input or processing activites. For example, errors or problems might t@ make changes to input orPART + OVERVIEW make a decision oF in increased profs to the company. Consider a market forecast that predicts 2 high demand for a new product. If you use this information to develop the new product and yout company makes an additional proft of €10 000, the value of this information to the com pany is €10 000 minus the cost of the information, 23 of Valuable Infomation Ss Itomaton shoul be Se gate to meat thee neecs curate information is error free. In some cases, inaccurate information is ted Because inaccurate data is fe into the transformation process rate x gene Complete Complete information contains athe important facts, but not more facts than are necessary (s2e the Simple characteristic below Economical Information should also be relatvely economical 1o produce. Decision makers Trust always Balance the value of information with the cost of producing it Floxible Flexible information can be used fora variety of purposes. For example, infoxmation on how much inventory is on hand for a particular part can be ised by a sales topcesentatve in closing a sale, by a precucton manager to ; etermne whether move inventory is needed, and by a financial executive 10 dotermine the otal value the company has invested in inventory Relevant Relevant intormation is important tothe decision maker Reliable Reliable information can be depended on. In many cases, the reli ofthe mation depends on the reliably ofthe data-collecton method. In other instances, ‘lability depends on the source ofthe information. A rumour from Shunknown source that ol prices righ! go up ray soon not be reliable (even though tight be useful) Secure Information should be seouee from access by unauthorized users : simple Information should be simple, net overly complex. Sophisticated and detailed information might not be needed, Infact, to0 much infomation car information overload, whereby a decision maker has too much information and is unable to determine what is really important Timely ‘Timely information is deivered when itis needed. Knowing fast week's weather conditions wll not help when trying to decide what coat to wear today smation should be ventiabie. This means that youl can check it fo make sure rect, parhaps by checking many sources fr the same information| Verifiable in itis Manual and Computerized Information Systems 3 ‘An information system can be manual or computerized. For example, some investment analyst wally draw charts and trend lines to assist ther in making investment decisions, Tra King ol ck prices (input) Over the last few months or years, these analysts develop pattems on 9 {erocessing) that help them determine what stock prices are likely to do in the next few 344 x analysis inh stems folow s paper or weeks (output). Some investars have made millions of euros using manual si mation systems. Of course, today, many excellent computerized information sy ince: take A ware Fore exan cars and Bis Th nolog busin bases manit infor Haraw and 04 devices charac tomers Proces: {nit anyeAvEW (CHAPTER 1 AN INTRODUCTION TO INFORMATION SYSTEMS ecicts indexes and markets and suggest when large biocks of ct and take advantage of market discrepancies A computer-based information system (CBIS) is a single set of hard: compuersse imation ware, software, databases, telecommunications, people and procedures that system (OBIS) A single is configured to collect, manipulate, store and process data into information. i ae ee For eral, a company’s pal oe entyerrvertoncontal ytom ae Sees naan cxampies of @ CBIS. CBISS can also be embedded into products. Some new pehtatosett cars and home appliances include computer hardware, sofware, databases Tent sand poses || and eventelecommunications to cortal het operations and make them more Ss oman useful. This is often caled ‘embedded, ‘pervasive’ or ubiquitous’ computing GBiSs have evolved into sophisticated analysis tools, he components of a CBIS are iustaed in Fue 13. Information tech- nology (refer to harcare, sofware, databases and tlcommuniations A _tetogy waersine business's technology infrastructure icudes al the hacwar, stare calm mrentaaeusare bases, elecommunications, people and procedures that are configured to colect, —_dlabases, wecommunicatons, renal, sore endprocess daa nfortomaton Thelecwobgyinrastucure fea perms a 2 sto shared 1S resources tat rm he foundation of each computer base) SEH cle x ino Gian omen, }0ks should be purchased or sold to tain | Z Figure 1.3 the ° % Components of a ° ‘ ‘Computer-Based information System ! | Howe People ed and Sofware rocedues ther ; \ \ . th, | Dotabases computer equipment used to perform input, processing nardware Ary mactinery Ht activi nays's E Input devices include keyboards, mice and other pointing (nostof which uses dg neal te reg akaMna devices anc equipment that can read magneic ink el) a! net n graph tomers to aqme nent firms often use voice-response technology to allow cus- activities of an information Processing gente Balances and ther inforration with spoken commands. system Ut and main mse nud Computer chips that contain the central processing wstook 1. One processor chip, called the "Bunny hip’ by somemimics living organisms and can be used by the drug industy to test drugs instead of using animals, such as rats or bunnies.' The experimental chip could save millions of euros and months of time in rug research costs, Processor speed is also important. The TOPS00 projact (ww:top500.0°g) has collcted statistics on the world's fastest computers since 1998. Currently the fastest is Tanhe-2, a supercomputer developed by China's National University of Defense Technology (NUDT) which is capable of performing 33 86 petafiop's (quadtillons of calculations per second). NUDT say it will be used for business opinion analysis, government security and nuctear fusion research? The many types of output devices include printers and computer screens. Bond traders, for ‘example, often use an array of si or more computer screens to monitor bond prices and make split second trades throughout each day. Another type of output device is a printer to print photos from a digital camera. Such printers acospt the memory card cirect from the camera. There are also many Jal-purpose hardware devices. Computerized event data recorders (EDRs) are now being placed into vehicles. Like an aeroplane black box, EDRs record a vehicle's speed, possible engine problems, a dhiver’s performance and more, The technology is being used to monitor vehicle operation, deter: mine the cause of accidents and investigate whether ttuck drivers are taking required breaks. saftware The computer Software consists of the computer programs that govern the operation of the programs that gover the computer. These programs allow a computer to process payroll, send bills to Se aeemcet aes customers and provide managers with information to inorease profits, reduce costs and provide better customer service. With software, people can work anytime at any place. Software, along with manufacturing tools, for example, can be used to fabricate parts almost anywhere in the workd.