BUSINESS INFORMATION

SYSTEMS
Introduction to Information
Systems

MS.N.Jasintha
Dept of HRM
FMSC
Learning Outcomes

 Describe how information systems transform business, and why

are they so essential for running and managing a business today.
 Explain what is an information system, how does it work? what
are its management, organization, and technology components?
 Describe the role of complementary assets.
What Happens in an Internet Minute?
The Role of Information Systems in Business Today

 How information systems are transforming business

 Emerging mobile digital platform
 Growing business use of “big data”
 extremely large data sets that may be analysed computationally to
reveal patterns, trends, and associations, especially relating to
human behaviour and interactions.
 Growth in cloud computing
 Globalization opportunities
 Internet has drastically reduced costs of operating on global scale
 Increases in foreign trade, outsourcing
 Presents both challenges and opportunities
 Information Technology Capital Investment

Information technology capital investment, defined as hardware, software,

and communications equipment, grew from 14 percent to 33 percent of all
invested capital between 1999 and 2013.
The Role of Information Systems in Business Today
 In the emerging, fully digital firm:
 Significant business relationships are digitally enabled and mediated.
 Core business processes are accomplished through digital networks.
 Key corporate assets are managed digitally.
 Digital firms offer greater flexibility in organization and
management.
 Time shifting, space shifting
 Space shifting also known as place shifting (or allows media, such
as music or films, which is stored on one device, to be accessed
from another place through another device
 Growing interdependence between:
 Ability to use information technology and
 Ability to implement corporate strategies and achieve
corporate goals
What Is an Information System?

 Information system:
 Set of interrelated components
 Collect, process, store, and distribute information
 Support decision making, coordination, and control
 Information vs. data
 Data are streams of raw facts.
 Information is data shaped into meaningful form.
What Is an Information System?

 Three activities of information systems produce information

organizations need
 Input: Captures raw data from organization or external
environment
 Processing: Converts raw data into meaningful form
 Output: Transfers processed information to people or activities that
use it
What Is an Information System?

 Feedback:
 Output is returned to appropriate members of organization to help
evaluate or correct input stage.
 Computer/computer program vs. information system
 Computers and software are technical foundation and tools, similar to the
material and tools used to build a house.
Functions of an Information System

An information system contains information about an organization and its

surrounding environment. Three basic activities—input, processing, and output—
produce the information organizations need. Feedback is output returned to
appropriate people or activities in the organization to evaluate and refine the input.
Environmental actors, such as customers, suppliers, competitors, stockholders, and
regulatory agencies, interact with the organization and its information systems.
The Role of Information Systems in Business Today

 Firms invest heavily in information systems to achieve six

strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
The Role of Information Systems in Business Today

 Operational excellence:
 Improvement of efficiency to attain higher profitability
 Information systems, technology an important tool in achieving greater
efficiency and productivity
 Walmart’s Retail Link system links suppliers to stores for
superior replenishment system
 New products, services, and business models:
 Business model: describes how company produces, delivers, and
sells product or service to create wealth
 Information systems and technology a major enabling tool for new
products, services, business models
 Examples: Apple’s iPad, Google’s Android OS, and Netflix
The Role of Information Systems in Business Today

 Customer and supplier intimacy:

 Serving customers well leads to customers returning, which raises
revenues and profits.
 Example: High-end hotels that use computers to track customer preferences
and used to monitor and customize environment
 Intimacy with suppliers allows them to provide vital inputs, which
lowers costs.
 Example: Dell
The Role of Information Systems in Business Today

 Improved decision making

 Without accurate information:
 Managers must use forecasts, best guesses, luck
 Results in:
 Overproduction, underproduction
 Misallocation of resources
 Poor response times
 Poor outcomes raise costs, lose customers
The Role of Information Systems in Business Today

 Competitive advantage
 Delivering better performance
 Charging less for superior products
 Responding to customers and suppliers in real time
 Examples: Apple, Walmart, UPS
 Survival
 Information technologies as necessity of business
 Industry-level changes
 Example: Bank’s introduction of ATMs, deposit machines
 Governmental regulations requiring record-keeping
 Examples: Toxic Substances Control Act
 The top five benefits of a fully integrated
Information System

•Real Time Data

•Better Communication

•Reduced Risk of Errors

•Greater Productivity

•One Secure Location

 Reason for the Failure of IS

Lack of management involvement with the design of IS

Narrow or inappropriate emphasis of the computer system

Undue concentration on lower level data processing applications

Lack of management knowledge in computers

Poor appreciation by information specialist of management's true

information requirement and of organizational problems

Lack of top management support

 Growing interdependence between the organization
and its information systems
Organization’s present and future accomplishments depend in many
aspects on what its systems will permit it to do now and later.

Change in the business's strategy, rules, or procedures requires changes in

the information systems software, hardware, databases, and
telecommunications.
An information system provides procedures to record make available
information, concerning part of the organization, to assist organization
related activities.

Information system is divided into operational, knowledge, management

and strategic level and into five major functional areas; production and
manufacturing, Finance, Accounting, sales & marketing and Human
resources.

