CHAPTER I: FOUNDATIONS OF INFORMATION SYSTEMS IN BUSINESS

Why are Information Systems (IS) important? Information technologies are playing a vital role in business. Especially in today’s global environment, internet- based information technologies are becoming a necessary ingredient for business success. IS have a major impact on business.

System concept System: A group of interrelated elements working together toward a common goal. Systems are divided into three distinct parts: INPUTS, PROCESSES, and OUTPUTS.

Components of System INPUT includes those elements that enter the system. All the elements necessary to convert or transform the inputs into outputs are included in the PROCESSES. OUTPUT transfers the elements that have been produced by a transformation process to their ultimate destination.

System concept (cont’d) System examples: HOSPITAL SYSTEM Patients admitted to hospital Following Tests, or examinations Cured people INPUTPROCESS OUTPUT MANUFACTURING SYSTEM Raw material Following operating procedures Finished good INPUTPROCESSOUTPUT

System concept (cont’d) Systems are surrounded by an environment. Example: a business performs its activities in a social, economical and political environment. We call such systems OPEN SYSTEM which interact with the other systems in its environment. Systems frequently include a feedback mechanism. A feedback is data about the performance of a system. Control monitors whether a system is moving toward the achievement of its goals. If a system has feedback and control components, it is called CYBERNETIC SYSTEM (self-regulating system). Ex: Thermostat-controlled heating system.

System concept (cont’d) Systems are evaluated and analyzed along two major dimensions: Efficiency and Effectiveness. Efficiency: Doing the “thing” right. Ex: How much money is used to generate a certain level of sales? Effectiveness: Doing the “right” thing. (accomplishing the goal). Ex: Total sales of a company.

Information system (IS) An IS collects, processes, stores, analyzes and disseminates information for a specific purpose. IS can be either computer-based or manual (paper and pencil technology). In this course we will concentrate on computer-based information systems which rely on computer hardware and software.

Information system (IS) IS is a system that accepts data resources as input and processes them into useful information as output.

IS Activities Information System Activities: Data Calculating, classifying, sorting, etc. Reports, forms, graphic images Stored for future use INPUT PROCESSING OUTPUT STORAGE CONTROL of system performance

Components of Information System 1. People 2. Hardware 3. Software 4. Data 5. Networks

Components of IS 1. People : those individuals who work with the system or use its outputs. a. End users (customers, managers, engineers. Most end users are knowledge workers) b. IS specialists (programmers, system analysts). 2. Hardware: The physical equipment used for input, processing and output activities in an IS. Ex: Keyboard, monitor, printer, processor, floppy disks, mouse. 3. Software: Programs and procedures. Program: a set of instructions that causes a computer to perform a particular task. Procedures: a set of instructions used by people to complete a task. 3.a. System software: It controls and supports the operations of a computer system. 3.b.Application software: Programs which are used by end users. Ex: Word, Excel. 3.c.Procedures: Set of instructions about how to use an IS. Ex: Instruction for using a software package.

Components of IS (cont’d) 4. Data : Distinguish between data and information DATA Located in a certain database In John Doe’s file In a field labeled “SSN” INFORMATION

WestCharles Mann 79154TM Shoes Monthly Sales Report for West Region Sales Rep: Charles Mann Emp No Item Qty Sold Price TM Shoes 1200 $100 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Data Versus Information

Components of IS (cont’d) 4. Data is unformatted information. Information is data that have been shaped into a form that is meaningful and useful. Data records, data files, databases are data resources. Ex: Employee files, customer records. 5. Network resources: Connecting system that permits the sharing of resources by different computers. Ex: computers, Internet, intranet, extranet, satellite wireless technologies, cellular phones and communication processors.

Types of IS McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved.

Types of IS IS can be classified in several ways. A. Operations Support Systems (OSS): IS that monitors the elementary activities and transactions of the organization such as sales, cash deposits, credit decisions. Deals with the day-to-day operations of an organization. It is categorized into three types: Transaction Processing Systems (TPS): TPSs are computerized systems that perform and record the daily routine transactions necessary to conduct the business. Payroll processing, order processing, order tracking are the examples of the activities supported by TPS.

Payroll TPS Payroll master file Data elements in payroll master file Employee number Employee name Employee department Employee occupation Employee pay rate Earnings State tax Payroll system Management reports Government documents Employee checks INPUT PROCESSOUTPUT Calculating pay Calculating cost of taxes etc.

TPS TPSs process transactions in two ways: BBatch processing OOnline processing Batch Processing of transactions occurs when transactions are collected and then processed together as a “batch” at some later time. Ex: Banks often use batch processing when reconciling checks drawn or customer accounts. Online processing of transactions provide immediate results. Data is processed immediately after a transaction occurs. Ex: Online reservation processing.

Types of IS 2. Process Control Systems: Process Control Systems are systems, which make use of computers to control ongoing physical processes. These systems are designed to automatically make decisions, which adjust the physical production processes. EX: the assembly lines of automated factories. 3. Enterprise collaboration systems: Enterprise collaboration systems are systems that use a variety of information technologies to help people work together. These systems help us collaborate, share resources and co-ordinate our cooperative work efforts. EX: Electronic mail system, videoconferencing.

Management Support Systems B. Management Support Systems: Support and provide information for managerial decision- making. It is categorized into three types: 1. MIS: MISs are designed to get the right information to the right people in the right format at the right time to help them make better decisions. MISs summarize and report on the company’s basic operations. MIS usually produces weekly, monthly, and yearly results- not day-to-day activities. Sales forecasting, inventory planning, advertising are some of the activities supported by MISs. Ex: MIS reports might list the total pounds of lettuce used this quarter by a fast-food chain.

MIS Data elements in MIS files Sales data Product description data Sales region data Product data Product code data etc. MIS FILES MIS Reports, graphic displays, etc. Managers Product code Product description Sales region Actual salesPlanned 4469Carpet cleaner Northeast4,066,7004,800,000 West2,546,0002,500,000 South3,778,1223,750,000 TOTAL10,390,82211,050,000 Aggregation Summarization etc. INPUT PROCESS OUTPUT

Types of IS 2. Decision Support Systems: Basic objective of DSS is to provide computerized support to complex, non- routine unique decisions. Ex: Excel is the most commonly used DSS tool. 3. Executive Information Systems: Provides information about key factors that are critical to accomplishing a firm's strategic objectives to executives. Long-range and strategic planning and crisis management are supported by EIS.

Career in IS Employment opportunities in the field of IS are excellent. Most of them are well-paid. Huge demand for system analysts, programmers, website designers.