Introduction to Information Systems ISYS 363 David Chao

What Is an Information System? Information system is a collection of components that work together to process data and provide information to help in the operation and management of an organization. Information system is an organizational and management solution, based on information technology, to a challenge posed by the environment.

Perspectives on Information Systems 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 posed by the environment. Figure 1-5 Information Systems Are More Than Computers

Perspectives on Information Systems 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. Figure 1-4 Functions of an Information System

The Fundamental Roles of Information Systems Support of business operations Support of managerial decision making Support of strategic competitive advantage: Information systems that give a company a competitive advantage in the market place. –Operational level: Travel websites: yahoo vs expedia Auction: eBay –Management level: eBay store, Amazon associates

Organizational Dimension of Information Systems Hierarchy of authority, responsibility Senior management Middle management Operational management Separation of business functions Sales and marketing Human resources Finance and accounting Production and manufacturing

Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management. Figure 1-6 Levels in a Firm

Types of Information Systems Operations Support Systems (Transaction Support Systems, TPS) –Efficiently process business transactions Management Support Systems –Provide information and support for effective decision making by managers

–Sales and marketing systems –Manufacturing and production systems –Finance and accounting systems –Human resources systems –Etc. Operations Support Systems (TPS)

Sales and marketing systems –Functional concerns include: Sales management, customer identification market research, advertising and promotion, pricing, new products –Examples of systems: Order processing (operational level) Pricing analysis (middle mgmt) Sales trend forecasting (senior mgmt)

Finance and accounting systems –Functional concerns include: Managing financial assets (cash, stocks, etc.) and capitalization of firm, and managing firm’s financial records –Examples of systems: Accounts receivable (operational mgmt) Budgeting (middle mgmt) Profit planning (senior mgmt)

An Accounts Receivable System Figure 2-4 An accounts receivable system tracks and stores important customer data, such as payment history, credit rating, and billing history.

An Employee Record Keeping System Figure 2-5 This system maintains data on the firm’s employees to support the human resources function. Types of Business Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems

Characteristics of Operational Support Systems (TPS) –Serve operational levels –Perform and record daily routine transactions necessary to conduct business E.g. sales order entry, payroll, shipping –Large amount of data, high processing speed, high reliability, accuracy, and security (fault tolerant) –Data: internal, historical, detailed

Two Ways to Process Transactions Batch Processing –Accumulate transactions over time and process periodically –Example: a bank processes all checks received in a batch at night Online Processing –Process transactions immediately –Example: a bank processes an ATM withdrawal immediately

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

Management Information Systems Facilitate management control by producing summarized reports that compare actual performance against planned performance on a regular and recurring basis. –Management control: Ensuring that performance meets established standards. Serve middle management Provide reports on firm’s current performance, based on data from TPS

How Management Information Systems Obtain their Data from the Organization’s TPS Figure 2-6 In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting system at the end of the time period. Managers gain access to the organizational data through the MIS, which provides them with the appropriate reports.

Sample MIS Report Figure 2-7 This report, showing summarized annual sales data, was produced by the MIS in Figure 2-6.

Sample MIS Report

Other Examples: Budget control: – S_II_Budget_Control_System.pdfhttp:// S_II_Budget_Control_System.pdf LYTD VS YTD Sales comparison

Sales Comparison

–Serve middle management –Support nonroutine decision making E.g. What is impact on production schedule if December sales doubled? –Often use external information as well from TPS and MIS Decision support systems

Information and Management Decisions A decision is a selection between several courses of action: –Penalty for bad decision Information helps reduce uncertainty: –Incomplete information Information systems improve decision- making effectiveness by providing decision makers with information related to the decisions for which they are responsible.

Structured Decision –The information requirements are known precisely. –The criteria for making decision are known. –The quality of a decision can be measured precisely.