® Software called ‘Fab Lab’ controls tools, such tters, miling machines and other devices. A Fab Lab system, which costs about € 15000, has been used to make radio frequency tags fo track animals in Norway, engine parts to allow trac- tors to run on processed castor beans in india and many other fabrication applications The two types of software are system software, such as Microsoft Windows, which controls basic computer operations, including star-up an printing: and applications software, such as Microsoft fice, which allows you to accomplish specific tasks, including word processing and allow trac: ons. ich controls wre, such as sssing and ‘an be used sters, prints pically con- 3e can con: sales, ontine ider a data: 1. One 2 that are e crime sta 2 values are cent return he Interet communics asks throug" slecormutt ‘plants and payrol dale APTEAY aN, ITRODUCTION TO INFORMATION SYSTEMS Networks connect computers and equipment ina building, around the country or {round the world to enable electronic communication, Investment firms can use Witeless networks to connect thousands of investors with brokers or traders. Many hotels use wireless telecommunications to allow guests fo connect to the Intemet, retrieve voice messages and exchange email without plugging their computers or mobile devices into a phone socket. Wireless transmission also allows drones, ‘such as Boeing's Scan Eagle, to tly using a remote control system and monitor buildings and other areas The Internet is the world's largest computer network, actually consist ing of thousands of interconnected networks, all freely exchanging information, Research fitms, colleges, universities, schools and businesses are just a few ‘examples of organizations using the Intemet. People use the Intemet to research information, buy and sell products and services, make travel arrangements, con- or around te wor to enable ‘tectonic communications, Anternet The word's largest computer network, actualy consisting of thousands of interconnected networks, a ‘reely exchanging informaton, duct banking, and download music and videos, among other activities. After downloading music, you can use audio software fo change a song's tempo, create mixes of your favourite tunes and modify sound tracks to suit your personal taste. You can even mix two or more songs simultane. ‘ously, which is called ‘mashing’. You can also use many of today's mobile phones to connect to the Intemet from around the world and at high speeds.® This not only speeds communications, but allows yOu fo conduct business electronically. Some airline companies are providing Internet ser- vice on their fights so that travellers can send and receive email, check investments and browse the internet. Internet users can create blogs (weblogs) 10 store and share their thoughts and ideas with others around the world.® You can also record and store TV programmes on comput ‘special viewing devices and watch them you to record TV programmes The World Wide Web (WWW), ter.” Otten called ‘place ‘Sor iting’, this technology allows, at home and watch them at a different place when i's convenient the web, is a network of links on the Internet to documents containing text, graphics, video and sound. Information about the documents and access to "em are controlled and provided by tens of thousands of special computers called ‘web server ‘The web is one of many services available over the Internet and provides access to many hun- Greds of milions of documents. Widely available Intemet access has allowed the development of cloud computing, where software and data storage are provided as an internet service and are accessed via a web browser ‘The technology used to create the Intemetis also being applied within companies 2nd organizations to create intranets, which allow people within an organization to xchange information and wark on projects. One company, for exampla, uses an Intranet to connect is 200 global operating companies and 20.000 employees. An extranet is @ network based on web technologies that allows selected outsiders, Such as business partners and customers to access authorized resources of a com: Pary’s intranet. Companies can move all or most of ther business activities to an Ratane! site for corporate customers, Many people Use extranets every day without Cnt it~ to track shipped goods, order products from their suppliers or access Roar 28sistance trom other companies. I you log on to the FedEx ste (ww. om) to check the status of a package, for example, you are using an extranet People ate th a fe the most important element in most computer-based inf systems t element in most computer-based information Systems eh eOPIe involved include users of the system and information y aomnel, including all the people who manage, run, program and system, peraon ramet the Sratogtes, polices, methods and ues for usin the loud computing A computing environment where sotware and storage ar provided as an Intemet service and are accessed via a web browser, Intranet An intemal company network built using Item and Word Wide Web slancards and products hat lows oople win an orgarization to exchange information and work on projects extranet A network based on web tectnologes tha alows selected outsiders, such as business parters, supers of customers, access authorized resources ofa company’s ievanet. procedures The suategies, Policies, metods and ues for sing a COIS, CBIS, including the "enance and security of the computer. For example, some procedures dest ibewhen each program should be run, Others describe who can access facts jn the database, or ‘hal to do if a disaster, such as a fro, earthquake or hurricane, renders the CB'S unusable. Good procedures can help companies take advantage of new opportunities and avoid potential disasters. Poorly developed and inadequately implemented procedures, however, can cause people to waste their time on useless rules or result in inadequate responses to disasters, such as hurricanes or tornadoes 1.2 Business Information Systems th The most common types of information systems used in business organizations are designed for electronic and mobile commerce, transaction processing, management informa tion and decision suppor. In addition, some organizations employ special-purpose systems, such as virtual realty, that not every organization uses. Together, these systems help emoloy- 8s in organizations accomplish routine and special tasks ~ from recording sales, processing payralls and supporting decisions in various departments, to examining alternatives for large Scale projects and opportunities. Often in large organizations one information system is used 10 accomplish all of these tasks. In others, separate systems are used. When one system's usedit ig called an Enterprise System, and it does most if not al of the tasks of the other systems shown in Figure 1.4. These systems are discussed next and each one is treated separately but you should be aware that they can be combined tagather fo form an enterprise system. You should also be aware that there is no agreed defnition an the minimum set of tasks that a system has to do in order for it to be considered an enterprise system but the expectation is that it must do more than any one af the following, saglaurcl clay Systems (Ca ead Transiating Shakespeare into Dothraki Many people using Google Transiate for the frst time are amazed by its ables. Ifyou haven't ted it, vist your local site (t's hiips:transiate.google.co.uk in the UK), enter some text, choose a language and click translate, If you actually speak the language you translated into, how did it do? Does the trans lation make sense and does it say what you meant it to say? If you don't speak that language, copy the translated text and translate it back into the first language - it probably won't be exactly the same, but does it stil mean what you sald inthe fist piace? Try translating the text through several other languages English to German to French to Chinese and then back to English - what does it say now? This game is actually popular fodder for YouTube videos - YouTubers translate the lyrics of a popular song (usually a song in English) into another tan- guage, then back into English, and record them: selves singing exactly what they ended up with Clearly, however, this technology has more serious applications So how does it work? It relies on the one thing that Google is enormauely good at - processing lols and lots of data, very very quicidy. Sony to dlsap- point you if you thought the computer could actualy, Understand what you are saying, Dut in fact i's just doing some statistics. There are many books that have been translated by a human from one language’ into another, say Victor Hugo’s Notre Dame de Paris from French to English. To translate a French phrase, all the computer has to do is find the same phrase in one of these books, then find the corresponding page and line in the English transiation and retum that to the user, But how does the computer know: that the page and line are the exact bits that trans: late the exact phrase the user wrote? That's where the statistios and data processing come in. The com puter doesn't just search for the phrase in ane book it looks in say 100 books (the actual igure Good? | uses is dificult to track down) and finds 100 possilé | translations. Ithen chooses the phrase that appea® the most in the sample of 100 :19,08 able For instance, if the user writes le voudrais une all of this material is freely available, which made ental pornme pour mon peli déjeuner avec mame, his it good sour to use. (We shoud point out tat use ine might not