Information Systems in Organizations EAK 362/2 MIS Lecture 3 Information Systems in Organizations

Defining some terms An information system collects, maintains, and provides information to people. An organization is a group of people working together to accomplish a goal. Many organizations use computers to operate more effectively, gather information, and accomplish tasks. 4/16/2019

ORGANIZATIONS PEOPLE: Managers, knowledge workers, data workers, production or service workers STRUCTURE: Organization chart, groups of specialists, products, geography OPERATING PROCEDURES: Standard Operating Procedures (SOP), rules for action POLITICS: Power to persuade, get things done CULTURE: Customs of behavior 4/16/2019

Is an organization the same as a business? An organization is a group of people working together toward a goal. A business is an organization that seeks profit by providing goods and services. The written expression of an organization’s mission is called a mission statement. describes goals way goals will be accomplished 4/16/2019

Most organizational activities can be classified into four functional groups as shown below. Operations Sales and Marketing Financial Management Human Resources Management 4/16/2019

Organizational functions defined The primary activities of an organization are called production or operations. Tracking the flow of money through an organization is referred to as accounting or financial management. Advertising and promoting an organization are the jobs of sales and marketing or public relations. Keeping track of employees is referred to human resources management. 4/16/2019

How necessary are computers? Computers are an important aspect of organizational activities. Organizations exist in a competitive environment where opportunities and threats abound. In response to threats, an organization can: become better at what it does change the structure of an industry create a new product or service 4/16/2019

Organizational Structures Every organization requires people. Workers are the people who carry out the organization’s mission. Managers determine organizational goals and plan what steps to take to achieve those goals. both need to make decisions 4/16/2019

Types of workers A high percentage of workers use information systems and other computer or communications technologies. Information workers - produce and manipulate information Service workers - deliver services to customers Goods workers - create and manipulate physical objects 4/16/2019

Organizational Pyramid Worker classification in the organizational pyramid 4/16/2019

Managerial Levels Executive managers - set long range goals for organization called strategic planning Middle managers - design ways to achieve plans laid out by executive managers, known as tactical planning Supervisors - deal primarily with day-to-day operations, known as operational planning 4/16/2019

Problem Solving To solve a problem, a worker must: Problems recognize the problem devise possible solutions select an action or solution Problems structured (every day, routine) semi-structured (less routine, uncertain) unstructured (require human intuition) Computer information systems help people solve structured, semi-structured, and unstructured problems. 4/16/2019

Information sources Organizations generate internal information : inventory cash flow personnel stored in an information system External information is collected from outside sources. not permanently stored in information system 4/16/2019

Information System Outputs Most information systems produce a fixed set of reports (daily cash receipts). Information analysis tools help people model problems then find a solution or decision. 4/16/2019

Decision Tool Example Criterium DecisionPlus software 4/16/2019

Criterium DecisionPlus software 4/16/2019

Information System Components An information system must have one or more of the following components: office automation system transaction processing system management information system 4/16/2019

Office Automation An office automation system “automates” or computerizes, routine office tasks. word processing software spreadsheet software scheduling software e-mail software 4/16/2019

Transaction Processing In an information system context, a transaction is an event that requires a manual or computer-based activity. A transaction processing system (TPS) keeps track of the transactions for an organization by providing a way to collect, store, display, modify, or cancel transactions. 4/16/2019

Examples of TPS Examples of transaction processing systems: point of sale system records items purchased at each cash register order-entry/invoice system provides a way to input, view, modify, and delete orders general accounting system records financial status of business e-commerce system - collects online orders and processes credit card payments 4/16/2019

How TPS data is captured Transaction processing system 4/16/2019

What happens to TPS data? Managers need sophisticated reports to help them understand and analyze data. created by a management information system Management information system can be a synonym for the term “information system” or refer to a type of information system. characterized by production of routine reports that managers use for structured and routine tasks 4/16/2019

Types of MIS System outputs One of the major goals of an MIS is to increase the efficiency of managerial activity. A managerial information system produces several types of reports. Detail report - organized list Summary report - combines or groups data Exception report - show information outside normal or acceptable ranges 4/16/2019

What is Decision Support ? A decision report system (DSS) allows users to: manipulate data directly incorporate data from external sources create data models and “what if” scenarios designed to make non-routine decisions 4/16/2019

How does Decision Support occur? A decision model is a numerical representation of a realistic situation. A decision query is a question or set of instructions describing the data that needs to be gathered to make a decision. A decision support system “supports” the decision maker but does not make the decision. 4/16/2019

Idealized Characteristics and Capabilities of a DSS Decision maker has complete control over all steps of the process. It supports, not replaces the decision maker. DSS leads to learning, which leads to new demands, and the refinement of the system. DSS should be easy to construct. 4/16/2019

Can decisions be automated? Information systems do not make decisions. The manager analyzes the data and reaches a decision. An expert system, sometimes referred to as a “knowledge-based system”, is a computer system designed to analyze data and produce a recommendation or decision. uses a set of facts or rules 4/16/2019

How do expert systems function? Knowledge base - set of facts and rules, stored in a computer file manipulated by inference engine software An expert system is not a general-purpose problem solver or decision maker. An expert system shell is a software tool that helps in developing expert system applications. contains an inference engine expert system without rules 4/16/2019

Types of expert system problem domains Expert systems are designed to deal with imprecise data or problems that have more than one solution. Using a technique called fuzzy logic, an expert system can deal with imprecise data by asking for a level of confidence. A neural network uses computer circuitry to simulate the way in which a brain might process information. 4/16/2019

Sensitivity Analysis SensitivityAnalysis - study of the impact that changes in one (or more) parts of a model have on other parts. Generally looks at what impacts changes in input variables have on output variables. Enables flexibility and adaptation to changing conditions. Applicability to different situations better understanding of the model and the problem it supports. “What-If” Analysis and Goal Seeking 4/16/2019

What-If Analysis Model maker makes predictions and assumptions regarding the input data. When a model is solved, the future depends on this data. What If the cost of carrying inventory increases 15%? What will be the market share if advertising budget increases by 5%? 4/16/2019

Goal Seeking Attempts to find the value of inputs necessary to achieve a desired output level. Represents a “backwards” solution If an initial analysis yields profits of $2 million, what sales volume is necessary for a profit of $2.2 million? 4/16/2019

THE DIGITAL FIRM ELECTRONIC COMMERCE ELECTRONIC BUSINESS ELECTRONIC MARKET: Information system links buyers & sellers to exchange information, products, services, payments 4/16/2019

ELECTRONIC COMMERCE INTERNET LINKS BUYERS, SELLERS LOWERS TRANSACTION COSTS GOODS & SERVICES ADVERTISED, BOUGHT, EXCHANGED WORLDWIDE BUSINESS-TO-BUSINESS TRANSACTIONS INCREASING 4/16/2019

ELECTRONIC BUSINESS INTRANET: Business builds private, secure network E-MAIL, WEB DOCUMENTS, GROUP SOFTWARE: Extends effective communication & control EXTRANET: Extension of Intranet to authorized external users 4/16/2019

WHAT YOU CAN DO ON THE INTERNET? COMMUNICATE & COLLABORATE ACCESS INFORMATION DISCUSS OBTAIN INFORMATION ENTERTAIN TRANSACT BUSINESS brainstorm 4/16/2019

END OF LECTURE 2 4/16/2019