Business Information Systems Building Blocks Dr Sherif Kamel The American University in Cairo

Outline Role of information systems. Types of information systems. Data and information. Classes of information systems. Information systems architecture. Information systems applications. Information systems building blocks. 5 Ps in systems development. The life cycle.

An integrated view of the role of IS in the organization

Types of information systems

MIS obtaining data from multiple TPS

Interrelationships among systems

Transaction processing systems A customer placing an order for products or services with a company. Making a holiday booking Buying an air line ticket Buying a car Withdrawing money from the ATM a customer ringing a call centre to pay his/her bills Payment for goods and services Placing order with a supplier

A transaction is… Any business related exchange. An event to which the business must respond.

Input-processing-output cycle

Transaction processing system functions Transaction processing systems consist of 4 main functions to accomplish their purposes The functions include: Input function Storage function Processing function Output function

Example: TPS payroll system

Types of TPS by function Major Functions of system Major Application systems

Concepts of transaction processing systems On-Line Input Transaction files from other systems Data for other Keypunched cards Scanning devices and sensors Audio input output A displayed message Transaction Processing Record Merge Perform Sort List Update Documents

TPS characteristics Provide fast and efficient processing Perform rigorous data editing Audited Involves a high potential for security-related problems. Support the work processes of a large number of people

TPS cycle A cycle through which business data goes… Data collection Data editing Data correction Data manipulation Data storage Document production

Transaction processing activities Data collection The process of capturing and gathering all data necessary to complete transactions. Begins with a transaction Should be captured at the source Timely With minimum manual effort Suitable format Data editing Checks data for validity and completeness Data correction Re-entry of wrongly keyed or scanned data

Transaction processing activities (Cont’d) Data manipulation Performing data transformations Data storage Updating databases with new transactions Document Production Generating output records and reports

Reports produced Detailed reports Summary reports Exception reports

Methods of transaction processing Batch processing systems. Online transaction processing (OLTP). Interactive/ Real-time. Online entry with delayed processing.

Transaction processing objectives Process data generated by and about transactions Maintain a high degree of accuracy Ensure data and information integrity Produce timely documents and reports Increase labour efficiency Help provide increased and enhanced service Help build and maintain customer loyalty

Transaction processing applications Accounting and financial information systems Sales and marketing information systems Production information systems Human resources information systems

1. Accounting and financial IS Systems that are first computerised by organisations. Outputs include: pay cheques cheques to vendors customer invoices stock reports many other forms and reports Accounts receivable Payroll systems

2. Sales and marketing IS System’s basic goal is to satisfy the needs of customers. Help the firm identify customers for the firm’s products or services, Develop products and services to meet customer needs, Promote products and services, Sell the products and services Provide ongoing customer support.

Sales and marketing IS types Sales order Market research Sales commission Point-of-sale systems Electronic shopping and advertising systems Telemarketing systems. Direct mail advertising systems.

3. Production IS These systems support the production of goods and services (to meet marketing system projections) Support decision-making for the operation, allocation, and planning of production resources. Produce reports about production data.

Production IS types Purchasing systems Quality control systems Shipping systems Inventory control systems Automated Material handling systems Computer aided design/manufacturing

Example – order processing system Order entry, sales configuration, shipment planning and shipment execution. Inventory control (finished product), invoicing, customer interaction and routing and scheduling.

Example – purchasing systems Inventory control Raw materials Packing materials Spare parts Supplies Purchase order processing Receiving Accounts payable

4. Human Resource IS Support acquiring and managing human resources including: recruiting, assessment, selection, placement, training, performance appraisal, compensation and benefit management, promotion, termination, occupational health and safety, and other activities. Integrates with other systems like payroll.

Teaching Notes This is the capstone figure for the chapter—the complete information systems building blocks framework. Teaching Tips Emphasize that ALL building blocks are relevant to ALL information systems that the student will encounter or develop during the course of their career. Emphasize that the building blocks must be synchronized both horizontally and vertically when building information systems. Vertical synchronization ensures that each block represents fully the perspectives of the other blocks in the same column. For example, a database schema must implement the intended data requirements. Horizontal synchronization ensures that each block in a given row is consistent and complete with respect to the other blocks in that same row. For example, each table in a database schema requires application software and specifications to maintain the data stored in those tables.

