Introduction to Information Systems Chapter 1 Introduction to Information Systems Copyright © 2004 South-Western. All rights reserved.

Learning Objectives To describe an information system’s integration with business processes and the organization To describe the business professional’s role in the current information technology-driven environment To illustrate the attributes of information and the importance of data quality Copyright © 2004 South-Western. All rights reserved.

Three Themes of the Text Enterprise systems Electronic business (E-Business) Information technology Copyright © 2004 South-Western. All rights reserved.

E-commerce vs. E-business value added “INPUTS” “OUTPUTS” TRANSFORMATION Processes Facilities Equipment Finance People Serves Customers Product Sold People Raw Material E-business: The transformation of key business processes through the use of Internet technologies! Copyright © 2004 South-Western. All rights reserved.

Enterprise Systems Integrated software packages designed to provide complete integration of an organization’s information processing systems and all related data Modules: Logistics Accounting Manufacturing Human resources Copyright © 2004 South-Western. All rights reserved.

Business Intelligence e-Business solutions enable transforming core business processes Web Selling Real Time Order Management Demand Plan Supply Plan Production Scheduling Customer Service Procurement Distribution Logistics SCM ERP CRM Suppliers/ Partners Customers Business Intelligence EC Platform / WEB Application Server/ Application Server Copyright © 2004 South-Western. All rights reserved.

Integrated App Frameworks Partners, Suppliers, Distributors S t a k e h o l d e r s Supply Chain Management E M P L O Y E S Logistics & Warehousing Distribution Manufacturing Enterprise Resource Planning (ERP) Admin. Control HRMS / e-Procurement Business Intelligence Finance/Accounting/Auditing Management Control Enterprise Application Integration Customer Service Customer Relationship Management (CRM) Marketing Field Sales Selling Chain Management Copyright © 2004 South-Western. All rights reserved. Customers, Resellers

E-Business Application of electronic networks (including the Internet) to undertake business processes between individuals and organizations Interaction between front-office and back-office processes Electronic networks include: The Internet Electronic data interchange (EDI) Copyright © 2004 South-Western. All rights reserved.

Information Technology Any hardware, software or communications technology that might be adopted by an organization to: Support or control a business process Enable management decisions Provide a competitive advantage. IT may be used to support enterprise systems and e-business applications. Copyright © 2004 South-Western. All rights reserved.

Elements in the Study of Information Systems Copyright © 2004 South-Western. All rights reserved. FIGURE 1.1

What Is an Information System? A set of interdependent elements that together accomplish specific objectives Subsystem A component part of a system that, together with other interrelated components, is integrated into a system structure. Copyright © 2004 South-Western. All rights reserved.

Systems and Subsystems FIGURE 1.2 Copyright © 2004 South-Western. All rights reserved.

Functional Model of an Information System NOTE: System outputs result in user actions. Some actions (i.e., feedback) in turn become subsequent system inputs. Copyright © 2004 South-Western. All rights reserved. FIGURE 1.3

Data Activities Business event data stores Capturing and converting input data Machine-readable form Master stores updating of standing data Information processing Data maintenance Copyright © 2004 South-Western. All rights reserved.

Business Process Components Information process The use of IS in coordinating all of the business processes of an organization Operations process The system that accomplishes the work of the organization Management process The system that management uses to plan and control the organization Copyright © 2004 South-Western. All rights reserved.

A Logical Model of a Business Process for Ordering Books Online FIGURE 1.4 Copyright © 2004 South-Western. All rights reserved.

Information System Output Flow and Users Because Figure 1.5 depicts data from business events, the vertical information flows upward. Other data, such as budgets, would flow downward. Copyright © 2004 South-Western. All rights reserved. FIGURE 1.5

Data versus Information Data presented in a form that is useful in a decision-making activity Reduces uncertainty and increases knowledge Data Facts and figures in raw form Measurements or observations of objects or events The basic function of an information system is to transform data into useful information. Copyright © 2004 South-Western. All rights reserved.

Qualities of Information Effectiveness Efficiency Confidentiality Integrity Availability Compliance Reliability of information Source: Reprinted with permission from COBIT: Control Objectives for Information and Related Technology—Framework, 3rd ed. (Rolling Meadows, IL: The Information Systems Audit and Control Foundation, 2000): 14. Copyright © 2004 South-Western. All rights reserved. EXHIBIT 1.1

A Hierarchy of Information Qualities FIGURE 1.6 Source: Adapted from Statement of Financial Accounting Concepts No. 2: Qualitative Characteristics of Accounting Information, Financial Accounting Standards Board (FASB), May 1980, p. 15. Copyright by Financial Accounting Standards Board, 401 Merritt 7, P.O. Box 5116, Norwalk, CT 06856-5116. Reprinted with permission. Copies of complete document are available from the FASB. Copyright © 2004 South-Western. All rights reserved.

Questions to Ask About an IS What will be recorded as a business event? What data stores will be used to record the event? When will the event be recorded: before or after occurrence? What controls will be necessary to provide valid, accurate, and complete records; to protect assets; and to ensure that the IS can be audited? What reports will be produced, and when will they be produced? How much detail will the reports include? Copyright © 2004 South-Western. All rights reserved.