Foundations of Information Systems in Business Chapter 1 Foundations of Information Systems in Business

Learning Objectives Understand the concept of a system and how it relates to information systems Explain why knowledge of information systems is important for business professionals Identify five areas of information systems knowledge they need

Learning Objectives Give examples to illustrate how information systems can support a firm’s Business processes Managerial decision making Strategies for competitive advantage Provide examples of information systems from your experiences with business organizations in the real world

Learning Objectives Identify challenges that managers might face in managing successful, ethical development and use of information technology Provide examples of the components of real world information systems Become familiar with the myriad of career opportunities in information systems

Foundation Concepts Vital component of successful businesses Improves efficiency and effectiveness of business processes Why study information systems and information technology? Strengthens competitive position in rapidly changing marketplaces Facilitates managerial decision making & workgroup collaboration

Case 1: Value Through Business Intelligence eCourier Tracks customer satisfaction in real time Immediate attention to complaints, problems Allows GPS tracking of couriers and orders Books 95% of deliveries online Uses SeeWhy software to spot trends and anomalies Optimizes system on an ongoing basis

Case 1: Value Through Business Intelligence Cablecom Uses online surveys to retain customers Responds to complaints and problems within 24 hours Bryan Cave Optimizes resources while delivering highest customer value Allows lawyers to track budgets in real time Provides diversity dashboard Enables firm to monitor client needs Allows quick response to demands

Case Study Questions How do information technologies contribute to the business success of the companies depicted in the case? Provide an example from each company, explaining how the technology implemented led to improved performance

Case Study Questions The Bryan Cave law firm used BI technology to improve the availability, access, and presentation of existing information; this allowed them to provide tailored, innovative services to customers What other professions could benefit from a similar use of these technologies, and how?

Case Study Questions Cablecom developed a prediction model to better identify customers at risk of switching to another company In addition to those noted in the case, what other actions could be taken if that information were available? Would you consider letting some customers leave anyway?

What is an Information System? Communication networks Policies and procedures People Any organized combination of… Data resources Hardware and software Stores, retrieves, transforms, and disseminates information in an organization

Early Information Systems They weren’t computerized Smoke signals Library card catalogs Book bag, day planner, and notebooks Cash registers Accounting ledger

What Should Business Professionals Know?

Fundamental Roles of IS in Business

Trends in Information Systems

What is E-Business? Using Internet technologies to empower… Business processes Electronic commerce Collaboration within a company Collaboration with customers, suppliers, other business stakeholders In essence, an online exchange of value

How E-Business is Being Used

E-Business Use Internal business processes Reengineering Support communication, coordination, coordination among teams and work groups Enterprise collaboration Buying, selling, marketing, and servicing of products and services over networks Electronic commerce

Types of Information Systems Operations Transaction processing Process control Enterprise collaboration Updating of corporate databases Management Decision support systems Executive information systems

Purposes of Information Systems

Types of Operations Support Systems Transaction Processing Systems Record and process business transactions Sales, inventory, and accounting Process Control Systems Monitor and control physical processes Using sensors to monitor refinery processes Enterprise Collaboration Systems Enhance team/workgroup communication Email, video conferencing

Two Ways to Process Transactions Batch Processing Online Processing Accumulate transactions over time and then process periodically Ex: Banks process all checks in a batch at night Process all transactions immediately Ex: A bank processes ATM withdrawals immediately

Management Support Systems What do they do? Provide information and support for effective decision making by managers Management information systems Decision support systems Executive information systems

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

Other Information Systems Expert Systems Provides expert advice Credit application advisor Knowledge Management Systems Creation, organization, dissemination of knowledge throughout company Intranet access to best business practices

Other Information Systems Strategic Information Systems Helps get strategic advantage Shipment tracking, e-commerce Functional Business Systems Focus on operational and managerial application of basic business functions Accounting, finance, marketing

IT Challenges and Opportunities

Measuring IT Success Efficiency Effectiveness Minimizes cost, time, use of information resources Effectiveness Supports business strategies Enables business processes Enhances organizational structure and culture Increases customer and business value

Developing IS Solutions

Challenges and Ethics of IT Application of IT Customer relationship management Human resource management Business intelligence systems Potential Harm Privacy infringement Inaccurate information Collusion

Challenges and Ethics of IT Potential Risks Consumer boycotts Work stoppages Government intervention Possible Responses Codes of ethics Incentives Certification

Ethical Responsibilities What uses of IT might be considered improper or harmful to other individuals or society? What is the proper business use of the Internet or a company’s IT resources? How can you protect yourself from computer crime?