Data and information Data are raw facts about the organization and its business transactions. Most data items have little meaning and use by themselves. Information is data that has been refined and organized by processing and purposeful intelligence. The latter, purposeful intelligence, is crucial to the definition—People provide the purpose and the intelligence that produces true information. No additional notes

Information systems and technology An information system (IS) is an arrangement of people, data, processes, communications, and information technology that interact to support and improve day-to-day operations in a business as well as support the problem-solving and decision making needs of management and users. Information technology is a contemporary term that describes the combination of computer technology (hardware and software) with telecommunications technology (data, image, and voice networks). Conversion Notes In previous editions, we tried to distinguish between “information systems” and “computer applications” (the latter being a subset of the former). This created more confusion with students than it was worth. Some books use the term “computer technology.” We prefer the more contemporary term, “information technology” as a superset of computer technology.

Front and back office information systems Front-office information systems support business functions that reach out to customers (or constituents). Marketing Sales Customer management Back-office information systems support internal business operations and interact with suppliers (of materials, equipment, supplies, and services). Human resources Financial management Manufacturing Inventory control Conversion Notes This classification scheme comes from popular usage in the trade literature. Teaching Tips This terminology is not to be confused with office automation. In fact, office automation systems can be either front-office or back-office, just as with other types of information system applications.

Federation of information systems Teaching Tips This slide visually illustrates front- and back-office applications and highlights the following: Many organizations purchase their back-office systems in the form of enterprise resource planning (ERP) products such as SAP, PeopleSoft, and Oracle. The ERP industry is trying to expand into the front-office applications. It might be noted that electronic commerce and business extensions are being added to both front- and back-office applications in order to streamline interfaces to both customers and suppliers. E-commerce is being driven by the Internet (and private extranets). E-business is being enabled by intranets.

Classes of information systems Transaction processing systems Management information systems Decision support systems Expert systems Office automation systems No additional notes

1. Transaction processing Transaction processing systems are information system applications that capture and process data about business transactions. Includes data maintenance, which provides for custodial updates to stored data. Business process redesign (BPR) is the study, analysis, and redesign of fundamental business (transaction) processes to reduce costs and/or improve value added to the business. No additional notes

2. Management information systems A management information system (MIS) is an information system application that provides for management-oriented reporting. These reports are usually generated on a predetermined schedule and appear in a prearranged format. Conversion Notes In some previous editions and other textbooks, MIS is referred to as “management reporting.”

3. Decision support systems A decision support system (DSS) is an information system application that provides its users with decision-oriented information whenever a decision-making situation arises. When applied to executive managers, these systems are sometimes called executive information systems (EIS). A data warehouse is a read-only, informational database that is populated with detailed, summary, and exception data and information generated by other transaction and management information systems. The data warehouse can then be accessed by end-users and managers with DSS tools that generate a virtually limitless variety of information in support of unstructured decisions. Conversion Notes Some books treat DSS and EIS as distinct; however, if definitions are closely examined, the differences are subtle – they only differ in audience. Both DSS and EIS tend to support the same decision-oriented activities and basically work the same. Data warehouse concepts are also taught in most database textbooks and courses. The design of a data warehouse differs significantly from traditional, operational databases.

4. Expert systems An expert system is a programmed decision-making information system that captures and reproduces the knowledge and expertise of an expert problem solver or decision maker and then simulates the “thinking” or “actions” of that expert. Expert systems are implemented with artificial intelligence technology that captures, stores, and provides access to the reasoning of the experts. No additional notes

5. Office automation systems Office automation (OA) systems support the wide range of business office activities that provide for improved work flow and communications between workers, regardless of whether or not those workers are located in the same office. Personal information systems are those designed to meet the needs of a single user. They are designed to boost an individual’s productivity. Work group information systems are those designed to meet the needs of a work group. They are designed to boost the group’s productivity. Office automation systems and the changing role in the organization across the organization in terms of information and communication technology. Examples of – organizational restructuring – business processes re-engineering.

Information systems applications Teaching Tips It may be useful to walk through this diagram in class. The textbook coverage included numbered annotations that highlight portions of this diagram. Remind students that any given information system may include many instances of each of these IS application processes and databases.

