Management Information Systems,

Sixth Edition

Chapter 1
Business Information Systems:
An Overview
 Objectives
Explain why information technology matters
Define digital information and explain why digital
systems are so powerful and useful
Explain why information systems are essential to
business
Describe how computers process data into
useful information for problem solving and
decision making
Identify the functions of different types of
information systems in business
Management Information Systems, Sixth Edition 2
 Objectives (continued)

Describe careers in information technology

Identify major ethical and societal concerns
created by widespread use of information
technology

Management Information Systems, Sixth Edition 3

 Does Information Technology Matter?

Hackett Group study: Does IT Matter? Hackett

Concludes the Answer is Yes
Worlds best performing companies spent 7%
more per employee on IT than typical companies
They recouped the investment fivefold in lower
operational costs
Todays business professionals must know how
to develop and use IT

Management Information Systems, Sixth Edition 4

 The Power of Digital Systems

Binary counting system uses only two digits:

0 and 1
Digital systems:
Computers and devices that use the binary
system
Can represent any information as a combination
of zeros and ones
Information can be represented, stored,
communicated, and processed digitally

Management Information Systems, Sixth Edition 5

 The Power of Digital Systems
(continued)
Digital information is stored and communicated
by means of electromagnetic signals
Extremely fast
Digital copy is an exact copy of the original
Accuracy and speed make digital systems
powerful, useful, and important

Management Information Systems, Sixth Edition 6

 The Purpose of Information Systems

Businesses use information systems

To make sound decisions
To solve problems
Problem: any undesirable situation
Decision: arises when more than one solution to
problem exists
Both problem solving and decision making
require information

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 The Purpose of Information Systems
(continued)
Keys to success in business:
Gathering correct information efficiently
Storing information
Using information
Purpose of information systems is to support
these activities

Management Information Systems, Sixth Edition 8

 Data, Information,
and Information Systems
Data, information, and system are
commonly used terms
Important to understand their similarities and
differences

Management Information Systems, Sixth Edition 9

 Data vs. Information

Data: a given or fact

Can be number, statement, or picture
Is the raw material in the production of
information
Information: facts or conclusions that have
meaning within context
Composed of data that has been manipulated

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 Data Manipulation

Data is manipulated to make useful information

New information can be generated from data,
such as averages, trends, etc.
Survey is common method of collecting data
Raw data is hard to read
Information is more useful to business than data

Management Information Systems, Sixth Edition 11

 Generating Information

Process: the manipulation of data

Usually produces information
May produce more data
A piece of information (output of a process) in
one context may be considered data (input to a
process) in another context

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 Generating Information (continued)

Management Information Systems, Sixth Edition 13

 Information in Context

Not all information is useful

To be useful, information must be:
Relevant
Complete
Accurate
In business, information must also be:
Current
Obtained in a cost-effective manner

Management Information Systems, Sixth Edition 14

 Information in Context (continued)

Management Information Systems, Sixth Edition 15

 What Is a System?

System: array of components that work together

to achieve goal or goals
System
Accepts input
Processes input
Produces output

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 What is a System? (continued)

System may have multiple goals

System may contain subsystems
Subsystem: component of a larger system
Subsystems have subgoals that contribute to
main goal
Subsystems can receive input from and transfer
output to other subsystems

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 What is a System? (continued)

Management Information Systems, Sixth Edition 18

 What is a System? (continued)

Closed system: has no connections with other

systems
Open system: interfaces and interacts with
other systems
Often a subsystem of a bigger system
Subsystems by definition are always open
Information system (IS): components that work
together to process data and produce
information

Management Information Systems, Sixth Edition 19

 Information and Managers
Systems thinking: thinking of an organization in
terms of subsystems
Powerful management approach that creates a
framework for problem solving and decision
making
Helps keep managers focused on overall goals
Database: collection of electronic records
Information systems automate exchange of
information among subsystems

Management Information Systems, Sixth Edition 20

 Information and Managers (continued)
Information map: description of data and
information flow within an organization
Shows a network of information subsystems that
exchange information with each other and with
the outside world
Information technology: technologies that
facilitate construction and maintenance of
information systems

