Chapter

1
Foundations of
Information Systems in Business

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
 Competitive Advantage

• “Developing products, services, processes,

or capabilities that give a company a
superior business position relative to its
competitors and other competitive forces.”
Glossary, p. 637

• Attributed to a firm that is … “leading an

industry in some identifiable way, such as
sales, revenues or new products.” Ch. 2, p. 53
• “…when a firm sustains profits that exceed
the average for an industry …”
Ch. 2, p. 53

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Trends in Information Systems

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 What is E-Business?

• An online exchange of value

– Conducting business on the Internet
• Using Internet technologies to empower…
– Business processes
– Electronic commerce
– Collaboration within a company
– Collaboration with customers, suppliers, and
other business stakeholders

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How E-Business is Being Used

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 E-Business Use

• Reengineering
– Internal business processes
• Enterprise collaboration systems
– Support teams and work groups
• Electronic commerce
– Buying, selling, marketing, and servicing of
products and services over networks

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Types of Information Systems

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 Information systems combine:

• Operations Support Systems (Figure 1.7)

– Transaction Processing systems
– Process Control Systems
– Enterprise Collaboration Systems
• Management Support Systems (Figure 1.9)
– Management Information Systems
– Decision Support Systems
– Executive Information Systems
• Other Systems (Figure 1.11)
– Expert Systems
– Knowledge Management Systems
– Strategic Information Systems
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 Two Ways to Process Transactions

• Transaction Processing (batch)

– Accumulate transactions over time
– Process periodically
– Example: a bank receives checks during the day
and processes in a batch at night
• Online Processing (real-time)
– Process transactions immediately
– Example: a bank processes an ATM withdrawal
immediately

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 Types of Management Support Systems

• Management Information Systems (MIS)

– Reports and displays
– Example: daily sales analysis reports
• Decision Support Systems (DSS)
– Interactive and ad hoc support
– Example: a what-if analysis to determine
where to spend advertising dollars
• Executive Information Systems (EIS)
– Critical information for executives and
managers
– Example: easy access to actions of
competitors
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 Other Information Systems
• Expert Systems
– Example: credit application advisor
• Knowledge Management Systems
– Support creation, organization, and dissemination
of business knowledge Example: intranet access
to best business practices
• Strategic Information Systems
– Help get a strategic advantage over customer
– Examples: shipment tracking, e-commerce Web
systems
• Functional Business Systems
– Focus on operational and managerial applications
Examples: accounting, finance, or marketing
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IT Challenges and Opportunities

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 Responsibility and Accountability

• IT plays an integral role in every facet of a

business
• Failure is often pinned on IT
• Cultivate a culture that embraces change
• Break projects into pieces
• Set realistic expectations
• There will always be problems
– “That’s life in IT”

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Developing IS Solutions

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 Challenges and Ethics of IT

• What are the ethical responsibilities?

• What are the risks?
• How can you protect yourself and your
company from computer crime?

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 IT Careers

• IT employment opportunities are strong

• Shortages of IT personnel are frequent
• Long-term job outlook is positive and
exciting
• Starting salaries are high

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 IT Careers

• Job increases will be driven by…

– Rapid growth
– Backfilling positions
– Information sharing environments
– Need for problem-solving skills
– Falling hardware and software prices

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IT Careers

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 Business Analysts serve critical role

• CIO – broker between management and IT

• Business Analyst
– In the trenches
– Analyzes business need and creates solution
– Communicates solution to technicians
– Balances IT resources with business needs
• Business Analyst credentials
– 5-10 years experience
– Technical undergraduate degree and MBA
– Process driven through changes to finish
– $45,000 to $100,000

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 The IS Function

• Major functional area of business

• Important contributor to
– Efficiency, productivity, morale, customer service
and satisfaction
• Major source of information for decisions
• Vital ingredient in developing competitive
products and services
• Dynamic and challenging career opportunity
• Key component of networked business

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 System Concepts help us understand…

• Technology
– Hardware, software, data management,
telecommunications networks
• Applications
– Programs to support inter-connected systems
• Development
– Developing ways to use information technology
• Management
– Emphasizes the quality, strategic business
value, and security of an organization’s
information systems

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 What is a System?

• Interrelated components
• Defined boundary
• Working together
• Common objectives
• Accepting inputs and producing outputs
• Organized transformation process

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 Basic Functions of a System

• Basic Functions
– Input
– Processing
– Output
• Cybernetic System
– Feedback
– Control

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 A Cybernetic System

What are the components for feedback and control?

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A Business as a System

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 Information System Resources

• People Resources
– Specialists
– End users
• Hardware Resources
– Machines
– Media
• Software Resources
– Programs
– Procedures

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 Information System Resources

• Data Resources
– Product descriptions, customer records,
employee files, inventory databases
• Network Resources
– Communications media, communications
processors, network access and control
software
• Information Products
– Management reports and business documents
using text and graphics displays, audio
responses, and paper forms

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 IS Activities

• Input of data resources

• Processing of data into information
• Output of information products
• Storage of data resources
• Control of system performance

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