Information systems architecture Information systems architecture provides a unifying framework into which various people with different perspectives can organize and view the fundamental building blocks of information systems. No additional notes

Perspectives or stakeholders System owners pay for the system to be built and maintained. System users use the system to perform or support the work to be completed. System designers design the system to meet the users’ requirements. System builders construct, test, and deliver the system into operation. Systems analysts facilitate the development of information systems and computer applications by bridging the communications gap that exists between non-technical system owners and users and technical system designers and builders. IT vendors and consultants sell hardware, software, and services to businesses for incorporation into their information systems. Conversion Notes For this edition, we added systems analysts and IT vendors and consultants. Each of these classes of stakeholders is described in greater detail in Chapter 1. Note that we use a consistent color for these stakeholders (throughout the chapter and textbook). Teaching Tips It is very important for students to understand that these are “roles,” not “job titles.” Any given individual can play more than one role. Any role is shared by many individuals.

Focuses for information systems Data—the raw material used to create useful information. Processes—the activities (including management) that carry out the mission of the business. Interfaces—how the system interfaces with its users and other information systems. Conversion Notes We deleted the “geography” focus (column) from this edition. It still exists; however, the technology architecture and network for an organization is typically developed separate from the information system, and typically supports many information systems and communications needs. By eliminating this column in the fifth edition, we have simplified the framework for the students. The book still presumes that the network is a critical component for all contemporary information systems.

Information system building blocks Teaching Notes This slide serves to establish the focus for the chapter. The highlighted cells are the information system building blocks that are described in detail as this chapter unfolds.

Data focus Teaching Notes This slide visually illustrates the chapter’s discussion of the DATA focus as seen by different stakeholders. Teaching Tips If your students have taken a database course, it can be useful to summarize that experience within the context of the DATA column.

Data focus System owners’ perspective System users’ perspective Business knowledge is the insight that is gained from timely, accurate, and relevant information. (Recall that information is a product of raw data.) System users’ perspective Data requirements are a representation of users’ data in terms of entities, attributes, relationships, and rules. Data requirements should be expressed in a format that is independent of the technology that can or will be used to store the data. System designers’ perspective Database schema System builders’ perspective Database management system Teaching Notes This slide places definitions and key terms relevant to the DATA focus into the context of stakeholders.

Process focus Teaching Notes This slide visually illustrates the chapter’s discussion of the PROCESS focus as seen by the different stakeholders. Teaching Tips Most students have some programming experience. Accordingly, it can be useful to summarize that experience within the context of the PROCESS column. Consider summarizing that experience by working bottom-to-top in the column to reinforce their perspective of the “application programs” they wrote. The programming instructor typically played the roles of system owners, users, and analysts when they wrote the programming assignments. The student typically played the roles of designer (e.g., flowcharts) and builder (e.g, logic).

Process focus System owners’ perspective Business functions are ongoing activities that support the business. Functions can be decomposed into other subfunctions and eventually into processes that do specific tasks. A cross-functional information system supports relevant business processes from several business functions without regard to traditional organizational boundaries such as divisions, departments, centers, and offices. Teaching Notes This slide places definitions and key terms relevant to the PROCESS focus into the context of stakeholders.

Process focus (Cont’d) System users’ perspectives Business processes are activities that respond to business events. Business processes are the “work” performed by the system. Process requirements are a representation of the users’ business processes in terms of activities, data flows, or work flow. A policy is a set of rules that govern a business process. A procedure is a step-by-step set of instructions and logic for accomplishing a business process. Teaching Notes This slide places definitions and key terms relevant to the PROCESS focus into the context of stakeholders.

Process focus (Cont’d System designers’ perspectives An application schema is a model that communicates how selected business processes are, or will be, implemented using the software and hardware. Software specifications represent the technical design of business processes to be automated or supported by computer programs to be written by system builders. System builders’ perspectives Application programs are language-based, machine-readable representations of what a software process is supposed to do, or how a software process is supposed to accomplish its task. Prototyping is a technique for quickly building a functioning, but incomplete model of the information system using rapid application development tools. Teaching Notes This slide places definitions and key terms relevant to the PROCESS focus into the context of stakeholders.

