1 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning INFORMATION SYSTEMS: AN OVERVIEW CHAPTER 1 Hossein BIDGOLI MIS

2 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview LO1 Discuss common applications of computers and information systems. LO2 Explain the differences between computer literacy and information literacy. LO3 Define transaction processing systems. LO4 Define management information systems. LO5 Describe the four major components of an information system. LO6 Discuss the differences between data and information. l e a r n i n g o u t c o m e s

3 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning LO7 Explain the importance and applications of information systems in functional areas of a business. LO8 Discuss how information technologies are used to gain a competitive advantage. LO9 Explain the Five Forces Model and strategies for gaining a competitive advantage. LO10 Review the IT job market LO11 Summarize the future outlook of information systems. l e a r n i n g o u t c o m e s (cont’d.) Chapter 1 Information Systems: An Overview

4 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Computers and Information Systems in Daily Life Computers and information systems are all around you –Online classes –Grading –Grocery and retail –PDA and smartphones –Internet “Information systems” versus “information technology”

5 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview A New Era of Marketing: YouTube YouTube is a popular video sharing service that can be used as a marketing tool. The following are examples of corporations that are using YouTube to promote their products and services: Quiksilver Ford Models University of Phoenix Online The Home Depot Nikefootball

6 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Computer Literacy and Information Literacy Computer literacy –Having skills in using productivity software Information literacy –Understanding the role of information in generating and using business intelligence Business intelligence (BI) –Provides historical, current, and predictive views of business operations and environments –Gives organizations a competitive advantage in the marketplace

7 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Social Networking and the Vulnerability of Personal Information To reduce risk and improve the privacy of your personal information, consider the following: Always use the privacy controls offered by the social networking sites Use long passwords Do not post a phone number or a full address Do not post children’s names Do not be specific when posting information about vacations or business trips

8 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The Beginning: Transaction Processing Systems Transaction processing systems (TPSs) –Focus on data collection and processing –Cost reduction –Operations repetitive –Human involvement minimal

9 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Management Information Systems Management information system (MIS) –Organized integration of hardware and software technologies, data, processes, and human elements –Designed to produce timely, integrated, relevant, accurate, and useful information For decision-making purposes Include: –Hardware components –MIS software –Processes

10 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Management Information Systems (cont’d.) Designing an MIS –Define objectives –Collect and analyze data –Provide information in useful format Used in both the private and public sector Many organizations use information systems to gain a competitive advantage

11 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Information Technology at Hertz Car Rental Company Mainframe-based decision support system (DSS) Executive information system (EIS) –Analyze essential information from both external and internal sources –Manipulate and refine data to make it more meaningful

12 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Major Components of an Information System Data Database Process Information

13 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Exhibit 1.3 Major Components of an Information System

14 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Data –Input to the system Sources of data –External –Internal Time orientation Can be collected in different forms –Aggregated –Disaggregated

15 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Database –Heart of an information system –Collection of all relevant data organized in a series of integrated files Essential for the success of any information system Managed with database management system (DBMS): e.g., Oracle Reduces personnel time needed to gather, process, and interpret data manually

16 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Process –Generates the most useful type of information for decision making Generally includes transaction-processing reports and models for decision analysis Includes a wide range of models to support all levels of decision making

17 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Information –Output of an information system –Facts that have been analyzed by the process component Quality of information –Timeliness –Integration with other data and information –Consistency and accuracy –Relevance

18 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Information (cont’d.) User interface –Must be flexible and easy to use –Graphical user interfaces (GUIs) Ultimate goal of an information system –Generate business intelligence (BI)

19 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Examples of Information Systems Example 1: a university –State university stores all student data in a database –Built-in query capability –Other types of analysis can be done Example 2: Teletech –International textile company –Database stores data on products, suppliers, sales personnel, costs –Process components –Forecasting models

20 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Using Information Systems and Information Technologies Information technologies –Achieve goals of information systems Examples –Internet –Databases –POS Systems –RFID tags

21 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Information Technologies at Home Depot POS system –Fast customer service –Improved inventory management Wireless network –Efficient in-store communication Web site –Communicate with customers –Increase sales with online orders RFID tags –Better manage inventory

22 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The Importance of Information Systems Information –Second most important resource in any organization Four Ms of resources: –Manpower –Machinery –Materials –Money

23 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The Importance of Information Systems (cont’d.) Personnel information system (PIS) or human resource information system (HRIS) –Designed to provide information that helps decision makers in personnel carry out their tasks more effectively –Use Web technologies Main difference between an intranet and the Internet –Intranets are private and the Internet is public

24 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The Importance of Information Systems (cont’d.) Logistics information system (LIS) –Designed to reduce the cost of transporting materials –Maintains safe and reliable delivery Manufacturing information system (MFIS) –Manages manufacturing resources –Companies can reduce manufacturing costs, increase product quality, and improve inventory decisions

25 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The Importance of Information Systems (cont’d.) Financial information system (FIS) –Provides information to financial executives in a timely manner Marketing information system (MKIS) –Improves marketing decisions –Provides timely, accurate, and integrated information about the marketing mix

