1. Lecture #1 (Part 1) Foundations of Information Systems in Business
Prof M Benyoucef
(613) , 4787
Office: DMS 6144

2. Outline Why are information systems (IS) important in Business?
What is an IS?
Dimensions of IS
The MOT Framework
Mini-case: UPS (Pages 16-17)
ADM2372, M Benyoucef, Fall'08

3. Why are IS important?
IS represent a large capital investment; as managers, you need to invest this capital wisely
IS help transform organizations
Effect of the Internet & wireless technologies on organizations & individuals
e-commerce; social networking; etc.
Businesses use IS to respond quickly to consumers
Businesses use IS to optimize operations
IS enable the global economy
IS enable the digital firm (see next slide)
ADM2372, M Benyoucef, Fall'08

4. IS are used for managing internal processes; for coordination with suppliers and partners; and for e-commerce transactions with customers and suppliers 4 1 2 5 3
ADM2372, M Benyoucef, Fall'08

5. Why are IS important? IS can be a strategic necessity
Most businesses could not survive without them
IS can bring competitive advantage
They allow firms to differentiate themselves from their competitors
IS provide better decision-making capabilities
IS enable companies to create new products, services, and business models
ADM2372, M Benyoucef, Fall'08

6. What is an IS? Definition
“A set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization”
Information about significant things (employees, items in stock, customers, etc.) within the organization or its environment
ADM2372, M Benyoucef, Fall'08

7. What is an IS? data, information, knowledge
Data: Raw facts representing events such as business transactions
Information: Data shaped into a form that is meaningful and useful to human beings
Knowledge: created by analyzing information; may lead to action
ADM2372, M Benyoucef, Fall'08

8. What is an IS? data, information, knowledge
From the checkout counter of a supermarket - details of transactions
Total sales of Brite Dish Soap, per region, per store
Knowledge: “how is this brand of soap doing in the Northwest compared to other brands?”
ADM2372, M Benyoucef, Fall'08

9. What is an IS? BI and KM
Business Intelligence (BI): converts data into useful info and, through human analysis, into knowledge
Knowledge Management (KM): the process of acquiring, organizing, and communicating knowledge
ADM2372, M Benyoucef, Fall'08

10. What is an IS? Functions of an IS
INPUT
Processing
Classify
Arrange
Calculate
OUTPUT
FEEDBACK
Input: captures or collects raw data
Processing: converts raw data into information
Output: transfers information to people or other systems
Feedback: output to help people evaluate input
ADM2372, M Benyoucef, Fall'08

11. What is an IS? Who interacts with an IS
ENVIRONMENT
Suppliers
Customers
ORGANIZATION
Information System
INPUT
Processing
Classify
Arrange
Calculate
OUTPUT
FEEDBACK
Regulatory Agencies
Competitors & Partners
Stockholders
ADM2372, M Benyoucef, Fall'08

12. What is an IS? Flow of information
Top: Management Level 4
Summarized 1 2
Detailed
Low: Operational Level 3
ADM2372, M Benyoucef, Fall'08
[Source: Haag et al., 2004]

13. What is an IS? Flow of information
e.g., horizontal flow of information:
“Order Fulfillment” is a process involving activities performed by 3 departments: “Sales”, “Accounting”, & “Manufacturing”
Sales
Accounting
Manufacturing
Generate
Order
Submit
Check
Credit
Approve
Invoice
Assemble
Product
Ship
ADM2372, M Benyoucef, Fall'08

14. What is an IS? Computer based IS
Computer Based Information System (CBIS)
Relies on computer hardware and software for processing and distributing information
ADM2372, M Benyoucef, Fall'08

15. Dimensions of IS
Using IS effectively requires understanding the organization, management and information technology (IT) shaping the systems
 IS Literacy
Computer Literacy
ADM2372, M Benyoucef, Fall'08

16. Dimensions of IS IS Literacy and MIS
The field of Management Information Systems (MIS) deals with behavioral and technical issues surrounding the development, use, and impact of information systems in organizations
ADM2372, M Benyoucef, Fall'08

17. Dimensions of IS Organization
- People
- Structure
- Business processes
- Culture
- Politics
Management: managers who understand the role of IS in creating business value
Information Technology (IT)
- Hardware
- Software
- Data Management Technology
- Networking & Telecommunications
Technology
ADM2372, M Benyoucef, Fall'08