Interface focus Teaching Notes This slide visually illustrates the chapter’s discussion of the INTERFACE focus as seen by the different stakeholders. Teaching Tips Many students have written programs for graphical user interfaces using languages such as Access, Visual Basic and HTML. Accordingly, it can be useful to summarize that experience within the context of the INTERFACE column. While it is conceptually and practically useful to separate INTERFACE and PROCESS, it should be noted that many of today’s contemporary application development environments (ADEs) such as Visual Basic effectively integrate the technology used to construct both the user interface and the application logic. Some students find this confusing. Interestingly, the emphasis on Web-based applications is truly separating the concerns. For example, the interface elements of a Web are written in HTML while the application logic is written in C++ or Java.

Interface focus System owners’ perspective System users’ perspectives Interface requirements are a representation of the users’ inputs and outputs. System designers’ perspective User dialogues describe how the user moves from window-to-window, interacting with the application programs to perform useful work. System builders’ perspective Middleware is a layer of utility software that sits in between application software and systems software to transparently integrate differing technologies so that they can interoperate. Teaching Notes This slide places definitions and key terms relevant to the INTERFACE focus into the context of stakeholders.

Information system building blocks Teaching Notes This is the capstone figure for the chapter—the complete information systems building blocks framework. Teaching Tips Emphasize that ALL building blocks are relevant to ALL information systems that the student will encounter or develop during the course of their career. Emphasize that the building blocks must be synchronized both horizontally and vertically when building information systems. Vertical synchronization ensures that each block represents fully the perspectives of the other blocks in the same column. For example, a database schema must implement the intended data requirements. Horizontal synchronization ensures that each block in a given row is consistent and complete with respect to the other blocks in that same row. For example, each table in a database schema requires application software and specifications to maintain the data stored in those tables.

The role of the network in IS Data Process Interface Building Building Building Blocks Blocks Blocks Conversion Notes This slide illustrates the classic model of separating and partitioning the layers of an information system application across a network. This is called a distributed computing architecture and it can be implemented using either client/server or Internet/intranet technology, or a combination of both. The network

Communications focus in IS Conversion Notes While we deleted the GEOGRAPHY column that was included in our framework in the fourth edition, we did not want to ignore it. Today’s information systems are built on top of constantly evolving networks. This slide was adapted from the margin art to illustrate that the framework works equally well for network analysis and design. We acknowledge that a more complicated and well-accepted framework exists in the form of the OSI model. That is yet another reason we chosen to deemphasize this column in our fifth edition.

5 Ps of information systems development Process - how we do it Project - the structures we use to manage it Product - the things we produce People - lots of them in various roles Problem - why we started in the first place

Process a set of activities inter linked and interdependent in time choice as to what we accentuate, what we ignore choice as to sequence and degree of linearity

It is important to note.... Committing resources to activities; Committing to some change Analysing organisational problems, work processes, user needs and business opportunities Designing the future activities of information use and restructuring work processes (the future information system) Designing and producing software Acquiring and configuring hardware Introducing the system to the organisation and to the people within it Sustaining the new ways of working through time, and making further adjustments Managing and controlling all the above activities

The life cycle problem identification feasibility study project set up and planning requirements specification systems analysis design programming

Project To initiate the process The unit the organisation recognises Goals and resources Framework for management

Project activities Organising Coordinating Controlling An activity view (how) A resource view (who and with what) A product view (what) An outcomes view (with consequences)

Project manager Achieve and sustain commitment Plan activities and achieve a work breakdown Estimate effort and cost Allocate resources to tasks Monitor milestones and deliverables Manage risk, sustain quality, respond Communicate and evaluate progress, problems and results

Product (deliverables) Concrete products, things to be made and delivered along the way Things left behind when the project is over Programs, a data base, a new order form A training course New jobs and new tasks A viable and feasible information system

Product in IS terms hardware and software documentation and training materials data resources formalised 'knowledge' informational transformations and outputs new jobs and new roles for people

Qualities looked for in product address the real problem be cost effective be user friendly…? be reliable and secure be sustainable

Away from computing cost convenience security maintainability politics

People Need people for an information systems Information systems perspective only makes sense if people are there Various ways of naming them Users or participants Customers and clients Actors and members

What do people want? Knowledge contract Psychological contract Efficiency contract Task structure contract Value contract

Problem Why did we start to talk about information systems? To achieve something new, better, different, but what? What is a problem? ‘A situation upon which someone may wish to act Different problems, different people, different process etc.… For the same problem we can choose to address it in different terms, different process, different project, different people, different product