Manager + Computer (DSS) Solution Computer Solution Manager Solution Structured Semistructured Unstructured DEGREE OF PROBLEM STRUCTURE The DSS Focuses on Semistructured Problems

Microsoft/Yahoo

Components of DSS Database: Current & Historical Data from Many Sources. –Internal and external data Model base: Collection of Mathematical & Analytical Building Blocks Interface for analysis: What - If Questions; sensitivity analysis

Using Decision Support Systems What-IF Analysis:Observing how changes to selected variables affect other variables. Sensitivity Analysis: Observing how repeated changes to a single variable affect other variables. Goal-Seeking Analysis:Set a target value for a variable, and then repeatedly changes other variables until the target is achieved. –Example: Benefit.Xls Optimization Analysis Simulation

–Support senior management –Address nonroutine decisions requiring judgment, evaluation, and insight –Incorporate data about external events (e.g. new tax laws or competitors) as well as summarized information from internal MIS and DSS Executive support systems

Span functional areas Execute business processes across firm Include all levels of management Four major applications: Enterprise systems Supply chain management systems Customer relationship management systems Enterprise applications

Other Information Systems Expert Systems –Provide expert advice –Knowledge base and rules –Example: Investment Expert System Knowledge Management Systems –Support creation, organization, and dissemination of business knowledge throughout company –Example: intranet access to best business practices, FAQ

Components of an Information System Information technology People Database Procedure

People Information specialists –programmer, system analyst, database administrator, etc. End-user: –Menu-level end users –Command-level end users –End-user programmer End-user computing

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?

Do you think it is wrong to Copy company’s software for use at home? 35 % say no. Use company equipment like computers to search for a new job? 34% say no. Blame your own personal errors on technological glitches? 39% say no. Use office computers to do personal shopping on the Internet? 46% say no.

Workplace PCs May Not Be Very Private Don’t be fooled: It may be personal, but it is not private. Cyber-surveillance: The person most likely to be spying on you is your boss. 27% of businesses surveyed by the American Management Association said they review employee . Reasons: –Productivity –Liability –Network performance

Detroit Mayor Scandal and Privacy Use city-issued pager Communications are stored for legal reasons. "There's absolutely no expectation of privacy with phones, s, text messages or computers," expert said. Comment: HOW IN THE WORLD DIDTHE PRESS DIG UP TEXT MESSAGES FROM 2001? AND IF THEY CAN DO THAT FOR HIM... THEN WHAT ABOUT OUR PRIVACY RIGHTS AS WELL.. BECAUSE THAT SHOULD BE PROTECTED..IF WE ARE TALKING ON OUR PHONES OR TEXTING..OMG!!!!!!!!

Database A group of related files –Support business operations –Provide information

An example of database application LuckyMarket presents another great way to save with your LuckyMarket Rewards Card! You can get up to 4 FREE movie tickets! From Feb. 01 through June 9, 2009, use your LuckyMarket Rewards Card every time you shop at Lucky. When you accumulate between $250 - $ in groceries during the qualifying period, you get 2 FREE movie tickets! And if you purchase $400 or more during the same period you get 4 FREE movie tickets!

BART Tries Pay-By-Phone System A contact-free cell phone payment program –puts a chip inside a phone that used like a debit card. –lets people pay by passing their phone over a turntile. –When the account became low in funds, the system could automatically fill it up by charging a credit card.

Major Functions of Database Management Creating a database –Analysis: Entity-Relationship Diagram –Design: Design file structure –Implementation Accessing a database Updating a database

Database Security Logical protection: –Illegal access –Illegal update –Virus Physical protection

Internet firms flocks to store data in blast-proof bunker Some biggest companies are running their Internet operations on systems installed in a 300-foot-deep nuclear blast-proof bunker.

Procedures Procedure: A step-by-step process or a set of instructions for accomplishing specific results. –Operations –Backup and Recovery –Security –Development

Operations Procedure: A procedure that describes how a computer system or application is used, how often it can be used, who is authorized to use it, and where the results of processing should go. Backup Procedure: A procedure that describes how and when to make extra copies of information or software to protect against losses. – admin-made-easy/server-backup.html Recovery Procedure: An action taken when information or software must be restored. Security Procedure: A procedure designed to safeguard data centers, communications networks, computers, and other IT components from accidental intrusion or intentional damage. Development Procedure: A procedure that explains how IT professionals should describe user needs and develop applications to meet those needs.

Measuring IS Success 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