MIS CHAPTER 1 INFORMATION SYSTEMS: AN OVERVIEW Hossein BIDGOLI

Chapter 1 Information Systems: An Overview l e a r n i n g o u t c o m e s 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 (cont’d.) Chapter 1 Information Systems: An Overview l e a r n i n g o u t c o m e s (cont’d.) 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. L1O Review the IT job market. L11 Summarize the future outlook of information systems.

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”: Used interchangeably

Computer Literacy and Information 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

The Beginning: Transaction Processing Systems Transaction processing systems (TPSs) Focus on data collection and processing, Cost reduction Operations repetitive Human involvement minimal

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

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 sectors Many organizations use information systems to gain a competitive advantage

Major Components of an Information System Data Database Process Information

Exhibit 1.3 Major components of an information system

Data Data Sources of data Time orientation Input to the system Sources of data External Internal Time orientation Can be collected in different forms Aggregated Disaggregated

Database Database Essential for the success of any information system 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

Process 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

Information Information Quality of 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

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)

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

Using Information Systems and Information Technologies Achieve goals of information systems Examples Internet Databases POS Systems RFID tags

Information Technologies at The 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

The Importance of Information Systems Second most important resource in any organization Four Ms of resources: Manpower Machinery Materials Money

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 / Internet is public

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

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

The Importance of Information Systems (cont’d.) Financial information system (FIS) Provides information to financial executives in a timely manner Marketing information system (MKIS) Improve marketing decisions Provide timely, accurate, and integrated information about the marketing mix

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

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

Information Technologies at Walmart Walmart 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

Using Information Technologies for a Competitive Advantage (cont'd.) Differentiation strategies Make products and services different from competitors Examples: Apple, Amazon.com

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

Porter’s Five Forces Model: Understanding the Business Environment 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

Exhibit 1.4 The Five Forces Model

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

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 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

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

The IT Job Market One of the fastest growing segments in the economy 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

CTO/CIO Top information systems job belongs to the chief technology officer (CTO) / chief information officer (CIO) Oversees long-range planning Keeps an eye on new developments that can affect a company’s success Also chief privacy officer (CPO) Responsibility for managing risks and business impacts of privacy laws and policies

Manager of Information Systems Services Responsible for managing: Hardware Software Personnel within the information systems department

Systems Analyst Responsible for: Requires: Design and implementation of information systems Requires: Computer knowledge Information systems background Thorough understanding of business systems and functional areas within a business organization

Outlook for the Future 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

Outlook for the Future (cont'd.) Internet growth will continue Computer criminals will become more sophisticated Protecting personal identity information will become more difficult

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