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 The Benefits of
Human-Computer Synergy
Humans are relatively slow and make mistakes
Computers cannot make decisions unless
programmed to do so
Synergy: combining resources to produce
output that exceeds the sum of outputs of the
separate resources by themselves
Human-computer combination allows human
thought to be translated into efficient processing
of data

Management Information Systems, Sixth Edition 22

 The Benefits of
Human-Computer Synergy (continued)

Management Information Systems, Sixth Edition 23

 Information Systems in Organizations

Information system consists of data, hardware,

software, telecommunications, people, and
procedures
Computer-based Information system: system
with one or more computers at center
Organizations lag behind and lose
competitiveness if they do not use information
systems

Management Information Systems, Sixth Edition 24

 Information Systems in Organizations
(continued)
Trends that have made information systems
important in business:
Growing power and decreasing cost of computers
Growing capacity and decreasing costs of data
storage devices
Increasing variety and ingenuity of computer
programs
Available, reliable, affordable, and fast
communications links to the Internet
Growth of the Internet
Increasing computer literacy of the workforce
Management Information Systems, Sixth Edition 25
 Information Systems in Organizations
(continued)

Management Information Systems, Sixth Edition 26

 The Four Stages of Processing

Input: collect and introduce data to system

Transaction: a business event, usually entered
as input
Transaction processing system (TPS): a
system that records transactions
Input devices include keyboards, bar code
readers, voice recognition systems, touch
screens
Data processing: perform calculations on input

Management Information Systems, Sixth Edition 27

 The Four Stages of Processing
(continued)
Output: what is produced by the information
system
Output devices include printers and speakers
Storage: maintaining vast amounts of data
Storage devices include optical discs

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 Computer Equipment
for Information Systems
Different technologies are used to support the
four data processing functions:
Input devices: receive input
Computers: process data
Output devices: display information
Storage devices: store data
Network devices: transfer data
Telecommunications: communication that
takes place between computers over great
distances
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 Computer Equipment
for Information Systems (continued)

Management Information Systems, Sixth Edition 30

 From Recording Transactions to
Providing Expertise:
Types of Information Systems
Different types of information systems serve
different functions
Capabilities of applications have been combined
and merged
Management Information System: a system
that supports planning, control, and making
decisions

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 Transaction Processing Systems

Transaction processing system (TPS): most

widely used type of system
Records data collected at point where
organization transacts business with other parties
Point-of-sale machines: record sales
Include cash registers, ATMs, and purchase
order systems

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 Supply Chain Management Systems

Supply chain: sequence of activities involved in

producing and selling products or services
For products, activities include marketing,
purchasing raw materials, manufacturing and
assembly, packing and shipping, billing, collection,
and after-sale services
For services, activities include marketing,
document management, and monitoring customer
portfolios

Management Information Systems, Sixth Edition 33

 Supply Chain Management Systems
(continued)
Supply chain management (SCM) systems:
systems that support these activities
Also known as enterprise resource planning
systems
SCM systems eliminate the need to reenter data
that was captured elsewhere in the organization
An SCM is an enterprise application

Management Information Systems, Sixth Edition 34

 Customer Relationship
Management Systems
Customer relationship management (CRM)
systems: systems for managing relations with
customers
Used in combination with telephones to provide
customer service
Often linked to Web applications that track online
transactions
Retaining loyal customers is less expensive than
acquiring new ones

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 Business Intelligence Systems

Business intelligence (BI) systems: systems

that glean relationships and trends from raw
data to help organization compete
Often contain statistical models
Access large pools of data
Data warehouse: large database that usually
store transactional records

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 Decision Support and Expert Systems

Decision support system (DSS): supports

decision making
Relies on models to produce tables
Extrapolates data to predict outcomes
Helps answer What if? questions
Expert system (ES): supports knowledge-
intensive decision making
Uses artificial intelligence techniques
Can preserve the knowledge of retiring experts

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 Geographic Information Systems

Geographic information system (GIS): ties

data to physical locations
Represents data on a map in different formats
May reflect demographic information in addition
to geographic information
May use information from global positioning
system (GPS) satellites
Examples: Google Earth, Mapquest