Managers and the Organization cannot ignore information system due to

its critical nature. The influence and the importance of information system
are evident in decision making, planning, and management of its
employee and in management of the products.

One of the most important roles of a manager is to make effective

decisions which is very challenging job of the manager
Types of Information System
Transaction processing systems (TPS) are the basic business
systems that serve the operational level of the organization.

A transaction processing system is a computerized system that

performs and records the daily routine transactions necessary to
conduct business.

Examples are sales order entry, hotel reservation systems, payroll,

employee record keeping, and shipping.
MIS also designates a specific category of information systems serving
management-level functions.

It serves the management level of the organization, providing managers

with reports and often online access to the organization’s current
performance and historical records.

MIS are oriented almost exclusively to internal, not environmental or

external, events.

MIS primarily serve the functions of planning, controlling, and decision

making at the management level.

Generally, they depend on underlying transaction processing systems for

their data.
Decision-support systems (DSS) also serve the management level of the
organization.

DSS help managers make decisions that are unique, rapidly changing, and
not easily specified in advance.

They address problems where the procedure for arriving at a solution

may not be fully predefined in advance.

Although DSS use internal information from TPS and MIS, they often
bring in information from external sources, such as current stock prices or
product prices of competitors
Senior managers use executive support systems (ESS) to help them make
decisions. ESS serve the strategic level of the organization.

They address non routine decisions requiring judgment, evaluation, and

insight because there is no agreed-on procedure for arriving at a solution.
Measuring Success of IT

 Efficiency
 Minimize cost, time, and use of information resources

 Effectiveness
 Support business strategies
 Enable business processes
 Enhance organizational structure and culture
 Increase customer and business value
Business information value chain

 Raw data acquired and transformed through stages that add value to that
information
 Value of information system determined in part by extent to which it
leads to better decisions, greater efficiency, and higher profits
The Business Information Value Chain

From a business perspective, information systems are part of a series of value-

adding activities for acquiring, transforming, and distributing information that
managers can use to improve decision making, enhance organizational
performance, and, ultimately, increase firm profitability.
 Investing in information technology does not guarantee good
returns.
 There is considerable variation in the returns firms receive from
systems investments.
 Factors:
 Adopting the right business model
 Investing in complementary assets (organizational and management
capital)
Measuring Success of IT

 Efficiency
 Minimize cost, time, and use of information resources

 Effectiveness
 Support business strategies
 Enable business processes
 Enhance organizational structure and culture
 Increase customer and business value
 Information Systems are More Than Computers

Using information systems effectively requires an understanding of the organization,

management, and information technology shaping the systems.
An information system creates value for the firm as an organizational and management
solution to challenges.
 Dimension of information Systems

Organizational Dimension of IS

In reality today information systems affect a much larger part of the

organization itself, such as organizational products, objectives, and
structure.

Involves the organization’s hierarchy, functional specialties, business

processes, Unique business culture , and political interest groups.

Powerful computers, software, and networks, including the Internet, have

helped organizations become more flexible
 Management Dimension of IS
Managers set the organizational strategy for responding and allocate the
human and financial resources to achieve the strategy and coordinate the
work.

It involves leadership, strategy, and management behaviour.

Information systems supply tools and information needed by managers to

allocate, coordinate and monitor their work, make decisions, create new
products, and services and make long-range strategic decisions. It helps to
make teamwork and collaborative work environments . Information
systems help to drive both daily operations and managerial strategies.

The systems assist managers in making decision making and also help to
tackle and address strategic issues and long-term trends both in the firm
and in the external environment.
 Technology Dimensions of IS
It consists of computer hardware, software, data management
technology, and networking/telecommunications technology (including
the Internet).

Computers and communications equipment can be connected in

networks for sharing voice, data, images, sound, or even video

All of these technologies represent resources that can be shared

throughout the organization and constitute the firm's information
technology (IT) infrastructure.

The IT infrastructure provides the foundation or platform on which the

firm can build its specific information systems.

Each organization must carefully design and manage its information

technology infrastructure so that it has the set of technology services it
needs for the work it wants to accomplish with information systems.
Contemporary Approaches to Information Systems

Approaches

Technical Behavioural

Computer Management Operations

Sociology Psychology Economics
Science Science Research
 Technical Approach

The technical approach to information systems emphasizes

mathematically based models to study information systems, as well as the
physical technology and formal capabilities of these systems.

Computer science is concerned with establishing theories of

computability, methods of computation, and methods of efficient data
storage and access.

Management science emphasizes the development of models for

decision-making and management practices.

Operations research focuses on mathematical techniques for optimizing

selected parameters of organizations, such as transportation, inventory
control, and transaction costs.
 Behavioural Approach
An important part of the information systems field is concerned with
behavioural issues that arise in the development and long-term
maintenance of information systems.

Issues such as strategic business integration, design, implementation,

utilization, and management cannot be explored usefully with the models
used in the technical approach.

sociologists study information systems with an eye toward how groups

and organizations shape the development of systems and also how
systems affect individuals, groups, and organizations.

Psychologists study information systems with an interest in how human

decision makers perceive and use formal information.

Economists study information systems with an interest in what impact

systems have on control and cost structures within the firm and within
Q&A