appear in any book, but the pase Google dd nat invent stalisicalwarslaton such Je voudais une porime’ probably does. Ifthe compute finds 100 books where this ne appears, Questions andin the ransated book at around about theright 4, Ty the exercises suggested inthe case -now point in the text the phrase ‘I would like an apple’ did Google Translate co? appears 90 times, then that would seem to Be @ 2, Could this technology be used by a global frm or correct translation with 90 per cent confidence. is the need for absolute accuracy so large that a those Naybe one othe original nes said would he an gran nator nou ene aaa FOO eh Shee He aa aeo cane 8: What are some of he preter wth using ae cnspn See ete a ee Google Translate to translate a web page? assing the computer Knows to leave them out. The com ‘What would the computer ee large pputer doesn't have to understand anything about _—Wanslate Shakespeare into Dothrak sedto language to do this. Given enough sample tex ssedit the computer could translate Shakespeare into References shown Dothraki, the language invented by the makers of ABC News, 2007. ‘Google Seeks World of instant atyou Dee Tones Translations’. Availabe rom: ww abe net. should Goanle Translate was developed under the aunews/2007-03.20/a009l- cooks woo m has leadership of computer scientist Franz Och and instan-ransiations/2220046 ustdo ‘riginally used documents created by the United Hyman Longevity, 2016. ‘About Franz Och’. Available | | Nalons. The UNhasaneedto create alctatwriten 'femn-manonanlorguaeonieieceiere cn ; ‘haterial accurately in a number of languages, and ‘Accessed: 20 April 2016. SS sp a a aa Figure 1.4 Business Information Systems Executive The tri sens \" Management information ‘systems Decision support systoms Transaction processing systems Customer relationship management systems aly chain management systems Operation Support mightemm dec \ (hiede by middle managers S, computers have been used to perform common busine: the level business where they tond to bused ‘taming ofthe tm transaction ay business lated exchange, such as payments to employees, sales to customers and paymens to Applications, Mar suppliers Auta these ary syst were designed fo reduce costs by SBP 8 any bust labourinensive business transactons. A transaction — tation roceing tem to customereSS2ated exchange, such as payments to employees, sales 178) Morice cmezion databases and devices used to ecard completed business transactions, tions was tne :Pa¥Tents to suppliers, Thus, processing business transac: transaction pt Commuter application developed for most organizations. A Processing system (TPS) is an organized collection of people,pant: OVERVIEW procedures, software, databases and devices used te record completed business transactions Iryou understand a transaction processing system, You ‘understand basic business operations and functions. Enerprise systems help organizations perform anc integrate important tasks, such aS paying employees and suppicrs, contoling invertor. sending out invoiges and ordering ciples In the past, companies accomplished these tasks Nee traditional transaction pro- cessing systems. Today, they are increasingly Being performed by enterprise resource plan fing eyetems. For example, Whitlpool Corporation, the large PP jance maker, used enterprise ooo ey planning to reduce inventory levels by 20 per cent an ‘cut about 5 per cent from its freight ang warehousing costs by providing managers wh information about inventory levels te ets® The new system may have also helped the company increase Its revenues by about €0.7 billion aoe the rst business systems to be computerized was, Me payroll system. The primary inputs 0% 2 payol TPS are the number of employee Poss ‘worked during the week and the pay ete ee pamary output consists of paycheques: aly Payot systems produced employee paycheques and related reports required by tax aulhor tse ‘Other routine applications include Cae ordering, customer bing and customer relationship management, and inventory contro. eae ear companies, for example, use their TPSS to buy pliers ‘of euros of needed parts each soar through webstes. Because these systems hancle ‘and process daily business exchanges yrransactions, they are all classified as TPSS. ners esos ploming A” enterprise resource planning (ERP) system is. 2 set {ERP} system A setof anages the vital business operations for an ert multisite, inunesporeco rissa ay 2 i Cromer, ent of progans,aking We SSUES more etecive. dn ene mite, global a oe tne scope olan ERP system might vary fom compary to Compe. | organization. most EAP systems provide integrated ‘software to support manufacturing 3 ‘ind finance. In such an ervironment, a forecast is prepared that estimates © customer demand for several weeks. The ERP system checks wel ® ‘already availabe infin coe eck Fwentory to moo! the projected demand. Manulaciying Ts, then produce = hee prt eliminate any shots. In developing the production nee the ERP system. ver the rat raterals and packing meters inventories and deen what needs to be checks ee he schedule. Most ERP systems also have a purchasing Spi that orders) orate eins In ation to these core Business processes, come EOP ofS can sup = ppt Pa icons ohelnneeh “The primary benefit: ot Ameming an ERP system include easing adoption of improved work processes and: Mroroasing access to timely data for decision making ‘in important type of transaction processing systom handes transactions Seal anata Seetronicaly over the web. E-commerce ivoives any BUSINESS To ‘electronically between tion executed electronically between ‘companies (business-to-business. 'B26}. ‘companies (business-to- companies and consumers (ousiness-to-consumer, 'B2C’}, consumers até Doses) congnesand other conser Teoneurner o-consumer,‘C2C), business and the public corer coneumers 2nd tor and consumers and the public sector. You might assume. that e-commert cau) easing raservad mail for consumes ving WebSte™ for online shopping, but ¥ loiycmrpet RRRIENET a2 silehadatede le ‘volume ee ee and ts fastest growing segment ~ is business-to-businesS oF Cede oer at snake purchasing easier or corporations, This growth Ss ratte em ay siuatod by renee Hee acess, growing user confidence, bette! Pa fhsnes vansactons se aetemsand rapily improving erst and eb secuy E-comer is slecrnicaly using mobile Siersopportunites forsmall businesses tomarket and selal ‘lowcost wor" He Tearetaes. glowing them 10 ener the global market. Mobile commerce (emcomme™ | se | ‘e-commerce Any businessations: ‘imary ve pay sioyee ‘clude contro seach anges grated atisite, th one tive. pany cturing system sto be orders an sup: senefits ‘es and ransac 23) ars and cra INTRODUCTION TO MATION SYSTEMS refers to transactions conducted anywhere, anytime. M-com that managers and corporations use to place and conduct business with handheld computers, portable phones, laptop computers cannected to a network and other mobile devices (see Figure 1.5 which shows a mobile phone being used to make a contact- relies on wireless communi Figure 1.5 contactless | payment 14-commey eres E-commerce offers many advantages for streamlining work activities. Figure 1.6 (overleaf) Provides a brief example of howse-commerce can simplity the process of purchasing new office furiture from an office-supoly company. in the manual system, a corporate office worker must Get approval for a purchase that exceeds a certain amount. That request goes to the purchasi epartment, which generates a formal purchase order to procure the goods from the approved Vendor. Business-to-business e-commerce automates the entire process. Employees go directly \o the supplier's website, find the item in a catalogue and order what they need at a price set By their company. If approval is required, the approver is notiied automatically. As the use of ercors E panies are phasing out thei traitional systems. The resulting Growth of e-commerce is creating many new business opportunities. Cornmerce can enhance @ company's stock prices and market value, Today, several ‘ave teamed up with more traditional brick-and-mortar businesses to draw can order products ani rby store, iene -ornmerce, business information systems use telecommunications and the involves use Many related tasks. Electronic procurement (e-procurement), for example, anes Using information sy systems and the nteme! fo acquire parts and sup- (e-business) goes