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 Geographic Information Systems
(continued)

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 Information Systems
in Business Functions
Functional business area: services within a
company that support main business
Includes accounting, finance, marketing, and
human resources
Part of a larger enterprise system

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 Accounting

Accounting information systems:

Help record transactions
Produce periodic statements
Create required reports for law
Create supplemental reports for managers
Contain controls to guarantee adherence to
standards

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 Finance

Finance systems:
Facilitate financial planning and business
transactions
Tasks include organizing budgets, managing
cash flow, analyzing investments, and making
decisions

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 Marketing
Marketings purpose is to pinpoint likely
customers and promote products
Marketing information systems:
Analyze demand for products in regions and
demographic groups
Identify trends in demand for products/services
Help analyze how advertising campaigns affect
profit
Web provides opportunity to collect marketing
data as well as promote products and services
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 Human Resources

Human resource management systems aid

record-keeping
Must keep accurate records
Aids recruiting, selection, placement, benefits
analysis, requirement projections
Performance evaluation systems provide
grading utilities

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 Web-Empowered Enterprises

E-commerce: buying and selling goods and

services through Internet
Internet is a vast network of computers
connected globally
Web has a profound impact on information
systems
An emerging advertising medium
A place to conduct e-commerce

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 Careers in Information Systems

Information technology professionals are

increasingly in demand
Network administrator, system administrator,
system analyst, software engineering, data
communications analyst, and database
administrator jobs are increasing in demand

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 Help Desk Technician

Help desk technician:

Supports end users in their daily use of IT
Often provides help via telephone
May use software that gives them control of the
users PC
May need to have knowledge of a wide variety of
PC applications

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 Systems Analyst

Systems analyst:
Researches, plans, and recommends software
and systems choices
Responsible for developing cost analyses, design
considerations, implementation timelines, and
feasibility studies
Involves analyzing system requirements,
documenting development efforts, and providing
specifications for programmers
Requires communication and presentation skills
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 Database Administrator

Database administrator (DBA): responsible for

databases and data warehouses
Develops and acquires database applications
Must adhere to federal, state, and corporate
regulations to protect privacy of customers and
employees
Responsible for securing the database

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 Network Administrator

Network administrator: acquires, implements,

manages, maintains, and troubleshoots
networks
Implements security
Firewalls
Access codes

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 System Administrator

System administrator: manages an

organizations computer operating systems
Must ensure that operating systems work
together, support business requirements, and
function properly
Responsible for backup and recovery, adding and
deleting user accounts, performing system
upgrades

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 Webmaster

Webmaster: creates and maintains Web site

Must be familiar with Web transaction software,
payment-processing software, security software
Manages both the intranet and extranet
Demand for Webmasters grows as more
businesses use Web

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 Chief Security Officer

Chief security officer (CSO): supervises

security of information system
Position exists due to growing threat to
information security
Usually reports to chief information officer (CIO)

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 Chief Information Officer and
Chief Technology Officer
Chief information officer (CIO): responsible for
all aspects of information system
Often a corporate vice president
Must have technical understanding of information
technologies as well as business knowledge
Chief technology officer (CTO): has similar
duties as CIO

Management Information Systems, Sixth Edition 54

 Chief Information Officer and
Chief Technology Officer (continued)

Management Information Systems, Sixth Edition 55

 Summary

Computer-based information systems pervade

almost every aspect of our lives
A system is a set of components that work
together to achieve a common goal
Subsystem: a system performs a limited task
that produces an end result, which must be
combined with other products from other
systems to reach an ultimate goal
Data processing has four stages

Management Information Systems, Sixth Edition 56

 Summary (continued)

Any IS that helps in management is a

management information system (MIS)
Many different types of MIS
Enterprise application systems (SCM or ERP) tie
together different functional areas of a business
ISs are used in many business functions,
including accounting, finance, marketing, and
human resources

Management Information Systems, Sixth Edition 57

 Summary (continued)

The job prospects for IT professionals are bright

IT has created societal concerns regarding
privacy, identity theft, spam, and Web
annoyances

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