26 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Information Technologies at UPS UPS Delivery Intercept –Web-based service that allows customers to intercept and reroute packages before they are delivered Package Flow Technology

27 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Wal-Mart Stores, Inc. Wal-Mart Satellite Network –Largest private satellite communication system in the United States –Links branch stores with the home office in Bentonville, Arkansas POS systems RetailLink Electronic data interchange RFID technologies

28 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Using Information Technologies for a Competitive Advantage Michael Porter –Professor at Harvard Business School –Identified three strategies for competing in the marketplace successfully Overall cost leadership Differentiation Focus

29 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Using Information Technologies for a Competitive Advantage (cont’d.) Information systems –Help organizations reduce the cost of products and services –Assist with differentiation and focus strategies –Can help bottom-line and top-line strategies Enterprise systems –Supply chain management (SCM) –Customer relationship management (CRM) –Enterprise resource planning (ERP) –Collaboration software

30 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Using Information Technologies for a Competitive Advantage (cont'd.) Differentiation strategies –Make products and services different from competitors –Examples: Apple, Amazon.com

31 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Using Information Technologies for a Competitive Advantage (cont'd.) Focus strategies –Concentrate on a specific market segment –Attempt to achieve a cost or differentiation advantage –Examples: Apple, Abercrombie & Fitch, Nordstrom

32 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Porter’s Five Forces Model: Understanding the Business Environment Five Forces Model –Michael Porter –For analyzing an organization, its position in the marketplace, and how information systems could be used to make it more competitive –Buyer power –Supplier power –Threat of substitute products or services –Threat of new entrants –Rivalry among existing competitors

33 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Exhibit 1.4 The Five Forces Model

34 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Porter’s Five Forces Model: Understanding the Business Environment (cont'd.) Buyer power –High when customers have many choices –Low when they have few choices –Limit buyers’ choices by offering services that make it difficult for customers to switch Supplier power –High when customers have fewer options –Low when customers have more options –Use information systems to make their products and services cheaper

35 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Porter’s Five Forces Model: Understanding the Business Environment (cont'd.) Threat of substitute products or services –High when many alternatives for an organization’s products or services are available –Add services to make organization more distinct –Add fees to discourage customers from switching Threat of new entrants –Low when duplicating a company’s product or service is difficult –Use focus strategies to ensure that this threat remains low

36 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Porter’s Five Forces Model: Understanding the Business Environment (cont'd.) Rivalry among existing competitors –High when many competitors occupy the same marketplace position –Low when there are few competitors

37 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Information Technology at Boeing Intelligent information systems –Artificial intelligence technologies –Expert systems

38 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market IT jobs fall into the following categories: Operations and help desk Programming Systems design Web design and Web hosting Network design and maintenance Database design and maintenance Robotics and artificial intelligence

39 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) CTO/CIO The top job in the information systems field belongs to either the chief technology officer (CTO) or the chief information officer (CIO) This person is responsible for long-range information systems planning and for keeping abreast of new developments in the field that can affect a company's productivity or competitiveness

40 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) Manager of Information Systems Services This person is responsible for managing all the hardware, software, and personnel within the information systems department

41 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) Systems Analyst This person is responsible for the design and implementation of information systems In addition to computer knowledge and an information systems background, this position also requires a thorough understanding of business systems and functional areas within a business organization

42 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) Network Administrator This person oversees a company's internal and external network systems, designing and implementing network systems that deliver correct information to the right decision-maker in a timely manner Providing network and cybersecurity is part of this position’s responsibility

43 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) Database Administrator A database administrator (DBA) is responsible for database design and implementation Additionally, a database administrator should have knowledge and understanding of data warehouses and data mining tools

44 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) Computer Programmer A computer programmer writes computer programs or software pieces that allow the information system to perform a specific task There are many computer languages available, and each one requires a specific knowledge suitable for a specific application

45 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview The IT Job Market (cont'd.) Webmaster A webmaster designs and maintains the organization’s Web site Because of the popularity of e-commerce applications, webmasters have been in high demand

46 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Requirements for IT Positions The educational backgrounds for an IT position can include an AA, BA, BS, MS, or MBA in information systems and related fields The salaries vary based on educational background, experience, and the job’s location Salaries range from $52,000 for a programmer to over $180,000 for a CIO

47 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Future Outlooks Hardware and software costs continue to decline –Processing information less expensive in the future Artificial intelligence and related technologies will continue to improve and expand Computer literacy will improve Networking technology will improve Personal computers will continue to improve in power and quality

48 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Future Outlooks (cont'd.) Internet growth and acceptance will continue Computer criminals will become more sophisticated –Protecting personal identity information will become more difficult

49 MIS, Chapter 1 ©2011 Course Technology, a part of Cengage Learning Chapter 1 Information Systems: An Overview Summary Examples of uses for computers and information systems Difference between computer literacy and information literacy Management information system (MIS) –Data, database, process, and information Porter –Three competitive strategies –Five Forces Model