beyond e-commerce and eecorebsnss rem a ets) Lng ten urna SHS 8d untons, such as accountng, thanee, maketng, Ss tees 12 ruranescurce iso cludes working fejomal mies sine Supokess partes and stakeholders. Compared with strategy, e-business strategy is lexble and adaptable. °8. Electronic @p10% iS i e RoE eee SthFigure 1.6 E-Commerce Greatly | ‘Simplifies Purchasing | —> |= ——_ management information system (MIS) An omganzed people, procedures, software, alection of people, procedures, injcy sofware, delabases and cevices tat provides route information to managers ang decision makers. provi s ‘Obtain approval equison Prepare equision ofequisition Purchesing deps i “ditional proces for placing purchase der | : aecnepscse ot fl *\ e-commerce process for placlng a purchase order benefits provided by an effective TPS are tangible and juslify their associated costs in co puting equipment, computer pro ‘and specialized personnel and supplies. A TPS argoe business actives and reduce clerical costs. though early accounting and financial TPSS ‘tere already valuable, companies soon realized that they could use the data stored in thest systems to help managers make better decisions, whether in human resource managem ‘marketing or administration. Satisfying the needs of managers and decision makers to be a major fac feloping information systems. a ‘\ management information system (MIS) is an organized collection a ‘and devices that provides routine focuses on ope jonal areas 29 MiSs typioa 108 ston 0 managers and decision makers. An MIS onal efclency, Marketing, production, tance and othe un CGoported by MiSs and inked through a common datab Tanvard reports generated wth data and information from the meaning the output of a TPS is the input to MIS. Producing a report" describes inventory that should be ordered i wise were frst geveloped the 19606 and typicaly used information systems to PO manga wpa. in many eases, these early reports were produced periodcaly ~ example of an MIS. ahsnuRTON SYSTEMS _— weekly, monthly or yearly. Because of their value to managers, MiSs have proliferated through: out the management ranks. For instance, the total payroll summary report produced tially for an accounting manager might also be useful to @ production manager to help moritor and control labour and job costs By the 1960s, dramatic improvements in technology resulted in information systems thal were les expensive but more powerful than eater systems. Peopie at all levels of organizations began using personal computers to do a variety of tasks; they were no longer solely dependent on the IS depart, ‘ment for all their information needs. People quickly ecognized that computer sys- = tems could support addtional decision-making actviies. A decision support decision support system (05S) system (DSS) is an organized collection of people, procedures, software, data- Agana clacton of s and devices that support problem-specitic decision making. The focus of a PEoMe procedures, software, imho eaves DSS son mekingeffecie decsione Whereas an MS Reps an organization do amet a ceased things right, a OSS helos a manager ‘do the right thing decison making in addition to assisting in all aspects of problem-specific decision making ge ‘a DSS can support customers by rapidly responding to their phone and email enquiries. A DSS goes beyond a traditional MIS by providing immediate assistance in solving problems, Many of these problems are unique and complex, and information is often difficult to abtain. For instance, a car manufacturer might try to determine the layout for its new manufacturing facity. Traditional MiSs are seldom used to solve these types of problems; a DSS can help by suggest ing alternatives and assisting in final decision making, Decision support systems are used when the problem is complex and the information needed to make the best decision is difficult to obtain and use. So a DSS also involves managerial judgment and perspective. Managers often play an active role in developing and implementing the DSS. A DSS recognizes that different managerial styles and decision tyoes require different stems. For example, two production managers in the same position trying to solve the same problem might require different information and support. The overall emphasis is to support, rather than replace, managerial decision making, The essential elements of a DSS include a collection of models used to support a decision maker or user (model base), a callaction of facts and information to assist in decision mak- ing (database), and systems and procedures (dialogue manager or user interface) that help decision makers and other users interact with the OSS. Software is often used to manage the com: iabase ~ the database management system (BMS) ~ and the model base - the model 3.can ‘managernent system (MMS). TPSs Inaddtion to DSSs for managers, group decision suppor systems and executive suppor system: these Use the same approach to support groups and execulives.® A group decision support system, also ment, Called @ group support system, includes the DSS elements just deseribed and software, called group tinues Ware, to help groups make effective decisions. An executive supgon system, also called an executive ‘lematon system, helps top-level manages, inciing afm's CEO, dvsional drectors and mem Shan the boar of irectors, make better decisions. An executive support system can assist with ‘606 planning, top-level organizing and staffing, strategic control and crisis management gement, Artificial Intelligence, , organizations often rely on specialized systems. Many nagement systems (KMSs), an organized collection of people, procedures, land devices to create, store, share and use the organization Sccording to a survay of CEOs, firms that use KMSs are more likely to innovate mar z experience ode 874 perform bePART OVERVIEW In addton to knowledge management, companies use ether ypes of specialized systems The Nissan Motor Compary, for example, has developed a specialized systom for het vehicles called ‘Lane Departure Proventon that nudges a car back into the correct lane tit vers off course."" The system uses cameras and computers to adjust braking to gat the vehicle back on course. The system switches of when the driver uses tur signals to change ariel imtegence (A) The lanes. Ciher specialzed systems are based on the notion o! artificial abity of conputersysems © intelligence (Al), in which the computer system takes on the characteristics rimeoracae eters of rman intligence. The felt of artical neligence incides soveral evo catego folds (ee Figue 17). Some people predict that in the future, we wil have nanobots, small moieeularsizod robots, vaveling throughout our bodies and in our bloodstream, keeping us healthy.'? Other nanobots will be emibedded in products and Senices, making our lives easir and creating new business opportunites igure 1.7 The Major Elements of Artif | Intetigence > ‘vision systems | Process wsual input ing. Learning systems Leen now to al | with new stations fom detaon prevous Expert systems Neural networks Robotics is an area ot Alin which machines take over complex, dangerous, routine or boring tasks such as welding car frames or assemiling computer systems and components, Vision systems allow robots and other devices to ‘see’, slore and process visual images. Natural language pro essing invovves computers understanding and acting on verbal er written commands in English. Spanish or other human languages. Leaming systems allow computers to learn from past mis takes or experiences, such as playing games or making business decisions, and neural networts is abranch of Al that allows computers to recognize and act on patterns or tends, Some suocess ful stock, options and futures traders use neural networks to spot trends and make them moe profitable with ther investments, State of the art Ais impressive. n 2011 the IBM supercomput Watson competed against and beat two human champions in the game show Jeopardy. By end of 2018, Google expects t0 be seling cars wth ‘crverless’ features, using Al in the vehicles ® avoid passenger injuries. expe eytem Astin at hes a covet bly fo s ‘ Irate suggestions andactIke Expert systems give the computer the ably to make suggestions and act ike aneertnapartevar fd. Sport in a particular field. t can help the novice user perform atthe level of CHAPTER exper. T wisdom « etal los