18. Dimensions of IS The IT dimension
Hardware: Physical equipment (computers, input/output devices, storage devices, etc.)
Software: Detailed preprogrammed instructions
Data Management: Software for managing the data on storage devices
Networking & Telecommunications Technology: Transfers data from one physical location to another
ADM2372, M Benyoucef, Fall'08

19. Dimensions of IS The IT dimension
Internet: international network of many networks
Intranets: internal corporate networks
Extranets: private intranets extended to authorized external users
WWW: system with universal standards for storing, retrieving, & displaying information in a networked environment
ADM2372, M Benyoucef, Fall'08

20. The MOT Framework
MOT (Management, Organization, Technology) Framework:
A diagram that graphically illustrates how management, organization, & technology elements work together to create an IS solution to a business problem
ADM2372, M Benyoucef, Fall'08

21. The MOT Framework
Let us revisit the Toyota Case discussed on Fri Sep 05 (Go to the course website, click on “Schedule & Slides”)
ADM2372, M Benyoucef, Fall'08

22. Mini-case: UPS Competes Globally with IT (Pages 16-17)
ADM2372, M Benyoucef, Fall'08

23. UPS www.ups.com World largest air & ground package service
Started in 1907 by 2 teenagers from Seattle
The promise: “best service & lowest rates”
Delivers 14.1 million items a day worldwide
Spends billions of dollars on IT to boost customer service while keeping costs low
ADM2372, M Benyoucef, Fall'08

24. UPS & Information Technology
UPS Truck Driver Picks up the package
Handheld Computer called Delivery Information Acquisition Device (DIAD)
UPS
Main Computers
Cellular Telephone Network
ADAPTER
- Customer’s Signature
- Pickup time
- Etc.
ADM2372, M Benyoucef, Fall'08

25. UPS & Information Technology
Main Computers
Along the route from sender to receiver
Barcode Scanner
CSR (Customer Service Representative)
Package
Internet
Services on the UPS website: track packages, calculate shipping rates, schedule pickups, payment, etc.
Customers tracking their packages
ADM2372, M Benyoucef, Fall'08

26. UPS - other services
Businesses can embed UPS functions (tracking, etc.) into their own website
UPS implemented custom built software to optimize package loading and delivery (using operations research)
UPS manages other companies’ logistics through its “Supply Chain Solutions” division
ADM2372, M Benyoucef, Fall'08

27. Question 1
What are the inputs, processing, and outputs of UPS’s package tracking system?
Inputs
package information, customer signature, pickup, delivery, current location (while en route), etc.
Processing
data transmitted to a central computer and stored, & organized so that it can be searched
Outputs
pickup & delivery times, location while en route
various reports, such as “all packages for a specific account”
“summary reports” for management
ADM2372, M Benyoucef, Fall'08

28. Question 2 What technologies are used?
Handheld computers (DIADs), bar code scanners, telecommunications for transmitting data, cellular phone networks, the Internet, & computers
How are these technologies related to UPS’s business strategy?
UPS strategy: “best service and lowest rates”
technology enables data to flow seamlessly throughout UPS
 technology enables UPS to be more competitive, efficient, and profitable
ADM2372, M Benyoucef, Fall'08

29. Question 3 What problems do UPS’s IS solve?
The need to meet high customer expectations
The need to keep customers from going to the competition
The need to lower costs by optimizing operations (truck loading, delivery, etc.)
ADM2372, M Benyoucef, Fall'08

30. Question 3 What would happen if these systems were not available?
UPS might not be able to compete effectively
UPS would, as it has through most of its history, attempt to provide information to its customers, but at higher prices
ADM2372, M Benyoucef, Fall'08

31. MOT Framework ADM2372, M Benyoucef, Fall'08
- High customer expectations
Customers have a choice to go elsewhere
Need to optimize operations
Consolidate UPS’s leading position
Monitor the performance of the delivery process
Organizational processes designed around package data entry/scanning in real time
- Track packages
- Generate reports for management
- Manage business accounts
- Increase customer satisfaction
- Increase revenue
Web based tracking system that is aware of the location of a package as it moves from pickup to delivery
ADM2372, M Benyoucef, Fall'08