1

Chapter
1
Foundations of Information
Systems in Business

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 2

What is MIS?
Information

Data that has been put into a meaningful and

useful context. Usually to help make a decision.

Management Information System

A combination of computers and people that is
used to provide information to aid in making
decisions and managing a firm.

Information Technology (IT)

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 3

MIS Components

Hardware
Software

Backup data
Restart job
Virus scan

People Data
Procedures

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 4

Goal of This Course

How can MIS help you do your job?

Understand the technology.

Analyze business problems.

An introduction to systems analysis.

Identify types of problems that MIS can help

solve through cases.
Ability to classify problems.

Know when to call for help.

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Why is MIS Important?

MIS affects all areas of business
Manufacturing

Accounting & Finance

Human resources

Marketing

Top management

Performance evaluations—expectations

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 6

Technology Excesses?
Typical Price Declines
• You can buy a new
800 model item when it is
700 released or wait for the
600 price to drop.
500 • You can keep buying
price

400 new releases or

300
continue to use an “old”
200
model.
100
• Answers depend on
0
1 3 5 7 9 11 13 15 17
your needs, the
time features offered, and
the reliability of the old
items.
• Plus the bling factor.

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 7

Business Trends & Implications

 Specialization
 Increased demand for technical skills
 Specialized MIS tools
 Increased communication
 Emphasis on Teamwork
 Methodology & Franchises
 Reduction of middle management
 Increased data sharing
 Increased analysis by top management
 Computer support for rules
 Re-engineering
 Mergers
 Larger companies
 Need for control and information
 Economies of scale
 Decentralization & Small Business
 Communication needs
 Lower cost of management tasks
 Low maintenance technology

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 8

Business Trend Summary

Business Trend Implications for Technology

Specialization 1.Increased demand for technical skills

2.Specialized MIS tools
3.Increased communication

Methodology & Franchises 1.Reduction of middle management

2.Increased data sharing
3.Increased analysis by top management
4.Computer support for rules
5.Re-engineering

Mergers 1.Four or five big firms dominate most industries

2.Need for communication
3.Strategic ties to customers and suppliers

Decentralization & Small 1.Communication needs

Business 2.Lower cost of management tasks
3.Low maintenance technology

Temporary Workers 1.Managing through rules

2.Finding and evaluating workers
3.Coordination and control
4.Personal advancement through technology
5.Security

Internationalization 1.Communication
2.Product design
3.System development and programming
4.Sales and marketing

Service Orientation 1.Management jobs are information jobs

2.Customer service requires better information
3.Speed
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Business Trends & Implications

 Temporary Workers
 Managing through rules
 Finding and evaluating workers
 Coordination and control
 Personal advancement through technology
 Security
 Internationalization
 Communication
 Product design
 System development and programming
 Sales and marketing
 Service Orientation
 Management jobs are information jobs
 Customer service requires better information
 Speed
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 10

Learning Objectives
Explain why knowledge of information
systems is important for business professionals
and identify five key areas of information
systems knowledge.
Give examples to illustrate how the business
applications of information systems can
support a firm’s business processes,
managerial decision making, and strategies for
competitive advantage.
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 11

Learning Objectives (Continued)

Provide examples of the components of real

world information systems.
Provide examples of several major types of
information systems.
Identify several challenges that a business
manager might face in managing the
successful and ethical development and use of
information technology in a business.

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 12

Section I

Foundation Concepts:
Information Systems and Technologies

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 13

Information Systems Framework

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 14

Information Systems Concepts (Continued)

Foundation Concepts
Fundamental concepts about the
components and roles of information
systems.
Information Technologies

Major concepts, developments, and

management issues in information
technology.

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 15

Information Systems Concepts (Continued)

Business Applications
The major uses of information systems for
operations, management, and competitive
advantage.
Development Processes

How business professionals and information

specialists plan, develop, and implement
information systems.
Management Challenges

The challenge of managing ethically and

effectively.
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 16

What IS a system?
A group of interrelated or interacting elements
forming a unified whole, OR
A group of interrelated components working
together toward a common goal by accepting
inputs and producing outputs in an organized
transformation process (dynamic system).
Three basic interacting components:
 Input

 Processing (transformation process)

 Output
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 17

Add Feedback and Control Loops..