to almost diagnose, evaluatior ion of value or tr Virtual re experienc immersive atifcial, scale and real or abs anatomy, and sharer behaviour such as rr viewing fro Avariet held wand objects. Di novogies er same envir and leamin tis citi seems, hos nology has ate expecte tion systerr information 1.3 Sy Systems de Systems de diverse as st Outsourci eveoomen together ney Usable sys loys Develo mucheRMEW stems. shicles ats off ack on hange ificial jtasks, ysterns (CHAPTER 1 AN INTRODUCTION TO INFORMATION SYSTEMS expert. The unique value of expert systems is that they alow organizations to capture and use the wisdom of experts and specialists. Therelore, years of experience and spectic skis ere not com pletely lost when a human exper des, retires or leaves for another job. Expert systems can be applied {0 almost any field or discipline. They have been used to monitor nuclear reactors, periorm medical diagnoses, locate possible repair problems, design and configure IS components, perform credit evaluations end develop marketing plans for a new product or new investment strategy. The collec- n of data, rules, procedures and relationships that must be followed to achieve value or the proper outcome is contained inthe expert systam's knowledge base. knowledge base A component ‘ofan exper system tat stores all ravantiformaton, data 2 y les, cases an relationships Virtual reality is the simulation of a real or imagined environment that can be Used bythe expert system experienced visually in three dimensions. Originally, virtual reality referred 10 virtual really The smulatonot immersive virual reality, which means the user becomes fully immersed in an ealor imaged enironment I, Computer-generated 3D world. The vitual world is presented in full tatcan be experienced visually je and relates properly to the human size. It can represent any 3D setting, ‘tee dimensions real or abstract, such as a building, an archaeological excavation site, the human anatomy, a sculpture or a crime scene reconstruction. Virtual worlds can be animated, interactive and shared. Through immersion, the user can gain a deeper understanding of the virtual world's behaviour and functionaily. Virtual reality can also refer to applications that are not fully immersive, such as mouse-controlied navigation through a 3D environment on a graphics monitor, stereo viewing from the monitor via stereo glasses, stereo projection systems and others A variety of input devices, such 2s head-mounted displays, data gloves, joysticks and hand- held wands, allow the user to navigate through a virtual environment and to interact wath virtual objects. Directional sound, tactile and force feedback devices, voice recognition and other tech- nologies enrich the immersive experience. Because several people can share and interact in the ‘same environment, virtual reality can be a powerful medium for communication, entertainment and leaming, tis difficult to predict where information systems and technology will be in 10 to 20 years. It seems, however, that we are just beginning to discover the full range of their usefulness. Tach- nology has been improving and expanding at an increasing rate; dramatic growth and change fare expected for years to come. Without question, a knowledge of the effective use of informa- tion systems will be critical for managers both now and in the long term. But how are these information systems created? 1.3 Systems Development S¥stems developments tne activity of creating or modiying business systems. systems developmen The Systems development projects can range from small to very large in flelds as stv eating ermaching Ghets©as stock analysis and video game development. Peopleinside acompany — StM0 bs SER Coven systems or companies can use outsourcing, hiring an outside company to perform a Of a systems development project. Outsourcing allows a company to focus on what Otteoat 8nd delegate other functions to companies with expertise in systems development Sevelope ee MONEVE. Is not the best atemative for ll companies. An alternative is agile systems togethor ni Where systems are developed rapidly in close partnership with users. Working a usable gas “Tthe system are developed, ested, modified and refined over and over again until Sable fystem emerges 50 that, formation systems to meet business needs is highly complex and dificult - so Mas Common for IS projects to overrun budgeis and exceed scheduled completion Court with estV'S Revenue and Customs (HMRC), which collects taxes in the UK, settled out ‘8 outsourcing company to recover funds lost due to a tax-felated mistake causedPART 1 OVERVEW The failed project overpaid about €2.5 blion to 2 8 amos with children or taxpayers in a lowincome tax bracket, One strategy for Spo To regults of a systems development project is to divide it into several stops, each wit & well datined goal and set of tasks to accomplish (see Figure 1.8). These steps are ‘summarized next by a failed systems development prof | | Figure 1.8 An Overview | of Systems Development Systema investigator ‘Understand te proba — aa \ | stems ara | | mines whal must be cone syste dos [pe sation err | | Y \ | | systems implomentaton | jon and A\ nalysis Systems Investig: The fst two stops of systems development are systems investigation and analyss. The goal Perse investigation to gain a cea understanding fhe problem tobe SoN0g or Oper obe adcresed, A ruse tne company. for exarpl, might launch a systems neste aes ovelopment project is feasible to automate purchasing at pots a to coe forc. Aer an oxganization understands the problem, the next queston is, 18 ria oth soiing? ven that xgarizatrs have lmted resources ~ people enna” oe gsorves call consideration the decison io cmtrue wih the soliton next step, systems analysis, defines the problems ‘and opportunities of the existing system. Dur nent ep yteTigabon ano anys, a3 wl os dosgn maintenance anc review, SCusS Oe et anat have tne complete support of topevel managers and focus on devaleh eve business goals.'* tion to deter ing systems that tion, and Maintenance and Review smente Systems Design, Impl systems design determines how the new system will work to meet the business nest defined during systems analysis. Systems imp! lementation involves creating or acquiring the vario¥" ‘system components (hardwar software, databases, etc.) defined in the design sien, assem 'stem into operation. The purpose of systems ‘maintenance bling them and putting the new sy reviews to check and modify the system so that continues to meet changing business "2 Int tie be op.billion to proving hawell red next overview lopment JCTION TO INFORMATION SYSTEMS CA 1.4 Information Systems in Society, Business and Industry Information systems have been develope to meet the needs of all types of organizations and People, and their use is spreading throughout the world to improve the lives and business activi- ties of many opens users to a variety of threat ‘A robot may not injure a human being or, through inaction, aiow a human being to come to harm’ This is Isaac Asimov's famous firs law of robot- ics and says that a robot must never harm a human being. But what if the rabot had to choose between one of two actions, both of which would cause harm? Believe itor not, there are devices interacting with humans right now that at any point could be required to make such a decision Driveriess vehicles are currently being tested ‘and used on roads all over the world. In Japan, riveriess robot taxis are being tested in the town of Fujisawa and if successful they will be used to transport spectators around for the 2020 Tokyo Olympics. in the UK, the government's 2016 bud- t confitmed that driverless lorries and cars will be ialled, saying they wanted the UK to be ‘a glabal centre for excellenis in connected and autonomous S will be driven in convoys led by an actual driver with the robots following behind, In Western Sydney, experts have said that Austra |ia ‘must not take our foot off the pedal’ and nave creat ch laboratory to test this emerging about this decision where someone is goit ‘0 get hut either way. What would happen ifa child ‘aN Out in front of a diveriess car and the car could Swerve, but if it did swerve it would hit another Sie? According to Nature magazine, people often {BePond that the child at the side is more innocent shaun’ One who fan out and therefore the robot arate Ot Swerve. But