An Overview of

Information Systems

CHAPTER 1
Computers & Information
Systems in daily life
▪ Why do companies use computers and information systems?
▫ Reduce cost
▫ Competitive advantage in the marketplace
▪ How does a computer and information system help
organisations?
▫ Assist employees to complete tasks more efficiently
▫ Increases the productivity of employees

COMPUTERS AND INFORMATION SYSTEMS ARE ALL AROUND US

IN OUR DAILY LIVES
Computer ▪ Computer literacy
Literacy ▫ Using computers to increase
productivity
vs
▪ Information literacy
Information ▫ Understanding information to
Literacy generate business intelligence
Transaction ▪ Definition
Processing ▫ Focus on data collection and
Systems processing that data

▪ Applied to structured tasks

▫ Record keeping
▫ Simple clerical operations
▫ Inventory control
Transaction ▪ When is it used:
Processing ▫ When operations are repetitive
Systems ▫ Minimal human involvement
▫ Automated systems are in place

▪ Benefits:
▫ Reduces costs
Management ▪ Definition
Information ▫ MIS is an organized integration of items to
System produce timely + integrated + relevant +
accurate and useful information for decision
making

▪ Elements of MIS:
▫ Hardware Input + Output + Memory devices
▫ Software In-house development or purchase
▫ Data
▫ Processes Methods used to execute a task
▫ Human intervention
Users + programmers + system analysts
4 Major Components of
Information Systems

Data Database Processing Information

 ▪ Definition:
▫ Considered the input to the system.
Data ▫ Consists of raw facts

▪ 2 Sources of data
▫ Internal data => information obtained from WITHIN
the organisation
▸ sales records + personnel records

▫ External data => information obtained from

OUTSIDE the organisation
▸ Customers + suppliers + government + economic
conditions

▪ The information which users need impacts the type of

data which is collected and used
 ▪ Definition:
Database ▫ Collection of all relevant data organised in a
series of files.

▪ What is a database management system used

for?
▫ Create + organise + management of a database
 User looks for
information on DBMS searches
the computer database

Database
User Management Database
System

DBMS gives DBMS finds

information to information
the user
 ▪ Definition:
Processing ▫ Process generates the most useful type of
information for making decisions from the data

▪ Information which can be generated

▫ Transaction processing reports
▫ Models for decision analysis

▪ A good information system has models which support

all levels of decision-making

▪ An information system should be able to grow with

the business
 ▪ Definition
Information ▫ Output of an information system
▫ Consists of facts that have been
processed/analysed and are useful to the MIS
user.

▪ Quality + usefulness of information

▫ Quality is determined by the usefulness of the
information
▫ Usefulness determines the success of the
information system
▫ Information is useful if it helps users to make
correct decisions in a timely manner
 ▪ Useful information is:
Information ▫ Timely
▫ Integrated with other data and information
▫ Consistent and accurate
▫ Relevant

▪ Information which does not comply with

quality standards leads to:
▫ Wrong decisions
▫ Misallocation of resources
▫ Missed opportunities
 Examples of components of Information
Systems…

Data Database Processing Information

Name All data Perform analysis on Provides output of the

collected from the data processed questions
Surname students is
How many students in 700 student in Bacc
Student nr. stored in the
the course? 1000 students in
database
Age BComm
Average age of
Gender students Average age is 21

Course
Data vs
Information Data Information
Input to the system Output of the system

Consist of raw facts Consist of Analysed facts

Unprocessed Processed

Difficult to use for Assist with decision

decision making making
Why is an ▪ Timely, relevant and accurate information is a critical
information tool to improve a company's competitive position in
the marketplace.
system
important? ▪ Information system manages 4 Ms of resources
▫ Manpower
▫ Machinery
▫ Materials
▫ Money

▪ Various types of information systems are being

developed to manage these resources
Types of ▪ Human resources information system
Information ▫ Provides information to decision makers
Systems which helps employees to perform their
tasks more effectively

▪ Logistics information system

▫ Reduces the cost of transporting materials,
while safe and reliable delivery is achieved.
Types of ▪ Manufacturing information system
Information ▫ Manage manufacturing resources so that
Systems companies can reduce the cost of
manufacturing, increase product quality
and make better decisions regarding
inventory

▪ Financial information system

▫ Provides timely information to executive
financial managers

▪ Marketing information system

▫ Improves marketing decisions
Strategies ▪ Differentiation strategy
for gaining a ▫ Differentiate the product in some way
▫ Successful if target market is not price sensitive
competitive ▫ E.g. Apple computer
advantage ▪ Overall cost leadership strategy
▫ Winning market share by appealing to cost-
sensitive buyers
▫ E.g. Clicks club cards, PnP smart shopper cards

▪ Focus strategy
▫ Focus on a specific market share
▫ E.g. Mercedes Benz focuses on luxury vehicles
Porter’s Five Forces
Model
Potential
entrants

Existing
Suppliers Buyers
competitors

Substitutes
Porter’s Five ▪ 5 forces model analyzes an organization, its
Forces position in the marketplace and how
Model information systems can be used to make an
organization more competitive.

▪ The five forces are:

▫ Buyer power
▫ Supplier power
▫ Threat of substitute products or services
▫ Threat of new entrants
▫ Rivalry among existing competitors
Porter’s Five What is the 5 forces model used for?
Forces ▪ Organisation analysis
Model ▪ Determines the organisation position in the
market
▪ Establishes how information can be used to give
the organisation more of a competitive
advantage
Porter’s Five Buyer Power
Forces ▪ Types of buying power
▫ High when customers (the buyer) have
Model many choices
▫ Low when customers (the buyer) have few
choices

▪ Limitation of buyers options

▫ Loyalty points
▫ Discount
▫ Adjustments
Existing
Buyers
competitors
Porter’s Five Supplier power
Forces ▪ Types of supplier power:
Model ▫ High when customers have few options
▫ Low when customers have many options

Existing
Suppliers
competitors
Porter’s Five Buyer power and supplier power are linked to
Forces each other
Model When the clients have more options
▫ When buyer power is high
▫ Supplier power is low.

When the clients have fewer options

▫ When buyer power is low
▫ Supplier power is high.

Existing
Suppliers Buyers
competitors
Porter’s Five Threat of substitute goods + services
Forces ▪ Types of threats:
Model ▫ High when customers (the buyer) have
many substitute products
▫ Low when customers (the buyer) have few
substitute products

Existing ▪ Avoid client substitution

competitors ▫ Client pays a fee when moving to an
alternative product
▫ Unique qualities to your product
▸ Apple & Nespresso
Substitutes
Porter’s Five Threat of new entrants
Forces ▪ Types of threats:
Model ▫ The easier it is to duplicate a service or
Potential product, the bigger this threat.
entrants
▫ Therefore the threat is high if the service +
product can easily be duplicated
Existing
competitors ▫ Therefore threat is low if the service or
product is not easy to duplicate
Porter’s Five Rivalry amongst existing competitors
Forces ▪ Types of rivalry
Model ▫ The more the competitors in a specific
market, the bigger the rivalry amongst
businesses
▫ Rivalry is low if there are few competitors
in the same market
Existing
competitors
Are threats and
substitute products
good for…
▫ The business?
▫ The consumer?

29
Porter’s Five Forces
Model
Potential
entrants

Existing
Suppliers Buyers
competitors

Substitutes