And the system, now called a cybernetic
system, that becomes even more useful for.
Self-monitoring

Self-regulating
Example: Thermostat controlled heat system that
automatically monitor & regulate room temperature.

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 18

Example of Business Information System

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Other System Characteristics

A system exists and functions in an
environment containing other systems.
Subsystem – a component of a larger system.

Systems that share the same environment may

be connected to one another through a shared
boundary, or interface.
Open versus closed system.

Adaptive system

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 20

Components of an INFORMATION System

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Components of an Information System (Continued)

People Resources
End Users

IS Specialists

Hardware Resources

Computer systems

Peripherals

Software Resources

System software

Application software

Procedures
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 22

Components of an Information System (Continued)

DataResources
Data versus Information

Network Resources

Communication media

Network support

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 23

IS Activities

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Data Versus Information

Monthly Sales Report

for West Region

Sales Rep: Charles Mann

Emp No. 79154
Item Qty Sold Price
TM Shoes 1200 $100

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 25

Attributes of Information Quality

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Logical Data Elements

Name
Field

Payroll
Record

Payroll
File

Personnel
Database

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 27

Information Products
Focus is on the end-user.
They are the result of IS activities…

Input

Processing

Output

Storage

Control

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 28

Transform data resources into information products

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 29

Example of Information system resources

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 30

Section II

Foundation Concepts: Business Applications,

Development, and Management

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 31

Major Roles of IS

Support
Competitive
Advantage

Support
Business
Decision Making

Support of
Business Processes and Operations

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 32

Major Roles of IS (continued)

Support Business Processes

Support Decision Making

Support Competitive Advantage

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 33

The Present and the Future

E-Business

The use of Internet technologies to

internetwork and empower…
Business processes

Electronic commerce, and

Enterprise communication & collaboration

Within a company & with its customers,

suppliers, & other business
stakeholders(Stockholder-investment, own).
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 34

IS in the E-Business Enterprise

Every business competes globally (whether
they realize it or not)
IS supports business operations through the
use of:
Intranets

Extranets

Internet

Other information technologies

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 35

IS in the E-Business Enterprise (continued)

Enterprise Collaboration Systems

Support communication, coordination, &
collaboration.
Virtual teams

Electronic Commerce

Buying & selling, and marketing & servicing

of products, services, & information.

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 36

Trends in Information Systems

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Types of Information Systems (classified

as operation or management)
Operations Support Systems
Transaction processing systems

Batch – transaction data accumulate over

time, processed periodically.
Real-time – data processed immediately
after a transaction occurs. (Point of Sale)
Process Control Systems – monitor &
control physical processes.
 Enterprise Collaboration Systems (Office automation
system) email or video conferencing
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 38

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Types of Information Systems (continued)

Management Support Systems

Management Information Systems (MIS) –
pre-specified reports & displays to support
decision-making. Sales managers may use network
computers and web browsers to instantaneous display sales result by
intranet. salesman daily sales report.
 Decision Support Systems – provide interactive ad hoc
support. Production manager to see what product is too
manufacture according to requirements.
 Executive Information Systems – critical
information tailored to the information needs of
executives. Touch text
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Types of other Information Systems (continued)

Other Classifications
Expert systems – expert advice, credit application advisor

Knowledge management systems – support

the creation, organization, & dissemination
of business knowledge- sales proposal strategy and
customer problems solution.
Functional business systems – support the
basic business functions- accounting, finance
 Strategic information systems – strategic advantage- online
stock trading, shipment, e-commerce
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 41

Operations and management classification

of IS

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 42

Challenges for business managers to

manage IS

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 43

Developing IS Solutions to Business Challenges

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 44

Ethical Challenges
Just because we can, should we?
Where do we draw the line between customer
privacy and collecting business information?
Do we owe it to society to use this technology
wisely and responsibly? Why? Isn’t our job
to make a profit?

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 45

In Summary, the IS Function…

Is a major functional area of business.
Is an important contributor to operational
efficiency, employee productivity and morale,
and customer service & satisfaction.
Is a major source of information and support
for decision making.
Provides a strategic advantage in developing
competitive products & services.