what if two children ran out the en one stood atthe idle? OF ifitwas an adult at © 88? Whatif the adult looked strong and healthy ‘ens. To provide their enormous benefits, however, information systems must be implemented with thought and care. The speed and widespread use of infor rom unethical people. and the robot calculated that they were more likely than the child to survive being hit at that speed? Answers to such questions often rely on what 's known to philosophers as the doctrine of double effect: sometimes itis permissible to cause a harm 2s a side effect (or ‘double effect’) of bringing about € good resutt. Analyzing these situations is dificult for € decision-making program. The robot must predict two futures and assess whether the action in eac impemmissible because it causes harm, or permissiole because the harms only side effect of causing good Should this be programmed into the robot or should the robot be allowed to learn it for itself? ‘Some computer scientists, ke Michael Fisher from the University of Liverpool in the UK, think that rule based systems could reassure the public. ‘People are going to be scared of robots if they're not sure what it’s doing’, he says. ‘But if we can analyze and prove the reasons for their actions, we are more likely to surmount that trust issue’. On the other hand, the Mmachine-leaming approach (where the robot has to learn what is best for itself) would create robots that can leam from experience, which might ultimately make them mote useful than a robot that must fo: low pre-programmed rules. According to Natur, many roboticists say that the best way forward wi be a combination of the two approaches. The chal lenge is to make them work together. Many people are looking forward to a time of riverless vehicles. Your car could crop you in the city and then go off to find a parking space; your car could drop the kids to school; your car could take you to the airport and then drive home avoiding you the hassle of paying for a long stay parking space. (continued)Since this case was written, Joshua Brown became the first person to be kiled when his selF-criving car made a mistake. Brown was legally responsible fo ‘when the accident happened. Apparently, the nfused by the white side ofa taller against the white of the sky. Should the robot swerve or not in each of the examples given? Can you justify your answer? Would you be comfortable taking a robotic taxi? t about a driverless car? Could a robot ever learn whether or not to swverve? Wouldn't it need to be in the situation ‘many times in order to learn that? \What impact could driveriess vehicles have on the economy? Ch, J. 2016. Steer Driveriess Cars Towards Full Automation’. Nature 53 Atthough information systems can provide enormous benefits, they do have some drawbac #€ also a concern. In Japan, a financial losses of ¥245 milion due to a typing mistake in entering a trade. In anather o: cits worth about £30 milion from a European cart ingly, the ethical use of systems has been highlight jenerally considered right or wrong. Some IS professional May create new opportunities for unethical behaviour. For example, a faculty member of a med 001 falsified computerized research results to get a promotion ~ and a higher salary. In a fas charged with using a human re layotts and firings to avoid paying pensions. More and elated mistakes Comput carbon Incred cern what is| accompany Deng, B. 2015. ‘Machine Ethics: The Robot's Dilemma’. Nature Goatty, M. 2016 iverless Cars. The Latest Scheme to Push Western Sydney into the Future’. The Daily Telegraph. Availabe trom: ‘www. dailelegraph.com.auinewst/argowe: go-west-driverless-cars-the latest-scheme-to- Push-westem-sydney-into-the-future/news- storyid4t78i BBC, 2016. ‘Budget 2016: Driveriess Lorries Get UK Trials’, Avaiiable from: www. bbc.co.uk! news/technology-35820873. McCurry, J. 2015. ‘Driveriess Robot Taxis to Be ‘ested in Japanese Town’. The Guardian Available frorn: www theguardian, com world/20 1S/ocv0S/criverless-robot-taxis-to-be- fed-in-japanese-town, Stanford Encyclopedia of Philosophy. hitp:iplato. stanford. edulentries/double-elfect/ Accessed: 20 Apri 2016 38 fim had trading ase, criminals st0®. ret.” 8, Ethical issues cot believe that computes othe ;ouree information system to time employe ‘Fe, the Intemet is also associated unethical compar such as § To prot many soft computer Zealand oj and giving the comma Youcan outside a computer 5 propose ing lems also re health prob ing workplac In the twenty citficut. For giomerates, improve ettic he increasec issues and dk path you take challenging e1 4 knowled. job. It will als Identity oppor also expectec organizational tion systems 1 tems and equi devices (arch telecommunice Information Computer syste Knowledge of |IAPTER 1 ANUINTRODUCTION TO INFORMATION SYSTEMS nl unethical behaviour, Unethical investors have piaced false rumours or incorrect information about m @ company on the Internet and tried to influence its stock price to make money. Information thett, Such as stealing credit card numbers and other personal information, is anather issue. To protect against these threats, you can install security and control measures. For example, many software products can detect and remove viruses and spam, or unwanted email, from computer systems. Information systems can help reduce other types of crime as well, in a New Zealand city, a free computer centre has cut vandalism by keeping young people off the stroat {and giving residents a sense of pride. When a pair of headphones disappeared irom the centre, the community rallied to make sure that they were promptly returned. firewalls (software and hardware that protect a computer system or network from outside attacks) to avoid Viruses and prevent unauthorized people from gaining access to your computer system. You can also use identification numbers and passwords. Some security experts Propose instaling web cameras and hiring ‘citizen spotters to monitor them. Use of information sys- tems also raises work concerns, including job loss through increased efficiency and some potential health problems from making repetitive motions, Ergonomics, the study of designing and position ing workplace equipment, can help you avoid health-related problems of using computer systems, In the twenty-first century, business survival and prosperity have continued to become more Gifficut. For example, increased mergers among former competitors to create global con Glomerates, continued downsizing of corporations to focus on their core businesses and to improve efficiencies, efforts to reduce trade barriers, and the globalzation of capital all point to. the increased intemationaiization of business organizations and markets. In addition, business issues and decisions are becoming more complex and must be made faster, Whatever career | _ path you take, understanding information systems will help you cope, adapt and prosper in this challenging environment. | A knowledge of information systems will help you make a significant contribution to the iob. It wll also help you advance in your chosen career or field. Managers are expected to identity opportunities to implement information systems to improve thelr business. They are also expected to lead IS projects in their areas of expertise. To meet these personal and organizational goals, you must acquire both computer literacy and informa- tion systems literacy. Computer literacy is @ knowledge of computer syS- computer teracy knowledge tems and equipment and the ways they function. It stresses equigment and of computersyteme and ogee Marduare, programs and irsructons (sofware), databases and SUBMwHan/ Pe a te telecommunications. and devices (hardware), Information systems literacy goes beyond knowing the fundamentals of programs and nchagas computer systems and equipment. Information ‘Systems literacy is the (software), databases and knowledge of how data and information are used by individuals, groups _slecommunications nd organizations. It includes knowledge of computer technology and th information systems literacy Boacer ange of infomation systems, Mos! important however. encom. NEw songs ow and why this technology is applied in business. Knowing imimomston eset Cul various types of hardware and software is an example of computer yeu to use hardware and software to increase profits, cul $038 improve productivity and increase