IT Careers Economic downturns affecting all job sectors, including IT Negative Rising labor costs are pushing jobs to India, the Middle East, Asia-Pacific IT employment opportunities strong, with new jobs emerging daily Positive Frequent shortages of IT personnel Long-term job outlook is positive and exciting

IT Careers

Job increases will be driven by… IT Careers Job increases will be driven by… Rapid growth in computer system design and related services The need to backfill positions Information sharing and client/server environments Need for those with problem-solving skills Falling hardware and software prices, which fuel expanded computerization of operations

The IS Function Major functional area of business Dynamic and challenging career opportunity Important contributor to operational efficiency, employee productivity, morale, customer service/satisfaction Vital ingredient in developing competitive products and services in global marketplace Major source of information and support for decision making Key component of today’s networked business

System Concepts: A Foundation Technology Hardware, software, data management, telecommunications networks Applications To support inter-connected information systems Development Finding ways to use information technology; includes designing basic information system components Management Emphasizes the quality, strategic business value, and security of an organization’s information systems

Case 2: JetBlue & the VA Good IT processes are as important as hardware and software when it comes to creating business value Even smaller, less-critical processes can have ramifications of a large magnitude in the interconnected world in which we live The IS developed by JetBlue in 24 hours, implemented during a crisis in 2007, is now a full-time system An unscheduled system failure took down key applications in 17 VA medical facilities for a day

Case Study Questions Eric Brinker of JetBlue noted that the database developed during the crisis had not been needed before; the company had never experienced a meltdown What are the risks and benefits associated with this approach to IT planning?

Case Study Questions With hindsight, we know that the decision made by Eric Raffin of the VA to not fail over to the Denver site was the correct one. But, it involved ignoring established backup procedures With the information he had at the time, what other alternatives could he have considered?

Case Study Questions A small, undocumented change resulted in the collapse of the VA system, largely due to the high interrelationship between its applications What is the positive side of this high degree of interconnection, and how does this benefit patients?

What is a System? A system is… A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives By accepting inputs and producing outputs In an organized transformation process

Basic Functions of a System Input Capturing and assembling elements that enter the system to be processed Processing Transforma-tion process converts input into output Output Transferring transformed elements to their ultimate destination

Cybernetic System All systems have input, processing, output A cybernetic system, a self-monitoring, self-regulating system, adds … Feedback… system performance data Control… monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal

A Cybernetic System

A Business as a System

Other System Characteristics A system that is a component of a larger system is a subsystem The larger system is an environment Several systems may share one environment Connected via a shared boundary (interface) Types of systems… Open and Adaptive

Components of an IS

Information System Resources People Information Hardware Networks Software Data

Data Versus Information Data are raw facts, typically about physical phenomena or business transactions Specifically, objective measurements of the attributes of entities Information is data that was converted into meaningful and useful context for end users Aggregated, manipulated, and organized Analyzed and evaluated Placed in proper context for a human user

Basic IS Activities Input Processing Output Storage Control

Recognizing Information Systems Business professionals should be able to look at an information system and identify… The people, hardware, software, data, and network resources they use The type of information products they produce The way they perform input, processing, output, storage, and control activities

Case 3: Sew What? Inc. Provides custom theatrical draperies and fabrics for stages, concerts, fashion shows, and special events worldwide Launched web site and acquired clients from all over the world; revenue grew more than 45% per year Runs its business with Intuit’s Quick-Books Enterprise Solutions & Dell PowerEdge servers Awarded “Small Business Excellence Award” for its innovative use of technology to improve customers’ experience

Case Study Questions How do information technologies contribute to the business success of Sew What? Inc.? Give examples from the case regarding the business value of information technology that demonstrate this conclusion

Case Study Questions If you were a management consultant to Sew What? Inc., what would you advise Megan Duckett to do at this point to be even more successful in her business? What role would information technology play in your proposals? Provide specific recommendations

Case Study Questions How could the use of information technology help a small business you know be more successful? Provide examples to support your answer