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 46

Discussion Questions
How can information technology support a
company’s business processes and decision
making, and give it a competitive advantage?
How does the use of the Internet, intranets,
and extranets by an e-business enterprise
support their e-commerce activities?
Why do big companies still fail in their use of
information technology? What should they be
doing differently?
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 47

Discussion Questions (continued)

How can a manager demonstrate that he or

she is a responsible end user of information
systems?
What are some of the toughest management
challenges in developing IT solutions to solve
business problems and meet new e-business
opportunities?
Why are there so many conceptual
classifications of information systems? Why
are they typically integrated in information
systems found in the real world?
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 48

Discussion Questions (continued)

In what major ways have the roles of

information systems applications in business
expanded during the last 40 years? What is
one major change you think will happen in the
next 10 years?
Can the business use of Internet technologies
help a company gain a competitive advantage?

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 49

Real World Case 1 – BellSouth Corporation

We understand that ROI is a key component

of business decision-making.
We also understand the importance of
choosing projects that help us achieve business
goals.
How is BellSouth Corporation measuring ROI
for technology projects?

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 50

BellSouth (continued)

How well is IT supporting the business goals of

BellSouth?
How has IT improved efficiency and
effectiveness of BellSouth’s business
processes?
How has IT helped BellSouth improve
managerial decision-making?
How has IT helped BellSouth improve
workgroup collaboration?
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 51

BellSouth (continued)

What resources were used?

What activities were performed?

What information products were produced?

Explain BellSouth’s “technology transfer

roadmap.”
What is it?

What function does it serve?

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 52

BellSouth (continued)

Is BellSouth’s technology transfer map a good

way to determine IT investment priorities?
Why or why not?
What are the strengths of this approach?

What are the possible drawbacks to this

approach?

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 53

BellSouth (continued)

What else might BellSouth do to guarantee the

strategic business value of potential IT
investment projects?

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 54

Real World Case 2 – Royal Caribbean International

What problems did Tom Murphy encounter?

Why did the IT group at Royal Caribbean

have such poor performance and business
status in the company?

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 55

Royal Caribbean (continued)

What did Murphy do to resolve the IT

problems?

What do you see as the top three factors in

Murphy’s turnaround of the IT function?

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 56

Royal Caribbean (continued)

What does Murphy see as the foundation for

change in a diverse workgroup?

What are Murphy’s four keys to managing a

diverse workforce?

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 57

Real World Case 3 – Clariant International

How has the focus of business managers

toward IT projects changed according to this
case?

What factors drove that change in focus?

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 58

Clariant (continued)

How does the change in focus impact the near-

term future of IT?

What types of challenges did Clariant

encounter?

How did they resolve those challenges?

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 59

Clariant (continued)

Are Web-enabling business processes a cost

effective strategy? Always?

What role did management play in Clariant’s

IT success?

Had management not been involved, would

you have expected the same level of success?
Why or why not?
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 60

Real World Case 4 – Hershey Foods Corp.

How could Hershey have avoided the failure of

its first implementation of their major new IT
system?

Did timing contribute to the problem?

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Hershey Foods (continued)

Do you see the failure of the first

implementation to be a software issue or a
project management issue? Why?

Why did Hershey’s major upgrade of that

system succeed?

Was it a matter of learning from past

mistakes?
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 62

Hershey Foods (continued)

What did Hershey do differently with the

upgrade?

Why do failures in major business/IT projects

continue to occur to large companies with so
much IT expertise and financial resources?

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 63

Hershey Foods (continued)

What business pressures contribute to those

failures?
Internal

External

How might end-user involvement have helped

with the implementation process?

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 64

Real World Case 5 – WH Smith PLC

Why did WH Smith need a new retail

management system?

What were their goals?

How does the system work?

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 65

WH Smith (continued)

How well does WH Smith’s new CRM system

support its business goals?

How has the staff been included in the

process?

Do you believe that including the staff is

important? Why?

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 66

WH Smith (continued)

In what other ways could IT help WH Smith

support its retail managers, marketers, and
customers?

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