customer satisfaction is an example of information (Stems literacy. Information systems literacy can involve recognizing how and why people (managers, employees, stockholders and others) use information systems being familiar with GrSanizations, decision-making approaches, management levels and information nesds and g how organizations can use computers and information systems to achieve ls. Knowing how to deploy transaction processing, management information, deci port and expert systems to help an organization achieve its goals is a key aspect of ‘ation systems literacy Sion su inform:PART Ov Information Systems in the Functional Areas of Business Information systems are used in all functional areas and operating divisions of business. In finance and accounting, information systems forecast revenues and business activity, deter- mine the best sources and uses of funds, manage cash and other financial resources, analyze investments and perform audits to make sure that the organization is financially sound and that all financial reports and documents are accurate. Sales and marketing use information systems to develop new goods and services (product analysis), select the best location for production and distribution faciities (place or site analysis), determine the best advertising | land sales approaches (promotion analysis) and set product prices to get the highest total revenues (price analysis). in manufacturing, information systems process customer orders, develop production sche tiles, control inventory Ievels and monitor product quality. n addition, information systems help to design products (computer-assisted design or CAD), manufacture items (computer-assisted manufacturing of CAM), and integrate machines or pieces of equipment (computer-integrated manufacturing or CIM). Human resource management uses information systems to screen applicants, administer performance tests 10 employees, monitor employee productivity and mote. Legal information systems analyze product lability and warranties and help to develop important legal documents and reports. information Systems in Industry In addition to being used in every department in a company, information systems are used in almost every industy or field in business, The airline industry develops Internet auction sites to offer discount fares and increase revenue. Investment firs use information systems to analyze ‘locks, bonds, options, the futures market and othe financial instruments, and provide improved services to thoir customers. Banks use information systems to help make sound loans and good investments, as well as to provide online payment for account holders. The transportation. 4 industry uses information systems to schedule trucks and trains to deliver goods and services at the lowest cost. Publishing comparies use information systems to analyze markets and to | develop and publish newspapers, magazines and books. Private healthcare organizations use, information systems to diagnose illnesses, plan medical treatment, rack patient records and | bil patients. Retal companies are using the web to take orders and provide customer service support. Retail companies also use information systems to help market produots and services manage inventory levels, contol the supply chain and forecast demand. Power management and ullity companies use information systems to monitor and control power generation and: usage. Professional services tims employ information systems to improve the speed and quell of services they provide to customers, Management consulting firms use intranets and extranets = to offer information on products, services, skli levels and past engagements to their consultants These industries are discussed in more detail as we continue through the book. aia 1.5 Global Challenges in Information Systems Changes in society as a result of increased intemational trade and cultural exchange, off called globalization, have always hadi big impact on organizations and their information f= tems, in his book The Wor fs Fat, Thomas Friedman descrives three eas of globalization Table 12). According to Friedman, we have progressed from the globalization of counties the globalization of mutinattonal corporations and individuals. Today, people in remote can use the internet fo compete with, and contribute fo, ther people, the largest corporat | and entire counties. These workers are empowered by high-speed Internet access, mo.overview vity, de! s, analyze ghest total jon sched- stems help + {9 screen activity and to develop are used in tion sites to sto analyze seimproved i loans and snsportation ind services. ‘kets and to izations use reration and Sand quality dextranets ants. 2ms ange, often aration sy" alization (89 f countries ‘emote area poration’ 3s, making (CHAPTER 1. AN INTRODUCT! TO INFORMATION SYSTEMS the world seem smaller and effectively leveling the global playing field. In the Globalization 3 cera, designing a new aeroplane or computer can be separated into smaller suotasks and then ‘completed by a person or small group that can do the best job, These warkers can be located in india, China, Russia, Europe and other areas of the world. The subtasks can then be combined oor reassembled into the complete design. This approach can be used to prepare tax returns, diagnose a patient's medical condition, fix a broken computer and many other tasks. 2 Eras of Globalization g Globalization! Late 1400-1800 Countries with the power to explore and influence the word Jovalzation 2 1800-2000 Multinational corporations that have plants, warehouses Globalization 3 -2000-today compete and nd countries by (ul technology tools Today's information systems have led to greater globalization. High-speed Internet a networks that can connect individuals and organizations around the world create mo intemational opportunities. Global marke products and services trom around the wi ‘These opportunities, however, introduce nurnerous obstacles and issues, including challenges involving culture, language and mary others, ‘= Cultural challenges: Countries and regional areas have their own cultures and customs that can significantly affect individuals and organizations involved in global trade. = Language challenges: Language differences can make it difficult to translate exact, ‘meanings from one language to another. '= Time and distance challenges: Time and distance issues can be difficult to overcome for individuals and organizations involved with global trade in remote locations. Large time differences make it difficult to talk to people on the other side of the world. With long distance, it can take days to get a product, a critical part or a piece of equipment from ‘one location to another location. Infrastructure challenges: High-quality electricity and water might not be available incertain parts of the world. Telephone services, Internet connections and skilled employees might be expensive or not reacily available. Currency challenges: The value of different currencies can vary significantly over time, making international trade more difficult and complex. Product and service challenges: Traditional products that are physical or tangible, such 88 a car or bicycle, can be difficult to deliver to the global market. However, electronic Products (e-products) and electronic services (e-services) can be delivered to customers Ctronically, over the phone, networks, through the Internet or other electronic means. S tenat®: Music, Books, manuals, and help and advice can ail be delivered over the rc ene transfer issues: Most governments don't allow certain military-related ve ament anc systems to be sold to some countries, Even s0, some believe that mat peombaties are stealing the intelectual property, trade secrets, copyrighted and counterfeiting products and services.PART OVERY ‘National laws: Every country has a set of laws that must be obeyed by citizens and organizations operating in the country. These laws can deal with a variety of issues, including trade secrets, patents, copyrights, protection of personal or financial data, privacy and much more, Laws restricting how data enters or exits a country are often called ‘trans-border data-flow laws’, Keeping track of these laws and incorporating them into the procedures and computer systems of muttinational and trans-national ‘organizations can be very dificult and time consuming, requiring expert legal advice. Trade agreements: Countries often enter into trade agreements with each other. The EU has trade agreements among its members.