© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott COMP3115 Information Systems Session 3: Fundamentals of Information Systems – Part I Dr. Paul Walcott Spring 2007/ © 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill Campus

Dr. Paul Walcott Session Objectives Describe system concepts, components and relationships Explain the cost/value, quality and competitive advantage of information

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Introduction In this session we will be examining the fundamentals of information systems  Information systems are vital to any business and are required by managers, entrepreneurs and business professions (O’Brien and Marakas, 2006)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott ”IT can help all kinds of businesses improve the efficiency and effectiveness of their business processes, managerial decision making and workgroup collaboration, thus strengthening their competitive positions.” (O’Brien and Marakas, 2006)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Let us begin by examining some basic system concepts

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott A system is a set of components with interrelated boundaries and common objectives (O’Brien and Marakus, 2006)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott An alternative definition of a system is “a set of interacting components that operate together to accomplish a purpose.” (Alter, 2002)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott For example, our brain is a system; where the neurons are interacting components

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott “A subsystem is a component of a system” (Alter, 2002)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Systems and Subsystems A subsystem may also be considered a system (Alter, 2002) Therefore a system is comprised of other systems (O’Brien and Marakus, 2006)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott (Alter, 2002, pp. 9) – A manufacturing firm with five subsystems

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Alter, 2002) The purpose of a system is the reason why it was created in the first place. A system’s success is determined from its purpose For example, the purpose of a system might be to record inventory levels

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Cont’d) The boundary of a system defines what is part of the system (inside the system) and what is not (outside) For example, the sales system could be considered to be outside the production system (see diagram)see diagram

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Cont’d) “A system’s environment is everything pertinent to the system that is outside of its boundaries (Alter, 2002)” An example of this is the culture of the students using the CHOL student information system at the Cave Hill Campus

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Cont’d) Also we must consider the inputs, output and processing of a system:  the inputs of a system is the information and physical objects that move from the environment, cross the boundary and enter the system and,  The outputs move from the system, cross the boundary and go to the environment

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Cont’d)  Within a given system processing occurs which transforms the inputs to outputs Two other system concepts which we will consider are feedback and control  Systems which include these are considered self-monitoring or self-regulating (O’Brien and Marakus, 2006)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Cont’d) “Feedback is data about the performance of a system (O’Brien and Marakus, 2006).”  One example is customer comments (preferences) about a product being feedback into the product design process

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Other System Concepts (Cont’d) “Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal (O’Brien and Marakus, 2006)”  Inputs and processing may be adjusted to produce the desired outputs  Adjusting sales quotes and bonuses may control sales performance

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott An information system is an “organized combination of people, hardware, software, communication networks, and data resources that stores and retrieves, transforms and disseminates information in an organization (O’Brien and Marakus, 2006).”

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information Technologies IS utilises several information technologies, including:  Hardware, for example a desktop computer  Software, for example an inventory control system  Telecommunication network technologies, for example a router  Data resource management technologies, for example a MySQL database

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Activity Form small groups, read the 2004 Athens Olympics Network case (O’Brien and Marakus, 2006, pp. 5) and answer the case study questions You have 20 minutes to complete this activity

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott IS Frameworks Several authors utilise frameworks to help them explain information systems These frameworks are useful when attempting to understand the information system in a given organisation In this section we will describe two frameworks proposed by (O’Brien and Marcus, 2006) and (Alter, 2002)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott IS Frameworks (Cont’d) Before describing these two frameworks, a useful framework for outlining the major areas of information systems knowledge utilised by IS professionals will first be described.

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Development processes – the processes required to develop an IS Management Challenges – the ability to effectively and ethically manage IT for users and the enterprise Foundational concepts – “fundamental behavioral, technical, business and managerial concepts” regarding the roles and concepts of IS Conceptual Framework (O’Brien and Marcus, 2006, pp. 7) In this model Information systems are characterised by: Information Technology (IT) – including hardware, software and the issues managers have managing IT Business applications – where IS are used for operations, management and competitive advantage

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (O’Brien and Marakus, 2006) The IS model illustrate the components of a business organisation Resources, such as people and materials, are input into the system and are transformed into goods and services  These are output to the business environment

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Feedback to management allows them to make necessary adjustments  This type of system is called adaptive The environment of businesses and government agencies is the society

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Organisations are considered “open systems” if they interface with other systems in their environment

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) (O’Brien and Marakus, 2006, pp.26)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Highlights major components of IS Inputs are transformed and stored utilising:  People resources  Hardware resources  Software resources  Data resources  Network resources

