1. Introduction to Information Systems
ISYS 363
David Chao

2. What is an Information System?
An organized combination of…
People
Hardware and software
Communication networks
Data resources
Policies and procedures
This system…
Stores, retrieves, transforms, and disseminates information in an organization
An organizational solution, based on information technology, to challenges posed by the environment.

3. Fundamental Roles of IS in Business

4. Types of Information Systems
Operations Support Systems
Efficiently support day-to-day operations
Management Support Systems
Provide information and support for effective decision making by managers
Strategic Information Systems
Help get a strategic advantage over customer

5. Operations Support Systems
Transaction Processing Systems, TPS
Record and process business transactions
Any exchange of money or other benefits between two or more parties
Order processing, purchasing
General ledger, accounts payable, accounts receivable
Large amount of data, high processing speed, high reliability, accuracy, and security (fault tolerant)
Data: internal, historical, detailed

6. Current Trend in Operations Support Systems
Enterprise Resources Planning ERP
for the internal world of a company
Customer Relationship Management CRM
for the external world of a company.

7. Enterprise Resources Planning, ERP
ERP software is multi-module application software that integrates activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking. ERP software may include application modules for the finance, accounting and human resources aspects of a business.
Integrated
Cross-functional
Shared database
Major vendors:
SAP, Oracle, Microsoft

8. Functional Organizational Structure
Most common organizational structure
Functional structure divided into functions or departments
Functions perform specialized tasks or activities
But, business processes cut across functions

9. Typical Functional Structure

10. Silo Effect
Focusing on functional objectives without regard to process objectives
Optimizing functional goals vs. process goals
Process execution requires
Communication and coordination among functions

11. Enterprise Systems
Enterprise systems (ES) support end-to-end processes
Investments in ES have provided
Increased profitability
Increased productivity
Competitive edge

12. Business Processes
Sequence of tasks or activities that produce desired outcomes
A generic business process model:

13. Key Business Processes
Procurement process (Buy):
All activities involved in buying or acquiring materials used by the organization, such as raw materials needed to make products.
Production process (Make):
Involves the actual creation of the products.
Fulfillment process (Sell):
All steps involved in selling and delivering the products to customers.

14. A Procurement Process

15. A Production Process

16. A Fulfillment Process

17. Fulfillment Process Steps

18. SAP Demo
Client #: 255
User: GBIFAC-01

19. Customer Relationship Management, CRM
Front office operations: Call Center
Direct interaction with customers, e.g. phone calls, , online services etc.
Sales Force Automation
tracks all contact that has been made with a given customer, the purpose of the contact, and any follow up that might be required.
Sales Intelligence
Cross-selling: selling an additional product or service to an existing customer
Up-selling: induces the customer to purchase more expensive items, upgrades, or other add-ons.
Switch-selling: customers are attracted by a special offer on some goods but the salesman's real aim is to sell other more expensive goods instead

20. Example of CRM Vendor
SalesForce.Com

21. Types of Management Support Systems
Management Information Systems (MIS)
Reports and displays
Example: daily sales analysis reports
Decision Support Systems (DSS)
Interactive and ad hoc support
Example: a what-if analysis to determine where to spend advertising dollars
Executive Information Systems (EIS)
Critical information for executives and managers
Example: easy access to actions of competitors

22. Management Information Systems
Facilitate management control by producing summarized reports that compare actual performance against planned performance on a regular and recurring basis.
Management control: Ensuring that performance meets established standards.
Serve middle management
Provide reports on firm’s current performance, based on data from TPS

23. Sample MIS Report

24. Sample MIS Report

25. Other Examples: Budget control: LYTD VS YTD Sales comparison
LYTD VS YTD Sales comparison

26. Budget Control Report

28. Sales Comparison

30. Decision support systems
Serve middle management
Support nonroutine decision making
E.g. What is impact on production schedule if December sales doubled?
Often use external information as well from TPS and MIS

31. Information and Management Decisions
A decision is a selection between several courses of action:
Penalty for bad decision
Information helps reduce uncertainty:
Incomplete information
Information systems improve decision-making effectiveness by providing decision makers with information related to the decisions for which they are responsible.

