05. Information Systems (IS) Rev: Feb, 2014 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: Dept. of Industrial & Management Engineering POSTECH

Contents 1Information Systems 1)Introduction 2)Components of IS 3)General role of IS 2Information Systems in Management 1)Problem types 2)The relationship between IS and Management 3)The role of IS in Management 3Case Study

3 What is Information? ■Definition of Data –Raw facts, typically about physical phenomena or business transactions Specifically, objective measurements of the attributes of entities such as number, name, etc. ■Definition of Information Facts that are organized and arranged in a meaningful manner. ■Data vs. Information (statistical analysis) ■Attributes of information –Accuracy –Timeliness –Relevance –Completeness –Reliability –Simplicity –Verifiability –Flexibility –Economy DataInformationThe transformation process 1. Information Systems 1) Introduction

4 What is a System? ■Definition of System –A set of interrelated components, with a clearly defined boundary, working together to achieve a common set of objectives by accepting inputs and producing outputs in an organized transformation process Input Capturing and assembling elements that enter the system to be processed Processing Transformation process converts input into output Output Transferring transformed elements to their ultimate destination 1. Information Systems 1) Introduction

5 What is an Information System? ■Definition of Information System –A set of interrelated components which are to collect, process, store, and distribute information to support decision making and control in an organization Information System Information System 1. Information Systems 1) Introduction

6 The view of Information Systems View Point 1 DataInformationDecision AidsKnowledge Statistical Analysis Math Analysis Reasoning View Point 2 Extreme top Top Middle low Extreme low EIS/ESS DSS IPS TPS OAS ERPERP View Point 3 Strategic Value IS Expansion H L L H ? ? 1. Information Systems 1) Introduction

7 What Does an Information System Do? ■ An information system performs three general activities –It accepts data from sources as input –It acts on data to process(produce) information : information generating system –The system outputs the information for the user, manager or staff member ■Information System Process Input of data Information generating Output Third StepFirst StepSecond Step 1. Information Systems 1) Introduction

8 Components of Information System (1/3) ■Does an Information System Need Computer? 95%5% YesNo As the volume of work grows  procedures increase in complexity,  activities become more interrelated,  improvements can be gained by introducing computer assistance Small size management 1. Information Systems 2) Components of IS

9 Components of Information System (2/3) A set of people, data, procedure to provide useful information Information System Data Procedure Network Communication of information Management of activities Decision making 1. Information Systems 2) Components of IS People Hardware Software

10 Components of Information System (3/3) Computer based loan information systems Banking database Economic database Fund on deposit Loan balance Balance financial plan Loan portfolio Employment data Economic data Processor Information supplied by applicant for loan Financial status Loan details Employment status 1. Information Systems 2) Components of IS ■E.g. Components of a Loan Information System

11 Why do we study Information Systems? (1/2) 1. Information Systems 3) General role of IS Collect, distribute, analyze Data Get information Remove uncertainty Make a good decision Store knowledge Why?

12 Why do we study Information Systems? (2/2) 1. Information Systems 3) General role of IS Vital component of successful businesses Improves efficiency and effectiveness of business processes Strengthens competitive position in rapidly changing marketplaces Facilitates managerial decision making & workgroup collaboration

13 Benefits and Uses of Information Systems 1. Information Systems 3) General role of IS Added Value to Products (Goods & Services) Higher-quality Products Improved health care & communications Reduced labor requirements & costs Increased efficiency & productivity Superior financial decision making, control over, operations, and managerial decision making Fewer errors Greater accuracy Better Safety & Service Product Labor Quality Management

14 Problem Types Input Problem Structure Definite Output Input Problem Structure Fuzzy Output Input Problem Structure User dependent Output User User Interaction 2. Information Systems in Management 1) Problem types Structured Problem Unstructured Problem Semi-structured Problem

15 What types of Information Systems Exist? IS Recognition about Information The adventExplanation TPS (Transaction Processing System) EfficiencyComputerTo process data about transactions MIS (Management Information System) ControlDatabase To enable people to make decision(action) DSS (Decision Support System) Decision PC and Model based To assist managers with unique strategic decisions that relatively unstructured ESS (Executive Support System) Strategic Resource Executive Support To assist top-level executive ES (Expert System)KnowledgeAI To mimic the decision process of a human expert ERP (Enterprise Resources Planning) ManagementIT To integrate management information across an entire organization Work Group Support System Communication To exchange information (ex: EDI, WP) 2. Information Systems in Management 2) The relationship between IS and Management

16 Evolution of IS ~ TPS (Transaction Processing System) MIS (Management Information System) DSS (Decision Support System) ESS (Executive Support System) ES (Expert System) ERP (Enterprise Resources Planning) WGSS (Work Group Support System) 2. Information Systems in Management 2) The relationship between IS and Management

17 A Business Perspective on Information Systems OrganizationsTechnology Management Information Systems 2. Information Systems in Management 3) The role of IS in Management

18 Technical & Behavioral Approaches to MIS Computer Science Operations Research Sociology Political Science Psychology Management Science MIS Behavioral Approaches Technical Approaches 2. Information Systems in Management 3) The role of IS in Management

19 Reference ■O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 1O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 1 ■Euiho Suh, “Introduction to Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)Euiho Suh, “Introduction to Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory) ■Euiho Suh, “Information & Management (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)Euiho Suh, “Information & Management (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)