®° The North American Free Trade ‘Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) are other examples.”! Others include the Australia-United States Free Trade Agreement and agreements between Bolivia and Mexico, Canada and Costa Rica, Canada and Israel, Chile and Korea, Mexico and Japan, the USA and Jordan and many others.® Summary ‘The value of information is directly linked to how Knowing the potential impact of information it helps decision makers achieve the organiza- tional goals. Information systems are used in almost every imaginable career area. Regardless of your ‘chosen career, you wil find that information systems are indispensable tools to help you achieve your goats Learning about information systems can help you get your frst job, earn promotions and advance your career. Information is a collection of facts, To be valuabie information must have several characteristics: it should be accurate, complete, economical to produce, flex: ible, reliable, relevant, simple to understand, timely, verifiable, accessible and secure. The value of informa- tion s directly inked tehow ithelps people achieve their organization's goals. ‘Computers and Information systems are con- stantly making It possible for organizations to improve the way they conduct business. A sys- tem is a set of elements that interact to accomplish a {goal or set of objectives. The components of a system include inputs, processing mechanisms and outputs. AA system uses feedback to monitor and control its operation to make sure that it continues to meet ts goals and objectives. System performance is measured by its efficiency and effectiveness. Efficiency is a measure of what s pro- duced divided by what is consumed; etfectivens sures the extent to which a system achioves is g A gyster’s performance standard is a specific objective. systems and having the ability to put this knowl. edge to work can result in a successful personal career, organizations that reach thelr goals and: 2 society with a higher quality of life, information systems are sets of interrelated elements that collect {inpul), manipulate and store (process), and cissem: rate (output) data and information, Input is the acti: ity of capturing and gathering new data, processing involves converting or transforming data into usetul outputs, and output involves producing useful informa tion. Feedbackis the output thats usedto make adjusts ‘ments or changes to input or processing actives. The components of a computer-based informal tion system (CBIS) include hardware, software, dat bases, telecommunications and the Internet, peoolé tions use can be classified into: (1) e-commerce aft commerce, TPS and ERP systems; (2) MIS 2 DSS; and (3) specialized business information toms. The key 10 understanding these types of 9 tems begins with learning their fundamentals E-commerce involwes any business tren tion executed electronically between parties ‘as companies (business to business), compa ‘and consumers (business to consumer), busi and the public sector, and consumers and the P» lic sector. The major volume of e-commerce and 5 fastest-growing segrne transactions that make purchasing easier fo! ™overview nd ses, ata, often ng onal ivice. The e are nent and Israel formation ais knowi- personal goals and ‘formation hat collect dissemi 3 the activ rocessing into useful tlinforma- akeadiust- tities. d Informa: ware, dala- vet, people { organiza. merce and ) MIS. and) nation sy 2es of sy als, 3 transac ities such companies business dd the puo® e-business 3 jer tor bias | Welding. CHAPTER 1 AN INTRODUCTION TO INFORMATION SYSTEMS. corporations, E-commerce also offers oppertunties for smal businesses to market and sol at & low cost woridvide, thus allowing them to enter the global market right ffom start-up, Ncommetce voles ‘anytime, anyuhere’ computing that ees on wisloss retivorks and systems, Tho most fundamental system is the transaction processing system (TPS), Atensactonis any business. feated exchange. The TPS handles the large volume oF business transactions that occur daly within an orgarization. An enterprise resource planning (ERP) systemisasetof integrated programs that can manage the vial business operations for an entro multe Gjobal egarizaton. A managementinfomaton sytem (MIS) uses the information roma TPS to genorat info. raion useful for management decision making ‘A decision suppert system (OSS) is an orparizes callecion of pepe, procedures, databases and devices that help make probler-spectic decisions, A DSS ders fom an MIS inthe suppor vento users, the emphasis on decisions, the. development and approach, and the systom components, speed and cut. Specialized business information systems include nowvedge management, anfcialinteligence, expert and. vial realty systems. Knowledge manage- ‘mont systems are organized collections of people, procedures, software, databases and devices used 20 erie, tore, share and use the organization's krowiedge and experience. Ail intligence (A) includesawiderargeotsystemsinwfichthecomputet fakes on the characteristics of hunan ineligence, Robotics isan area ofA in which machines perform Gerplex, dangerous, routine or boring tasks, Such 23 rrames or assembing compute systems Bt components. Vision systems allow robots and athe devices i have sight ano store and process sul imagos, Natural language processing ivoNes Somutersiniorpreting and acting on verbal owt. a mands in English, Spanish or other human. fovea. Learning systome let computers earn {of est istakes or experiences, such a8 plying Apes c making business decison, whe neural reeatts a branch ofl that alows computers to Ben a 8 on patoms or trends. An expert (5) is designed to act as an expert consul tant to a User whe : Stooge whos sekng aac about speci ire nah term ial eat tered to ay ley, in which the user becomes an attic, computer generated 90 world. Vital realty can also refer to applications that are not fully immersive, such as mouse-controlied Navigation through @ 3D environment on a graphics monitor, stereo viewing from the monitor via stereo Glasses, stereo projection systems and others. System users, business managers and informa tion systems professionals must work together to build a successful information system. Systems development involves creating or modifying existing business systems. The major steps of this process and their goals include systems investigation (gain a clear understanding of what the problem is), systems analysis (define what the systems must do to solve the problem), systems design (determine exactly how the system will work to meet the business needs), systems implementation (create or acquire the various system ‘components defined in the design step), and systems maintenance and review (maintain and then modify the system so that it continues to meet changing busi- ness needs}, Information systems must be applied thoughtfully and carefully so that society, business and indus- tty can reap their enormous benefits, Information systems play a fundamental and ever-expanding role in society, business andindustry. But their usecan also raise serious securty, privacy and ethical issues. Effec- tive information systems can have a major impact on corporate strategy and organizational success. Bus nesses around the globe are enjoying better safety and senice, greater efficiency and effectiveness, reduced expenses, and improved decision making and contol because of information systems, Individuals who can help their businesses realize these benefits wil be in demand well into the futur. Computer and information systems literacy are pre- requisites for numerous job opportunities, and not only in the IS field. Computer literacy is knowledge of com- Putersystemsand equipment, andinformationsystems literacy is knowledge of how data and information are used by individuals, groups and organizations, Today, information systems are used in all the functional areas of business, including accounting, finance, sales, mar- keting, manufacturing, human resource management and legal information systems. Information systems are also used in every industry, such as airlines, invest ‘ment fms, banks, transportation companies, publish- ing companies, healthcare, retail, power management, professional services and more.