32. Components of DSS
Database: Current & Historical Data from Many Sources.
Internal and external data
Model base: Collection of Mathematical & Analytical Building Blocks
Interface for analysis: What - If Questions; visual dashboard

33. Using Decision Support Systems
What-IF Analysis:Observing how changes to selected variables affect other variables.
Sensitivity Analysis: Observing how repeated changes to a single variable affect other variables.
Goal-Seeking Analysis:Set a target value for a variable, and then repeatedly changes other variables until the target is achieved.
Example: Benefit.Xls
Optimization Analysis
Simulation: IBM Innov8 2.0

34. Strategic Information System
Information systems that provide a firm with competitive products and services which give it a strategic advantage over its competitors in the marketplace.
Information systems that promote business innovation, improve operational efficiency.

35. Strategic Advantage and Strategic Necessity
Strategic advantage refers to obtaining a sustainable competitive edge over competitors. The ability to obtain a greater than normal return on investment.
A strategic necessity is a system that must be installed to remain competitive and stay in business.

36. Competitive forces model by Michael Porter
Threat of
New Entrants
Bargaining Power
of Suppliers
Rivalry among
Existing Competitors
Bargaining Power
of Customers
Threat of Substitute
Products

37. Competitive Strategies
Cost leadership strategy:
Become a low cost producer of products and services
Find ways to help suppliers or customers reduce their costs
Product differentiation strategy.
Innovation strategy: Finding new way of doing business, enter new market.
Alliance strategy: Establish alliances with customer, suppliers, competitors, other company.
Growth strategy: expanding, diversifying, integrating.

38. Strategic Roles for Information Systems
Improving business operations
Promoting business innovation
Locking in customers and suppliers
Interorganizational IS, EDI, automatic inventory replenishment system
Creating switching costs
make customers dependent on the continued use of innovative IS.
Raising barriers to entry
discourage competitors from entering a market

39. Components of an Information System
Information technology
People
Database
Procedure

40. People Information specialists End-user:
programmer, system analyst, database administrator, etc.
End-user:
Menu-level end users
Command-level end users
End-user programmer
End-user computing and management

41. Ethical Responsibilities
What uses of IT might be considered improper or harmful to other individuals or society?
What is the proper business use of the Internet or a company’s IT resources?
How can you protect yourself from computer crime?

42. Workplace PCs May Not Be Very Private
Don’t be fooled: It may be personal, but it is not private.
Cyber-surveillance: The person most likely to be spying on you is your boss. 27% of businesses surveyed by the American Management Association said they review employee .
Reasons:
Productivity
Liability
Network performance

43. Database A group of related files Support business operations
Provide information

44. An example of database application
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45. Major Functions of Database Management
Creating a database
Analysis: Entity-Relationship Diagram
Design: Design file structure
Implementation
Accessing a database
Updating a database

46. Database Security Logical protection: Physical protection
Illegal access
Illegal update
Virus
Physical protection

47. Internet firms flocks to store data in blast-proof bunker
Some biggest companies are running their Internet operations on systems installed in a 300-foot-deep nuclear blast-proof bunker.

48. Weird Data Center Location

49. Procedures
Procedure: A step-by-step process or a set of instructions for accomplishing specific results.
Operations
Backup and Recovery
Security
Development

50. Operations Procedure: A procedure that describes how a computer system or application is used, how often it can be used, who is authorized to use it, and where the results of processing should go.
Backup Procedure: A procedure that describes how and when to make extra copies of information or software to protect against losses.
Recovery Procedure: An action taken when information or software must be restored.
Security Procedure: A procedure designed to safeguard data centers, communications networks, computers, and other IT components from accidental intrusion or intentional damage.
Development Procedure: A procedure that explains how IT professionals should describe user needs and develop applications to meet those needs.