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) People Resources Comprises of:  End users: users of the IS – in businesses these are often knowledge workers  IS specialists: developers and operators of the IS System analyst, software developers, system operators, managers, clerks and technical personnel

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Hardware Resources Comprises of:  Machines and media For example paper  In computerised Information Systems Computer systems and computer peripherals

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Software Resources Comprises of:  All of the information processing instructions Software programs and procedures used  Note: non-computerised systems also have software resource components Procedures and information processing instructions (for example, some type of process manual)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Software Resources These include:  System software: for example operating systems  Application software  Procedures: operating instructions for individuals for example, filling out a paper form

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Data Resources Data that is used to benefit the end user This data is processed, analysed and stored

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) Network Resources Communications media  For example twisted pair cables Network infrastructure  Hardware, software and data technologies that support operation and use of communication networks

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Information System Model (Cont’d) For most real life Information Systems you should therefore be able to identify the:  People, hardware, software, data and network resources used  Types of information products produced  Way input, processing, output, storage and control activities are performed

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott The Work System Model (Alter, 2002) A work system is a “system in which human participants and/or machines perform a business process using information technology and other resources to produce products and/or services for internal or external customers (Alter, 2002).”

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott The Work System Model (Cont’d) This model helps us understand both computerised and non-computerised information systems

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott The Work System Model (Cont’d) Outputs are products and services for customers Subsystems performing the work are enclosed in cyan Context and infrastructure – external factors controlled by managers and system participants

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Patterson, 2005) Information has several characteristics, including:  Cost  Value  Quality These will be explained in this section

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Cont’d) Accuracy How a piece of information is going to be used usually determines how accurate it needs to be Operational level information, such as point of sale, must be accurate Tactical or strategic level information can be less accurate

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Cont’d) Accuracy Obtaining 100% accurate information is often unrealistic and costly

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Cont’d) Value “The relative importance of information for decision making can increase or decrease its value to an organisation (Patterson, 2005).” If a piece of information increases competitive advantage then it is of great value

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Cont’d) Value  For example, an investment manager that has the necessary news to support his view that a given stock will sky rocket is of great value

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Cont’d) Cost  How much does it cost to obtain a piece of information?  If too costly then the organisation may seek a less comprehensive alternative

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Characteristics of Information (Cont’d) Cost and value are different, since a piece of information that is of great value to an organisation might not have been costly

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage Business organisation can use information to gain a competitive advantage by (Gordon and Gordon, 2004):  Analysing and responding to current market conditions  Improving customer service  Controlling costs  Improving quality  Expanding globally

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage (Cont’d) Analysing and responding to current market conditions allows: A reduction in excess inventory  Purchasing mistakes can be corrected The price of overpriced items can be adjusted The organisation to redirect funds  For example to utilise excess cash to purchase more of the inventory that is in high demand

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage (Cont’d) Analysing and responding to current market conditions allows: Introduction of new products  “first to market” concept

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage (Cont’d) Improving customer service: Management theory advises businesses to be customer-centric IS should be used to collect data from customer  For example, utilising a customer relationship management (CRM) system to record customer preferences  eBay used the demands of customers to improve its service levels

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage (Cont’d) Controlling costs: Become a low-cost producer  Outsourcing is an option Ethical questions such as “should workers be exploited to provide low cost merchandise?” must be considered  Exploit economies of scale This often requires more sophisticated systems to track  Limit spending through budgets  Utilise the web to streamline processes (for example acquisitions)

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage (Cont’d) Improve Quality: Have a reputation for good quality  Customers will pay for it Utilise feedback from customers to improve quality

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Using Information to Gain Competitive Advantage (Cont’d) Expand Globally: Going global expands market share This can be viewed as a reducing cost strategy  Cheaper raw materials  Cheaper labour Several barriers do exist, including:  Language  Lack of communication infrastructure  Trust issues  Costs

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott Conclusions In this session we discussed  System concepts, components and relationships For example: system, subsystem, boundary and environment  Discussed a real world case study of the 2004 Athens Olympics  Described two information system conceptual frameworks  Described how information can be used to gain competitive advanatge

© 2008 Dr. Paul Walcott – The University of the West Indies: Cave Hill CampusDr. Paul Walcott References O’Brien, James, A., George, M., Marakas Management Information Systems. 7 th Edition. New York: McGraw-Hill. Alter, Steven Information Systems: The Foundations of E- Business. 4 th Edition. Upper Saddle River, NJ: Pearson Education. Gordon, Steven, R. and Judith R. Gordon Information Systems: A Management Approach. 3 rd Edition, Wiley.